Contracts

Section 2-207 of the Uniform Commercial Code

Learn about the definition for this legal term.

What is Section 2-207 of the Uniform Commercial Code?

Section 2-207 of the Uniform Commercial Code (often referred to as UCC 2-207) governs the sale of goods and is primarily used when one business sells to another. Section 2-207 applies particularly to terms that are added when one merchant accepts an offer from another. Unlike business-to-consumer contracts, these additional terms do not automatically invalidate the contract. Instead, they will be incorporated into the contract unless the other party clearly disputes the new terms. This section also governs what is known as the battle of the forms. Typically, the party whose form was accepted last regulates the terms of the contract. But under UCC 2-207, this may not be the case. The terms of the contract are those that neither party disputed.

The Definition of Goods under the Uniform Commercial Code

When evaluating whether a contract is governed by Section 2-207 of the Uniform Commercial Code, it is critical to understand whether the subject of the contract is considered a good.

Section 2-105 of the Uniform Commercial Code defines goods as "all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities (Article 8) and things in action. ‘Goods’ also includes the unborn young of animals and growing crops and other identified things attached to realty as described in the section on goods to be severed from realty.”

Case Examples

  • The purpose of Section 2-207: The purpose of Section 2-207 is to address the fact that many business contracts are not fully bargained or laid out in writing, especially between parties that work together often. Section 2-207 is intended to permit these parties to introduce new or modified terms into a contract without completely undermining the contract formation process. This is partially because these parties engage regularly in business, are considered more sophisticated than the average consumer, and therefore more able to handle changing terms. See JOM, Inc. v. Adell Plastics, Inc., 193 F.3d 47, 52 (1st Cir. 1999).
  • Conditional Acceptance: Although additional terms do not automatically prevent contract formation under UCC 2-207, the acceptance of such additional terms will not be automatic if one party conditions their acceptance on the additional terms and then fails to affirmatively accept those terms. For example, in PCS Nitrogen Fertilizer, L.P. v. Christy Refractories, L.L.C., 225 F.3d 974, 978 (8th Cir. 2000), a merchant buyer did not form a binding contract with the seller because he put in writing that his additional terms must be accepted prior to the contract being formed. As the merchant seller did not expressly accept the terms, no contract was formed. Id. Section 2-207 will also require affirmative acceptance of any terms that materially alter one party's rights in relation to another, such as the addition of an arbitration clause. Id.

Further Reading

For more detailed information, see our related Contracts terms:

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