Article 2 — Sales · Section 2-305
This study guide provides an overview of UCC § 2-305, which addresses the formation of contracts regarding open price terms in sales transactions.
Source: U.C.C. § 2-305
UCC § 2-305(a): A contract for sale of goods which does not set a price is not thereby rendered unenforceable, if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy. UCC § 2-305(b): A price to be fixed by the parties means that if it is not fixed, it will be determined as per the provisions of this section.
UCC § 2-305 allows parties to create a legally enforceable sales contract even if the price is not specified, as long as there is mutual intention to contract and a basis to determine the price. If the price is not set, it will be determined through reasonable standards.
A provision in a sales contract that does not specify a price, allowing it to be determined later.
A standard or criteria that provides enough detail to ascertain the agreed-upon price.
Example 1
Two parties agree to enter a contract for the sale of widgets but do not set a price, indicating the price will be determined by market rates at the time of delivery.
Example 2
A farmer contracts with a grocery store to deliver produce with the price to be determined based on the current market value at the time of harvest.