Chap 21 Sales and Leases Flashcards
sale
sale is a transfer of title to goods from a seller to a buyer for a consideration known as the price (UCC2-106)
goods
goods are defined as movable, tangible, personal property (UCC2-105(1))
sales transactions are governed by
article 2 of the code
general contract law continues to apply when the code has not specifically modified the law
general contract law
also continues to govern all contracts outside the scope of the code, including employment contracts, service contracts, insurance contracts, contracts involving real property and contracts for the sale of intangibles such as stock, bonds, patents and copyrights and AR
transactions which are not sales but which affect goods include
bailments
leases
gifts
security interest
bailments
transfer of possession of personal property and generally presence of consideration, however no transfer of title
leases
transfer of possession of personal property and presence of consideration, however no transfer of title
gifts
transfer of title and possession, however no presence of consideration
security interest
transfer of possession and presence of consideration, however, title or right to repossess property is reserved in seller
good faith
all parties to a contract or duty under the code are required to act honestly in fact in their dealings with others
good faith in the case of merchants
involves honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade
unconscionability
a contract or portion of a contract that is regarded as imposing an unfair burden on one of the parties to the point that the courts conscience is offended thereby precluding enforcement
in such cases the court may:
- refuse to enforce the entire contract
- it may enforce the contract after exercising (removing) the unconscionable provision
- it may modify the contract in such a manner as to make it conscionable
where are you likely to find unconscionability
adhesion contract - one where you can negotiate provisions, like a mortgage
course of dealing
is a sequence of previous conduct between the parties that may fairly be regarded as establishing a common bassi of understanding for interpreting their expressions and greement
usage of trade
is a practice of method of dealing regularly followed in a place, vocation or trade
sales by and between merchants
the code established different and more stringent rules for transactions involving merchants
a merchant may be
- a dealer in the goods, involved in the transaction or
- by his occupation hold himself out as having knowledge or skill peculiar to the goods or practices involved or
- employ and agent or broker whom he holds out as having such knowledge or skill
freedom of contract
within certain parameters the parties to a contract may alter the effect of some code provisions (good faith, however, is always required and cannot be contracted away)
validation and preservation of sales contracts
the code reduces the formal requisites of a valid agreement to the bare minimum and attempts agreements whenever the parties manifest an intent to enter into a contract
formation of sales contract
the code will strive to recognize a contract if the intent of the parties is consistent with such a conclusion
definiteness of an offer
the code has rejected the strict approach of the common law which required that the term must be definite and complete. the code provides that even though one or more terms to have been omitted the contract need not fail for indefiniteness
the code provides rules
when the parties do not agree, as to the terms of payment, duration, and the particulars of performance
an offer is definite
if it defines the goods and fixes that price or makes provision to do so
open price
if no price is stated in the agreement, the price is a reasonable price
open delivery
must be reasonable; is place of sellers business unless otherwise agreed
open quantity: output and requirements contracts
an output is the agreement to purchase the entire output of a seller for a stated period, and a requirements contract is an agreement to supply a buyer with all her requirements of certain goods
enforceable based on good faith of both parties
irrevocable offers
an offeror may general withdraw or revoke her offer at any time before it is accepted
to be effective, the notice revoking the offer must reach the offeree before he has accepted
an option is a contract
by which the offeror is bound to hold an offer open for a specified period of time; it requires consideration, but can apply to all types of contracts, including sales of goods and, because consideration is involved, it not limited to a certain time as below
firm offers
firm offers are irrevocable without requiring consideration. a merchant must keep an offer open for up to three months if the merchant gives assurance in a signed writing that it will be held open for that time, or if no time is stated, for a reasonable time (again, not to exceed three months)
variant acceptances battle of the forms
the code does not follow the common law mirror image rule regarding acceptances
under the common law rule where two businesses exchange pre-printed forms with varying terms no contract exists, even if the parties intend that there be a contract
the code addresses this battle of the forms problem by focusing on the intent of the parties
as to nonmerchants, the additional terms are construed as proposals for addition to the contract
as to merchants, additional terms (those proposed by the offeree) become part of the contract is 1. the offer has no limited acceptance to the terms of the offer; 2. they do not materially alter the agreement and 3. the terms are not objected to by the other party
the courts are divided as to
how to handle different, conflicting terms
the majority of the courts hold that the different terms cancel each other out and look to the code to supply the missing terms
unless clearly specified by the offer,
an acceptance may be by any reasonable means, as opposed to the common laws authorized means of acceptance
auction sales
is an auction is explicitly advertised as without reserve, the items being sold cannot be withdrawn unless no bid is made
in a with reserve auction, goods may be withdrawn up until the sale is final
an auction is generally considered to be with reserve unless otherwise advertised
statute of frauds
the code provides that a contract for the sale of goods costing $500 or more is not enforceable unless there is some writing - or record - sufficient to evidence the existence of a contract between the parties
40 states have adopted the uniform electronic transactions act (UETA) which gives full effect to contracts formed by electronic records and signatures
modification of contracts
an agreement modifying a contract must be in writing or record if the resulting contract modification brings the contract into or keeps the contract within the statute of frauds
written compliance
the statute of frauds compliance provisions under the code are more than the rules of general contract law
the code merely requires a writing or record 1 sufficient to indicate that a contract has been made between the parties 2 signed by the party against whom enforcement is sought or by her authorized agent or broker and 3 including terms specifying the quantity
the quantity need not be specified if the contract is a valid requirements or output contract
a writing or record may be sufficient even if it omits or incorrectly states the term, however it is not enforceable beyond the quantity stated in the writing
under the code the term signature
is liberally interpreted and can include any mark made with the intent to authenticate the writing, such as a thumb print initials or an x
exceptions to USS 2-201
confirmatory memo specially manufactured goods admissions partial performance parol evidence
confirmatory memo
between merchants, a written confirmation of the contract sent within a reasonable time and sufficient against the sender is likewise sufficient against the recipient of it, unless the recipient who has knowledge of its contents gives written notice of objection to it within ten days after receipt of the confirmation
this means that if these requirements have been met, the recipient of the writing or record is in the same position he would have assumed by signing it, and the confirmation, therefore, is enforceable against him
specially manufactured goods
the code permits enforcement of an oral contract for specifically manufactured goods where the goods are not readily marketable and where there has been a substantial beginning on their manufacture or where there have been commitments for procurement made by the manufacturer
admissions
the code permits enforcement against a party to the extent that the party in his pleading, testimony or otherwise in court admits that a contract was made
partial performance
enforcement of an oral contract is also possible where a contract has been partially performed
partial performance is sufficient to enforce the contract to the extent that the goods have been delivered and accepted or to the extent that the payment has been made and accepted
paroles evidence
contractual terms that are set forth in a writing intended by the parties as a final expression of their agreement may not be contradicted by evidence of any prior agreement or of a contemporaneous agreement, but they may be explained or supplemented by course of performance, course of dealing, usage of trade or by consistent additional evidence
note: subsequent modifications of the contract are not prohibited by the parol evidence rule
