the sale and lease of goods section 13.1. understanding business and personal law the sale and lease...

The Sale and Lease of Goods The Sale and Lease of Goods Section 13.1Section 13.1

Understanding Business and Personal Law


Contracts for the Sale of Goods

The law of sales governs contracts for The law of sales governs contracts for the sale and lease of goods. the sale and lease of goods.

Sales Sales




A A salesale is a contract in which is a contract in which ownership of goods is transferred ownership of goods is transferred from the seller to the buyer for from the seller to the buyer for consideration.consideration.The consideration is also known as The consideration is also known as the the priceprice, or the money that is paid , or the money that is paid for goods.for goods.

Sales Sales




GoodsGoods are all things that are are all things that are moveable, such as your clothing, moveable, such as your clothing, books, pens, food, car, and even books, pens, food, car, and even the gas you put in your car. the gas you put in your car. Money, stocks, and bonds are not Money, stocks, and bonds are not considered goods.considered goods.

Sales Sales




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13.113.1

SalesSales




The The Uniform Commercial CodeUniform Commercial Code (UCC) is a collection of laws that (UCC) is a collection of laws that governs various types of business governs various types of business transactions.transactions.When you have a contract involving When you have a contract involving goods, the UCC will apply.goods, the UCC will apply.

The UCC The UCC




A sales contract may involve either a A sales contract may involve either a sale or a sale or a contract to sell.contract to sell.

The Sales Contract The Sales Contract




Every time you buy goods and take Every time you buy goods and take ownership of them, a sale occurs.ownership of them, a sale occurs.However, if you will take ownership However, if you will take ownership at some future time, the agreement at some future time, the agreement is a contract to sell, not a sale.is a contract to sell, not a sale.

The Sales Contract The Sales Contract




When a contract includes both goods When a contract includes both goods and services, the dominant element and services, the dominant element determines the type of contract.determines the type of contract.

Contracts for Both Goods Contracts for Both Goods and Services and Services




If the sale of goods dominates, the If the sale of goods dominates, the laws of the UCC apply.laws of the UCC apply.If the performance of service If the performance of service dominates, the common law of dominates, the common law of contract applies.contract applies.

Contracts for Both Goods Contracts for Both Goods and Services and Services




Special Rules for Sales Contracts Special Rules for Sales Contracts

With some exceptions, the UCC With some exceptions, the UCC applies to all sellers and buyers of applies to all sellers and buyers of goods. goods.





A A merchantmerchant is a business or person is a business or person who deals regularly in the sale of who deals regularly in the sale of goods or who has a specialized goods or who has a specialized knowledge of goods.knowledge of goods.A non-merchant is a casual or A non-merchant is a casual or occasional seller.occasional seller.





A sales contract must contain the A sales contract must contain the same elements as other contracts, but same elements as other contracts, but the UCC has relaxed some of the the UCC has relaxed some of the strict rules of contract law.strict rules of contract law.




Good Faith Good Faith

Parties to a sales contract must treat Parties to a sales contract must treat each other fairly.each other fairly.




Methods of Dealing Methods of Dealing and Usage of Trade and Usage of Trade

When parties have previously dealt When parties have previously dealt with each other, those methods of with each other, those methods of dealing may be used to supplement or dealing may be used to supplement or qualify the terms of their sales qualify the terms of their sales contract. contract.




Methods of Dealing Methods of Dealing and Usage of Trade and Usage of Trade

This rule is true with any This rule is true with any usage of usage of tradetrade, which is the method of dealing , which is the method of dealing that is commonly used in the particular that is commonly used in the particular field.field.




Formation of a Sales Contract Formation of a Sales Contract

You may make a contract in any You may make a contract in any manner that shows that the parties manner that shows that the parties have reached an agreement.have reached an agreement.




Acceptance of an Offer Acceptance of an Offer

In most situations, you may accept an In most situations, you may accept an offer by any means and in any offer by any means and in any reasonable manner.reasonable manner.




Different or Additional Terms Different or Additional Terms

An acceptance may have different or An acceptance may have different or additional terms added without a additional terms added without a complete rejection of the offer.complete rejection of the offer.




Firm Offer Firm Offer

A A firm offerfirm offer is a merchant’s written is a merchant’s written promise to hold an offer open for the promise to hold an offer open for the sale of goods. sale of goods.

It does not require payment to be It does not require payment to be binding.binding.




Open-Price Terms Open-Price Terms

A sales contract may be made without A sales contract may be made without a settled price. a settled price.

Unless the parties agree on a price Unless the parties agree on a price prior to delivery, a reasonable price prior to delivery, a reasonable price can be settled at the time of delivery.can be settled at the time of delivery.




Output and Requirement Terms Output and Requirement Terms

Output and requirement contracts are Output and requirement contracts are allowed even if they are not definite.allowed even if they are not definite.




