Sales & other contractual situations

1. Sales & other contractual situations Mr. Valanzano Business Law

2. Sales • Sale – a contract in which ___________ of (_______ to) ________ transfers from the ________ to the ________ for a __________ • If the transfer of ownership is set to take place in the future, the transaction is a ______________________ rather than a sale. • Price – _______________________________________ ___________________________________ • When parties exchange goods for goods, the sale is a ____________ (_________).

3. Sales of Goods __________________ • The UCC ______________ the sale of goods and contracts to sell goods in the future. • Goods – __________________________________ _________________________________ • By UCC definition, __________ do not include: • ___________ (except rare collectible currency or coins) • _____________ (not touchable) ______________ property • _____________ and ________________ • ___________ and other forms of _______________

4. UCC Sales Contracts • Under the UCC, a sales contract may be made in any manner _________________________________. • _____________ occurs when the buyer delivers the agreed ________ and the ___________ accepts it. • Receipt of Goods – ________________________________________ ______________________________________ • In a contract for a _____________, any goods involved are treated as _______________. • _______________ – the buyer has agreed, by words or conduct, that the goods received are satisfactory • Shown when the goods are __________, ____________, or treated as if they were _____________ by the buyer.

5. _______________ Sales Contracts • When a court finds that a ___________ or a ___________ ____________of a contract is unconscionable, that means the contract and/or clause is _______________and ____________. • ____________________________ are the most likely to be found unconscionable because 1 party dictates all the important terms. • If a court decides a contract or clause is ________________, they may do any of the following: • _____________ to enforce the contract • _________ the contract ___________ the unconscionable _______ • _____________ the clause’s application so that the contract is no longer ____________

6. Quick Review • Answer the following questions on your handout: • 1) Which of the following are considered goods under the UCC? A) Rare coins B) Patents C) Neither D)Both • 2) Which of the following would NOT be considered goods under the UCC’s law of sales? A) Passenger plane B) Computer C) 6 acres of land D) All of the above ARE goods under the UCC • 3) True or False: Contracts to sell are not governed by the UCC’s of sales.

7. ________________ • _______________ – a _________ who deals regularly in a particular _________________ or otherwise claims to have special ____________ or _______ in a certain type of sales transaction • Casual Sellers – _______________________________ _________________________________ • Special __________ and __________ of ownership: • ______________________ • _____________ • __________________ regulations • ___________________

8. Sales Compared to Other Transfers of Ownership and Possession

9. Special Rules for ______________ • Under certain circumstances, oral contracts for the sale of goods priced at _____________ may be a __________ and ______________. • Exceptions to these requirements of the __________ __________ include: • Goods __________ and ___________ by the buyer • buyer _________ goods and _________ seller of approval • ________ or __________ goods • does not ________ goods after a _______________ amount of time • ______________ for goods and ________________ payment • Sale of __________________ not suitable for sale to others

10. Quick Review • Answer the following questions on your handout: TRUE OR FALSE • 1) Generally, orally made sales or contracts to sell are valid and enforceable in court. • 2) If a buyer resells the goods, the UCC treats the buyer’s actions as acceptance. • 3) Both parties have to sign the writing to satisfy the statute of frauds.

11. The ________ to _________ Ownership • Generally, only the ______________ of goods may legally _____________ ownership of those goods. • The ____________ of the goods receives only the property rights that the _____________ and nothing more. • Exceptions to transfer of _____________ rules: • Persons ___________ to do so may transfer __________________ title • Buyers in a sale ____________________ may transfer better title than they have • _________________________ – innocent third party that gives up value for stolen goods and acquired rights in them • Holders of ___________________________ of title may transfer better title than they have • Merchants who keep _____________ of _______________ goods they have sold may transfer better title than they have

12. ______________ for Transfer of Ownership • For ownership of goods to be transferred in a sale, the goods must be both ___________ and ____________. • _________________ – goods owned by the seller that are physically in existence even though they may not be in a fully assembled or immediately deliverable condition • Identified Goods – _____________________________ ____________________________________________ ____________________________________________ • Unless goods are both existing and identified, they are then considered _________________.

13. When Does Ownership Transfer? • Common situations involving _________ of ________: • Seller delivers goods to their __________________ • __________________________ – the seller places the proper goods at the buyer’s disposal and notifies the buyer so that delivery can be received • Seller ________, but does not ______________, goods to their _________________ • Seller delivers ______________________ • Buyer takes ______________ at __________________ • Neither the _____________________ nor the ______ ___________ governs the outcome of these situations.

