Some
Comments
on
Contracts
and
the
California
Commercial
Code
By
Raymond
G.
Coyne*
CALIFORNIA'S
VERSION
of
the
Commercial
Code' was
enacted
in
June
of
1963
and
became
effective
on
January
1,
1965.
This
article
is
an
attempt
to
answer
in
a
general way
the
natural
question
posed
by
so
many
since
its
enactment-what
does
the
Commercial
Code
do
to
the
law
of
con-
tracts?
The
question
is
reasonable
and
the
answer
is
short-not
much.
But
the
Commercial
Code
does
bring
about
some
changes
in
contract
law
and
cases
governed
by
the
Commercial
Code
are
in
the
California courts.
It
might
be
prudent
therefore
to
examine
the
changes
in
contract
law
brought about by
this
Code.
The
first
thing
to
be
noted
is
that
the
Commercial
Code,
insofar
as
general
contract
law
is
concerned,
is
largely limited
in
its
application
to
contracts
for
the
sale
of
goods.
It
does
not
make
any
changes
in
the
law
:relating
to
other
types
of
contracts,
e.g.
contracts
for
services,
contracts
for
the
sale
of
real
property
or
construction contracts.
Since,
as
to those
contracts
not
specifically
covered
by
the
Commercial
Code
the
law
has
not
been changed,
this
means
that
we
probably
will
see
two
bodies
of
contract
law develop,
one
with
respect
to
the
sale
of
goods
and
the
other
with
respect
to
the
rest.
This
raises.
another
question.
Will
the Uniform
Commercial Code
2
extend its
influence
beyond
the
commercial
area
and
gradually
bring
about
a
change
in
the
law
applicable
to
those
contracts
now
beyond
its
ken?
This
question
will
perforce
be
answered
in
time
by
the
bench
and
the
bar
and
others
who
contribute
to
shaping
the
law.
The
Commercial
Code
does
not
seem
to
have
changed
the
basic
con-
cept
of
what
a
contract
is.
True,
the
Commercial Code
defines
the
terms
"agreement"
'
and
"contract"
4
and
differentiates
between
them.
"Agree-
ment"
for
example
means
"....
the bargain
of
the
parties....
."
"Contract"
means
". .
the
total
legal
obligation
which
results
from
the
parties'
agreement....
."
But
when
these
definitions
are
read
together they
incor-
*
A.B.,
Boston
College;
LL.B., Georgetown
University;
Associate
Professor
of
Law, Univer-
sity
of San Francisco.
1
California's
Commercial
Code
contains
some
125
variations
from
the
Official
Text
of the
Uniform
Commercial
Code.
2
Adopted
in
at
least
41
states
and
the
District
of
Columbia
as
of
this
writing.
3
Cal.
Comm.
Code
§1201(3).
4
Cal.
Comm.
Code
§1201(11).
UNIVERSITY
OF
SAN
FRANCISCO
LAW
REVIEW
porate
the
provisions
of
current
California
law
defining
the
term
"con-
tract."
5
In
addition
the
Commercial
Code
makes
express
reference
to
the
existing
body
of
California
law
concerning
contracts, equity,
capacity,
agency,
estoppel,
fraud,
misrepresentation,
duress,
coercion,
mistake
and
the
like,
as
supplementing
the
Commercial
Code
unless
specifically
dis-
placed
by
the
provisions
of
that
code.'
Thus,
it
is
clear
that
the
Com-
mercial
Code
was
not intended
to
make
obsolete
the
entire
common
law
of
contracts
even
with
respect
to
those
contracts
subject
to
the
Commer-
cial
Code.
It
is
also
clear
that
insofar
as
the
basic
concept
of
contract
is
concerned,
those
contracts
subject
to
the
Commercial
Code
and
those
which
are
not,
are
alike.
Aside
from
contracts
for
the
sale
of
goods,
which
used
to
be
covered
in
the
Sales
Act
provision
of
the
Civil
Code,
California
law
concerning
offer
and
acceptance
and
mutual
assent,
though
codified,
is in
line
with
the
common
law.
An
offer,
for
example,
must
be
definite
and
certain
before
it
can
be
accepted
and
thus
form
a
contract.
7
The
Commercial
Code,
on
the
other
hand,
would
allow
the
formation
of
a
contract
even
though
the
offer
was
not
definite
and
certain
since
by
its terms
a
contract
does
not
fail
for
indefiniteness
if
the
parties
intend
to
make
a
contract
and
if
there
is
a
reasonably
certain
basis
for
giving
an
appropriate
remedy.
8
Here
contracts
for
the
sale
of
goods
and
contracts
not
covered
by
the
Commercial
Code
part
company,
and
whether
they
will
come
together
again
is
conjectural.
