The law of sales governs contracts for the sale and lease of goods.

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Section 13.1
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Sales
The law of sales governs contracts for the sale
and lease of goods.
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Sales

• A sale is a contract in which ownership of goods
  is transferred from the seller to the buyer for
  consideration.
• The consideration is also known as the price, or
  the money that is paid for goods.

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Sales

• Goods are all things that are moveable, such as
  your clothing, books, pens, food, car, and even
  the gas you put in your car.
• Money, stocks, and bonds are not considered goods.

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13.1
Sales
Shirt Store

Shirt Store
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The UCC

• The Uniform Commercial Code (UCC) is a collection
  of laws that governs various types of business
  transactions.
• When you have a contract involving goods, the UCC
  will apply.

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The Sales Contract
A sales contract may involve either a sale or a
contract to sell.
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The Sales Contract

• Every time you buy goods and take ownership of
  them, a sale occurs.
• However, if you will take ownership at some
  future time, the agreement is a contract to sell,
  not a sale.

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Contracts for Both Goods and Services
When a contract includes both goods and services,
the dominant element determines the type of
contract.
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Contracts for Both Goods and Services

• If the sale of goods dominates, the laws of the
  UCC apply.
• If the performance of service dominates, the
  common law of contract applies.

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Special Rules for Sales Contracts
With some exceptions, the UCC applies to all
sellers and buyers of goods.
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Special Rules for Sales Contracts

• 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 is a casual or occasional seller.

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Special Rules for Sales Contracts
A sales contract must contain the same elements
as other contracts, but the UCC has relaxed some
of the strict rules of contract law.
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Good Faith
Parties to a sales contract must treat each other
fairly.
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Methods of Dealing and Usage of Trade
When parties have previously dealt with each
other, those methods of dealing may be used to
supplement or qualify the terms of their sales
contract.
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Methods of Dealing and Usage of Trade
This rule is true with any usage of trade, which
is the method of dealing that is commonly used in
the particular field.
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Formation of a Sales Contract
You may make a contract in any manner that shows
that the parties have reached an agreement.
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Acceptance of an Offer
In most situations, you may accept an offer by
any means and in any reasonable manner.
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Different or Additional Terms
An acceptance may have different or additional
terms added without a complete rejection of the
offer.
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Firm Offer
A firm offer is a merchants written promise to
hold an offer open for the sale of goods. It
does not require payment to be binding.
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Open-Price Terms
A sales contract may be made without a settled
price. Unless the parties agree on a price
prior to delivery, a reasonable price can be
settled at the time of delivery.
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Output and Requirement Terms
Output and requirement contracts are allowed even
if they are not definite.
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Output and Requirement Terms

• An agreement to buy all of the manufacturers
  goods is an
• output contract.
• A requirement contract occurs when a seller
  agrees to supply the needs of a buyer.

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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.
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Leasing Goods
You can apply the sale-of-goods rules to the
leasing of goods, with a few modifications.
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Form of Sales Contracts
Many sales contracts are oral rather than
written. As long as the price is less than 500,
an oral contract for the sale of goods is
enforceable.
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Form of Sales Contracts
If the price is 500 or more, a sales contract
must be in writing to be enforceable with the
following exceptions
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Exceptions to the 500 rule

• Written confirmation of an oral contract between
  two merchants is sent within a reasonable time,
  and no objection is made within ten days.

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Exceptions to the 500 rule

• The contract involves specially manufactured
  goods that cannot be resold easily.

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Exceptions to the 500 rule

• The buyer receives and accepts the goods or pays
  for them.
• The parties admit in court that they entered into
  an oral contract.

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Anton Carapoli makes handcrafted violins for
professional musicians. His instruments are
famous and sell for over 20,000.
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If Carapoli and a buyer contract orally for a
violin, is the contract enforceable if the buyer
later refuses to pay the agreed sum?
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ANSWER
Yes. A Carapoli violin is a specially
manufactured good.
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Other Sales Governed by UCC Rules
Other sales governed by the UCC rules include
auction sales and bulk transfers.
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Auction Sales
In an auction with reserve, the auctioneer
doesnt have to sell the goods for the highest
bid if its lower than the reserve amount. The
auctioneer may withdraw the goods at any time
before a sale is completed.
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Auction Sales
In an auction without reserve, the auctioneer
must sell the goods to the highest bidder. The
goods cannot be withdrawn from bidding unless no
bid is made.
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Auction Sales
An auction sale is with reserve unless it is
expressly stated that it is without reserve.
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Bulk Transfers
Sometimes a business transfers all merchandise
and supplies at once, known as a bulk reserve.
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Bulk Transfers
The UCC rules require that the buyer of the bulk
goods notify all of the sellers creditors at
least ten days before the transfer will take
place.
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Section 13.1 Assessment
Reviewing What You Learned

1. When do you use the law of sales?

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Section 13.1 Assessment
Reviewing What You Learned
Answer
For the sale and lease of goods.
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Section 13.1 Assessment
Reviewing What You Learned

1. What special rules apply to sales contracts?

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Section 13.1 Assessment
Reviewing What You Learned
Answer
Must be in good faith may be supplemented with
methods of dealing and usage of trade may result
from the parties conduct offer may be accepted
by any reasonable means
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Section 13.1 Assessment
Reviewing What You Learned
Answer
acceptance may include terms different than those
in offer consideration not required for firm
offer price need not be settled out put and
requirement contracts allowed may be modified
without consideration.
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Section 13.1 Assessment
Reviewing What You Learned

1. When must sales contracts be in writing? What are
   the exceptions?

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Section 13.1 Assessment
Reviewing What You Learned
Answer
For sale of goods for 500. Exceptions oral
contracts between two merchants when a
confirmation is sent and no objection made oral
contracts for specially manufactured goods
admissions in court executed oral contracts.
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Section 13.1 Assessment
Reviewing What You Learned

1. What are some rules for auctions and bulk sales?

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Section 13.1 Assessment
Reviewing What You Learned
Answer
In an auction with reserve, the auctioneer need
not accept the highest bid. In an auction without
reserve, the auctioneer must accept the highest
bide.
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Section 13.1 Assessment
Reviewing What You Learned
Answer
The UCC rules require that the buyer of bulk
goods in a bulk transfer notify all of the
sellers creditors at least ten days before the
transfer will take place.
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End of Section 13.1