14. Risk of Loss • _______________ does not always transfer from seller to buyer when __________ transfers. • Possible alternatives to when _________ of __________ take place: • Seller ships goods by ____________ • __________________________ – seller agrees to deliver goods to a specific destination and retains risk of loss until goods reach said destination • Goods held by ___________ • Bailee – _______________________________________________ ______________________________________________________ • Either party ____________ after goods are _____________ • Goods neither _______________ nor ___________________

15. Insurable Interest • The buyer obtains a special _______________________ in goods at the time of their __________________ to the contract. This gives the buyer the right to buy ____________ on the goods. • The physical act of ___________ goods can include: setting aside, ___________, tagging, _____________, boxing, _______________, or shipping. • In addition to _____________________, the buyer has the following rights: • To ___________ the identified goods at a ______________ hour • To compel ___________ if the seller ___________________________ delivery • To collect ____________ from third parties who __________________ the goods

16. Transfer of __________ and ___________ in Specific Transactions

17. Quick Review • Answer the following questions on your handout: • 1) FOB means: A) First of Business B) First on Board C) Free of Business D) Free on Board • 2) True or False: The transfer of the risk of loss from seller to buyer always occurs when title transfers. • 3) The carrier collects the price and transportation charges upon delivery, then transmits this amount to the seller in: A) COD sales B) Cash-and-carry sales C) A sale or return D) Sales on credit

18. Consumer Protection • ______________ – an individual who acquires ______ that are primarily intended for _________, _________, or ______________ use • It was once thought that consumers would do business living by the phrase “_______________________” or “___________________________.” • As society progressed to a more __________________ society, it became more difficult for _____________ to judge a product’s _____________, _____________, _______________, and ____________________.

19. ________ Protection for Consumers • ________________________ – allows 1 or more people to ______ not only on behalf of ______________, but also on behalf of many ______________________________ • __________________________ – an ______________ requiring a _______________ to stop the specified conduct (severe _________ penalties occur if this order is violated) • Consent Order – ________________________________________ ______________________________________________________ • In settling a __________ with a business, a consumer may seek help or advice from the: • State ______________________ office • _______________________________ (local) • __________________________ department of the business involved

20. What Do Federal Consumer Laws Do? • Protect against the ____________ and __________ of _____________ or _______________ consumer goods • Prohibit _______________________________ • Require _____________ and _______________ to help ensure ______________ with the law • Provide _______________________________

21. Protection Against __________ Goods • _________________________ • Consumer Product Safety Commission (_________) • Any company that finds its products ______ to comply with safety regulations must _____________ that fact to the commission. • Products can be ___________ and repaired, ______________, or the price can be refunded. • ___________, _________, and ______________ • ___________________________________________ (FDA) • Production facilities for food, drugs, and cosmetics must be _______ and ingredients must be _________________________________. • FDA requires ________ on regulated products and must give name and address of manufacturer, ________________, or distributor, as well as nutritional info for food. • Standards for ___________ and ____________ • Weighing and measuring devices are inspected and tested at least ___________________ to ensure accuracy.

22. Protection Against __________________ • Unfair Trade Practice – _________________________ ____________________________________________ • Companies sometimes agree to __________ or ______ prices to ensure their survival and ________________. These agreements are ________ and _____________. • _____________________________ – advertising that intentionally _________, makes untrue claims of quality or effectiveness, or fails to revel important facts • The _______________________ (FTC) has the responsibility of preventing these types of ads.

23. Other Unfair Trade Practices • Illegal ________________ • Lotteries must require a __________, be won by ________, and have a __________ to be won. • Unfair _________ and ___________ • _______________ Goods • _________ Goods Sold as _______ • Confusing _____________ or ______________ • ________________ Merchandise • Sending _________ merchandise and _________ payment. • Commercial ____________ • Fraudulent ____________ and ________________

24. FTC Guidelines • The ______ has adopted many guidelines intended to _____________________________ by requiring businesses to act in certain ways including: • Potential ______________ must explain to their intended borrowers their methods of _________________________. • Under certain circumstances, ________, _______________, or both must provide ________________________ to their customers. • Businesses that sell ________________ must give purchasers _____ days to _____________ contracts for purchases of _______ or more.

25. Quick Review • Answer the following questions on your handout: • 1) Which of the following is regulated by the Consumer Product Safety Commission? A) Drugs B) Firearms C) Toys D) Cosmetics • 2) True or False: Legally, a person buying goods for their business is not a consumer. • 3) The elements of a lottery are ________, chance, and consideration. A) Price B) Money C) Luck D) None of the above

26. _______ and ________ Protection • ________________________ • Examples of licensed professionals: ___________, nurses, pharmacists, __________, teachers, _________________, realtors, insurance agents, beauticians. • Certain professionals need to earn _____________ in order to meet standards and requirements to ________________________. • ______________ for _____________ Consumers • _____________________, cease-and-desist orders • _________________ and __________ Adulteration Laws • Businesses where food is handled need to be ________________ and _______________ need to be _________________. • ______________________ • State and local laws are in place to govern ____________, accessibility, ____________________, and type of usage. • Detailed regulations apply to _______________, elevators, _________, sprinkler systems, _______ location and marking, and sanitary facilities.