The
Commercial
Code
provision
is
based
upon
the
intent
of
the
parties
to
make
a
contract
and
the
requirement
that
there
be
a
reasonably
certain
basis
for
granting
an
appropriate
remedy.
These
qualifications
have
their
origins
in
commercial
practices
which
would
not
seem
applicable
in
the
non-commercial
setting
and
it
may
well
be
that
this
twain
shall
not
meet
again.
With
regard
to
acceptance,
there
are
some
differences
between
con-
tracts
subject
to
the
Commercial
Code
and
those
which
are
not.
But
first,
a
point
of
similarity
should
be
noted.
The
Commercial
Code'
provides
that
unless
otherwise
unambiguously
indicated
by
language
or
circum-
stances,
an
offer
is
to
be
construed
as
inviting
acceptance
in
any
matter
,
Cal.
Civ. Code
§§1549
(contract
defined),
1619,
1620,
1621
(express
and
implied
con-
tracts)
;
Cf.
Restatement,
Contracts
§§1,
3
(1932).
6
Cal.
Comm.
Code
§§1201(3),
1201(11),
1103.
7
Cal.
Civ.
Code
§§1565,
1580;
Burgess
v.
Rodom,
121
Cal.App.2d
71,
262
P.2d
335
(1953)
Restatement,
Contracts
§32 (1932).
8
Cal.
Comm.
Code
§2204(3),
as
to price
of
goods,
however,
if
the
offer
or contract
does
not
settle
the
price
the
Commercial
Code
does.
Cal.
Comm.
Code
§2305.
0 Cal.
Comm.
Code
§2206(1)
(a).
[Vol.
1
October
1966]
CONTRACTS
AND
THE
COMMERCIAL
CODE
and
by
any
medium
reasonable
in
the
circumstances.
The
provision
was
deliberately
drafted
in
this
manner
to
avoid
the application
of
any
rule
to
the
effect
that
the
mode
of
communicating
the
acceptance
must
be
the
same
as
that
used
for
the
offer
and
is
intended
to
be
flexible
enough
to
apply
to
acceptances
by
present
and
future
means
of
communication.
It
has
its
counterpart
in
the
Civil
Code
provision
°
which
requires
the
acceptance
to
conform
to
any
prescribed
conditions
concerning
communi-
cation
which
are
contained
in
the
offer.
In
the
absence
of
any
such
condi-
tions,
"any
reasonable
and
usual
mode
may
be
adopted."
Actually
both
of
these
provisions
are
in
accord
with
the
common
law
rule.
11
However,
the
Commercial
Code
in
the
same
section'
12
provides
that
an
order
or
other
offer
to
buy
goods
for
prompt
or
current
shipment
can be
accepted
by
a
prompt
promise
to
ship
or
by
prompt
shipment
of
conform-
ing
or
nonconforming
goods.
To
the extent
that
this
section
permits
acceptance
by
either
prompt
promise
to
ship
or
prompt
shipment
of
conforming
goods
it
appears
that
there
has
been
no
change
in
California
law.
3
But
insofar
as
this
section
provides
that
an
offer
to
buy
goods
can
be
accepted
by
shipping
nonconforming
goods
we
have
new
contract
law
in
California.
In
another
section
of
the
Commercial
Code
4
there
is
a
change
as
to
acceptance
in
contract
law
applicable
to
the
sale
of
goods.
This
section
states
that
a
definite
and
seasonable
expression
of
acceptance
or
a
written
confirmation
operates
as
an acceptance
even
though
it
contains
terms
in
addition
to
or
different
from
those
contained
in
the
offer,
unless
the
acceptance
itself
is
expressly
made
conditional
on
the
further
acceptance
of
the
additional
terhs
by the
original
offeror.
Absent
any
such
condition
the
additional
terms
become
proposals
for
addition
to
the
contract
and
presumably
these
proposals
must
be
assented
to before
they
become
a
part
of
the
contract.
As
may
be
seen
from
the
foregoing
an
acceptance
or
written
confirmation
containing
additional
terms
can
have
a
twofold
effect.
It
is
an
acceptance
so
that
a
contract
is
formed
according
to
the terms
of
the
original
offer
and
it
is
also
in
the
nature
of
a
counteroffer
to
the
extent
that
it
contains
proposals
for
addition
to
the
contract
already
formed.
It
should
be
noted
here
that
what
has
been
said
above
concerning
pro-
posals
for
additions
to
the
contract
applies
only
in
cases
where
at
least
one
of
the
parties
to
the
contract
is
not
a
merchant.
10
Cal.
Civ.
Code
§1582;
Davis
v.
