UCC 2-207 Flowchart: Battle of the Forms

UCC 2-207 Flowchart

Download a .pdf version of the UCC 2-207 flowchart

When it is not exactly clear what parties agreed upon but it is clear that the parties intended to agree, a court must determine what terms apply. If various forms have been sent back and forth between the parties common law only gives us two options to apply to the forms: Offer and Acceptance or Counteroffer. The Uniform Commercial Code (UCC) gives us a third option: acceptance with additional terms.

UCC 2-207 Flowchart
UCC 2-207 Flowchart

This option can be found in the UCC 2-207. The goal of 2-207 is to determine which terms apply from the contract negotiation; however, the language of the section can be very confusing and hard to follow. This UCC 2-207 flowchart should be helpful in navigating this section of the UCC.

Download a .pdf version of the UCC 2-207 flowchart


For an example of the Battle of the Forms in action see Brown Machine, Inc. v. Hercules, Inc.


Yates v. Hendon, 541 US 1 (2004)

Facts: Yates, the sole shareholder and president of Raymond B. Yates, M.D., P.C., a professional corporation, set up and participated in an ERISA-protected profit sharing plan for the corporation. Personal creditors filed an involuntary bankruptcy petition under Chapter 7. Just three weeks before bankruptcy was filed against him, Yates paid $50,467 into the ERISA profit sharing plan. ERISA has an anti-alienation provision which protects the Plan’s assets from transfer or attachment. The Bankruptcy Trustee sought the $50,467 that Yates had paid into the profit-sharing plan to be allocated to Yates’ creditors.

Procedural History: The Bankruptcy Court ruled in favor of the Trustee because it determined that Yates was “a self-employed owner of the professional corporation that sponsored the pension plan,” and therefore, Yates could not “participate as an employee under ERISA.”

Issue: Whether Yates, the working owner of a business, can qualify as a “participant” in a pension plan covered by the Employee Retirement Income Security Act (ERISA).

Holding: Yes, Yates can qualify as a participant in the ERISA plan as long as the plan covers one or more employees other than the business owner and his or her spouse.

Reasoning: Although ERISA did not helpfully define “employee,” the Court did not look to common-law agency principles to determine whether Yates was an employee as it did in Clackamas Gastroenterology Associates v. Wells. Instead, the Court determined that “ERISA’s text contains multiple indications that Congress intended working owners to qualify as plan participants. Because these indications combine to provide “specific guidance,” there is no cause in this case to resort to common law.” Under ERISA, a working owner may have dual status; Yates can be an employee and an employer. In addition, ERISA was enacted against a backdrop of IRC provisions that permitted corporate owners to participate in tax-qualified plans.


Natkin v. Winfrey, 111 F. Supp. 2d 1003 (N.D. Ill. 2000)

Facts: Natkin and Green, the plaintiffs, are professional “live event” photographers who had worked on the set of The Oprah Winfrey Show. Winfrey subsequently published a book which contained eleven photographs that were taken by the plaintiffs. Natkin and Green did not give their permission and instituted a copyright infringement action; they claim they were independent contractors. Winfrey claims that the photographs are not owned by the plaintiffs because they were employees of Harpo and the pictures were taken within the scope of their employment.

Issue: Whether Natkin and Green were employees of Winfrey when the photographs, which are the basis for the copyright action, were taken.

Holding: Natkin and Green were never Harpo employees. Harpo hired both photographers as independent contractors; therefore, Harpo must produce a written work made for hire agreement to successfully claim exclusive ownership of the copyrights to these photographs.

Judgment: Natkin and Green were granted a partial summary judgment on the work made for hire issue.

Reasoning: Harpo Productions choose to treat Natkin and Green as independent contractors and cannot change their position to reap a different benefit. Generally, a photographer is the author of his photographs. However, there are two relevant exceptions: (1) “work made for hire” and (2) “joint work.”

