1. David P. Twomey - Boston College
Marianne M. Jennings - Arizona State University
© 2014 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.
David P. Twomey - Boston College
Marianne M. Jennings - Arizona State University
© 2011 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. Nature and Form of Sales
Chapter 23
Nature and Form of Sales
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
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3. A. Nature Of Sales 1. Subject Matter of Sales
2. Sale Distinguished From Other Transactions
3. Formation of Sales Contracts
4. Terms in the Formed Contract
5. Bulk Transfers
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
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in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

4. A. Nature of Sales [LO.1 – LO.3]
Subject Matter of Sales:
Article 2 of the UCC applies to sales of goods contracts.
A sale of goods is defined as the transfer of title to tangible personal property for a price.
Goods consists of all forms of tangible property.
Article 2 does not cover investment securities, insurance policies, commercial paper or real estate.
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
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in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

5. A. Nature of Sales Subject Matter of Sales:
(A) Nature of Goods. Applies to contracts for sales of personal property and the transfer of commodities.
(B) Existing and Future Goods. Both existing goods and future goods (goods either not yet owned or not yet produced by the seller) are covered.
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
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in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

6. A. Nature of Sales Sale Distinguished from Other Transactions:
(A) Bailment. Not a sale because only possession, not title is transferred to a bailee.
(B) Gift. A gratuitous (free) transfer of property is not a sale because there is no price paid.
(C) Contract for Services. Not a sale of goods. Governed by common law, not UCC.
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
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in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

7. A. Nature of Sales Sale Distinguished from Other Transactions:
(D) Contract for Goods and Services. Contract is classified according to the dominant element (good or service).
 Paramount Contracting Co. v. DPS Industries, Inc.: Sale of dirt was predominant purpose of the contract meaning the sale was for a good and the UCC applied.
Revised Article 2 does not cover “information” but it is not defined.
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
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in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

8. A. Nature of Sales Formation of Sales Contracts:
(A) Necessary Detail for Formation. Minimum terms are subject matter & quantity. Other terms may be open as long as there is clear intent.
(B) The Merchant versus NonMerchant Parties. Some sections of Article 2 subject merchants to different standards and rules due to their experience and commercial knowledge.
(C) Offer. A merchant’s firm offer cannot be revoked for up to three months if there is a written, signed intent to keep the offer open.
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
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in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

9. A. Nature of Sales Formation of Sales Contracts:
(D) Acceptance – Manner. Any reasonable manner or including communication or performance
(E) Acceptance – Timing. The mailbox rule applies. Must be a reasonable method of communication.
(F) Acceptance – Language. The mirror image rule does not apply.
(1) Additional Terms in Acceptance – Nonmerchants. Offerree may accept and at the same time propose additional terms which does not result in a rejection as under common law.
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
© 2014 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.

10. A. Nature of Sales Formation of Sales Contracts:
(F) Acceptance – Language. (continued)
(2) Additional Terms in Acceptance – Merchants.
Issue of the battle of the forms as a result of different boilerplate language.
Additional terms become part of the contract if they do not materially alter the offer and are not rejected.  C9 Ventures. v. SVC-West L.P.: An indemnification provision is a material alteration to an agreement as a matter or law and does not become part of the contract.
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
© 2014 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.

11. A. Nature of Sales Formation of Sales Contracts:
(F) Acceptance – Language. (continued)
(3) Conflicting Terms in Acceptance.
Conflicting terms on basics requirements like price may lead court to conclude the parties have not met minds.
When terms conflict but the intent to contract is clear, the UCC recognizes the contract and ignores the conflicting terms.
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
© 2014 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.

12. A. Nature of Sales Formation of Sales Contracts:
(G) Defenses to Formation. Article 2 incorporates common law defenses.
(1) Unconscionability. A court may refuse to enforce a sales contract that is grossly unfair.
(2) Illegality. A contract for the sale of an illegal, recalled or banned good is void.
(3) The Effect of Illegal Sale. Contract cannot be enforced and courts will generally not aid either part in recovery.
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
© 2014 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.

13. UCC Rules for Additional Terms in Acceptance
Material
Offer Is Limited
Objection
Contract
without
Additional
Terms
with
Nonmerchants
Nonmerchant/Merchant
Merchants
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
© 2014 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.

