6The UCCThe 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.
7The Sales ContractA sales contract may involve either a sale or a contract to sell.
8The Sales ContractEvery 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.
9Contracts for Both Goods and ServicesWhen a contract includes both goods and services, the dominant element determines the type of contract.
10Contracts for Both Goods and ServicesIf the sale of goods dominates, the laws of the UCC apply.If the performance of service dominates, the common law of contract applies.
11Special Rules for Sales Contracts With some exceptions, the UCC applies to all sellers and buyers of goods.
12Special 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.
13Special 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.
14Good FaithParties to a sales contract must treat each other fairly.
15Methods 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.
16Methods 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.
17Formation of a Sales Contract You may make a contract in any manner that shows that the parties have reached an agreement.
18Acceptance of an OfferIn most situations, you may accept an offer by any means and in any reasonable manner.
19Different or Additional Terms An acceptance may have different or additional terms added without a complete rejection of the offer.
20Firm OfferA 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.
21Open-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.
22Output and Requirement Terms Output and requirement contracts are allowed even if they are not definite.
23Output and Requirement Terms An agreement to buy all of the manufacturer’s goods is anoutput contract.A requirement contract occurs when a seller agrees to supply the needs of a buyer.
24ModificationNo 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.
25Leasing GoodsYou can apply the sale-of-goods rules to the leasing of goods, with a few modifications.
26Form 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.
27Form of Sales Contracts If the price is $500 or more, a sales contract must be in writing to be enforceable with the following exceptions:
28Exceptions 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.
29Exceptions to the $500 rule The contract involves specially manufactured goods that cannot be resold easily.
30Exceptions 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.
31Anton Carapoli makes handcrafted violins for professional musicians Anton Carapoli makes handcrafted violins for professional musicians. His instruments are famous and sell for over $20,000.
32If Carapoli and a buyer contract orally for a violin, is the contract enforceable if the buyer later refuses to pay the agreed sum?
33ANSWERYes. A Carapoli violin is a specially manufactured good.
34Other Sales Governed by UCC Rules Other sales governed by the UCC rules include auction sales and bulk transfers.
35Auction SalesIn 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.
36Auction SalesIn 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.
37Auction SalesAn auction sale is with reserve unless it is expressly stated that it is without reserve.
38Bulk TransfersSometimes a business transfers all merchandise and supplies at once, known as a bulk reserve.
39Bulk TransfersThe 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.
40Reviewing What You Learned When do you use the law of sales? Section AssessmentReviewing What You LearnedWhen do you use the law of sales?
41Reviewing What You Learned Answer Section AssessmentReviewing What You LearnedAnswerFor the sale and lease of goods.
42Reviewing What You Learned Section AssessmentReviewing What You LearnedWhat special rules apply to sales contracts?
43Reviewing What You Learned Answer Section AssessmentReviewing What You LearnedAnswerMust 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;
44Reviewing What You Learned Answer Section AssessmentReviewing What You LearnedAnsweracceptance 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.
45Reviewing What You Learned Section AssessmentReviewing What You LearnedWhen must sales contracts be in writing? What are the exceptions?
46Reviewing What You Learned Answer Section AssessmentReviewing What You LearnedAnswerFor 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.
47Reviewing What You Learned Section AssessmentReviewing What You LearnedWhat are some rules for auctions and bulk sales?
48Reviewing What You Learned Answer Section AssessmentReviewing What You LearnedAnswerIn an auction with reserve, the auctioneer need not accept the highest bid. In an auction without reserve, the auctioneer must accept the highest bide.
49Reviewing What You Learned Answer Section AssessmentReviewing What You LearnedAnswerThe 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.