REVIEW SHEET 1 2 3 4 SALE OF GOODS UCC Article 2 Items covered UCC Common Law changes Firm offer rule If a merchant promises in a signed writing to keep the offer open for a reasonable time he cannot revoke for that time although no consideration was received by the merchant The merchant cannot be bound to keep the offer open beyond 3 months even if he promises to do so in a signed writing Who is a merchant Deals in the goods of the kind involved in the sales contract Example A sells B his car and sells cars for a living A is a merchant and the rules that apply to merchants would apply Pre existing duty rule Does not apply if a modification to a contract is done in good faith example after the contract in entered into the seller requests more money because his material costs are more than expected Additional terms between merchants and non merchants If both parties are merchants and the offeree merchant adds an additional immaterial term shipping terms any such additional terms by the offeree become part of the contract if not rejected to within a reasonable time In a contract between nonmerchants or only one party is a merchant or no one is a merchant additional immaterial terms by the offeree are treated as a separate offer and never become part of the contract unless the original offeror accepts the additional terms The Statute of Frauds a Goods 500 or more b Specifically manufactured goods exception c Merchant memo rule Open terms a Price if omitted the price for the good is a reasonable price at the time of delivery b Payment terms if omitted seller is paid when the buyer receives the goods c Time of delivery if omitted the time of delivery is within a reasonable time d Open delivery item if omitted delivery is made at the seller s place of business the buyer picks up the goods e Quantity term amount the statue does not allow this provision to be filled in Risk of loss with movement of goods 5 Passage of title and risk of loss from the seller to the buyer when goods are being shipped by the seller Title passes when the goods are sold a Shipping contracts FOB Free on Board F O B factory is a shipping contract risk of loss passes to the buyer when goods are given to the carrier All contracts are shipping contracts unless otherwise stated b Destination contract FOB destination is a destination contract risk of loss passes to the buyer when the goods reach their destination Example FOB 12 Sunset Lane ALBANY risk of loss passes to the buyer when goods reach their destination c F A S Free along side and can be described as a partial destination contract Risk of loss passes from the seller to the buyer when the goods are alongside a means of transport for example a ship or plane d COD Abbreviation for cash on delivery and is a shipping contract The buyer cannot receive the goods unless he first pays for the goods 6 Risk of loss without movement of goods a Merchant seller Risk of loss passes from a merchant seller to a buyer when the goods are in the possession of the buyer b Non merchant seller Risk of loss passes from a non merchant seller when the goods are tendered when the buyer can pick up the goods Example the seller states that the buyer may pick up the goods at noon risk of loss passes to the buyer at that moment even if the buyer picks up the goods at a later time 7 Goods destroyed while in possession of the merchant a Identified goods Destroyed or damaged but not destroyed Contract is void b Unidentified goods contract is still enforceable 8 a Sale on approval although the seller has possession of the goods title does not pass to the seller Miscellaneous sale on approval sale or return consignment until he approves of the sale b Sale or return title passes to the buyer at the time of the sale but the buyer has the option to return the goods for a period of time c Consignment allows a seller to sell goods but pay the supplier of the goods at a later time after they are sold The person who receives the goods is a consignee the person who provides the goods is a consignor When the consignee has the goods he has title and creditors of the consignee can seize the goods in the possession of the consignee to satisfy money owed to them The consignor maintains title when the goods are in the possession of the consignee If a sign at the consignee s store indicates the store sells on consignment title remains with the consignor 9 Imperfect title a Void title A buyer obtains void title if the goods when received are stolen The victim of the theft can always reclaim the goods even if the stolen goods are purchased by an innocent buyer b Voidable title A buyer obtains voidable title if the goods when received are stolen and the thief acquired the goods by fraud The victim of the fraud can reclaim the goods but not from an innocent buyer An innocent buyer is a person who gave consideration for the goods and is not aware that they are stolen If the person receives the goods as a gift he is not an innocent buyer c Entrustment rule If goods are entrusted to a merchant who sells the same goods for a living a person who purchases from the merchant acquires good title If the goods are stolen void title when entrusted to a merchant the goods can be reclaimed by the owner the entrustment rule does not apply 10 Remedies available to a buyer if non conforming goods are delivered Inspection of COD goods Goods sent COD cannot be inspected a Reasonably inspect goods before acceptance Buyer has the right b b Reject goods promptly if non conforming buyer not suing for damages When a buyer rejects the goods he requests a return of his consideration or a replacement The buyer is not entitled to other damage awards c Revoke acceptance Although the buyer has accepted the goods the buyer can return the goods after acceptance if the defect was material and hard to find upon reasonable inspection or the seller informed the buyer he would fix the defect d Obligations of non merchant and merchant buyer upon rejection of goods If a non merchant rejects goods his only obligation is to hold the goods with reasonable care for a sufficient time for the seller to remove the goods If a merchant rejects goods he must follow the reasonable instructions of the seller including shipping them back or reselling them if perishable e Statute of limitations For a breach of contact for a contract for goods is 4 years 11 Remedies available to a seller a A seller can cure fix a non conforming defect before the contract is made