1. Essentials of the legal environment today, 5e
Roger leroy miller
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

2. Sales, leases, and product liability
Chapter 14
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

3. Learning objectives
How do Article 2 and Article 2A of the UCC differ? What types of transactions does each article cover?
Under the UCC, if an offeree includes additional or different terms in an acceptance, will a contract result? If so, what happens to these terms?
What remedies are available to a seller or lessor when the buyer or lessee breaches the contract? What remedies are available to a buyer or lessee if the seller or lessor breaches the contract?
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

4. LEARNING OBJECTIVES (CONT’D)
What are implied warranties arise under the UCC?
What are the elements of a cause of action in strict product liability?
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

5. Articles 2 and 2a Article 2—The Sale of Goods
Article 2 of the UCC governs sales contracts (contracts for the sale of goods)
Whenever a conflict arises between a common law contract rule and the state statutory law based on the UCC, the UCC controls.
What is a sale?
What are goods?
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

6. Exhibit 14.1
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

7. Articles 2 and 2a Who is a merchant?
A person who deals in good of the kind involved in the sales contract
A person who, by occupation, holds himself or herself out as having knowledge and skill unique to the practices or goods involved in the transaction
A person who employs a merchant as a broker, agent, or other intermediary
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

8. Articles 2 and 2a Article 2A—Leases
Covers leases or subleases of goods
Difference from Article 2 is that it applies to leases rather than sales of goods
Note: Article 2A is not concerned with leases of real property; land or buildings
LO-1
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

9. Formation of sales and lease contracts
Articles 2 and 2A modify common law contract rules.
Offer
Open terms
Merchant’s firm offer
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

10. Formation of sales and lease contracts
Acceptance
Communication of acceptance
Additional terms
UCC dispenses with the mirror image rule
A contract is formed if the offeree’s response indicates a definite acceptance of the offer, even if the acceptance includes terms additional to or different from those contained in the offer.
Rules when one party or both parties are nonmerchants
Rules when both parties are merchants
LO-2
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

11. Formation of sales and lease contracts
Consideration
Common law rule that a contract requires consideration also applies to sales and lease contracts
The Statute of Frauds
Special rules for contracts between merchants
Exceptions
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

12. Exhibit 14.2
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

13. performance
Consists of the duties and obligations each party has under the terms of the contract
Obligations of the Seller or Lessor
Place of delivery
The perfect tender rule
Cure
Substitution of carriers
Commercial impracticability
Destruction of identified goods
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

14. performance Obligations of the Buyer or Lessee
Payment
Right of inspection
Acceptance
Anticipatory Repudiation
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

15. Remedies for breach Remedies of the Seller or Lessor
The right to cancel the contract
The right to withhold delivery
The right to resell or dispose of the goods
The right to recover the purchase price or lease payments due
The right to recover damages
LO-3
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

16. Remedies for breach Remedies of the Buyer or Lessee
The right to cancel the contract
The right to obtain the goods on insolvency
The right to obtain specific performance
The right of cover
The right to replevy goods
The right to recover damages
The right to reject the goods
Revocation of acceptance
The right to recover damages for accepted goods
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

17. Remedies for breach Additional Provisions Affecting Remedies
A seller and buyer can expressly provide for remedies in addition to those provided in the UCC.
Can also specify remedies in lieu of those provided in the UCC, or change the measure of damages
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

18. warranties Articles 2 and 2A designate several types of warranties
Title Warranties – can automatically arise in sales and lease contracts
Express Warranties – concerns the quality, condition, description, or performance potential of the goods
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

19. warranties Express warranties arise when seller or lessor indicates:
That the goods conform to any affirmation of fact or promise that the seller or lessor makes to the buyer or lessee about the goods
That the goods conform to any description of them
That the goods conform to any sample or model of the goods shown to the buyer or lessee
Basis of the bargain
Statements of opinion and value
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

20. warranties Implied Warranties Warranty Disclaimers
Implied warranty of merchantability
Implied warranty of fitness for a particular purpose
Warranties implied from prior dealings or trade custom
Warranty Disclaimers
LO-4
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

21. Product liability
Based on the theories of negligence, misrepresentation, and strict liability
Negligence
If a manufacturer fails to exercise “due care” to make a product safe, a person who is injured may sue for negligence.
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

22. Product liability Misrepresentation
When a user is injured as a result of a manufacturer’s or seller’s fraudulent misrepresentation, the basis of liability may be the tort of fraud.
Misrepresentation on a label or ad is enough to show intent.
Buyer must have relied on the misrepresentation.
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

23. Product liability Strict Product Liability
People may be liable for the results of their acts regardless of their intentions or their exercise of reasonable care.
Requirements
Proving a defective condition
Unreasonably dangerous products
Product defects – manufacturing and design
LO-5
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

24. Product liability Defenses to Product Liability Assumption of risk
Product misuse
Comparative negligence
Commonly known dangers
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.