Jacoby,
1 Cal.2d
370,
34
P.2d
1026
(1934).
11
See
e.g.,
Henthorn
v.
Fraser,
2
Ch.
App.
27
(1892)
;
Restatement,
Contracts
§66
(1932).
12
Cal.
Comm.
Code
§2206(1)
(b).
13
Beatty
v.
Oakland
Sheet
Metal
Co.,
111
Cal.App.2d
53,
244
P.2d
25
(1952).
14
Cal.
Comm.
Code
§2207.
UNIVERSITY
OF
SAN
FRANCISCO
LAW
REVIEW
There
is
another
standard
applied
as
between
merchants."
In
this
case
any
additional
terms
contained
in
the
acceptance,
not
expressly
made
conditional
on
the
acceptance
of
the
additions
by the
original
offeror,
become
a
part
of
the
contract
automaticallly,
unless:
(1)
the
offeror
had
taken
the
precaution
to
limit
expressly
the
acceptance
to
the
terms
of
the
offer;
or,
(2)
the
additions
would
materially
alter
the
offer;
or,
(3)
the
offeror
objects
to
the
additions and
gives
notice
before, or
within
a
reason-
able
time
after,
receiving
notice
of
the additions.
1
"
In
any
event,
whether
we
are
dealing
with
merchants
or
not,'
7
it
is
possible
for
an
offer
to
be
accepted
by
an
acceptance
which
varies the terms
of
the
offer.
On
the
other
hand
when
we
are
concerned
with
contracts
not
within
the
scope
of
the
Commercial
Code,
California
law
has
been
and
is to
the
effect
that
an acceptance,
in
order
to
operate
as
such
and
create
a
binding
contract,
must
not vary
from
or
qualify
the
terms
of
the
offer.'
If
there
is
such
a
variance the
purported
acceptance
amounts
in
law
only
to
a
counteroffer
which
rejects
and terminates
the
original
offer'"
and
there
is
no
possibility
of
contract
unless
and
until
the
counteroffer
is
itself
accepted.
Again
we
have
the
situation
where
contracts subject
to
the
Commercial
Code
and
those
which
are
not
2°
are
governed
by
different
rules
of
law.
Since
the
modes
of
acceptance
set
out
in
the
Commercial
Code
are
based
on
and
designed
to
accomodate
commercial
practices,
2
'
and
sometimes
only
commercial
practices
"between
merchants"
which
developed
apart
from
the
general
law
of
contracts,
it
seems
that
the
dichotomy
will
continue
and
that
in
this
area
we
will
have
to
contend
with
two
bodies
of
contract
law.
Consideration
is
another
area
of
change.
Under
the
Commercial
Code
with
respect
to
the
sale
of
goods
we
now
have
the
concept
of
"firm
offer."
This
is
an
offer
by
a
merchant
22
to
buy
or
sell
goods
contained
in
a
signed
writing
which
gives
assurance
that
the
offer will
be
held
open.
The
Com-
mercial
Code
provides
that
such
an
offer
is
not
revocable
for
lack
of
consideration
for
the
time
stated,
and
if
no
time
is
stated
then
for
a
reasonable
time,
but
in
no
event
will
it
be
irrevocable
for more
than
three
16
For
definitions
of
"merchant"
and
"between
merchants"
see
Cal.
Comm.
Code
§2104.
1'
Cal.
Comm.
Code
§2207(2).
17
Parenthetically,
we
note
that
within
the
Commercial
Code
itself
we
have
a
Commercial
Code (between
merchants)
and a non-Commercial
Code
(between
others).
18
Cal. Civ.
Code
§1585.
Cf.
Restatement,
Contracts
§60 (1932).
19
Apablasa
v.
Merritt
&
Co.,
176
Cal.App.2d
719,
1
Cal.Rptr.
500
(1959).
20
We
assume
that
if
§§2207
and
10103
(general
repealer)
of
the
Commercial
Code modify
§1585
of
the
Civil Code,
the
modification
is
only
with
respect
to
contracts
for
the
sale
of
goods.
21
Cf.
Cal.
Comm.
Code
§1102.
22
"Merchant"
is
defined
in
Cal.
Comm.
Code
§2104(1).
[Vol.
1
October
1966]
CONTRACTS
AND
THE
COMMERCIAL
CODE
months.
2
As
a
precaution
and
in
order
to avoid
a battle
of
forms
the
section
goes
on
to
state
that
if
the
assurance
is
contained
on
a
form
sup-
plied
by
the
offeree
it
must
be
separately
signed
by the
offeror.
This
is
new
California
law.