Further Discussion on the Work Made for Hire Exception:

Under the “work made for hire” exception, the works are “authored” by the hiring party. One of two elements must be met to constitute a work made for hire: (1) a work prepared by an employee within the scope of his employment; or (2) a work specially ordered or commissioned…if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. 17 USC §101. Here, there was no written agreement so Winfrey argued the first element. The court applied the Reid factors (13 nonexhaustive factors from a Supreme Court decision regarding the work made for hire exception) to this argument and determined that Natikin and Green were not Harpo employees. Some of the relevant facts to this determination:

Natkin and Green used their own camera equipment and lenses, brought additional equipment (i.e. lights, backdrops), and usually processed the film themselves. They had complete discretion over the technical aspects of the shoot. Harpo Productions paid Natkin and Green as independent contractors and did not provide them with any insurance or other compensation benefits. Also, the photographers billed Harpo for their services and expenses, they did not receive regular paychecks or a salary. Finally, Harpo’s IRS reports describe the payments to Green and Natkin as “nonemployee compensation.”

McCary v. Wade, 861 So. 2d 358 (Miss. Ct. App. 2003)

Facts: McCary and Fulwiley were riding home in a van provided by their employer. The van was struck head-on by a logging truck driven by Dexter Myrick after Myrick swerved to avoid colliding with another driver who pulled out in front of him. McCary and Fulwiley were severely injured and sued all parties involved as well as Chris Wade and his company Wade Land Management (WLM). Wade had contracted with Georgia Pacific for sale of the timber and hired Myrick to transport the timber.

Issue: Whether Wade could be held vicariously liable for Myrick’s actions.

Holding: Myrick was an independent contractor. Therefore, Wade and WLM were not liable under respondeat superior for Myrick’s negligence.

Reasoning: The court examined the facts of the relationship between Myrick and WLM. For example, Myrick bought his own timber, cut it, and hauled it all himself. Myrick decided his own work hours and where he would work. Also, Myrick owned all of the equipment needed for his operation. The day of the accident, Myrick was en route to his home from Georgia Pacific. Furthermore, Wade “didn’t have to pay a cent” for Myrick’s cutting operation and only used ICs because he would have to pay for haulers’ trucks and operation costs.

McCary and Fulwiley raised the issue that Myrick should be found as an employee under public policy because Myrick was bankrupt and without insurance coverage. However, the court held that the public policy factor only becomes an issue when an employer and employee have a relationship that would ordinarily be characterized as an employer/employee but have a contract which defines their relationship as that of independent contractors. Here, the evidence actually showed that Myrick was an independent contractor.

Fitzgerald v. Mobil Oil Corporation, 827 F. Supp. 1301 (E.D. Mich. 1993)

Facts: Fitzgerald, a tractor-trailer driver, was injured on the job when he fell from the top of the tanker trailer he used to deliver oil. The trailer was owned by Montgomery Tank Lines, defendant, and leased to Mobil Oil. The tractor was owned by another party, Rieger, and also leased to Mobil Oil. Plaintiff’s employment situation was complex and confusing: Fitzgerald was hired to deliver oil from Mobil Oil’s plant to various Mobil Oil customers. Fitzgerald was initially hired by Rieger. Before he could be hired by Riger, Fitzgerald had to pass a road test that was administered by Mobil Oil at a Mobil Oil facility. Another company, TLI, would pay Fitzgerald.  Mobil Oil would then reimburse TLI for driver wages and other expenses, including worker’s compensation insurance premiums. Mobil Oil and TLI had a contract that specifically disclaimed the existence of an employer/employee relationship between Mobil Oil and TLI-supplied drivers.

Issue: Whether Mobil Oil can be consider plaintiff’s employer. (In this case, Fitzgerald did not want Mobil Oil to be considered his employer because it would limit his recovery to Worker’s Comp under the “exclusive remedy provision.”)

Holding: Mobil Oil was Fitzgerald’s employer.


The court went through the four elements of the Economic Realities Test and determined that, under the totality of the circumstances, Mobil Oil was the employer of Fitzgerald (even though Mobil Oil had expressly disclaimed an employer/employee relationship):

1. Control of a worker’s duties,

Fitzgerald telephoned a Mobil dispatcher at least once a day for work assignments. The Mobil dispatcher told him where to deliver oil and how much oil to deliver. In addition, Fitzgerald kept his truck at Mobil Oil’s facility and hauled exclusively for Mobil Oil. However, Fitzgerald was trained by an employee of Rieger, submitted his travel logs to Rieger, refused an assignment when Rieger told him not to take it, and Riger arranged for repairs of Fitzgerald’s tractor.

