Contract Law: Northrop Corp. V. Litronic Industries, 1994

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Contracts Law Outline 1) INTRODUCTION *Key principles: 1) UCC trumps common law: Every state except Louisiana has adopted the Uniform Commercial Code. Provisions of UCC usually trump common law. Article 2-1103: common law applies to contracts for sales of goods, unless it contradicts article 2. 2) Redress/punishment: Law concerned mainly with relief of promises to redress breach and not with punishment of promisors to compel performance; 3) Expectation interest: The relief granted to the aggrieved promisee should generally protect the promisee’s expectation by attempting to put the promise in the position in which it would have been had the contract been performed; 4) Damages/performance: The appropriate form of relief is substitutional, in the form of a judgment awarding money damages to be paid to the aggrieved promise, rather than specific, in the form of a court order directing the promisor to perform its promise. 5)…show more content…
Litronic Industries, 1994. FACTS: Litronic offered to sell electronic components to Northrop for a weapons system; the offer contained a limited 90-day warranty. Northrop accepted the offer on terms providing for an indefinite warranty. After 90 days, Northrop tried to return some of the wire boards as defective. Litronic refused to accept them, arguing that he 90-day warranty period had lapsed. RULE: KNOCKOUT DOCTRINE. When the seller’s and buyer’s terms differ materially, the two terms cancel each other out, and the contested term is supplied by a Code gap-filler. Posner points out, however, that he would prefer a rule that says all additional terms are different terms and vice versa, thus UCC 2-207(2) about additional terms should apply, unless materially alter the contract. Prof. Goldberg, on the other hand, suggests a “best shot” rule, where all terms in one form should be enforced based on their relative fairness. This rule would force companies to create more balanced

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