84-2-305. Open price term. (1) The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery if
(a) nothing is said as to price; or
(b) the price is left to be agreed by the parties and they fail to agree; or
(c) the price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded.
(2) A price to be fixed by the seller or by the buyer means a price for him to fix in good faith.
(3) When a price left to be fixed otherwise than by agreement of the parties fails to be fixed through fault of one party the other may at his option treat the contract as cancelled or himself fix a reasonable price.
(4) Where, however, the parties intend not to be bound unless the price be fixed or agreed and it is not fixed or agreed there is no contract. In such a case the buyer must return any goods already received or if unable so to do must pay their reasonable value at the time of delivery and the seller must return any portion of the price paid on account.
History: L. 1965, ch. 564, § 39; January 1, 1966.
KANSAS COMMENT, 1996
1. Under the common law, courts refused to enforce agreements in which certain terms were left open on the ground that the agreement was too indefinite or else constituted merely an "agreement to agree." Article 2 rejects the common law approach and makes such agreements enforceable so long as the parties intended to be bound. See 84-2-204(3). It provides a number of "gap fillers"—statutory default rules that fill the gaps left in open term contracts. This section is a gap filler for agreements in which the parties left open the price term.
2. Under subsection (1), if the contract is silent as to price, if the parties left the price to be agreed on later and then were unable to agree, or if the price was to be set by a third person and that person failed to do so, then the resulting gap in the contract is filled with a reasonable price. If either the buyer or the seller are to set the price, subsection (2) requires that the price be set in good faith. For an application of this provision, see Wayman v. Amoco Oil Co., 923 F. Supp. 1322 (D. Kan. 1996). When a price is not set because of the fault of one party to the contract, under subsection (3) the other party may either treat the contract as canceled or itself fix a reasonable price.
3. This section does not specify how a court should determine what is a reasonable price. Certainly course of dealing, course of performance, or trade usage will be relevant, and may result in a "reasonable" price that is either above or below the market price. Otherwise, a court ordinarily will find the reasonable price to be the fair market value at the time and place for delivery.
Law Review and Bar Journal References:
"Kansas Contract Law and the Uniform Commercial Code," Laurence A. Stanton, 10 W.L.J. 327, 329, 332 (1971).
"The U.C.C.C. and Real Estate Financing: A Square Peg in a Round Hole," Thomas L. Griswold, 28 K.L.R. 601, 615 (1980).
"Too Much Good Faith in Real Estate Purchase Agreements? Give Me an Option," Harvey L. Temkin, 34 K.L.R. 43, 54 (1985).
CASE ANNOTATIONS
1. Gap-filler statutes, under New York law, as unuseable where parol evidence admissible to establish missing terms examined. Rajala v. Allied Corp., 66 B.R. 582, 594 (1986).
2. Dealer did not violate agreement with franchisee regarding price where dealer satisfied UCC good faith requirement. Wayman v. Amoco Oil Co., 923 F. Supp. 1322, 1346 (1996).
|
|