2. Payment of wages,

Although it was indirect, Mobil Oil was liable to TLI for reimbursement of driver wages and benefit payments

3. The right to hire and the right to discipline, and

Mobil Oil had the right to refuse Fitzgerald’s services and if it had, Fitzgerald would have been, at least temporarily, without an assignment. The court stated that, “the power to stop Fitzgerald from engaging in the daily tasks he relied on for wages is enough to satisfy the test.”

4. The performance of the duties as an integral part of the employer’s business towards the accomplishment of a common goal.

Fitzgerald’s work constituted an integral part of Mobil Oil’s business as delivery of oil is an ongoing and necessary function of the business.

Ansoumana v. Gristede’s Operating Corp., 255 F. Supp. 2d 184 (SDNY 2003)

Facts: Ansoumana and 500 other workers brought a class action under the Fair Labor Standards Act (FLSA). Ansoumana and the rest of the class (the plaintiffs) were delivery workers for supermarkets and drugstore chains. The plaintiffs were hired by the Hudson/Chelsea group of defendants and assigned to Duane Reades stores, another defendant. Duane Reade is a large retail drugstore chain in the New York metropolitan area. The plaintiffs would make deliveries to customers on foot and provide general in-store services, as directed by Duane Reade’s store supervisors. Duane Reade paid Hudson/Chelsea $250 to $300 per week, per worker. Hudson/Chelsea would pay the plaintiffs $20-$30 per day as independent contractors. Many of the plaintiffs would work eight to eleven hours a day, six days a week, and were still paid this flat rate; lower than minimum wage and not compensated for overtime as required by FLSA. However, independent contractors do not receive protection under FLSA.

Issues: (1) Whether the Hudson/Chelsea defendants were employers of the plaintiffs. (2) Whether Duane Reade was a joint employer of the plaintiffs.

Holding: Duane Reade and the Hudson/Chelsea defendants were employers of the plaintiffs under FLSA.

Judgment: Duane Reade and the Hudson/Chelsea defendants are jointly and severally obligated for underpayments of minimum wage and overtime.

Reasoning: In answering whether the Hudons/Chelsea defendants were employers of the plaintiffs, the court applied the economic reality test which distinguishes between employees and independent contractors:

1. The degree of control exercised by the employer over the workers;

2. The workers’ opportunity for profit or loss and their investment in the business;

3. The degree of skill and independent initiative required to perform the work;

4. The permanence or duration of the working relationship; and

5. The extent to which the work is an integral part of the employer’s business

“No one factor is dispositive; the ultimate concern is whether, as a matter of economic reality, the workers depend upon someone else’s business for the opportunity to render service or are in business for themselves.”

In answering whether Duane Reade is a joint employer with the Hudson/Chelsea defendants, the court mentioned the economic reality test. The court also applied another four-part test to determine whether Duane Read were “employers” required to pay minimum wages: (1) who hired and fired the works; (2) who supervised and controlled their work schedules and conditions of employment; (3) who determined the rate and method of payment; and (4) who was to maintain employment records.

Clackamas Gastroenterology Associates v. Wells, 538 US 440 (2003)

Facts: Wells, a bookkeeper for eleven years at Clackamas Gastroenterology Associates, brought an action under the ADA for unlawful discrimination on the basis of disability. Clackamas moved for summary judgment on the basis that it did not have 15 employees which is required for the ADA to apply. Clackamas is a professional corporation which has 14 employees. In addition to the 14 employees, however, Clackamas is owned by four physicians who are actively engaged in the medical practice.

Issue: Whether the four physician shareholders and directors of Clackamas, who are actively engaged in medical practice, should be counted as “employees” under the ADA.

Procedural History: The district court applied the economic realities test and concluded that the four doctors were not employees for purposes of the ADA. The Ninth Circuit Court of Appeals reversed because it saw “no reason to permit a professional corporation to secure the best of both possible worlds.”

Holding: The trial court must apply the common-law tests, specifically the element of control, to determine whether the physicians are employees or the employer.

Judgment: Reversed and remanded to the district court.

