Ch. 7 Consumer Law and Contracts 7-1 Sales Contracts

Bell Ringer #1  What does UCC stand for?  What is it’s purpose?  What does UCC stand for?  What is it’s purpose?

Sales Law  Governs the sale of goods  Uniform Commercial Code  Uniform set of laws developed to help with interstate commerce.  Relaxed some of the strict rules of contract law.  Governs the sale of goods  Uniform Commercial Code  Uniform set of laws developed to help with interstate commerce.  Relaxed some of the strict rules of contract law.

Sale of goods vs. Service Performed  How do you know which laws to follow? Law of contracts or UCC? Look for which is dominant.  Ex: a business buys 3 new computers and has them installed.  Sale of goods is dominant, so law of UCC  Ex: a business has the computers serviced and some new hardware installed.  Service is dominant, so law of contracts.  How do you know which laws to follow? Law of contracts or UCC? Look for which is dominant.  Ex: a business buys 3 new computers and has them installed.  Sale of goods is dominant, so law of UCC  Ex: a business has the computers serviced and some new hardware installed.  Service is dominant, so law of contracts.

Special Rules for Sales Contracts  Previous methods of dealing  Good Faith  Offer and Acceptance of a sales contract  Offers can be oral or written  Acceptance can be done in any reasonable way  Occurs when sent!  Previous methods of dealing  Good Faith  Offer and Acceptance of a sales contract  Offers can be oral or written  Acceptance can be done in any reasonable way  Occurs when sent!

Special Rules for Sales Contracts  Merchants are held to a higher standard than non-merchants.  Exception is Firm Offers - merchant’s written promise to hold an offer open for the sale or lease of goods. a) No consideration is needed when a merchant promises in writing to hold an offer open for the sale or lease of goods. b) A merchant cannot revoke a firm offer during the time stated in the offer or for a reasonable time if none is stated. c) No offer can last more than 3 months.  Merchants are held to a higher standard than non-merchants.  Exception is Firm Offers - merchant’s written promise to hold an offer open for the sale or lease of goods. a) No consideration is needed when a merchant promises in writing to hold an offer open for the sale or lease of goods. b) A merchant cannot revoke a firm offer during the time stated in the offer or for a reasonable time if none is stated. c) No offer can last more than 3 months.

Special Rules for Sales Contract  Different or Additional Terms  An acceptance may add different or additional terms without ending the original contract.  Statute of Limitations  4 years for sales contracts  Different or Additional Terms  An acceptance may add different or additional terms without ending the original contract.  Statute of Limitations  4 years for sales contracts

Example: A sporting goods store prepares a written promise to sell a kayak to a customer for a certain price. Do you think the store can revoke the offer? How long do they have to keep the offer open? A sporting goods store prepares a written promise to sell a kayak to a customer for a certain price. Do you think the store can revoke the offer? How long do they have to keep the offer open?

Oral Sale for Goods  If less than $500, it is still enforceable.  If more than $500, it needs to be in writing.  If less than $500, it is still enforceable.  If more than $500, it needs to be in writing.

When the rule doesn’t apply: 1. A written confirmation of an oral contract between 2 merchants is sent within a reasonable time and no objection is made within 10 days. 2. The contract involves specially manufactured goods that can’t be resold easily. 3. The buyer receives and accepts the goods or pays for them. 4. The parties admit in court that they entered into an oral contract. 1. A written confirmation of an oral contract between 2 merchants is sent within a reasonable time and no objection is made within 10 days. 2. The contract involves specially manufactured goods that can’t be resold easily. 3. The buyer receives and accepts the goods or pays for them. 4. The parties admit in court that they entered into an oral contract.

