1. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 15 Slide 1 Sales Define sale and explain how the UCC governs the sale of goods Identify unconscionable contracts and contracts of adhesion Distinguish between payment, delivery, and transfer of title of goods LESSON 15-1 GOALS

2. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 15Slide 2 WHAT IS A SALE? A sale is a contract in which ownership of (title to) goods transfers immediately from the seller to the buyer for a price. If the transfer of ownership is to take place in the future, the transaction is a contract to sell rather than a sale. Price is the consideration for a sale or contract to sell goods. When parties exchange goods for goods, the sale is a barter.

3. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 15Slide 3 SALES OF GOODS UNDER THE UCC The Uniform Commercial Code (UCC) governs sales of goods and contracts to sell goods in the future. Goods are tangible movable personal property such as airplanes, books, clothing, and dogs. By UCC definition, goods do not include the following: Page 229 Payment – delivery of the agreed-upon price and the concurrent acceptance of it by the seller.

4. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 15Slide 4 SALES OF GOODS UNDER THE UCC (#12) The UCC recognizes a sales contract made in any manner sufficient to show agreement. This contract can exist if the parties recognize the existence of a contract by their conduct involving a delivery of, acceptance of, and payment for the goods.

5. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 15Slide 5 SALES OF GOODS UNDER THE UCC (#16) The law of contract is simpler and less strict in the application to sales of goods. The UCC also defines payment and receipt of goods, governs both sales of goods and contracts to sell goods in the future.

6. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 15Slide 6 CONTRACTS FOR PERSONAL SERVICES In many situations, the contract is primarily for personal services. Such contracts are not sales because any goods supplied are merely incidental. Vendor – seller in sales of goods and contracts to sell Vendee – buyer in sales of goods and contracts to sell

7. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 15Slide 7 WHAT’S YOUR VERDICT? Were all of these agreements sales?

8. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 15Slide 8 MUST DELIVERY AND PAYMENT BE MADE AT THE SAME TIME? In the basic sales transaction, payment, delivery, and transfer of title take place simultaneously at the seller’s place of business. A bill of sale is a receipt that serves as written evidence of the transfer of ownership of goods.

9. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 15Slide 9 MUST DELIVERY AND PAYMENT BE MADE AT THE SAME TIME? (#13) A bill of sale is written evidence of the transfer of ownership of goods. If signed by the seller, buyer, or both it can satisfy the requirements of the statute of frauds for a signed writing. (#13) It also facilitates resale of the goods because it provides the owner with written evidence of ownership.

10. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 15Slide 10 MUST DELIVERY AND PAYMENT BE MADE AT THE SAME TIME? (#18) In most sales transactions, payment, delivery, and transfer of title occur at the same time. (#18) However, payment or delivery or both may take place later while title still passes when the buyer selects and agrees to buy existing goods.

11. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 15Slide 11 MUST DELIVERY AND PAYMENT BE MADE AT THE SAME TIME? (#18) Unless specified otherwise, the seller may retain goods until payment is made and a buyer may refuse to pay until the seller delivers. (#18) In credit sales a buyer may get both title and possession before payment.

12. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 15Slide 12 WHAT’S YOUR VERDICT? When did the Baumgartens become owners of the gifts they had purchased?

13. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 15Slide 13 OTHER METHODS OF SALES CONTRACTING UNDER THE UCC Sales contracts may be made through a traditional exchange of offer and acceptance. UCC also recognizes alternative methods. Proposal for addition Purchase order form Sales order form

14. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 15Slide 14 OTHER METHODS OF SALES CONTRACTING UNDER THE UCC (#14) The acceptance is assumed if the offeror fails to object within a reasonable time but the new term must not materially alter the offer. (#14) If the new term is a material alteration, the offeror must expressly agree to be bound by it.

15. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 15Slide 15 WHAT’S YOUR VERDICT? Was the Chocolate Castle Company’s acceptance of the order valid?

16. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 15Slide 16 UNCONSCIONABLE SALES CONTRACTS The UCC provides that a court may find that a contract or a clause of a contract is unconscionable, that is, grossly unfair and oppressive. Contracts of adhesion are contracts in which the more powerful party dictates all the important terms.

17. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 15Slide 17 UNCONSCIONABLE SALES CONTRACTS (#17) Any contract may be found unconscionable if it is grossly unfair and oppressive so that is offends an honest person’s sense of justice. (#17) A contract of adhesion is one in which one of the parties dictates all the important terms and the weaker party must accept the terms or forego the contract. (#17) Because of the imbalance, a contract of adhesion is often likely to be unconscionable.

18. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 15Slide 18 UNCONSCIONABLE SALES CONTRACTS (#15) The court may refuse to enforce the contract, enforce the contract without the unconscionable clause, or limit the clause’s application so that the contract is no longer unfair.

19. LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 15Slide 19 WHAT’S YOUR VERDICT? Was this agreement unconscionable?