2023 New Mexico Statutes › Chapter 55 - Uniform Commercial Code › Article 2 - Sales › Part 3 - GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT › Section 55-2-305 - Open price term.

(1) The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery if:
(a) nothing is said as to price; or
(b) the price is left to be agreed by the parties and they fail to agree; or
(c) the price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded.
(2) A price to be fixed by the seller or by the buyer means a price for him to fix in good faith.
(3) When a price left to be fixed otherwise than by agreement of the parties fails to be fixed through fault of one party, the other may at his option treat the contract as cancelled or himself fix a reasonable price.
(4) Where, however, the parties intend not to be bound unless the price be fixed or agreed and it is not fixed or agreed there is no contract. In such a case the buyer must return any goods already received or if unable so to do must pay their reasonable value at the time of delivery and the seller must return any portion of the price paid on account.
History:
1953 Comp., § 50A-2-305, enacted by Laws 1961, ch. 96, § 2-305.
OFFICIAL COMMENTS
UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.
Prior uniform statutory provision.
— Sections 9 and 10, Uniform Sales Act.
Changes.
— Completely rewritten.
1. This section applies when the price term is left open on the making of an agreement which is nevertheless intended by the parties to be a binding agreement. This article rejects in these instances the formula that "an agreement to agree is unenforceable" if the case falls within Subsection (1) of this section, and rejects also defeating such agreements on the ground of "indefiniteness". Instead this article recognizes the dominant intention of the parties to have the deal continue to be binding upon both. As to future performance, since this article recognizes remedies such as cover (Section 2-712), resale (Section 2-706) and specific performance (Section 2-716) which go beyond any mere arithmetic as between contract price and market price, there is usually a "reasonably certain basis for granting an appropriate remedy for breach" so that the contract need not fail for indefiniteness.
2. Under some circumstances the postponement of agreement on price will mean that no deal has really been concluded, and this is made express in the preamble of Subsection (1) ("The parties if they so intend ") and in Subsection (4). Whether or not this is so is, in most cases, a question to be determined by the trier of fact.
3. Subsection (2), dealing with the situation where the price is to be fixed by one party rejects the uncommercial idea that an agreement that the seller may fix the price means that he may fix any price he may wish by the express qualification that the price so fixed must be fixed in good faith. Good faith includes observance of reasonable commercial standards of fair dealing in the trade if the party is a merchant. (Section 2-103). But in the normal case a "posted price" or a future seller's or buyer's "given price," "price in effect," "market price" or the like satisfies the good faith requirement.
4. The section recognizes that there may be cases in which a particular person's judgment is not chosen merely as a barometer or index of a fair price but is an essential condition to the parties' intent to make any contract at all. For example, the case where a known and trusted expert is to "value" a particular painting for which there is no market standard differs sharply from the situation where a named expert is to determine the grade of cotton, and the difference would support a finding that in the one the parties did not intend to make a binding agreement if that expert were unavailable whereas in the other they did so intend. Other circumstances would of course affect the validity of such a finding.
5. Under Subsection (3), wrongful interference by one party with any agreed machinery for price fixing in the contract may be treated by the other party as a repudiation justifying cancellation, or merely as a failure to take cooperative action thus shifting to the aggrieved party the reasonable leeway in fixing the price.
6. Throughout the entire section, the purpose is to give effect to the agreement which has been made. That effect, however, is always conditioned by the requirement of good faith action which is made an inherent part of all contracts within this act. (Section 1-203).
Point 1: Sections 2-204(3), 2-706, 2-712 and 2-716.
Point 3: Section 2-103.
Point 5: Sections 2-311 and 2-610.
Point 6: Section 1-203.
"Agreement". Section 1-201.
"Burden of establishing". Section 1-201.
"Buyer". Section 2-103.
"Cancellation". Section 2-106.
"Contract". Section 1-201.
"Contract for sale". Section 2-106.
"Fault". Section 1-201.
"Goods". Section 2-105.
"Party". Section 1-201.
"Receipt of goods". Section 2-103.
"Seller". Section 2-103.
"Term". Section 1-201.
ANNOTATIONS
Am. Jur. 2d, A.L.R. and C.J.S. references.
— "Escalator" price adjustment clause, 63 A.L.R.2d 1337.
Construction and application of UCC § 2-305 dealing with open price term contracts, 91 A.L.R.3d 1237.
77A C.J.S. Sales § 94 et seq.