When does the right of ownership pass from the seller to the buyer?  The title passes from a seller to a buyer when the seller does what is required under the contract to deliver the goods.  Title - right of ownership to goods  Bill of sale - formal evidence of ownership - proves you once had ownership not that you currently have the item.  Insurable Interest - legal interest in the protection of property from injury, loss or destruction.  The title passes from a seller to a buyer when the seller does what is required under the contract to deliver the goods.  Title - right of ownership to goods  Bill of sale - formal evidence of ownership - proves you once had ownership not that you currently have the item.  Insurable Interest - legal interest in the protection of property from injury, loss or destruction.

Voidable Titles Occur When:  You obtain property as a result of someone’s fraud, mistake, undue influence, or duress.  You buy or sell goods to a minor or mentally challenged person.  If you transfer goods with a voidable title to someone they gain a valid title.  You obtain property as a result of someone’s fraud, mistake, undue influence, or duress.  You buy or sell goods to a minor or mentally challenged person.  If you transfer goods with a voidable title to someone they gain a valid title.

Who’s Responsible  Risk of Loss - who is responsible if the goods get lost or damaged.  When the title passes the risk of loss also passes!  You can’t have a title to goods that don’t yet exist, for example, CROPS.  Risk of Loss - who is responsible if the goods get lost or damaged.  When the title passes the risk of loss also passes!  You can’t have a title to goods that don’t yet exist, for example, CROPS.

1. Shipment Contracts  Seller gives goods to a carrier for deliver to a buyer  Title and risk of loss pass to the buyer when the goods are given to the carrier.  Seller gives goods to a carrier for deliver to a buyer  Title and risk of loss pass to the buyer when the goods are given to the carrier.

2. Destination Contracts  When the contract requires the seller to deliver the goods to a destination.  Both title and risk of loss pass to the buyer when the seller turns the goods over at the shipping destination.  When the contract requires the seller to deliver the goods to a destination.  Both title and risk of loss pass to the buyer when the seller turns the goods over at the shipping destination.

Remedies For Breach of Sales Contracts  Seller’s Remedies - when buyer refuses to accept or pay for goods they ordered.  Cancel the contract  Withhold delivery  Stop delivery of goods held by a carrier  Resell any goods, bring a claim against the buyer (agreed price - resale price)  If you can’t resell the goods, bring claim against the buyer (agreed price - market price)  Bring claim against the buyer for the price of any goods the buyer accepted.  Seller’s Remedies - when buyer refuses to accept or pay for goods they ordered.  Cancel the contract  Withhold delivery  Stop delivery of goods held by a carrier  Resell any goods, bring a claim against the buyer (agreed price - resale price)  If you can’t resell the goods, bring claim against the buyer (agreed price - market price)  Bring claim against the buyer for the price of any goods the buyer accepted.

Remedies for Breach of Sales Contracts  Buyer’s Remedies - when the seller fails to deliver goods or sends incorrect, damaged or defective goods.  Cancel the contract  Bring a claim against the seller for return of money that was paid.  Bring a claim against the seller (agreed price - market price)  Refuse to accept the goods if something is wrong with them (buyer must notify the seller and give them a chance to correct the problem)  Buyer’s Remedies - when the seller fails to deliver goods or sends incorrect, damaged or defective goods.  Cancel the contract  Bring a claim against the seller for return of money that was paid.  Bring a claim against the seller (agreed price - market price)  Refuse to accept the goods if something is wrong with them (buyer must notify the seller and give them a chance to correct the problem)

More Buyer’s Remedies  Buy similar goods from someone else and bring a claim against the seller (agreed price - cost of purchase)  Give notice to the seller that the goods have been accepted but there is something wrong with them (if nothing is done, buyer can bring a claim against the seller for breach of contract or warranty)  Revoke the acceptance and return the goods if a serious defect was undetectable or if the buyer was led to believe that the seller would fix the defect.  Buy similar goods from someone else and bring a claim against the seller (agreed price - cost of purchase)  Give notice to the seller that the goods have been accepted but there is something wrong with them (if nothing is done, buyer can bring a claim against the seller for breach of contract or warranty)  Revoke the acceptance and return the goods if a serious defect was undetectable or if the buyer was led to believe that the seller would fix the defect.