Chapter 13 Flashcards
Goods
all things (other than money, stocks, and bonds) that are tangible,
movable and valuable
Future Goods
Goods that are not yet in existence or under the control of people
Conforming goods
Those that are in accordance with the obligations under the contract
Contracts for both the sale of goods and services
-When a contract includes both goods and services, it is referred to as a
mixed, blended, or hybrid contract.
- It is important to identify whether the contract is for goods or services,
because the law that is applied to the contract will differ depending on
the nature of the contract
-The UCC is often more flexible verses common law of
contracts
Nonconforming Goods
Those good that are not the same as those called for under the contract or that are in some way defective
Good Faith
-Under the UCC, every contract or duty imposes an obligation of good faith. in other words, the parties to a sales contract must act with and deal fairly with each other.
Course of dealings
When the parties have dealt with each other before, their prior dealings give special meaning to sales contracts
Usage of trade
any method of dealing that is commonly used in the particular field
Merchant and the UCC
Merchants are held to a higher standard by the UCC as compared to non-merchants
Merchant definition
a person who deals in good of the kind sold in the ordinary course of business or who otherwise claims to have knowledge or skills particular to those goods
Firm Offer (applied to Merchants only)
-writing must be signed by the merchant, and the time period for holding the offer may not exceed three months
- this rule differs from the general rule of contract law, which requires consideration in an option contract
Open Price terms (pricing Exception)
- occur when the parties intend to be bound by a contract but fail to mention the price or decide to set the price later (no market price available)
- Under non-UCC law, no contract would come about because the terms are not definite
-E.g.= the seafood industry
Output Contract (Quantity Exception)
seller agrees to sell “all the goods manufactured” to a particular buyer
Requirements Contract (Quantity Exception)
Buyer agrees to buy “all the oil we need to heat our building” or some similar requirement
E.g.= paying for electricity
The form of a Sales contract
-As long as the price is under $500, an oral contract for the sale
of goods is enforceable
-If the price is $500 or more, a sales contract must be in writing
to be enforceable
Additional Terms in acceptance
- Mirror image rule under common law does not apply
-A contract for the sale of goods occurs even though the acceptance
states terms that are additional to or different from those offered.
-the additional terms are treated as proposals for additions to the
contract if the parties are not both merchants
-This rule is intended to deal with a situation when an agreement
has been reached either orally or by informal correspondence
between the parties and is followed by one or both of the parties
sending formal acknowledgments or memos that contain
additional terms not discussed earlier
Exceptions to a Sales Contract
- Oral contracts between merchants
* If either merchant receives a written confirmation of the oral contract from the other
merchant within a reasonable time and does not object to it in writing within 10 days,
the oral contract is enforceable. - Specially manufactured goods
- Admissions in court by the party against whom enforcement
is sought. - Executed contracts
Title
The right to the ownership to goods
Bill of Sale
a written statement that provides evidence of the transfer of personal property from one person to another
Voidable title
-title that may be voided if the injured party elects to do so
-also received when goods are bought from a minor or a person
who is mentally impaired
Entrusting Goods to a Merchant (Bailment)
People often entrust goods that belong to them to merchants
-When this occurs, if the merchant sells the goods in the ordinary
course of business to a third party who has no knowledge of the
real owner’s rights, the third party receives good title to them.
-Must sell/buy good in the ordinary course of business
Entrusting Goods Reasoning
-This rule of law is to give confidence to people who buy in the
marketplace.
-People can be assured that they will receive good title to
property (except stolen property) that they buy from a merchant
who deals in goods of that kind in the ordinary course of
business
Shipment Contract
-one in which the seller turns the goods over to a carrier for delivery to the buyer
- f.o.b = “free on board.”
-When goods are sent f.o.b. the place of shipment, they will be delivered free to the place of shipment (ups or fedex
building).
- The buyer must pay all shipping charges from there to the place of destination
Destination Contract
-the contract requires the seller to deliver goods to a destination
-Tender, to offer to turn the goods over to the buyer.
-goods shipped under such terms belong to the seller until they have been delivered to the destination shown on the
contract.
Who suffers loss?
-It is not unusual for goods to be stolen, damaged, or destroyed while they are awaiting shipment, are being shipped, or are awaiting pickup after a sales contract has been entered.
- When something happens to the goods, it becomes necessary to determine who must suffer the loss: the seller or the buyer.
-The rules for determining the risk of loss are contained in the UCC.
- Except when goods are to be picked up by the buyer and in a few other cases, whoever has title to the
goods bears the risk of loss.
