1. Sales Contracts

2.  Sale – Contract in which ownership of goods transfers immediately from the seller to the buyer  Ownership – Collection of rights that allow the use and enjoyment of property  Contract to Sell – Transfer of ownership is to take place in the future

3.  Goods – Tangible, touchable, moveable personal property (items other than land or buildings)  Price – Consideration for a sale or contract to sell goods ◦ May be expressed in money, in service, or in other goods (barter)

4.  UCC – Governs the sales of goods ◦ A sales contract may be made in any manner sufficient to show agreement ◦ Contract suffices if the parties, by their actions, recognize the existence of a contract

5.  UCC definition, goods do not include: 1.Money – except for rare coins, which are collectable items with values that exceed face value 2.Intangible – Not touchable, personal property, such as legal rights to performance under a contact 3.Patents and copyrights 4.Real property – generally land, building, and legal rights within

6.  Contracts That Are Not Sales ◦ Contractual situations, goods may be included, but the primary purpose of the contract is to provide a service ◦ Vendor – Seller of both goods and contracts to sell ◦ Vendee- Buyer or purchaser

7.  Payment and Delivery ◦ Payment – Occurs when the buyer transfers the agreed-upon consideration and the seller accepts it ◦ Delivery – the act by which the subject matter of the contract is placed within the possession or control of the buyer

8.  Payment and Delivery ◦ Receipt of Goods – Means that the buyer takes physical possession or control of the goods  Includes actual delivery ◦ In the basic sales transaction, payment, delivery, and transfer of title take place simultaneously

9.  Payment and Delivery ◦ Bill of Sale – Receipt that serves as written evidence of the transfer of ownership of goods.  Makes resale of the property easier because it provides the owner with written evidence of ownership.

10.  Use of Credit ◦ Most sellers extend credit to qualified buyers  Acceptance of Goods ◦ Means that the buyer has agreed, by words or by conduct, that the goods received are satisfactory ◦ Is shown when the goods are used, resold, and otherwise treated as if they owned them

11.  Other ways to contract ◦ May be made through a traditional exchange of an offer and acceptance

12.  Unconscionable – Grossly unfair  Contracts of Adhesion – One of the parties dictates all the important terms ◦ Weaker party must generally accept the terms as offered or no contract at all  If a clause is found to be unconscionable, the courts may do any of the following: ◦ Refuse to enforce the contract ◦ Enforce the contract without the unconscionable clause ◦ Limit the clauses application so that the contract is no longer unfair

13.  Turn to page 233 and answer the assessment questions

14.  Special Rules for Merchants ◦ UCC treats all buyers and sellers the same ◦ Special rules for individuals who are merchants ◦ Merchant – someone who deals regularly in the type of goods being exchanged or claims special knowledge or skill in the type of sales transaction being conducted

15.  Special Rules for Merchants ◦ Casual Sellers – Individuals who do not qualify as merchants ◦ Example – you selling you car (casual seller); Car dealership selling same car (merchant) ◦ Merchants may be required to have license to sell  Subject to special taxation

16.  Merchant Status in Sales Contracts ◦ Under UCC, an offeror may state that the offer to buy or to sell must be accepted exactly as made or not at all. Offoree my accept or change terms (counteroffer).  Under the law of sales of goods, the new term is treated as a proposal for addition to the contract

17.  Merchant Status in Sales Contracts  When both parties are merchants  A new term inserted by the offeree automatically becomes part of the contract if the offeror fails to object within a reasonable time  New term must not materially alter the offer  The original offer must not expressly bar such changes

18.  Merchant Status in Sales Contracts  When both parties are merchants  If the new term is a material alteration, it is included in the contract only if the original offeror expressly shows an intention to be bound by it

19.  Sales contracts are generally valid and enforceable in court whether they are oral, written, or implied from the conduct of the parties ◦ Contract > $500 or more must be in writing to be enforceable

20.  Not all of the terms of a sales contract have to be in writing to satisfy the Statutes of Frauds ◦ All that is required is a writing, signed by the party being sued, which satisfies the court that a contract to sell, or sale, has been made

21. ◦ The number or quantity of goods involved in the transaction must be contained in writing ◦ The contract is not enforceable beyond the stated quantity

22.  Not required to be writing ◦ Time and manner of performance ◦ Credit and warranty terms ◦ Packaging, Labeling, and Shipping instructions ◦ Price

23.  Law generally requires a signature of the person being sued  Between merchants, the signature of the party who is suing may be enough to prove an otherwise unenforceable sales contract

24.  If merchant sends a written conformation of an oral contract to another merchant within a reasonable time after this oral agreement was made, the confirmation binds both parties  If the second merchant sends a written objection to the confirmation within 10 days, the confirmation is not binding

25.  Oral contracts for the sale of goods valued at $500 or more may be valid and enforceable 1.Goods received and accepted by the buyer  Need both to make contract binding

26.  3 ways to accept goods  After reasonable opportunity to inspect the goods, the buyer signifies to the seller that the goods conform to the contract  The buyer acts inconsistently with the seller’s ownership (uses, consumes, or resells the goods)  The buyer fails to make an effective rejection after having a reasonable opportunity to inspect the goods. ◦ If the buyer accepts only some of the goods, the contract is enforceable only for those goods

27.  Oral contracts for the sale of goods valued at $500 or more may be valid and enforceable 2.Buyers pays for goods and seller accepts payment  When payment in full has been accepted by the seller, the oral contract is enforceable in full  When partial payment has been accepted, the oral contract is enforceable only for the goods paid for if the goods can be divided and the price can be apportioned fairly  If the goods are indivisible and there can be no dispute as to quantity, the contract is enforceable in full

28.  Oral contracts for the sale of goods valued at $500 or more may be valid and enforceable 3.Goods specially made not suitable for sale to other  Can enforce oral contract for non-resalable goods if:  The seller has substantially begun to manufacturer  The seller has made contract to obtain the goods from third parties

29.  Oral contracts for the sale of goods valued at $500 or more may be valid and enforceable 4.Party against who enforcement sought admits oral contract made

30.  Turn to page 237 and complete 13-2 assessment