27. Product Liability • ______________________ – the relationship that exists between or among the contracting parties as a result of their _______________ _________________ • A _________________ suit may be based on a breach of ________, or on the torts of ________, _____________, or ________________. • Consumers injured by a _________ product are most likely to recover damages by relying on ____________________. • The defect caused the product to be ________________________. • It is difficult for an injured consumer to _________________ because: • _____________ may not be ___________, __________, or ___________ • The seller’s ______________________ is hard to prove • ___________________ can be difficult to prove in certain situations

28. Warranties • ____________ – a statement about a product’s ______________ or ____________ that the seller __________ the buyer is ________ • Warranties can be either ___________ or _____________ and are governed by the UCC. • Express Warranty – ______________________________________ ______________________________________________________ • ____________________ – an express warranty that obligates the seller to repair or replace a defective product ____________________ to the buyer in a reasonable amount of time • ____________________ – any warranty that provides _____________ ______________ than a full warranty; a seller must __________ buyers when there is a limited warranty • Implied Warranty – ______________________________________ ______________________________________________________

29. Required Information for a Warranty • Under the ________________________________, the FTC has established minimum standards for warranties for goods that cost more than ________. • ____________ are _______ required to give warranties. • Information that must be included in a warranty: • ________ the warranty is extended to • Description of ____________ and any _____________ parts • What the ___________ will and will not to in the event of a _______________ • When the warranty ____________ and _________ • ________________ procedure to obtain ___________ of warranty obligations • Availability of any _______________________________________ • Any limitation on _________________________________________ • If there are any _______________ or ___________________ on incidental or consequential damages • These exact words: “______________________________________________ ______________________________________________________________.”

30. ___________ Warranties • Implied warranties are made to ____________________________. • These warranties are _______________________ and do not need to be mentioned in a contract. Only if the parties specifically agree is any one or more of these warranties excluded. • Types of implied warranties: • Warranty of Title – _________________________________________ _________________________________________________________ • _______________________________ – the goods should be delivered free of all claims of third parties if which the buyer is not aware of at the time of contracting • ___________________________________ – a buyer who needs goods for a certain purpose tells the seller about that purpose then: • relies on the seller’s ________ and _________ for selecting appropriate goods • the seller has _________ reason to know of the buyer’s _____________ • the implied warranty here is that the goods delivered to the buyer are _______ _______________________________________

31. Warranties Implied by Law for ________ • In addition to the warranties made by all sellers, the following are warranties also made by _________ ___________: • _________________________ – the goods in which a merchant normally deals with will be delivered to a buyer free of any _____________________________ ____________________________________________ • _________________________ – requires that the goods be ____________________________________ ______________________________

32. ______ Warranties Made by All ______ • Warranty of Conformity to ______________________ ___________ • Every seller is bound by any __________________________ _____________ that is part of the agreement. • A buyer should want these statements in ____________. • Warranty of Conformity to __________________________ • Used when a _____________ of the goods or a ___________ or ___________ of the goods is made ________________. • The goods need to __________ the description, sample, or model used in the words of the contract.

33. __________ of Warranties • A seller may offer to sell goods ________ warranties when: • The goods are ________________________ • A new __________ or ___________ is being used • To sell goods _________ a warranty, the seller must _____ _________________________, and use language that will exclude implied warranties. • Disclaimer – ______________________________ • A disclaimer must be ______________ and be ______________ _____________________. • An implied warranty can be excluded by using expressions such as “_________,” “________________,” or other similar words.

34. Quick Review • Answer the following questions on your handout: • 1) Caveat emptor means let the _________ beware.A) Buyer B) Seller C) Ruler D) Student • 2) True or False: Although several legal theories are available to form the basis for a product liability suit, injured consumers may find it difficult to recover damages. • 3) Detailed safety regulations apply to:A) Elevators B) Sprinkler systems C) Fire escapes D) Exit signs E) All of the above • 4) True or False: A warranty that obligates the seller to repair or replace the defective product with only a labor cost to the buyer is still a full warranty. • 5) Claims of third parties that a buyer is not aware of at the time of contracting is called a(n):A) Fitness B) Encumbrance C) Infringement D) Conformity