1. © 2010 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. Click your mouse anywhere on the screen when you are ready to advance the text within each slide. After the starburst appears behind the blue triangles, the slide is completely shown. You may click one of the blue triangles to move to the next slide or the previous slide.

3. © 2010 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. “A commodity appears at first sight an extremely obvious, trivial thing. But its analysis brings out that it is a very strange thing, abounding in metaphysical subtleties and theological niceties.” Karl Marx, German political philosopher

4. © 2010 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.  As trade increased throughout history, the need for a uniform, modernized business law grew greater.  In 1952, the Uniform Commercial Code was published by a group of scholars whose goal was to draft a modern law of commerce.  The UCC has been revised several times, most recently in 2003.

5. © 2010 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.  The UCC is the single most important source of law for commerce and contracts.  The UCC is “ancient in origin, contemporary in usage, admirable in purpose, and flawed in application.”  The UCC is the creation of scholars, and has no legal effect until a state legislature adopts it. All 50 states and the District of Columbia have adopted the UCC, but not all have used identical versions.

6. © 2010 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.  Code’s Purpose To simplify, clarify and modernize the law governing commercial transactions, To permit the continued expansion of commercial practices through custom, usage and agreement of the parties, To make uniform the law among the various jurisdictions.

7. © 2010 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.  Article 2 UCC §2-102: Article 2 applies to the sale of goods, things that are movable, other than money and investment securities.  Article 2A Article 2A governs the leasing of goods.  In a mixed contract involving sales and services, the UCC will govern if the predominant purpose is the sale of goods, but the common law will control if the predominant purpose is service.

8. © 2010 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.  UCC §2-104: A merchant is someone who routinely deals in the particular goods involved, or who appears to have special knowledge or skill in those goods, or who uses agents with special knowledge or skill in those goods.  The UCC frequently holds a merchant to a higher standard of conduct than a non-merchant.

9. © 2010 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.  Good Faith The UCC imposes a duty of good faith in the performance of all contracts. For non-merchants, good faith means honesty-in-fact. For a merchant, good faith means honesty- in-fact, plus the exercise of reasonable commercial standards of fair dealing.  Unconscionability UCC §2-302: A contract may be unconscionable if it is shockingly one-sided and fundamentally unfair.

10. © 2010 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.  UCC §2-204 provides three important rules: The parties may make a contract in any manner that sufficiently shows that they reached an agreement. Knowing the moment of making of the contract is not critical. One or more terms may be left open. Commercially reasonable terms will be assumed by the courts.

11. © 2010 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.  UCC §2-201 requires a writing for any sale for goods worth more than $500.  Contracts for Goods over $500 Writing Sufficient to Indicate a Contract –In general, the writing must be signed by the defendant. Incorrect or Omitted Terms –Under the UCC, a court may enforce a bargain even though one or more terms were left open. Enforceable Only to Quality Stated –The Code will enforce the contract only up to the quality of goods stated in the writing.

12. © 2010 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.  When two merchants make an oral contract, and one sends a confirming memo to the other within a reasonable time, and the memo is sufficiently definite that it could be enforced against the sender, then the memo is also valid against the merchant who receives it, unless he objects in 10 days.  An oral contract may be enforceable if the seller is specially manufacturing the goods, the defendant admits in court that there was a contract, or the goods have been delivered or paid for.

13. © 2010 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.  Under §2-207, an acceptance that adds or alters terms will often create a contract. OFFER Offeree intends to accept Offeree does NOT intend to accept NO CONTRACT Accepts terms Contract Adds terms Usually forms a contract Changes terms Usually forms a contract Accepts IF offerer accepts new terms NO contract (is a new offer) Click once to start self-building graphic.

14. © 2010 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.  Additional: those that raise issues not covered in the offer. When both parties are merchants, additional terms generally become part of the bargain.  Different: contradict terms in the offer. Cancel each other out; if there is no clear oral agreement, the Code supplies its own terms to cover prices, delivery dates and places, warranties, and other subjects.

15. © 2010 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.  Open Prices: Under §2-305, the parties may conclude a contract even though they have not settled the price. Under the Code, if the parties have not stated a price, it is to be a reasonable price at the time of delivery.  Output and Requirements Contracts The UCC requires that the parties in an output or requirements contract make their demands in good faith.

16. © 2010 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.  UCC §2-209: An agreement modifying a contract needs no consideration to be binding.  The parties may agree to prohibit oral modification and insist that all modifications be in writing and signed. Between merchants, such a clause is valid. If either party is not a merchant, such a clause if valid only if the non-merchant separately signs it.

17. © 2010 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.