Output and Requirement Terms Output and Requirement Terms

An agreement to buy all of the An agreement to buy all of the manufacturer’s goods is an manufacturer’s goods is an output contractoutput contract..A A requirement contractrequirement contract occurs occurs when a seller agrees to supply the when a seller agrees to supply the needs of a buyer.needs of a buyer.




Modification Modification

No consideration is necessary to No consideration is necessary to change a contract for the sale of change a contract for the sale of goods. goods. The modification may be oral, unless The modification may be oral, unless the original agreement is in writing the original agreement is in writing and states that it must be modified in and states that it must be modified in writing.writing.




Leasing GoodsLeasing Goods

You can apply the sale-of-goods rules You can apply the sale-of-goods rules to the leasing of goods, with a few to the leasing of goods, with a few modifications.modifications.




Many sales contracts are oral rather Many sales contracts are oral rather than written. As long as the price is than written. As long as the price is less than $500, an oral contract for the less than $500, an oral contract for the sale of goods is enforceable.sale of goods is enforceable.

Form of Sales Contracts Form of Sales Contracts




If the price is $500 or more, a sales If the price is $500 or more, a sales contract must be in writing to be contract must be in writing to be enforceable with the following enforceable with the following exceptions:exceptions:

Form of Sales Contracts Form of Sales Contracts




Written confirmation of an oral Written confirmation of an oral contract between two merchants is contract between two merchants is sent within a reasonable time, and sent within a reasonable time, and no objection is made within ten no objection is made within ten days.days.

Exceptions to the $500 rule Exceptions to the $500 rule




The contract involves specially The contract involves specially manufactured goods that cannot be manufactured goods that cannot be resold easily.resold easily.





The buyer receives and accepts the The buyer receives and accepts the goods or pays for them.goods or pays for them.The parties admit in court that they The parties admit in court that they entered into an oral contract.entered into an oral contract.





Anton Carapoli makes handcrafted violins for professional musicians. His instruments are famous and sell for over $20,000.




If Carapoli and a buyer contract orally for a violin, is the contract enforceable if the buyer later refuses to pay the agreed sum?




ANSWERANSWER

Yes. A Carapoli violin is a specially manufactured good.




Other sales governed by the UCC Other sales governed by the UCC rules include auction sales and bulk rules include auction sales and bulk transfers.transfers.

Other Sales Governed Other Sales Governed by UCC Rules by UCC Rules




Auction Sales Auction Sales

In an In an auction with reserveauction with reserve, the , the auctioneer doesn’t have to sell the auctioneer doesn’t have to sell the goods for the highest bid if it’s lower goods for the highest bid if it’s lower than the reserve amount. than the reserve amount. The auctioneer may withdraw the The auctioneer may withdraw the goods at any time before a sale is goods at any time before a sale is completed.completed.





In an In an auction without reserveauction without reserve, the , the auctioneer must sell the goods to the auctioneer must sell the goods to the highest bidder. highest bidder.

The goods cannot be withdrawn from The goods cannot be withdrawn from bidding unless no bid is made. bidding unless no bid is made.





An auction sale is with reserve unless An auction sale is with reserve unless it is expressly stated that it is without it is expressly stated that it is without reserve.reserve.




Bulk Transfers Bulk Transfers

Sometimes a business transfers all Sometimes a business transfers all merchandise and supplies at once, merchandise and supplies at once, known as a known as a bulk reservebulk reserve. .




Bulk Transfers Bulk Transfers

The UCC rules require that the buyer The UCC rules require that the buyer of the bulk goods notify all of the of the bulk goods notify all of the seller’s creditors at least ten days seller’s creditors at least ten days before the transfer will take place.before the transfer will take place.




Reviewing What You Learned

1. When do you use the law of sales?

Section 13.1 Assessment





For the sale and lease of goods.


Answer





2. What special rules apply to sales contracts?






Must be in good faith; may be supplemented with methods of dealing and usage of trade; may result from the parties’ conduct; offer may be accepted by any reasonable means;


Answer





acceptance may include terms different than those in offer; consideration not required for firm offer; price need not be settled; out put and requirement contracts allowed; may be modified without consideration.


Answer





3. When must sales contracts be in writing? What are the exceptions?






For sale of goods for $500. Exceptions: oral contracts between two merchants when a confirmation is sent and no objection made; oral contracts for specially manufactured goods; admissions in court; executed oral contracts.


Answer





4. What are some rules for auctions and bulk sales?






In an auction with reserve, the auctioneer need not accept the highest bid. In an auction without reserve, the auctioneer must accept the highest bide.


Answer





The UCC rules require that the buyer of bulk goods in a bulk transfer notify all of the seller’s creditors at least ten days before the transfer will take place.


Answer

The Sale and Lease of Goods The Sale and Lease of Goods End of Section 13.1End of Section 13.1

the sale and lease of goods section 13.1. understanding business and personal law the sale and lease...

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