2. Deciding the "governing law" question. Deciding whether the UCC or the common law applies to the contract at issue (the governing law question) is an important first question that must be resolved in any contracting situation where the UCC may be triggered. Consider the following hypotheticals and answer this question: Is the transaction governed by Article 2?

a. Purnima contracts to buy a French Bull Dog puppy from a reputable dog breeder as a companion for her daughter Deeya. Would

your answer change if the puppy was not born when Purnima contracted to purchase it from the breeder?

b. Acme Manufacturing contracts to purchase a 10-ton machine from Brubaker Machines.

c. American Ash Recycling Corp. agrees to give Treated Ash Aggregate (or AggRite) for free to Pennsy Supply, Inc. if Pennsy agrees to come pick up the AggRite and haul it away. Pennsy agrees.

d. Randolph contracted with a general contractor to build his brand-new home for a fixed price of $250,000. The contractor agreed to supply all construction materials and to build the house per the specifications agreed to by the parties. The parties' written contract included a title at the top of each page that read, "New Home Construction Contract" and allocated the contract price as follows: $120,000 for materials and $130,000 for building the home. What if the contract did not contain a title or allocate the contract price? How would you sort out the answer to the governing law question then?

3. Application of common law the "mirror image" rule. Having concluded that the common law of contract should apply, rather than the UCC (or, more precisely, that the admiralty law applicable to this case should be informed by common law rather than by UCC Article 2 principles), the court proceeds to apply what it views as the common law rules of offer and acceptance. Classical contract law employed the "mirror image" rule and the "last shot" rule. The first of these gives a "varying" acceptance the effect of only a counter-offer, preventing the contract from being made on the terms of the original offer. In Princess Cruises, the court applies the classical mirror image rule in a contemporary setting. In support, the court cites Restatement (Second) 59, which merely echoes the classical rule of the first Restatement 60. The court fails, however, to quote Comment a to Restatement (Second) 59, which provides as follows:

a. Qualified acceptance. A qualified or conditional acceptance proposes an exchange different from that proposed by the original offeror. Such a proposal is a counter-offer and ordinarily terminates the power of acceptance of the original offeree. See 39.

The effect of the qualification or condition is to deprive the purported acceptance of effect. But a definite and seasonable expression of acceptance is operative despite the statement of additional or different terms if the acceptance is not made to depend on assent to the additional or different terms. See 61; UCC 2-207(1). The additional or different terms are then to be construed as proposals for modification of the contract. See UCC 2-207(2). Such proposals may sometimes be accepted by the silence of the original offeror. See 69.

The Restatement (Second) on the "varying acceptance" issue thus attempts to steer a course somewhat closer to the UCC than indicated in the court's opinion. Would Comment a to Restatement (Second) 59 have produced a different outcome in Princess Cruises had the court cited it? Should the court in Princess Cruises have cited Comment a? Why do you think it didn't? In the case that follows, we will compare UCC 2-207 with the common law on this point.