Law 2

Need 5 things

• 1. Offer
• 2. Acceptance
• 3. Agreement - supported by consideration
• 4. Capacity
• 5. Legality

Applies to the SALE OF GOODS

Any time goods change hands it goes under the UCC doesn't matter if the the buyer or seller is a merchant or not

Any transaction however paid for, in which title transfers from seller to buyer for a price

• Legal ownership
• not a document, but a legal concept of ownership

• Tangible Movable items of personal property
• not money or stocks

Involves the sale of both goods and services

Predominant-purpose test - UCC applies if transaction is "predominantly" a sale of goods

• Someone who either
• Deals in the goods of the kinds involved in the transaction OR
• Holds themselves out as an expert, by their occupation, in the goods involved in the transaction

• UCC has Firm Offer Rule
• UCC relaxes definiteness requirement
• UCC Eliminates Mirror Image Rule
• UCC eliminates the preexisting obligation rule

If the offerer promises to keep an offer open until a certian time, the offer must remain open

Under common law, such an offer must only remain open if the offeree pays for the option, otherwise, offerer can revoke at any time

• Only Quantity is required for a valid contract
• price, payment, delivery, duration, etc can be reasonably filled in if not stated in the contract
• lack of these does not void the contract

• 1. If either paty is a non-merchant:
• additional terms are considered proposed additions to the contract
• if additional proposed items are NOT explicitly accepted, a contract is formed on the basis of the original offer without the additional terms

• 2. If both parties are merchants, additional terms automatically become part of the contract UNLESS
• the offer expressly limits acceptance to the terms of the offer OR
• additional terms materially alter the contract OR
• the offeree objects within a reasonable time

• Agreed-to modifications to an existing contract do not need to be supported by consideration nder the UCC
• as long as they are made in good faith

Certain contracts must be in writting to be enforceable

• Land
• Debts of Others
• Anything over a year
• Goods >= $500

Specially manufactured goods

Even if these are over 500 they need not be in writting

• As long goods are not suitable for sale to others in seller's ordinary course of business
• Seller has made a substantial begining of their manufacture or procurement

Parties to a complete and final written contract cannot introduce oral evidence in court that changes the intended meaning of the written terms

• Parties can submit evidence to interpret terms
• course of performance (during this contract)
• course of dealing (during other contracts)
• trade usage (between others in the same industry)

UCC and Common law rules have the sale goal - to put the non breaching party in the position he would have been in had the contract been fully performed

The non breaching party can usually choose from a number of remedies

Contract law does NOT punish the breaching party

• the seller's remedies ususally focus on:
• getting goods back from a breaching buyer
• allowing the seller to find another buyer
• awarding damages

can also demand cash is a buyer becomes insolvent prior to delivery, despite the original payment terms

• In possession of common carriers
• buyer insolvency - seller can stop entire shipment regardless of size
• buyer repudiation of failure to make payment - seller can stop delivery if discrete unit (carload, truckload, planeload)

Seller can reclaim goods within 10 days of delivery if seller discovers that the buyer was insolvent when the goods were received

the 10 day limit does not apply if the buyer misrepresented his solvency or buyer paid with a dishonored check

• if contract is breached, while goods are in the process of being made, seller can either:
• cease production and resell for scrap or salvage
• complete production and sell to another buyer

If the goods are either not in possession of the seller or unable to be sold to anyone other than the original buyer

• This is called "action for the price"
• Buyer accepted but failed to pay
• seller cannot sell item to another buyer or otherwise dispose of them
• goods are damaged or lost after ROL has passed to buyer

• compensatory
• - to place Seller in position he would have been in if the buyer had not breched
• - can include incidental damges - transaction costs in selling to another buyer, attorney fees
• - seller has a duty to mitigate

• Consequential
• - additional losses foreseeable to buyer and caused by buyers breach

If buyer has made partial or full payment prior to receving goods, and seller becomes insolvent within 10 days after receiving the first payment, then buyer can capture the goods as long as it pays any remaining amount due

Buyer can order seller to deliver unique goods if other remedies such as damages would be inadequate

art, coins, antiques

buyer may purchasr goods from another seller in a commercially reasonable manner, and recover any amount paid in excess of the contract price

buyer may institute legal action to recover goods that are wrongfully in the possession of another - used when goods are scarce and attempts at cover are unsuccessfull

seller's repudiation of the contract or failure to deliver goods gives buyer the right to cancel, ending buyers obligations

is VOID

• owner had not voluntarily transferred title
• good faith purchaser obtains viod title

is Voidable

• Owner voluntarilly transferred title
• good faith purchaser obtains good title

• Owner who entrusts goods to a merchant relies on merchant
• Merchant can pass Good title to good faith purchaser even through merchant never had title

If seller is merchant - risk of loss passes to buyer upon delivery

If seller is a non-merchant - the risk of loss passes when seller "tenders" goods to buyer, makes the goods available and notifies buyer

• Carrier is primarily liable for loss or damage
• over and above carrier's ability to pay
• - Shipment contract (default) - seller agrees to deliver goods to carrier, buyer assumes ROL during transit
• - Destination Contract - seller agrees to deliver goods to buyer - ROL remains with seller during transit

• Negotiable document of title - "to the order of" when endorsed by buyer
• Non-Negotiable document of title - when the bailee is notified
• No document of title - when bailee is notified and acknowledges transfer of title

Sale on Approval - seller alloes buyer to take possession before buyer decides whether to complete the contract - ROL stays with seller untill acceptance

Sale or Return - Seller and buyer agree that buyer may return goods at a later time - ROL shifts to buyer based on pervious rules

Seller: Sent nonconforming goods - ROL remains with seller untill cured or accepted

• Buyer: nonpayment, repudiation of contract, refusal to take delivery
• - for desination contracts - ROL remains with seller to extent of seller's to insurance
• - buyer liable for any deficit
• - to encourage sellers to use shipment contracts