Until
the
adoption
of
the
Commercial
Code
offers
had
to
be
supported
by
consideration
in
order
to
make
them
irrevocable
and
this
was
true
of offers
to
buy
and
sell
goods
as
well
as
offers
relating
to
other
contracts.
The
Commercial
Code does
not
affect
those
sections
of
the
Civil
Code
2
4
which
allow
revocation
of
an
offer
any
time
before
acceptance
unless
consideration
had
been
paid
to
keep
the
offer
open
2
"
or
unless
the
doctrine
of
estoppel
is
applicable.
26
Consequently,
in
cases
where
the
Commercial
Code
is
not
applicable,
absent
any
grounds
for
applying
estoppel,
an
offer
will
still
need
to
be
supported
by
consideration
in
order
to
be
irrevocable.
Here,
it
should
be
noted
that
the
Commercial
Code
provisions
relative
to
firm
offers
apply
only to
offers of
relatively
short duration
which
are
contained
in
signed
writings.
Apparently,
there
is
nothing
to
prevent
an
offeror
from
making
his
offer
irrevocable
beyond
three
months
if
consideration
is
paid
for
it.
Also,
since
the
provision
had
to
do
with
signed
writings,
oral
offers,
to
be
irrevocable
will
still
require
consideration.
The
Commercial
Code
27
attempts
to
solve
the
familiar
and
vexing
problem
of
the
pre-existing
duty
rule.
Among
other
things
it
states
that
an
agreement
modifying
a
contract
for
the
sale
of
goods
needs
no
con-
sideration
to
be
binding.
It
also
provides
that
a
written
agreement
for
the
sale
of
goods
may
only
be
modified
by
a
written
agreement
or
by
an
oral
agreement
"fully"
executed
by both
parties.
This
last
provision
is
similar
to
past
and
current
California
law
2
"
except
that
in
order
to
over-
rule
a
famous
case
2
"
it
specifically
provides
that
the
oral
agreement
to
be
an
effective
modification
must
be
fully
executed
by
both
parties.
However,
insofar
as
a
written
modification
of
a
written contract
needs
no
considera-
tion
the
law
is
new.
One
of
the
chief
objections
of
doing
away with
the
necessity
of
consideration
when
a
one-sided
modification
of
an
agreement
23
Cal.
Comm.
Code
§2205.
24
Cal.
Civ.
Code
§§1550,
1586.
25
Bard
v.
Kent,
19
Cal.2d
449,
122
P.2d
8
(1942).
26
Drennan
v.
Star
Paving
Co.,
51
Cal.2d
409,
333
P.2d
757
(1958).
27
Cal. Comm.
Code
§2209.
California's
Commercial
Code
varied
from
the
Official
Text
in
§2209(2)
and omitted
§2209(3)
of
the
Official
Text.
The
latter
required
any
contract
as
modi-
fied
which
was
within
the
statute
of
frauds
of
the
Commercial
Code
to
satisfy
the
require-
ments
of
the
statute
of
frauds.
28
Cal. Civ.
Code
§1698.
29
D.
L.
Godbey
&
Sons
Const.
Co.
v.
Deane,
39
Cal.2d
429,
246
P.2d
946
(1952),
holding
that
an
oral
agreement
executed
by
only
one
of
the parties
was
effective.
UNIVERSITY
OF
SAN
FRANCISCO
LAW
REVIEW
is
made
is
the
hold-up
aspect.
Conceivably
situations
could
arise
wherein
one
of
the
parties
to
a
contract
for
the
sale
of
goods
could
in
bad
faith
demand
higher
than
the
contract
price.
To
obviate
this
and
other
bad
faith
situations
the
Commercial
Code
3°
provides
that
"Every
contract
or
duty
within
this
code
imposes
an
obligation
of
good
faith
in
its
perform-
ance or
enforcement."
The
requirement
of
good
faith
is
not
new
in
contract
law
in
California,
of
course,
but
it
seems
certain
that
there
will
be
diffi-
culty
in
determining
what
is
or
is
not
good
faith
when
a
contract
subject
to
the
Commercial
Code
is
modified
without
consideration
in
a
situation
that
would
otherwise
invoke
the
pre-existing
duty
rule.
Those
contracts
not
subject
to
the
Commercial
Code,
if
oral,
can
be
modified
in
writing
without
new
consideration
as
before;"'
if
written,
they
can
be
modified
either
by
an
executed
oral
agreement
2
or
by
a contract
in
writing,
but
in
the
latter
case
consideration
is
necessary.
3
3
Once
again
we
have
different
rules
depending
upon
whether
the
contract
is
subject
to
the
Commercial
Code
or
not.
There
are
also
some
changes
in
the
Commercial
Code
regarding
the
statute
of
frauds.
