Presentation on theme: "The Sale and Lease of Goods Chapter 7. Previous Contracts Governed Real estate Employment And personal Service In this chapter we will look at the law."— Presentation transcript:
Previous Contracts Governed Real estate Employment And personal Service In this chapter we will look at the law of sale Governs the contracts for the sale and lease of goods
Sale Contract A contract in which ownership of goods is transferred from the seller to the buyer for consideration Price is consideration (money) Goods are all things moveable Clothing, books, pens, food, car, and gas
UCC Uniform Commercial Code A collection of laws that governs various types of business transactions.
Example Malika got a summer job at a Smoothie Shop on the same day that her parents bought a new house. To celebrate, her family went out to dinner. The day’s activity involved three different contracts. Malika’s oral employment contract and her parents written contract and the family’s oral contract with the restaurant for dinner is a sale of goods and governed by the UCC
Purpose of UCC Combine the laws relating to commerce into a single uniform code Simplify, clarify and modernize the law governing commercial transactions To encourage the expansion of commercial practices through custom, usages and agreement of parties
Sales The sales contract is A sale or a contract to sell Every time you buy goods and take ownership a sale occurs But if you take ownership at a later time the agreement is a contract to sell, not a sale.
Example Darnell mows lawns in his neighborhood to make money in the summer. He went to a store to buy a new power mower, the model he want was out of stock. The store clerk agreed to order the mower for Darnell to pick up in a week. Darnell knew that his friend Foster, was interested in buying his used mower. He offered to sell the mower to Foster for $25. Foster accepted his offer and paid Darnell. Darnell’s contract with the hardware store is a contract to sell because he will not take ownership until a week later. His deal with Foster is a sale because Foster took immediate ownership of the mower for the agreed price.
Goods And Service If the Contract includes both goods and services the dominant element determines the type of contract
Example If you buy a furnace and have it installed, the sale of goods- the furnace is the dominant feature and the laws of the UCC apply but if they have the furnace serviced and new parts are installed the performance of service is dominant and the common law of contract apply.
Merchants UCC applies to all sellers and buyers of goods. 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 an occasional sale(example) you sale a used CD to a music store
Special Rules A sales contract must contain the same elements as other contracts but the UCC has relaxed some of the strict rules of the contract law. The following slides will discuss the flexible rules that apply in all contract for the sale of goods:
Rules Good faith-- all parties must treat each other fairly Methods of Dealing and Usage of Trade— Method of dealing that is commonly used in a particular field Formation of a Sales Contract- make a contract in any manner that shows that the parties have reached an agreement (oral or written)
Rules Continued Acceptance of an offer- you may accept an offer by any means and in any reasonable manner. Different or Additional Terms- may have different or additional terms added without a complete rejection of the offer. This is treated as a proposal if both parties are not merchants If both parties are merchants it becomes part of the contract
Rule Continued Firm offer—A merchants written promise to hold an offer open for the sale of goods. Does not require payment to be binding Open-Price- A sales contract may be made without a settled price Unless a price has been agree upon prior to deliver a reasonable price can be settled at time of delivery
Rules Continued Output and Requirement Terms Contracts are allowed even if they are not definite. Example A retailer might agree to buy all of a backpack manufacture’s backpacks. A agreement to buy all of a manufacture’s goods is an output contract. On the other hand, Tri- State Petroleum Distributors might agree to sell all of the gasoline needed by the Gabriel Trucking Company. This agreement is a required contract, the sellers agrees to supply the needs of a buyer
Rules Continued Modification: No 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.
Leasing Goods You can apply the sales-of-goods rules to the leasing of goods with a few modifications. Rentals such as DVD player, tuxedo, computer, or car are governed by the UCC
Forms of Sales Contracts Many sales are oral rather than written Made by phone, or face-to-face Sales under $500 can be oral and are enforceable Sales above $500 must be in writing to be enforced. This rule does not apply when A written confirmation of an oral contract between two merchants is sent within a reasonable time and no objection is made within ten days The contract involves specially manufactured goods that cannot be resold easily The buyer receives and accepts the goods or pays for them The parties admits in court that they entered into an oral contract
Other Sales Governed by UCC Rules Auctions Allows people to negotiate or set their own prices. Auctions with reserve: the auctioneer doesn’t have to sell to the highest bidder if it is lower than the reserve amount. He must withdraw the good before a sale is completed Auctions without-- reserve auctioneer must sell to the highest bidder Bulk transfer- transfer of all merchandise and supplies at once. Buyers much notify all seller’s creditors at least ten days before the transfer takes place. So creditors can take steps to make sure they get their money.
Assignment Create an Outline from this PowerPoint. There should Ten Headings The special rules can be under one heading Answer the following 5 questions When do you use the law of sales? When must sales contracts be in writing? What are the exceptions to that rule What are some rules for auctions and bulk sales When you contract for something that includes both goods and service, such as wall-to-wall carpeting installed in your home, how should you determine whether to apply the law of sales?