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ECU FINA 2244 - CHAPTER 11

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CHAPTER 11Sales***Do not worry about memorizing specific section numbers of the UCC!***I. The UCC: Uniform Commercial Code, *Bushels of Apples* Pg. 276-278A. Definition: 1. Covers: Contracts for the sale of goods2. Does not cover: Contracts for services, real estateB. Development of commercial law in England/the US: C. The UCC vs. the law of contracts: 1. Sales deals with Article 22. When does the UCC apply, as opposed to the law of contracts? When it is movable, but not money or a security3. Mix of goods and servicesa. general rule: Look to see which dominates the contractb. Paramount Contracting CompanyII. Goods, Merchants, Sales & Titles Pg. 278-280A. Goods1. Definition2. Movable? Transportable, moveable from the time of sale3. Tangible? Touchable, seen and touchedB. Merchants1. Definition: Deals with goods or has special knowledge, or someone who employs an agent with knowledge 2. duty of good-faith: Everybody has good faith, but merchant has ahigher duty and expertise C. Sales & Title1. Definition of sale: Passing a title from a seller to buyer for a price2. Definition of title: Legal right to ownership3. Who holds title to goods? If the goods exist and have been identified to the contract4. How is title passed? Pg. 281a. agreement of parties: b. UCC rule on passing title: Delivery is key or title documents is deliveredc. Stolen goods and title: Not entitled, original owner receivestitleIII. Forming a Sales Contract Pg. 281A. Purpose of UCC rules – filling the gap when a contract is silentB. How is contract made? Pg. 2821. UCC: In any manner sufficient to show agreement2. Compare with common law: Clear, definite, accepted unconditionally Pg. 281 Fig. 11.23. Crest Ridge Construction Pg. 282C. Indefiniteness and the Offer: Pg. 2831. parties’ intent: reasonably certain basis for giving appropriate remedy. Price may change from market of goodsD. Acceptance1. General rule: Contract is formed when the offer is accepted in any reasonable manner, even if additional terms or added or changed2. Conflicting terms on standard forms: Acceptance is valid but based on the offeror accepts 3. Orkal Industries, LLC Pg. 284E. Statute of Frauds Pg. 2851. basic rule: Certain contracts must be in writing2. Specification of terms: Sale of goods for $500 or more is not enforceable unless in writing and signed by party with enforcement F. Failure to Respond to a Writing1. Merchants: Only applies to merchants unless objection in 10 days2. Nonmerchants: Does not applyG. Parol Evidence1. Written documents and oral testimony: Written not contradicted by oral testimony2. Customary trade dealings: Oral testimony in trade dealings3. Complete and exclusive statement of termsH. Filling the Gaps Pg. 2861. Rationale2. regular dealings: When the parties had done previous contracts 3. Griffith: Court looks at trade usage 4. trade usage: Regular practice of methods in dealing with a particular trade5. price: If unclear, UCC sets price or a reasonable method6. quantityi. general rule: Contract must specify the quantity of good purchasedii. exceptionsa. requirements contract: Seller provides all of certain goods a buyer requiresb. output contract: Buyer agreesto take all output produced bya seller7. delivery terms Pg. 287-288i. reasonable time: Trade custom, ability of transportation, if not specified, left up to the sellerii. seller’s option: Seller can assure the carrier is confident and the party understands the risk of lossiii. seller’s place of businessiv. goods turned over to shipping companyIV. Performance and Obligations Pg. 288-289A. Seller1. basic obligation: Transfer and deliver goods to the buyer2. perfect tender rule vs. substantial performance: Tender has be conform exactly to the contract, UCC is substantial, if parts do not comply, the buyer may accept or deny 3. cure i. definition: Repair or replace defective goodsii. three situations: Time cannot have passed, seller has to notify buyer, seller has to repairor replace within time of performance B. Buyer Pg. 289-2901. Basic obligations: Accept goods from the contract and pay for them2. Buyer’s options regarding non-conforming goods (3): Reject, accept, or cancel contract3. Right of inspection: Inspect before accepting 4. Right of rejectiona. general ruleb. rule in installment contracts5. Duty of acceptance: Must accept if properly tendered and conforming goods6. Paymenta. general rule: Required when and where you receive the goods, only after inspection V. Sales Warranties Pg. 291A. Definition of warranty: Statement or representation made by seller that thegoods are of quality, safety, perforce, or titleB. Warranty of title: Promising that good title is being transferred free of claims. If stolen, buyer can sue sellerC. Express warranty1. Definition: Warranty about quality, safety, performance, or durability2. three circumstances where created: Sample or model of goods, describing certain attributes of the goods, making specific promises or statements3. characteristics of express warranties: Founds in writing, specific claims, attributes not obvious, found if reasonable for a buyer to rely on seller D. Implied warranty Pg. 2921. Definition: Automatically with quality and safety2. Implied warranty of merchantability: Accompanies every sale made by a merchant, generally acceptable in the line of trade, goods are up to standard 3. Implied warranty of fitness for a particular purpose: Seller wouldhave reason to know of the buyer’s reason for making a purchaseand buyer relies on the sellers expertiseE. Disclaimers Pg. 2931. Definition: a statement meant to reduce liability by excluding or limiting warranty. “As is” at a used car dealership 2. express warranty: Cannot be disclaimed 3. implied warranty: Can disclaim implied, as long as you clearly state merchantability and it is conspicuous a. conspicuousness: A reasonable person would notice it—Allcaps or a certain color4. Lee Pg. 293VI. Remedies and DamagesPg. 294-295A. Seller Fig. 11.41. Seller’s Remediesa. Buyer breaches before receiving goods: Can cancel, resell, or stop deliveryb. Buyer breaches after receiving goods: Can sue to recover purchase price if not received i. able to reclaimii. unable to reclaim2. Seller’s Damagesa. Designb. incidental damages: Expenses with stopping delivery or transportation or storing or returning or selling to another partyB. Buyer1. Buyer’s Remedies: Cancelling the contract, suing, and buying from another seller. 2. Buyer’s Damages Pg. 296


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