The
stautory
amount
in
contracts
for
the
sale
of
goods
remains
the
same,
i.e.,
the
statute
does
not
apply
unless
the
price
is
$500
or
more.
34
The
statutory
amount
for
choses
in
action
under
the
Commercial
Code,
however,
is
$5000.31
Previously
it
was
$500."
6
The
Commercial
Code
makes
other
changes,
too.
Formerly
the
memo-
randum,
in
order
to
suffice,
had
to
be
"a
note[or
memorandum
in
writing
of
the
contract
of
sale.""
7
Now
it
is
enough
if
there
is
a
writing
"sufficient
to
indicate
that
a
contract
for
sale
has
been
made
between
the
parties.
3
8
Also
the
memorandum
need
not
be
complete
and
can
omit
or
incorrectly
state
material
terms
although
a
contract
is
not
enforceable
beyond
the
quantity
of
goods
stated
in
the
writing.
Thus,
to
be
a
sufficient
memo-
randum
under
the
Commercial
Code
the
memorandum
need
only
indicate
that
a
contract
has
been
made;
the writing
must
be
signed;
and
the
writing
must
specify
the
quantity
of
goods
involved.
The
word
"signed,"
30
Cal.
Comm.
Code
§1203.
31
Cal.
Civ. Code
§1697.
32
Price
v.
Price,
24
Cal.App.2d
462,
75
P.2d
665
(1938).
33
Cal.
Civ.
Code
§1698;
Krobitzsch
v.
Middleton,
72
Cal.App.2d
804,
165
P.2d
729
(1946).
3
4
Cal.
Comm.
Code
§2201(1).
35
Cal.
Comm.
Code
§1206.
(For
statute
of
frauds
relating
to
securities
see
§8319
and
for
security
agreements
§9203.)
36
Cal.
Civ.
Code
§1624a.
37
Cal.
Civ.
Code
§§1624a
&
1724,
both
repealed
by
the
Commercial
Code.
38
Cal.
Comm.
Code
§2201(1).
[Vol.
1
October
19661
CONTRACTS
AND
THE
COMMERCIAL
CODE
incidentally,
is
defined
by
the
Commercial
Code
39
as
including
"any
symbol
executed
or
adopted
by
a
party
with
present
intention
to
authenti-
cate
a
writing."
This
seems
to
be
in
accord
with
current
California
law.
4
"
Those
contracts
not
subject
to
the
Commercial
Code
continue
to
be
governed
by
the
Civil
Code
with
respect
to
the
statute
of
frauds.
4
'
More-
over,
under
the
Civil
Code
a
memorandum,
in
order
to
be
sufficient,
must
state
with
reasonable
certainty
each
party
to the
contract,
the
subject
matter
to
which
the
contract
relates, the terms and
conditions
of
all
the
promises
and
by
when
and
to
whom
the
promises
are
made.
42
In
short,
under
the
Civil Code
the
memorandum
must
be
self sufficient
in
the
sense
that
it
must
contain
all
the
terms
of
the
contract
and
name
the
parties.
Under
the
Commercial
Code if
the
memorandum
indicates
that
a
contract
has
been
made
and
specifies
the
quantity
of
goods,
then
the
door
is
open
for
oral
evidence
as
to
what
the
contract
is.
Thus
it
would
seem
that
a
memorandum
sufficient
to
meet
the requirements
of
the
Commercial
Code
might
fall
far
short
of
meeting
the requirements
of
the
Civil Code.
This
might raise
an
interesting
question
if
a
contract
is
subject
to
the
Com-
mercial
Code
statute
of
frauds
because
it
is
a
contract
for the
sale
of
goods
for
a
price
of
more
than
$500,
and
also
subject
to
the
Civil
Code
statute
of
frauds
because
it
is
a
contract
not
to
be
performed within
a
year from
the
making
of
the memorandum.
Would
or
should
the
relaxed
requirements
of
the
Commercial
Code
with
respect to the
sufficiency
of
the
memorandum
be
applicable
in
such
a
case?
As
indicated
above
43
in
discussing
the
preexisting
duty
rule,
California's
version
of
the
Commercial
Code
varies
from the
Official
Text
with
respect
to
agreements
modifying
an
existing
contract.
The
California
version
states initially
that
"An
agreement
modifying
a
contract
within
this
divi-
sion
needs
no
consideration
in
order
to
be
binding."
This
language
is
broad
enough
to
include
oral
modifications
of
oral
contracts.
44
The
official
version
of
the
Commercial
Code
contained
a
subsection
45
which
stated:
"The
requirements
of
the
statute
of
frauds
section
of
the article
(Section
2-201)
must
be satisfied
if
the
contract
as modified
is
within
its
pro-
visions."
