to Sales

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CHAPTER 19
Introduction to Sales
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Quote of the Day

• A commodity appears at first sight an extremely
  obvious, trivial thing. But its analysis brings
  out that it is a very strange thing, abounding in
  metaphysical subtleties and theological
  niceties.
• Karl Marx,
• German political philosopher

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The Uniform Commercial Code (UCC)

• The UCC is the single most important source of
  law for commerce and contracts.
• The UCC is ancient in origin, contemporary in
  usage, admirable in purpose, and flawed in
  application.

Click here to view the text of the UCC on the
internet.
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UCC Basics

• Codes Purpose
• To simplify, clarify and modernize the law
  governing commercial transactions,
• To permit the continued expansion of commercial
  practices through custom, usage and agreement of
  the parties,
• To make uniform the law among the various
  jurisdictions.

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Scope

• Article 2
• UCC 2-102 Article 2 applies to the sale of
  goods, things that are movable, other than money
  and investment securities.
• Article 2A
• Article 2A governs the leasing of goods.
• In a mixed contract involving sales and services,
  the UCC will govern if the predominant purpose is
  the sale of goods, but the common law will
  control if the predominant purpose is service.

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Merchants

• UCC 2-104 A merchant is someone who routinely
  deals in the particular goods involved, or who
  appears to have special knowledge or skill in
  those goods, or who uses agents with special
  knowledge or skill in those goods.
• The UCC frequently holds a merchant to a higher
  standard of conduct than a non-merchant.

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Good Faith Unconscionability

• Good Faith
• The UCC imposes a duty of good faith in the
  performance of all contracts.
• For non-merchants, good faith means
  honesty-in-fact.
• For a merchant, good faith means honesty-in-fact,
  plus the exercise of reasonable commercial
  standards of fair dealing.
• Unconscionability
• UCC 2-302 A contract may be unconscionable if
  it is shockingly one-sided and fundamentally
  unfair.

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Statute of Frauds

• UCC 2-201 requires a writing for any sale for
  goods worth more than 500.
• Contracts for Goods over 500
• Writing Sufficient to Indicate a Contract
• In general, the writing must be signed by the
  defendant.
• Incorrect or Omitted Terms
• Under the UCC, a court may enforce a bargain even
  though one or more terms were left open.
• Enforceable Only to Quality Stated
• The Code will enforce the contract only up to the
  quality of goods stated in the writing.

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Merchant Exception

• When two merchants make an oral contract, and
• one sends a confirming memo to the other within a
  reasonable time, and
• the memo is sufficiently definite that it could
  be enforced against the sender herself, then
• the memo is also valid against the merchant who
  receives it, unless
• he objects in 10 days.

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Added Terms Section 2-207

• Under 2-207, an acceptance that adds or alters
  terms will often create a contract.

Click once to start self-building graphic.
Offeree does NOT intend to accept
Offeree intends to accept
OFFER
Accepts terms
Adds terms
Changes terms
Accepts IF offerer accepts new terms
NO CONTRACT
Usually forms a contract
Usually forms a contract
Contract
NO contract (is a new offer)
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Additional or Different Terms

• Additional those that raise issues not covered
  in the offer.
• When both parties are merchants, additional terms
  generally become part of the bargain.
• Different contradict terms in the offer.
• Cancel each other out if there is no clear oral
  agreement, the Code supplies its own terms to
  cover prices, delivery dates and places,
  warranties, and other subjects.

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Open Terms 2-305 2-306

• Open Prices Under 2-305, the parties may
  conclude a contract even though they have not
  settled the price.
• Under the Code, if the parties have not stated a
  price, it is to be a reasonable price at the time
  of delivery.
• Output and Requirements Contracts
• The UCC requires that the parties in an output or
  requirements contract make their demands in good
  faith.

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Modification

• UCC 2-209 An agreement modifying a contract
  needs no consideration to be binding.
• The parties may agree to prohibit oral
  modification and insist that all modifications be
  in writing and signed.
• Between merchants, such a clause is valid.
• If either party is not a merchant, such a clause
  if valid only if the non-merchant separately
  signs it.

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The Uniform Commercial Code enables merchants to
form contracts more quickly and easily. But
along with this increased facility goes greater
responsibility, since informal discussions may
suddenly turn into a contract.
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Link to the Internet
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