Hofstra University Zarb School of Business Department of Accounting, Taxation, and Legal Studies ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Assistant Professor Glen M. Vogel, P.E., Esq.

Hypothetical You are the owner of a company called Compudata – a computer software & systems company. You receive an inquiry from BMI, Inc. regarding your company’s various services. What are some of the legal issues you need to consider?

How do we enter into a contract? What happens if BMI breaches? How do we protect our product? Are we dealing with the right person? What happens if we have a dispute? What happens if our product hurts someone? Does making our product impact the environment? Do we have any competitors? Contracts Remedies IP Agency Litigation Product Liability Environmental Law Antitrust Law

Article 2 of the UCC Sale of Goods

Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker.

Unless excluded or modified, a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Goods, to be merchantable, must: (a) pass without objection in the trade under the contract description; and (b) in the case of fungible goods, are of fair average quality within the description; and (c) are fit for the ordinary purposes for which such goods are used; and (d) run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; and (e) are adequately contained, packaged, and labeled as the agreement may require; and (f) conform to the promise or affirmations of fact made on the container or label if any.

As an example: if Alice lends Bob a $10 bill, she does not care if she is repaid with the same $10 bill, two $5 bills, a $5 bill and five $1 bills or bunch of coins that total $10 as currency is fungible. However, if Bob borrows Alice's car she will most likely be upset if Bob returns a different vehicle--even a vehicle that is the same make and model--as automobiles are not fungible with respect to ownership.

A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract. An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined. Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

A valid contract requires 6 things: 1. Agreement 2. Consideration 3. Contractual Capacity 4. Legality 5. Genuineness of Assent 6. Proper Form

Correct information about your PRODUCT/SERVICES Correct information about you – the SELLER Correct information about the BUYER Terms – clear & bargained for: Amount to be paid When will it be paid What form will payment take What happens if payment is not made – what are your rights Interest on payments Delivery of merchandise/product Who pays for delivery Insurance on delivery Signatures!! Agency issues

Agency: a fiduciary relationship that results when one person (the principal) manifests his consent that another person (the agent) will act on his behalf and subject to his control and the agent manifests an intent to so act. Specific Agency Rules: 1. Partnerships – the act of any one partner binds all of the partners & the partnership. They are all agents for the business. 2. Corporations & other business forms – it is less clear and agency will depend on the title of the person involved and their specific corporate duties/responsibilities.

Express Contracts: a contract in which the terms of the agreement are explicitly stated orally or in writing. Implied Contract: a contract formed in whole or in part by the conduct (as opposed to the words) of the parties. In order to establish an implied-in-fact in contract you need to show: The plaintiff must have furnished some service or property to defendant; The plaintiff reasonably expected to be paid and the defendant knew or should have known that a reasonable person in the plaintiff’s position would have expected to be paid, and; The defendant must have had the opportunity to reject the service or property and failed to do so.

The following website produced by Cornell University School of Law is a great resource for issues surrounding the sale of goods. It has all of the relevant sections of the UCC available for your review.