This last
quoted
subsection
was
omitted
from
the
California
3
9
Cal.
Comm.
Code
§1201(39).
40
See
Murphy
v.
Munson,
95
Cal.App.2d
306,
212
P.2d
603
(1949).
41
Cal. Civ.
Code
§1624.
42
Rivers
v.
Beadle,
183
Cal.App.2d
691,
7
Cal.Rptr.
170
(1960).
43
Drennan
v.
Star
Paving
Co.,
51
Cal.2d
409,
333
P.2d
757
(1958).
44See
definitions
of
"agreement"
and
"contract,"
Cal.
Comm.
Code
§§1201(3)
and
1201(11)
respectively.
45
Uniform
Comm.
Code
§2-209(3),
not
enacted
in
California.
UNIVERSITY
OF
SAN
FRANCISCO
LAW
REVIEW
Commercial
Code.
Does
this
mean
that
we
could
have
a
situation
where
the
original
oral
contract
was
unenforceable
because
of
lack
of
a writing
but
that
the
contract
as
orally
modified
without
consideration
is
enforce-
able
even
though
it
is
for
the
sale
of
goods
for
a
price
in
excess
of
the
statutory
amount?
The
section
purports
to
deal
with
agreements
to
modify
contracts.
It
specifically
requires
either
a
writing
or
an oral
agreement
fully
executed
by
both
parties
to
modify
a
written
contract.
Further,
it
is
silent
as
to
the
necessity
of
a
writing
in
the
case
of
modification
of
an
oral
contract.
In
view
of
these
factors,
perhaps
a
plausible
case
could
be
made
to
the
effect
that
no
writing
is
necessary.
A
court
faced
with
such
a
question
might
reason
that
insofar
as
the
modified
agreement
is
a
contract
for
the
sale of
goods
for
a
price
in
excess
of
the
statutory
amount
the
basic
statute
of
frauds
provision
4
"
is
applicable.
It
seems,
however,
that
to
obviate
such
a
problem
it
might
have
been
wise
to
make
specific
refer-
ence
to
compliance
with
the
Commercial
Code's
statute
of
frauds
in
the
case
of
agreements
modifying
contracts
as did
the
Official
Text.
There
are
two
other
situations
in
which
the
California
Commercial
Code
differs
from
the
Official
Text
in
dealing
with
the
statute
of
frauds.
These
are
not
changes
in
contract
law
but
rather
a
change
in
the
definition
of
"goods"
in
one
case
and
a
change
in
the
legal
effect
of
pleading
or
testimony
in
court
with
respect
to
the
statute
of
frauds
in
the
other.
In
the
first
instance,
the
California
Commercial
Code,
47
unlike
the
Official
Text,
classifies
timber
as
"goods"
rather
than
real
property
no
matter
which
party
to
the
contract
of
sale
is
to
sever
the
timber.
This
was
deliberately
done
.in
order
to
avoid
a
limitation
on
the
amount
that
could
be
loaned
by
national
banks
to
finance
timber
cutting
contracts.
According
to
the
Comptroller
of
the
Currency,
the
limitation
(40
per cent)
applies
only
where
a
timber
cutting
contract
under
local
law
is
a
contract
for
the
sale
of
real
property
and
not
a
contract
for
the
sale
of
goods.
By
classify-
ing
timber
as
goods
the application
of
the
limitation
is
avoided
with
respect
to
California
timber.
The other
situation
of
change
is
found
in
the
deliberate
failure
to
in-
clude
in
the
statute
of
frauds
section
of
the
California
Commercial
Code
4
a
provision
contained
in
the
Official
Text
to
the
effect
that
if
a
party
against
whom
enforcement
is
sought
admits
in
his
pleading,
testimony
or
other-
wise
in
court
that
a
contract
was made,
then
the
contract
is
enforceable
against
him.
The
basis
for
this
provision
is
the
theory
that
once
such an
46
Cal.
Comm.
Code
§2201.
4
7
Cal.
Comm.
Code
§2107(2).
48
Cal. Comm.
Code
§2201.
[Vol.
I
October
1966]
CONTRACTS
AND
THE COMMERCIAL
CODE
admission
is
made
the
reason
for
the
rule
against
enforcement
disappears
since
the
purpose
of
the
rule
is
to
prevent
enforcement
of
contracts
not
in
fact
made.
Because
of
some
practical
difficulties
49
and
also
because
such
a
provision
might
tend
to
put
a
premium
on
perjured
testimony
to
the
effect
that
no
contract
had
been
made
the
rule
was
not
adopted
in
California.
With
respect
to
the
statute
of
frauds
the
Commercial
Code
has
also
adopted
a
special
rule
applicable
"between
merchants."
