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 – __________________________________ _________________________________ not 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 clauses 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 UCCs 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 UCCs 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 TransactionType of propertyIs a contract involved? Transfer of ownership? Transfer of possession? Evidence of transaction Personal or realNoYes (usually)Usually none or a deed ConveyanceUsually (may be gratuitous) Contract or deed Real (usually)Usually (may be gratuitous) No SaleYes (usually)Contract or bill of sale GoodsYes (usually but not immediately) BarterYesContract Negotiable instruments UsuallyCommercial paper or contract AssignmentUsuallyYes, when contract is performed PersonalUsuallyNoYesContract

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 buyers 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 buyers 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 Type of TransactionWhen does transfer occur? Title passes to buyer at time of transaction when they pay cash and take immediate delivery Sales on creditBuyer receives title ______________ even though _______________ or ____________ is ______________ Title goes to buyer once seller delivers and buyer pays at time of delivery Sale or returnTitle passes to buyer on ___________ but can be passed ___________ __________ if goods are ___________ within ___________ or _______________ amount of time Title does not pass to buyer until they approve of the goods Sale of an undivided interest Title passes to buyer at the ___________________________________ _________________________________________ Ownership passes to buyer at time of auction close. Risk of loss passes to buyer upon tender of goods in exchange for payment.

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 products _____________, _____________, _______________, 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 sellers ______________________ is hard to prove ___________________ can be difficult to prove in certain situations

28. Warranties ____________ – a statement about a products ______________ 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 sellers ________ and _________ for selecting appropriate goods the seller has _________ reason to know of the buyers _____________ 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