(1) The time for shipment or delivery or any other action under a contract if not provided in this article or agreed upon shall be a reasonable time.
(2) Where the contract provides for successive performances but is indefinite in duration it is valid for a reasonable time but unless otherwise agreed may be terminated at any time by either party.
(3) Termination of a contract by one party except on the happening of an agreed event requires that reasonable notification be received by the other party and an agreement dispensing with notification is invalid if its operation would be unconscionable.
History: 1953 Comp., § 50A-2-309, enacted by Laws 1961, ch. 96, § 2-309.
ANNOTATIONSOFFICIAL COMMENTS
UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.
Prior uniform statutory provision. — Subsection (1) - see Sections 43(2), 45(2), 47(1) and 48, Uniform Sales Act, for policy continued under this Article; Subsection (2) - none; Subsection (3) - none.
Changes. — Completely different in scope.
1. Subsection (1) requires that all actions taken under a sales contract must be taken within a reasonable time where no time has been agreed upon. The reasonable time under this provision turns on the criteria as to "reasonable time" and on good faith and commercial standards set forth in Sections 1-203, 1-204 and 2-103. It thus depends upon what constitutes acceptable commercial conduct in view of the nature, purpose and circumstances of the action to be taken. Agreement as to a definite time, however, may be found in a term implied from the contractual circumstances, usage of trade or course of dealing or performance as well as in an express term. Such cases fall outside of this subsection since in them the time for action is "agreed" by usage.
2. The time for payment, where not agreed upon, is related to the time for delivery; the particular problems which arise in connection with determining the appropriate time of payment and the time for any inspection before payment which is both allowed by law and demanded by the buyer are covered in Section 2-513.
3. The facts in regard to shipment and delivery differ so widely as to make detailed provision for them in the text of this article impracticable. The applicable principles, however, make it clear that surprise is to be avoided, good faith judgment is to be protected, and notice or negotiation to reduce the uncertainty to certainty is to be favored.
4. When the time for delivery is left open, unreasonably early offers of or demands for delivery are intended to be read under this article as expressions of desire or intention, requesting the assent or acquiescence of the other party, not as final positions which may amount without more to breach or to create breach by the other side. See Sections 2-207 and 2-609.
5. The obligation of good faith under this act requires reasonable notification before a contract may be treated as breached because a reasonable time for delivery or demand has expired. This operates both in the case of a contract originally indefinite as to time and of one subsequently made indefinite by waiver.
When both parties let an originally reasonable time go by in silence, the course of conduct under the contract may be viewed as enlarging the reasonable time for tender or demand of performance. The contract may be terminated by abandonment.
6. Parties to a contract are not required in giving reasonable notification to fix, at peril of breach, a time which is in fact reasonable in the unforeseeable judgment of a later trier of fact. Effective communication of a proposed time limit calls for a response, so that failure to reply will make out acquiescence. Where objection is made, however, or if the demand is merely for information as to when goods will be delivered or will be ordered out, demand for assurances on the ground of insecurity may be made under this article pending further negotiations. Only when a party insists on undue delay or on rejection of the other party's reasonable proposal is there a question of flat breach under the present section.
7. Subsection (2) applies a commercially reasonable view to resolve the conflict which has arisen in the cases as to contracts of indefinite duration. The "reasonable time" of duration appropriate to a given arrangement is limited by the circumstances. When the arrangement has been carried on by the parties over the years, the "reasonable time" can continue indefinitely and the contract will not terminate until notice.
8. Subsection (3) recognizes that the application of principles of good faith and sound commercial practice normally call for such notification of the termination of a going contract relationship as will give the other party reasonable time to seek a substitute arrangement. An agreement dispensing with notification or limiting the time for the seeking of a substitute arrangement is, of course, valid under this subsection unless the results of putting it into operation would be the creation of an unconscionable state of affairs.
9. Justifiable cancellation for breach is a remedy for breach and is not the kind of termination covered by the present subsection.
10. The requirement of notification is dispensed with where the contract provides for termination on the happening of an "agreed event." "Event" is a term chosen here to contrast with "option" or the like.
Point 1: Sections 1-203, 1-204 and 2-103.
Point 2: Sections 2-320, 2-321, 2-504 and 2-511 to 2-514.
Point 5: Section 1-203.
Point 6: Section 2-609.
Point 7: Section 2-204.
Point 9: Sections 2-106, 2-318, 2-610 and 2-703.
"Agreement". Section 1-201.
"Contract". Section 1-201.
"Notification". Section 1-201.
"Party". Section 1-201.
"Reasonable time". Section 1-204.
"Termination". Section 2-106.
Right to terminate. —The general duty of good faith does not override the right to terminate "at any time" specifically conferred by Section 55-2-309(2) NMSA 1978. The essence of the at-will doctrine is the right of either party to cease doing business without liability for future profits that the other party hopes it will earn if the relationship continues. Santa Fe Custom Shutters & Doors, Inc. v. Home Depot, 2005-NMCA-051, 137 N.M. 524, 113 P.3d 347.
Contract with indefinite time provisions terminable at will. — Subsections (2) and (3), when read together, set out that a contract with indefinite time provisions is terminable at will upon reasonable notification. McCasland v. Prather, 1978-NMCA-098, 92 N.M. 192, 585 P.2d 336.
Am. Jur. 2d, A.L.R. and C.J.S. references. — 77A C.J.S. Sales § 168 et seq.