50
In
effect
it
states
that
if
there
is
a
written
confirmation
of
a
contract
sent,
which
would
be
a
sufficient
memorandum
as
against
the
sender,
a
failure
to
answer
the
confirmation
within
ten
days
of
receipt
has
the
effect
of
making
the
writing
a
sufficient
memorandum
as
against
both
parties.
Insofar
as
this
provision
would
allow
one
party
to
sign
the
memorandum
and
thus
bind
the
other
party
it
is
new
contract
law.
It
differs
from
the
rule
obtain-
ing
in
other contracts
subject
to
the
Commercial
Code
but
not
between
merchants.
In
that
case
the
memorandum
must
be
signed
"by
the
party
against
whom
enforcement
is
sought
or
by
his
authorized
agent
or
broker.""
Also
it
differs
from
the
rule
which
applies
to
contracts
not
subject
to
the
Commercial
Code
where
the
memorandum
must
be
"sub-
scribed
by
the
party
to
be charged
or
by
his agent."
52
The
doctrine
of
anticipatory
repudiation
has
always
caused
problems
for
students
of
the
law
and
despite
the
respectable
authority
to
the
effect
that
there
never
was
any
real
necessity
for
its
adoption
it
appears
to
be
here
to
stay.
Not
surprisingly
it
is
provided
for
in
the
Commercial
Code.
5
3
Basically
the
Commercial
Code
does
not
change
California
law
except
in
one
particular.
Under
the
Commercial
Code
when
there
has
been
an
anti-
cipatory
repudiation
the
aggrieved
party
"'
may
await
performance
by
the
repudiating
party
for
a
"commercially
reasonable
time."
5
At
the
end
of
a
commercially
reasonable
time
he
has
a
duty
to
avoid
resulting
dam-
ages
from
that
time
on
and
if he
does
not
he
will
not
recover
those
damages.
On
the
other
hand
and with
respect
to
contracts
not
subject
to
the
Commercial
Code
California
law
allows
the
non-repudiating
party
to
await
performance
until
preformance
is
due
under
the
terms
of
the
con-
49
e.g.
Does
a
demurrer
constitute
an
admission?
50
Cal.
Com.
Code
§2201(2).
51
Cal.
Comm.
Code
§2201(1).
52
Cal.
Civ.
Code
§1624.
53
Cal.
Comm.
Code
§2610.
54
Cal.
Comm.
Code
§1201(2).
55
Cal.
Comm.
Code
§2610(a).
UNIVERSITY
OF
SAN
FRANCISCO
LAW
REVIEW
tract.
56
Thus,
in
some
circumstances,
a
person
whose
repudiated
contract
is
subject
to
the
Commercial
Code
.may
not,
without
penalty
anyway,
await
performance
until
the
contract
performance
date,
whereas
in
those
contracts
not
subject
to
the
Commercial
Code
he
may.
Perhaps
this
is
an
area
where
the
Civil
Code
ought
to
be
changed.
Certainly
it
seems
un-
realistic
and
economically
unsound
to
allow
a non-repudiating
party
to
await
performance
even
for
a
term
of
years
if
it
happens
to
be
a
contract
wherein
the
date
of
performance
will
not arrive
until
then.
A
reasonable
time
ought
to
be
long
enough
for
him
to
urge
retraction
and
performance
if
he
desires
to
do
so.
But
when
he
has
had
a
reasonable
time
for
this
and
is
unsuccessful,
it
seems
just
to
require
him
to
look
elsewhere
or
in
any
event
to
avoid
resulting
damages
after
this
time.
Of
course,
the
Commercial
Code
7
allows
the
non-repudiating
party
to
pursue
immediately
any
remedies
available
for
breach
if
there
has
been
no
timely
retraction
of
the
repudiation"
and
in
this
respect
Commercial
Code
contract
law
and
non-Commercial
Code
contract
law
are
the
same.
59
The
Commercial
Code
also
makes
it
clear
that
prospective
inability
to
perform
can
in
some
circumstances
be
treated
as
a
repudiation.
6
" It
pro-
vides
that
when
reasonable
grounds
for
insecurity
arise
with
respect.
to
the
other
party's
performance,
the
apprehensive
party
may
demand
ade-
quate
assurance
in
writing
that
the
other
party
will
perform
and
can
suspend
his
own
performance
until
such
assurance
is
forthcoming.
If
such
assurance
is
not
received
within
thirty
days
the
failure
to
provide
the
assurance
constitutes
a
repudiation.
The
idea
underlying
this
provision
is
really
the
same
as
that
underlying
the
former
provisions
of
the
Civil
Code
with
respect
to
stoppage
in
transit
because
of
insolvency.
