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Section 13.1. Sales. The law of sales governs contracts for the sale and lease of goods. Sales. A sale is a contract in which ownership of goods is transferred from the seller to the buyer for consideration.
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Sales The law of sales governs contracts for the sale and lease of goods.
Sales • A sale is a contract in which ownership of goods is transferred from the seller to the buyer for consideration. • The consideration is also known as the price, or the money that is paid for goods.
Sales • Goods are all things that are moveable, such as your clothing, books, pens, food, car, and even the gas you put in your car. • Money, stocks, and bonds are not considered goods.
13.1 Sales Shirt Store $ Shirt Store
The UCC • The Uniform Commercial Code (UCC) is a collection of laws that governs various types of business transactions. • When you have a contract involving goods, the UCC will apply.
The Sales Contract A sales contract may involve either a sale or a contract to sell.
The Sales Contract • Every time you buy goods and take ownership of them, a sale occurs. • However, if you will take ownership at some future time, the agreement is a contract to sell, not a sale.
Contracts for Both Goods and Services When a contract includes both goods and services, the dominant element determines the type of contract.
Contracts for Both Goods and Services • If the sale of goods dominates, the laws of the UCC apply. • If the performance of service dominates, the common law of contract applies.
Special Rules for Sales Contracts With some exceptions, the UCC applies to all sellers and buyers of goods.
Special Rules for Sales Contracts • A merchant is a business or person who deals regularly in the sale of goods or who has a specialized knowledge of goods. • A non-merchant is a casual or occasional seller.
Special Rules for Sales Contracts A sales contract must contain the same elements as other contracts, but the UCC has relaxed some of the strict rules of contract law.
Good Faith Parties to a sales contract must treat each other fairly.
Methods of Dealing and Usage of Trade When parties have previously dealt with each other, those methods of dealing may be used to supplement or qualify the terms of their sales contract.
Methods of Dealing and Usage of Trade This rule is true with any usage of trade, which is the method of dealing that is commonly used in the particular field.
Formation of a Sales Contract You may make a contract in any manner that shows that the parties have reached an agreement.
Acceptance of an Offer In most situations, you may accept an offer by any means and in any reasonable manner.
Different or Additional Terms An acceptance may have different or additional terms added without a complete rejection of the offer.
Firm Offer A firm offer is a merchant’s written promise to hold an offer open for the sale of goods. It does not require payment to be binding.
Open-Price Terms A sales contract may be made without a settled price. Unless the parties agree on a price prior to delivery, a reasonable price can be settled at the time of delivery.
Output and Requirement Terms Output and requirement contracts are allowed even if they are not definite.
Output and Requirement Terms • An agreement to buy all of the manufacturer’s goods is an • output contract. • A requirement contract occurs when a seller agrees to supply the needs of a buyer.
Modification No consideration is necessary to change a contract for the sale of goods. The modification may be oral, unless the original agreement is in writing and states that it must be modified in writing.
Leasing Goods You can apply the sale-of-goods rules to the leasing of goods, with a few modifications.
Form of Sales Contracts Many sales contracts are oral rather than written. As long as the price is less than $500, an oral contract for the sale of goods is enforceable.
Form of Sales Contracts If the price is $500 or more, a sales contract must be in writing to be enforceable with the following exceptions:
Exceptions to the $500 rule • Written confirmation of an oral contract between two merchants is sent within a reasonable time, and no objection is made within ten days.
Exceptions to the $500 rule • The contract involves specially manufactured goods that cannot be resold easily.
Exceptions to the $500 rule • The buyer receives and accepts the goods or pays for them. • The parties admit in court that they 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?
ANSWER Yes. A Carapoli violin is a specially manufactured good.
Other Sales Governed by UCC Rules Other sales governed by the UCC rules include auction sales and bulk transfers.
Auction Sales In an auction with reserve, the auctioneer doesn’t have to sell the goods for the highest bid if it’s lower than the reserve amount. The auctioneer may withdraw the goods at any time before a sale is completed.
Auction Sales In an auction without reserve, the auctioneer must sell the goods to the highest bidder. The goods cannot be withdrawn from bidding unless no bid is made.
Auction Sales An auction sale is with reserve unless it is expressly stated that it is without reserve.
Bulk Transfers Sometimes a business transfers all merchandise and supplies at once, known as a bulk reserve.
Bulk Transfers The UCC rules require that the buyer of the bulk goods notify all of the seller’s creditors at least ten days before the transfer will take place.
Section 13.1Assessment Reviewing What You Learned • When do you use the law of sales?
Section 13.1Assessment Reviewing What You Learned Answer For the sale and lease of goods.
Section 13.1Assessment Reviewing What You Learned • What special rules apply to sales contracts?
Section 13.1Assessment Reviewing What You Learned Answer 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;
Section 13.1Assessment Reviewing What You Learned 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.
Section 13.1Assessment Reviewing What You Learned • When must sales contracts be in writing? What are the exceptions?
Section 13.1Assessment Reviewing What You Learned Answer 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.
Section 13.1Assessment Reviewing What You Learned • What are some rules for auctions and bulk sales?
Section 13.1Assessment Reviewing What You Learned Answer 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.
Section 13.1Assessment Reviewing What You Learned 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.
