Supply relationships run on purchase orders, acknowledgments, and long-term supply agreements that often conflict with one another. When a shipment is late, a component fails in the field, or a supplier announces a price increase or allocation, the answer depends on which terms actually govern and how the law fills the gaps. We represent buyers and sellers of goods and services, including manufacturers, component suppliers, distributors, and technology companies buying hardware and services, in drafting supply agreements and in the disputes that follow when the supply chain breaks.
When UCC Article 2 Applies
UCC Article 2 governs sales of goods in every state but Louisiana. Services contracts are governed by common law. Mixed contracts, such as equipment with installation or hardware with embedded software, are classified in most states by their predominant purpose, which decides whether Article 2's rules on gap-filling, warranties, remedies, and its four-year statute of limitations apply. For cross-border sales of goods between parties in countries that have adopted the United Nations Convention on Contracts for the International Sale of Goods, the CISG applies automatically unless the contract expressly excludes it, and it differs from the UCC on formation, writing requirements, and remedies.
Forms, Warranties, And Disclaimers
Under UCC 2-207, an acknowledgment with different or additional terms can still form a contract, and in most states conflicting terms knock each other out and are replaced by UCC defaults. That is how a seller's carefully drafted warranty disclaimer can disappear. Express warranties arise from descriptions, samples, and specifications. Implied warranties of merchantability and fitness for a particular purpose apply unless properly disclaimed; a disclaimer of merchantability must mention merchantability and, if written, be conspicuous. Remedy limits, such as repair or replace, are enforceable under UCC 2-719 unless they fail of their essential purpose. The CISG has no statute of frauds and treats a reply with material changes as a counteroffer.
Drafting Supply Agreements
We draft master supply agreements, purchase and sale terms, services agreements, and quality agreements for both buyers and sellers. Key terms include forecasts and binding purchase commitments, lead times, allocation rights during shortages, pricing and adjustment mechanisms for raw materials and tariffs, delivery terms using Incoterms or UCC shipment terms, inspection and acceptance procedures, warranty scope and duration, recall cooperation, and limitation of liability. For technology products, we address firmware and software licensing, updates, and data rights. We also make sure your terms are presented and accepted in a way that survives a battle of the forms, through order acknowledgments and precedence clauses.
Supply Chain Disputes
We represent buyers and sellers in disputes over defective goods, late or short deliveries, wrongful rejection, unpaid invoices, price increases, and termination of supply relationships. Under the UCC, a buyer may reject nonconforming goods, a seller may have a right to cure, and a buyer who has accepted goods may revoke acceptance only for substantial impairment. Damages can include the cost of cover and incidental and consequential damages unless the contract excludes them. We assess whether a supplier can claim commercial impracticability under UCC 2-615 or force majeure, and whether either side can demand adequate assurance of performance under UCC 2-609. Disputes are handled with our Litigation practice.
Practical Steps For Buyers And Sellers
Use a master agreement for important suppliers or customers so that purchase orders carry only quantities, prices, and dates. Decide whether you want the CISG to apply, and exclude it expressly if not. Document inspection results promptly, and give written notice of defects within a reasonable time, since a buyer who waits can lose its remedies. Keep warranty disclaimers conspicuous and remedy limits specific. When a supplier signals trouble, demand adequate assurance in writing rather than simply withholding payment. And before terminating a supply relationship, check notice periods and any obligations to buy remaining inventory or pay for work in progress.
