MBE Rules · Contracts
Open Price Term
UCC §2-305
The rule
A contract may be enforced with the price left open — a reasonable price at delivery applies; a party who is to fix the price must do so in good faith, and failure of an agreed pricing mechanism permits avoidance only when the parties so intended.
In plain English
An open price term in a contract means that the parties can still enforce the contract even if they haven't agreed on a specific price. Instead, a reasonable price will be determined at the time of delivery, and any party responsible for setting the price must do so honestly and fairly.
Worked example
Alice and Bob enter into a contract for Alice to deliver 100 widgets to Bob, but they do not specify a price. When the delivery date arrives, Alice proposes a price of $10 per widget, which Bob feels is reasonable based on market conditions. The court enforces the contract at the reasonable price of $10 per widget.
Memory hook
Open price? No problem—just keep it reasonable!
The trap
Students often overlook that the party fixing the price must do so in good faith, leading them to assume any price is acceptable. Additionally, they may misinterpret the implications of a failed pricing mechanism.
How examiners test it
Questions often present a scenario where the price is left open or a pricing mechanism fails, asking whether the contract can still be enforced or what constitutes a reasonable price.
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