Clemson LAW 3220 - Chapter 11 – Sale by Merchants

Unformatted text preview:

Chapter 11 Sale by Merchants 3 23 15 Specific type of contract and statutory law that deals with them Article 2 of the Uniform Commercial Code only applies to contracts for the sale of goods by merchants o Goods tangible personal property o Merchants people involve in selling goods o Limited application Doesn t apply to real property intangible property and services only sale of goods by merchants Mixed contract buy a computer part of contract also says they ll come install it o Article 2 applies to the predominant nature of the contract the goods the goods are priced higher than the service Suppliers for stores Wal Mart etc subject to article 2 Differences from Common Law o More flexible merchants have an obligation to deal in good faith If there is a term not clear or missing from contract article 2 and courts try to fill in the gaps from common law New contract leaves out a term court looks to previous contracts or to what is customary in the trade Not critical if you leave a term out we ll fix it Purpose promote commerce Need article and acceptance but contract can be formed in any manner that forms agreement between parties Parties have an obligation to negotiate in good faith An offer can be revoked anytime before it s accepted o Except Firm offer states a specific period of time for a buyer to respond Offer can t be revoked during that time period Acceptor tries to change terms constitutes counter offer first party can accept or not Contract Modification article 2 says merchants can modify contracts old or new without any new consideration o Modifications need to be made in writing Statute of Frauds Any contract for the sale of goods by merchants for 500 or more has to be in writing or the courts won t enforce it Parole Evidence Rule You cannot introduce oral evidence or testimony if it contradicts the written terms of the contract o However if there is a missing or vague term you can introduce it because we want to promote commerce Different things we can look to in order to fill in the gaps if parties didn t put all material terms in contract Find that there is a contract to promote business o Look to previous behavior Selling under contract with Wal Mart for 5 years New contract and we leave a term out look to previous contracts and pull that term out o Look to trade practice what terms do other contracts with Wal Mart have Choose reasonable term and put it in contract Ch 11 pg 1 3 23 15 o Specific terms or suggestions left out Don t put price into contract court is going to assume you meant to agree to a reasonable price which is probably fair market value Quantity left out merchants always have a duty to act in good faith so what would be a reasonable quantity to deal with from previous dealings Requirements Contract seller agrees to provide whatever quantity of goods the buyer needs They re their sole supplier If quantity is left out court looks at a reasonable quantity for the time that contract was entered into Output Contract buyer agrees to buy any unit that the seller can produce They re their sole customer Court looks at how much the producer could reasonably produce when the contract was entered into Delivery terms when where the product has to be delivered If left out assume reasonable time decided on by looking at similar producers of the product Payment terms how soon the product must be paid for after delivery If left blank it is assumed that you will pay cash on delivery Sellers and buyers have rights and obligations o Sellers primary obligation deliver conforming goods to buyer in accordance o Buyer s primary obligation pay for goods in accordance to the terms of the to the terms of the contract contract o Buyer s Initial right is to inspect the goods If any goods are non conforming Buyer has an obligation to notify seller as soon as possible and tell them which option they have decided to do Option 1 Accept all goods Option 2 Reject all goods Option 3 Accept conforming goods reject non conforming goods If time for performance hasn t passed yet seller has opportunity to deliver conforming goods before the deadline and the contract isn t breached why buyer has obligation to notify seller asap Warranties 4 expressed warranties that can arise and 2 implied warranties from seller to buyer o Expressed Warranty of Title seller has good clear title to the goods that they are selling to the buyer Always exist regardless of what contract says article 2 creates this warranty If seller makes any statement or promise of goods to the buyer creates expressed warranty that the statement or promise is true Seller s description of the goods provided to the buyer that all of the product meets that description Ch 11 pg 2 3 23 15 Any sample or model of the goods that the seller provides to the buyer creates an expressed warranty that all of the goods produced will be of the same quality o Implied Implied warranty of Merchantability always exists regardless of contract Your warrantying to the buyer that the goods you re going to deliver are merchantable fit to be sold to consumers Fit for ordinary use all in kind and quality packaging and labeling is adequate and accurate any labeling on product is accurate Fitness for particular purpose Can arise in a contract for the sale of goods but not always If buyer goes to seller and describes how they re going to use it Seller has the responsibility to tell them whether it will meet their needs because they are more knowledgeable about the product than the buyer o All warranties create Strict Liability to the Seller They re responsible so straight to damages Article 2 says that warranties can be Disclaimed if the language is clear and conspicuous in the contract and the buyer signs the contract Buyers rarely let Sellers disclaim all warranties More common to let them disclaim 1 or 2 warranties or they might agree to a dollar limit on the amount of damages if 1 of the warranties is breached o Non breaching party has the right to sue for damages o Non breaching party has the duty to mitigate the damages o Remedy to put the non breaching party in the same economic position they would ve been in if there had been no breach monetary compensatory damages o Remedies Buyer breaches Sellers remedies include Seller tells Buyer to cancel contract Seller can sue for damages lost profits Seller Seller breaches has right to get product back Can sue buyer for any incremental cost transportation etc and cost of goods if can t sell to anyone else


View Full Document

Clemson LAW 3220 - Chapter 11 – Sale by Merchants

Documents in this Course
Exam 2

Exam 2

8 pages

Exam 2

Exam 2

8 pages

Chapter 6

Chapter 6

29 pages

CH 13

CH 13

9 pages

Ch5 Notes

Ch5 Notes

17 pages

Law Notes

Law Notes

15 pages

Load more
Download Chapter 11 – Sale by Merchants
Our administrator received your request to download this document. We will send you the file to your email shortly.
Loading Unlocking...
Login

Join to view Chapter 11 – Sale by Merchants and access 3M+ class-specific study document.

or
We will never post anything without your permission.
Don't have an account?
Sign Up

Join to view Chapter 11 – Sale by Merchants 2 2 and access 3M+ class-specific study document.

or

By creating an account you agree to our Privacy Policy and Terms Of Use

Already a member?