Chapter 11: Contracts for

the Sale of Goods

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Contract rules

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Statute of Frauds

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Mailbox Rule

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Peppercorn Rule

Where did these names come from?

Common law of contracts

Potential problems?

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What if you do business in many states?

Solutions?

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Uniform Commercial Code

• First published 1952

• National Conference of Commissioners on Uniform State Laws (NCCUSL)

• Enacted in part by all 50 states

• Enacted in entirety by 49 states

• Modifies and standardizes common law

UCC Art. 2: Sales of Goods

• Adopted by every state except Louisiana

• Covers sales

– not rentals or leases

• Covers goods

– tangible, moveable property

– not land

– not intangibles

Offers

• Common law: definite terms

• price

• payment

• delivery

• quantity

Common law: Do we have a contract?

Terms?

Quantity?

Delivery?

Payment?

Price?

No definite terms?

No contract.

UCC: Open terms

• price

• payment

• delivery

• quantity

Price?

• Reasonable price at time of delivery

Payment?

• Due at time and place of delivery

Delivery?

• At seller's place of business (or residence)

• In a reasonable time

Quantity?

• ???

• Can't be open

• Except:

– Requirements contract

– Output contract

Merchant's firm offer

• written offer by merchant stating time it will remain open cannot be revoked

Merchant?

• Buys & sells goods for a living

Different rules for contracts between merchants

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Mirror-Image Rule

Common law?

• Any change in terms is a counter-offer

• Rejects original

• No contract

UCC

• w/ nonmerchant:contract is formed according to original terms

• between merchants: additional terms are part of contract unless:

– original offer expressly limited to its terms

– new terms materially alter the contract

– offeror objects to new terms w/in a reasonable time

Statute of Frauds

Between merchants

• written confirmation sent to other party satisfies SOF if other merchant does not send written rejection in 10 days

Exceptions to statute of frauds • specially mfd. goods

– specially manufactured for buyer

– not suitable for resale to others in the ordinary course of business

• seller has substantially begun to manufacture or made commitments

• admissions in pleadings, testimony, or court proceedings

• partial performance: payment made or goods accepted

Modifications to contracts

• Common law: new consideration required (MOO)

• Between merchants no consideration needed

Remedies

• Common law: money damages

• UCC

– Withhold delivery

– Demand cash if buyer insolvent

– Re-sell goods

– Cancel

– Stop in transit

– Reclaim goods

Warranties

• title

• express

• implied

– merchantability

– fitness for a particular purpose

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Risk of Loss

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risk of loss

• title vs. possession

• doesn’t necessarily follow title

• Generally, risk follows goods

Delivery terms?

• Shipment contract?

• Destination contract?

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Shipment contract (default under UCC)

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Destination Contract

Performance

• tender of delivery: seller must have conforming goods available for buyer to take delivery

• perfect tender rule

– right to cure

– commercial impracticability

– destruction of identified goods

– cooperation

Non-conforming goods

• buyer's remedies:

– accept

– reject

– accept part/reject part

• Cure