Printable Format84-2-106. Definitions: "Contract"; "agreement"; "contract for sale"; "sale"; "present sale"; "conforming" to contract; "termination"; "cancellation". (1) In this article unless the context otherwise requires "contract" and "agreement" are limited to those relating to the present or future sale of goods. "Contract for sale" includes both a present sale of goods and a contract to sell goods at a future time. A "sale" consists in the passing of title from the seller to the buyer for a price (section 84-2-401). A "present sale" means a sale which is accomplished by the making of the contract.
(2) Goods or conduct including any part of a performance are "conforming" or conform to the contract when they are in accordance with the obligations under the contract.
(3) "Termination" occurs when either party pursuant to a power created by agreement or law puts an end to the contract otherwise than for its breach. On "termination" all obligations which are still executory on both sides are discharged but any right based on prior breach or performance survives.
(4) "Cancellation" occurs when either party puts an end to the contract for breach by the other and its effect is the same as that of "termination" except that the cancelling party also retains any remedy for breach of the whole contract or any unperformed balance.
History: L. 1965, ch. 564, § 23; January 1, 1966.
KANSAS COMMENT, 1996
1. Subsection (1) defines the phrase "contract for sale" to include both present sales of goods and contracts for the sale of goods in the future. The rights of the parties do not differ between the two types of transactions unless Article 2 so provides. This subsection also limits the words "contract" and "agreement" (which are defined in 84-1-201) to transactions within the scope of Article 2. Although the definition of "sale" is based on the passage of title from seller to buyer, the concept of title is largely unimportant in Article 2. See 1996 Kansas Comment 1 to 84-2-401.
2. Subsection (2) states when contract performance conforms to the contract. Performance is "conforming" when it is in accord with the seller's contract obligations. The Kansas Court of Appeals has explained that "nonconformity cannot be viewed as a question of quantity and quality of goods alone, but of the performance of the totality of the seller's contractual undertaking." Evco Distrib., Inc. v. Commercial Credit Equip. Corp., 6 K.A.2d 205, 627 P.2d 374, rev. denied, 229 K. 669 (1981). Article 2, with some exceptions, provides that exact conformance to the contract is necessary for the seller to be able to require acceptance by the buyer. See 1996 Kansas Comment 1 to 84-2-601.
3. Subsections (3) and (4) distinguish between "termination" and "cancellation." Termination is when either party ends the contract otherwise than for breach. Cancellation is when either party ends the contract because of the other party's breach. See also 84-2-703(f) (cancellation by seller); 84-2-711(1) (cancellation by buyer). The effect of cancellation is the same as termination, except that a canceling party retains any remedy for breach of the unperformed part of the contract or the contract as a whole. Termination discharges any executory duties of either party, although both parties retain any claim based on a prior breach of the contract.
Law Review and Bar Journal References:
"U.C.C.: The Farmer is Not a Merchant Under the U.C.C.—Promissory Estoppel to Avoid the Operation of the Statute of Frauds," Mark A. Buck, 16 W.L.J. 230, 234 (1976).
Subsection (1) mentioned in note on warranty violations in tripartite finance lease agreements, Winton A. Winter, Jr., 25 K.L.R. 573, 576 (1977).
"Deregulation and Natural Gas Purchase Contracts: Examination Through Neoclassical and Relational Contract Theories," Danton B. Rice, Michael A. Schlueter, 25 W.L.J. 43, 59 (1985).
"Clear Title: A Buyer's Bonus, A Lender's Loss—Repeal of UCC § 9-307(1) Farm Products Exception by Food Security Act § 1324 [7 U.S.C. § 1631]," Mark V. Bodine, 26 W.L.J. 71, 73 (1986).
"Electronic Commerce in Kansas: Contract Formation and Formalities Under Article 2," Christopher R. Drahozal, 68 J.K.B.A. No. 5, 22 (1999).
Attorney General's Opinions:
Cereal malt beverages; off-premise sales. 87-1.
CASE ANNOTATIONS
1. Buyer accepted goods; not present sale; defendant not entitled to cure nonconformance; defects; action on implied warranties proper. Linscott v. Smith, 3 Kan. App. 2d 1, 3, 5, 587 P.2d 1271.
2. Title to goods under K.S.A. 84-2-105, 84-2-401 cannot pass under a contract for sale prior to their identification to the contract. Reeves v. Pillsbury Co., 229 Kan. 423, 426, 625 P.2d 440.
3. Directed verdict for defendants erroneous; UCC applicable to transaction involving irrigation system with defective hose not manufactured by dealer. Stair v. Gaylord, 232 Kan. 765, 770, 659 P.2d 178 (1983).
4. Cited; choice of law question is whether transaction between parties bears appropriate relation to this state. Owens-Corning Fiberglas v. Sonic Dev. Corp., 546 F. Supp. 533, 540 (1982).
5. Cited; where suit involves sale of goods rather than rental, four-year limitation applicable. Transamerica Oil Corp. v. Lynes, Inc. 723 F.2d 758, 762 (1983).
6. Cited; farm equipment leasing company not merchant; not liable for implied warranty of merchantability. Wight v. Agristor Leasing, 652 F. Supp. 1000, 1009 (1987).
7. Summary judgment precluded where genuine issue exists as to whether secondary packaging operation was "seller" or "merchant." Nature's Share, Inc. v. Kutter Products, Inc., 752 F. Supp. 371, 378 (1990).
4. Debtor had sufficient rights in livestock so that bank's security interest attached. Kunkel v. Sprauge Nat. Bank, 128 F.3d 636, 641 (1997).
5. Action was not removable to federal court because nondiverse distributor was fraudulently joined. Cooper v. Zimmer Holdings, Inc., 320 F. Supp. 2d 1154, 1158 (2004).