61
However,
the
Commercial
Code
remedy
is
new
and
can
be
used
in
a
variety
of
circum-
stances
other
than
insolvency.
62
Further,
it
eliminates
the
necessity
of
acting
at
one's,
peril
in
differentiating
between
mere
intervening
impair-
ment
of
credit
and
insolvency.
This
is
a
realistic
remedy.
It
is
based
on
the
proposition
that
when
people
enter
into
a
contractual
relationship
they are
actually
and ultimately
bargaining
for
whatever
performance
is
promised
and
each
has
an
obligation
to
see
that
the
other's
expectancy
56
Cal. Civ.
Code
§1440.
57
Cal.
Comm.
Code
§2610(b).
58
Cal.
Comm.
Code
§2611.
59
Winegar
v.
Gray,
204
Cal.App.2d
303,
22
Cal.Rptr.
301
(1962).
60
Cal.
Comm.
Code
§2609.
61
Cal.
Civ.
Code
§§1777,
3076,
3077,
all
repealed
by
the Commercial
Code.
62
See
37
J.
State
Bar
Cal.
148,
149
(1962).
[Vol.
I
October
1966]
CONTRACTS
AND
THE
COMMERCIAL
CODE
is
not
impaired.
Once
that
obligation
is
accepted
63
then
there
is
no
hard-
ship
in
requiring
an
assurance
of
performance
from
one
whose
own
actions
have
given
rise
to
the
doubts.
It
seems
that
it
would
be
wise
to extend
this
doctrine
to
contracts
other
than
those
covered
by
the
Commercial
Code.
64
The
principal
change
in
the
Commercial
Code
with
respect
to
damages
is
in
the
cover
provisions
applicable
to
both
buyer
and
seller."
For
ex-
ample,
if
there
has
been
a
repudiation
the
buyer
can
cover
by
purchasing
substitute
goods
from
other
sources.
If
he
does
so
then
the
measure
of
damages
is
the
difference
between
the
cost
of
the
substitute
goods
pur-
chased
and
the
contract
price.
Formerly
the
measure
of
damages
was
the
difference
between
the
contract
price
and
the
market
price
at
the
time
set
for
performance.
The
buyer
is
not required
to
cover,
but
if
he does
not,
he
cannot
recover
any
consequential
damages
which
cover
would
have
prevented."
6
The
seller
has
a
similar
remedy,
the
right
of
resale,
and
if
he
resells
in
good
faith
in
a
commercially
reasonable
manner
then the
measure
of
damages
is
the
difference
between
the
resale
price
and
the
contract
price.
Further
the
Commercial
Code
specifically
provides
that
the
seller
is
not
accountable
to
the
buyer
for
any profit
he
might
make
on
the
resale.
Once
again
the
seller
does
not
have
to
resell
and
if he
does not
then
the
measure
of
damages
is
the
difference
between
the
contract
price
and
the
market
price
at
the
time
of
performance
under
the
contract.
67
What
has
been
said
so
far
sketches
the
more
drastic
changes
in
contract
law
brought
about
by
the
California
Commercial
Code.
No
attempt
has
been
made
to
make
the
coverage
all inclusive
(and
obviously
anyone
who
is
involved
with
a
case
or
a
study
affected
by
the
Commercial
Code
must
do
his
own
work).
There
are,
of
course,
many
concepts
encompassed
by
the
Commercial
Code
which
are
about
the
same
under
the
Code
as
they
were
under
statute
and
decision
previously
in
California.
Assignment
of
rights
and delegation
of
duties
68
and
the
doctrine
of
impossibility
of
per-
formance
and
commercial
frustration
6
9
come
immediately
to
mind.
As
a
matter
of
fact,
it
seems
that
the
changes
in
contract
law
have
not
been
great,
a
matter
which
should
be
of
some
comfort
to
those
who
have labored
to
master
contract
law
in
the
pre-Commercial
Code
era.
63
As
it
has
been in
California,
see
Univrsal
Sales
Corp.
v.
California
Press
Mfg.
Co.,
20
Cal.2d
751,
128
P.2d
665
(1942).
64
Compare
Restatement,
Contracts
§§318,
324
(1932)
;
Cal. Civ.
Code
§1440.
65
Cal.
Comm.
Code
§§2706
(cover
by
seller),
2712
(cover
by
buyer).
66
Cal.
Comm.
Code
§2715(2)
(a).
67
Cal.
Comm.
Code
§2708;
Cf.
Cal.
Civ. Code
§§3353
(damage
to
seller),
3354
(damage
to
buyer).
68
Cal.
Comm.
Code
§2210.
69
Cal. Comm.
Code
§2615.
