Sales Law November 19, 2009 Winn

Sales Law November 19 Thursday 11/19 – Watch Monty Python Dead Parrot Sketch on Youtube and identify the UCC Article 2 issue – Introduction to Supply Chains handout – Finish Chapter 3 Monday 11/23 – Problems 4-1 to 4-4, 4-6 and 4-7

Markets, Relational Contracts, Bureaucracy ConsultingCommodity Futures Employment MarketBureaucracy Stock Market Supplier (Toyota) Relational Contract Lending MBA: “Make or Buy” Supplier (Wal-Mart) Outsourcing Vertical Integration

Article 2 Warranties Express warranties – Contract terms created by words or conduct of seller – [Can only be disclaimed with specific disclaimers] Implied warranty of merchantability – Objective standard based on trade standards and reasonable expectations – [Can be disclaimed with conspicuous general disclaimers] Implied warranty of fitness for a particular purpose – Implied in law based on individual requirements communicated by buyer to seller and interpreted by seller – [Can be disclaimed with conspicuous general disclaimers] Implied Warranty of Title – Ownership of goods is a fundamental implied term – [Can only be disclaimed with great difficulty with very specific disclaimers]

Void versus Voidable Title Good Title – Buyer cannot be forced by anyone to surrender goods due to superior claim of ownership – Warranty of good title implied in law, absolutely explicit disclaimer required, nothing less works Compare: basis of bargain must be disclaimed explicitly, cannot be disclaimed with general disclaimers Voidable Title – Buyer has superior title to everyone in the world except former owner Bought jewelry from jewelry shop but rightful owner only “entrusted” for repairs—only rightful owner can “avoid” the transfer to the buyer Minor child enters into an unenforceable contract selling an asset, has option to “affirm” contract upon majority or to “avoid” it and reclaim goods – If Buyer sells to “good faith purchaser for value” then GFP gets good title Void Title – Buyer has mere possession, must surrender goods under many circumstances Thief stole goods from rightful owner, police can always recover possession for rightful owner from buyer or buyer’s buyer, etc.