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Wednesday, May 28, 2014

Who Says The Uniform Commercial Code Isn't Beautiful?

For the beginning of my bar review program, I have been going through Kaplan's review sessions for core subjects. I completed the contracts review sessions the other day, and I found that while I did okay on the common law and remedies questions, I did not perform as well on the portion of the review that covered the Uniform Commercial Code (UCC).

I initially thought that my struggles were due to the cut-and-dry nature of the UCC's rules. The review lectures pointed out that if I didn't remember a rule for a certain scenario, it would be hard to narrow down the potential answers. Since I hadn't reviewed these rules since my first year of law school, I chalked off my struggles as a consequence of rusty memorization.

But perhaps I didn't do as well on the UCC questions because this area of law is too ugly. At least, that's what Kenneth Ching argues in his article, Beauty and Ugliness in Offer and Acceptance (H/T: Legal Theory Blog). Here is the abstract:

This essay applies classical aesthetics to the contract doctrine of offer and acceptance. It argues that contract law can be understood, analyzed, and improved using three criteria of beauty: proportion, integrity, and clarity. Based on these criteria, this essay (1) argues that the traditional doctrine of offer and acceptance is beautiful, (2) argues that UCC §2-207 is ugly and fails to improve upon offer and acceptance, and (3) suggests improvements for UCC §2-207.
I took a break from bar review to look over Ching's article to see if my struggles with the UCC were aesthetic in origin. I have come to the conclusion that they are not, and that further review and memorization of the UCC should get me up to speed on the rules. In fact, I did some of that review while I was reading Ching's article and as a result I developed some serious qualms with Ching's claims.

To start, Ching's argumentation seems sloppy at points. For example, he praises the "clarity" and "intelligibility" of offer and acceptance, and how the components of common law contracts fit neatly into one another. (7). He then confronts criticism of this common law approach. He begins by dispelling some concerns (like simultaneous offer and acceptance) as being theoretical constructs that could not arise in practical situations. (9).

But when responding to tougher criticism, like the mirror-image rule and battle of the forms, Ching's argument pivots awkwardly -- he admits that offer and acceptance are complicated, but goes on to argue that this supports his conclusion that offer and acceptance are beautiful. The complexity of offer and acceptance is "internal richness," which contributes to the aesthetic appeal of these concepts. (11). At this point, Ching's definition of beauty seems broad enough to simply swallow any criticism of offer and acceptance, and his earlier praise of clarity and intelligibility seems to have been forgotten.

More importantly, Ching seems to be making mistakes of law in advancing his aesthetic claims. Ching takes aim at UCC §2-207(1) which reads:

A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

Ching criticizes this particular section of the UCC, writing:

§2-207(1)’s approach also lacks proportion. If we are looking for agreement based on acceptance, then offer has logical priority. There can be no definite expression of acceptance if there is no offer. Thus, once an offer is made, to form an agreement, an acceptance should be proportionate to the offer. Allowing the offeror to be the master of his offer preserves this proportion. §2-207’s approach of allowing the offeree to accept with terms that materially alter the contract creates disproportion between the parties’ manifestations of assent. (16) [emphasis added]
But wait! UCC §2-207(2) states:

(2) The additional terms are to be construed as proposals for addition to the contract.Between merchants such terms become part of the contract unless: 
(a) the offer expressly limits acceptance to the terms of the offer; 
(b) they materially alter it; or 
(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received. [emphasis added]
UCC §2-207(2) clearly avoids the disproportion that Ching laments in his criticism of section 2-207(1). Interestingly, the phrase he uses in attacking section 2-207(1) -- "materially alter" -- seems drawn from the very subsection of the code that undermines his criticism.

Ching addresses section 2-207(2) in a later portion of his paper. He begins by reiterating his concern with disproportionality:

The offer and acceptance are disportionate; they don’t match. The agreement lacks integrity; it is missing agreement. And the principle of the rule is unclear: why should the offeror be stuck with the offeree’s additional terms, even if he does perform after receiving the purported acceptance? (18)
Again, this claim is overlooking the limits this section provides, but Ching at least acknowledges their existence in this portion of his paper. Regarding subsection (b), the provision that additional terms that materially alter the contract do not become part of the contract, Ching's sole reply to this subsection is:
This helps the offeror but hurts the offeree because now he is stuck with a contract which he had only accepted on materially different terms. (19)
Ching's initial argument against UCC §2-207(1) is that it gives too much power to the offeree, as Ching claims that the offeree can add material alterations to the contract. As I mentioned, this criticism fails to account for the limits on the offeree's power -- and Ching's only acknowledgement of this limit is to now argue that the offeree is at an unacceptable disadvantage, which destroys proportionality. This underdeveloped claim seems to directly contradict Ching's earlier statement that "allowing the offeror to be the master of his offer preserves this proportion" (16).

Ching's paper offers a perspective on contract law that I have not seen before, and as somebody who is in the position of needing to memorize many of the UCC's rules, I am inclined to sympathize with his claims that the rules are unappealing. But I find that Ching's aesthetic approach involves standards that are dangerously easy to manipulate. And he devotes far too little attention to sections of the code that undermine his claims. For Ching's argument to gain any meaningful traction, he will need to confront these sections in far greater detail.

1 comment:

  1. Michael, thanks for reading and writing about my essay. I think you've misunderstood the arguments you've criticized. Good luck on the bar! - Kenny