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WVU BCOR 320 - Chapter 13

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BCOR 320 1nd Edition Lecture 25 Chapter 13: Sales and product liabilityDevelopment of the UCC  As trade increased throughout history, the need for a uniform, modernized business law grew greater. In 1952, the Uniform Commercial Code was published by a group of scholars whose goal was to draft a modern law of commerce. The UCC has been revised several times, most recently in 2003.Scope of Article 2: Article 2• UCC §2-102: Article 2 applies to the sale of goods, things that are movable, other than money and investment securities. Article 2A• Article 2A governs the leasing of goods.Merchants:  UCC §2-104: A merchant is someone who routinely deals in the particular goods involved, or who appears to have special knowledge or skill in those goods, or who uses agents with special knowledge or skill in those goods. The UCC frequently holds a merchant to a higher standard of conduct than a non-merchant.Formation Basics: UCC §2-204 provides three important rules:• The parties may make a contract in any manner that sufficiently shows that they reached an agreement.• Knowing the moment of making of the contract is not critical.These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.• One or more terms may be left open. Commercially reasonable terms will be assumed by the courts.Statute of Frauds: UCC §2-201 requires a writing for any sale for goods worth $500 or more.• Writing Sufficient to Indicate a Contract– In general, the writing must be signed by the defendant.• Incorrect or Omitted Terms– Under the UCC, a court may enforce a bargain even though one or more terms were left open.• Enforceable Only to Quality Stated– The Code will enforce the contract only up to the quality of goods statedin the writing.Merchant Exception: When two merchants make an oral contract, and • one sends a confirming memo to the other within a reasonable time, and • the memo is sufficiently definite that it could be enforced against the sender, then • the memo is also valid against the merchant who receives it, unless he objects in 10 days.Additional or different terms: Additional: those that raise issues not covered in the offer.• When both parties are merchants, additional terms generally become part of the bargain. Different: contradict terms in the offer.• Cancel each other out; if there is no clear oral agreement, the Code supplies its own terms to cover prices, delivery dates and places, warranties, and other subjects.Buyers Remedies:  Conforming goods satisfy the contract terms. Non-conforming goods do not. Inspection -- The buyer generally has the right to inspect the goods before paying or accepting. May reject non-conforming goods, but the seller has the right to cure, by delivering conforming goods before the contract deadline. Cover If the seller breaches, the buyer may ”cover” by reasonably obtaining substitute goods. Buyer may then obtain the difference between the contract price and the coverprice, plus incidental and consequential damages, minus expenses saved. Incidental and Consequential Damages An injured buyer is generally entitled to incidental and consequential damages.Sellers Remedies: Stop or refuse delivery Resale• The seller may recover difference between the resale price and contract price, plus incidental damages, minus expenses saved. Action for the Price The seller may recover the contract price if: the buyer has accepted the goods, or  the seller’s goods are conforming and he is unable to resell after a reasonable effort.Product Liability:Warranties, Negligence, strict liability, fraudProduct liability:  When goods cause injury, there is a question of product liability. There are four main issues related to product liability cases:• Warranty -- a contractual assurance that goods will meet certain standards (UCC, Art. 2)• Negligence – unreasonable conduct by the defendant.• Strict Liability – policy which holds the defendant liable regardless of his behavior.• FraudWarranties:  Express Warranties Implied Warranties• Title• Merchantability• Fitness for a Particular


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