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Performance/Acceptance Under Reservation of Rights

The Missouri Uniform Commercial Code (“UCC”) generally applies to contracts or transactions for the sale of goods between merchants. Broadly speaking, it liberalizes many of the rigid common law rules relative to breach of contract actions, contract interpretation and business disputes by seeking to, among other things, “permit the continued expansion of commercial practices.” Section 400.1-102, RSMo.

An excellent example of how the Missouri UCC treats a dispute versus how the common law of contracts treats a dispute is illustrated in 400.1-207, RSMo, which states that “[a] party who, with explicit reservation of rights, performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved.” Under traditional contract law, if someone accepts substitute consideration or voluntarily performs differently upon request, then it may be interpreted as a waiver or estoppel of the initial consideration or performance. For example, if you initially agreed to pay $5 for a box of metal, and instead you send me payment of $2, my acceptance of the $2 may bar me from claiming that I am owed $5.

By virtue of section 400.1-207,  commerce may continue along the lines contemplated by the contract despite a pending dispute. Majestic Bldg. Material Corp. v. Gateway Plumbing, Inc., 694 S.W.2d 762 (Mo. Ct. App. 1985).  Thus, specific use of the language discussed in the statute accommodates both performance and payment as a right within the contract because the right to cancel is not waived by acceptance. Business and commercial activity can continue without interruption and disputes can be sorted out at a later date. 

Contact us with questions relating to the UCC, contracts, or commercial disputes generally.