Reasoning: Because Congress did not “helpfully define” the term employee, the Court believed that “Congress intended to describe the conventional master-servant relationship as understood by common law agency doctrine.” Therefore, the majority looked to the Restatement (Second) of Agency and six (non-exhaustive) similar factors submitted by the EEOC. The court focused on the factor of control stating, “We think that the common-law element of control is the principal guidepost that should be followed in this case.” Under this factor, the physicians appear not to be employees of the clinic. For example, the physicians apparently control the operation, share the profits, and are personally liable for malpractice claims.

Ginsburg’s Dissent: Ginsburg did not agree with the Court’s placement of “overriding significance” on the one factor of control. In addition, the same physicians had defined themselves as “employees” under ERISA; which defined employee the same way as the ADA. (But see Yates v. Hendon). Furthermore, the physicians are covered by Oregon’s workers’ compensation law. Ginsburg concluded that Clackmas, the professional corporation, is the employer and the physicians are employees of the corporation. This conclusion came from the fact that the professional corporation was created in order to limit the physicians’ liability for the debts of the practice and that the physicians had to adhere to the corporation’s policies and procedures.

Compare to Yates v. Hendon, 541 US 1 (2004) which the Supreme Court decides the next term.

Best Interest of the Child

EVERYTHING in family law revolves around the best interests of the child. Whether it is a divorce proceeding, modification of child support, or an adoption; the court’s primary concern is the  ultimate safety and well-being of the children who will be impacted. The hope is that by protecting the best interest of the child, the child can grow into a self-sufficient adult.

Section 402 of the Uniform Marriage and Divorce Act has provided five factors to help determine what is in the Best Interest of Child. Although Section 402 is specifically related to determining custody, the factors can be used in other proceedings as well.

Section 402 of the UMDA states:

The court shall determine custody in accordance with the best interests of the child.  The court shall consider all relevant factors, including:

  1. The wishes of the child’s parent or parents as to his custody;
  2. The wishes of the child as to his custodian;
  3. The interaction and interrelationship of the child with his parent or parents, his siblings, and any other person who may significantly affect the child’s best interest;
  4. The child’s adjustment to his home, school, and community; and
  5. The mental and physical health of all individuals involved.

Federal Income Tax Outline – Page 1 Gross Income

Chapter 1

Power to Tax

Article 1, Section 8, Clause 1

Very extensive power with two constitutional limitations:

  1. Direct taxes must be imposed by the rule of apportionment among the several states in accordance with their respective populations
  2. Indirect taxes by the rule of uniformity – geographic

16th Amendment

–        “from whatever source derived”


Tax Court – no jury

District Court of Appeals – jury or non-jury; must pay a fee

–        You can start in either court. Consider precedent/jury/fee


Statute of Limitations

  • 3 years is normal
  • 6 years if you omit 25% of your gross income
  • Infinity if fraud or no file


Gross Income

Section 61

Gross income includes the receipt of any financial benefit which is:

  1. Not a mere return of capital, and
  2. Not accompanied by a contemporaneously acknowledged obligation to repay, and
  3. Not excluded by a specific statutory provision

Income is realized whenever there are “instances of:

  1. undeniable accessions to wealth,
  2. clearly realized, and
  3. over which the taxpayers have complete dominion.”



Cesarini v. United States

Money found in an used piano; section 61 is broad, all-inclusive; treasure trove is included in GI to the extent of its value in US currency*

Old Colony Trust Co. v. Commissioner

Corporation agreed to pay income tax of directors; the taxes were paid based on the employees services to the employer

Commissioner v. Glenshaw Glass Co.

Exemplary/punitive damages are included in GI; compensatory damages are not GI because they return the individual to his original place

Charley v. Commissioner

Travel credits converted to cash; the taxpayer was wealthier from the sale of the travel credits = GI

*Fair market value: willing buyer, willing seller, neither of whom is under unusual compulsion


Gross Income (GI)

– (Deductions Toward AGI)

= Adjusted Gross Income (AGI)

– (Deductions From AGI)

= Taxable Income



Amount Realized

– (Adjusted Basis)

= Gain Realized

Gain Recognized*

*Gain recognized is the full amount of Gain Realized unless some other Code section states that it is not recognized.


Income is taxable from both legal and illegal sources – “The wages of sin are not exempt from taxation.”

In order to have an Amount Realized: Must have a sale or an exchange


Federal Tax Outline – Page 2


This Federal Tax Outline is keyed to Fundamentals of Federal Income Taxation, 15 edition, Foundation Press.