14. A. Nature of Sales Terms in the Formed Contract:
(A) Price. May be open with an indication of later determination. If no reference, the price will be reasonable at delivery - generally market.
Cost plus formulas are often used.
If one party is setting, UCC requires good faith.
(B) Output and Requirements Contracts. Does not specify quantity – rather what the seller produces or what the buyer requires.
(C) Indefinite Duration Term. Continuing contract that runs for a reasonable term and may be terminated by either party.
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
© 2014 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.

15. A. Nature of Sales Terms in the Formed Contract: Bulk Transfers:
(D) Changes in Terms: Modification of Contract. Agreement is binding without consideration and valid as long as voluntary.
(E) Contradicting Terms: Parol Evidence Rule. If court decides that a writing represents the entire contract, parol evidence is not permissible.
(F) Interpreting Contract Terms: Course of Dealing and Usage of Trade. Previous conduct becomes part of contract. Patterns used to determine intent.
Bulk Transfers:
Trend is for suppliers to use UCC Article 9.
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
© 2014 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.

16. B. Form of Sales Contract
6. Amount
7. Nature of The Writing Required
8. Effect of Noncompliance
9. Exceptions to Requirement of a Writing
10. Non-code Requirements
11. Bill of Sale
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
© 2014 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.

17. B. Form of Sales Contract [LO.4 – LO.5]
Amount:
Statute of frauds requires record if price is $500 or more. Amount has been increased to $5,000.  Rosenfeld v. Basquiat: Because the writing satisfies the requirements, contract is valid.
Nature of Writing Required:
(A) Terms. Indication of sale of contract to sell along with the quantity of goods involved.
(B) Signature. Generally required. Confirmation memorandum allows two merchants to be bound by an oral agreement with a memo signed by one party. Other party has 10 days to object.
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
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in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

18. B. Form of Sales Contract
Nature of Writing Required:
(C) Purpose of Execution. Writing can satisfy the statute of frauds even if not made for that purpose.
(D) Particular Writings. Formal communications satisfy the requirement. s, faxes and screen printouts are generally acceptable as long as they meet formation standards and specify quantity.
Home Basket Co. LLC v. Pampered Chef, Ltd: s constituted an offer, and clicking on the “Accept P.O.” created an enforceable contract. Failure to read or understand terms and conditions is not a valid reason to set them aside.
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
© 2014 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.

19. B. Form of Sales Contract
Effect of Noncompliance:
Sales agreement cannot be enforced but may be voluntarily performed by the parties.
Exceptions To Writing Requirement:
(A) Specially Manufactured Goods. When goods are specially made & not suitable for other sales.
(B) Receipt and Acceptance. Oral contracts are enforceable if goods were delivered & accepted.
(C) Payment. Enforceable if full payment made.
(D) Admission. Oral contract is enforceable but only for the quantity of goods admitted.
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
© 2014 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.

20. B. Form of Sales Contract
Noncode Requirements:
Other statues may impose requirements in addition to those required by the UCC.
Bill of Sale:
Regardless of requirements, parties may wish to execute written evidence. Such writing is commonly know as a bill of sale which is merely a receipt. It can be used as proof of an otherwise oral agreement.
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
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in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

21. C. Uniform Law for International Sales
12. Scope of the CISG
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
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in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

22. C. Uniform Law for International Sales [LO.6]
United Nations Convention on Contracts for the International Sales of Goods (CISG) applies to contracts between U.S. parties and parties in other nations that have ratified the convention.
Automatically applies to contracts for the sale of goods in different countries when those countries have ratified the convention.
Scope of the CISG:
Doesn’t apply to personal goods or contracts in which the predominate obligation is services.
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
© 2014 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.

23. D. Leases of Goods 13. Types of Leases 14. Form of Lease Contract
15. Warranties
16. Default
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
© 2014 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.

24. D. Leases of Goods Types of Leases:
Article 2A regulates consumer, commercial finance and nonfinance leases, and subleases.
(A) Consumer Lease. Made by merchant lessor regularly engaged in leasing or selling goods involved in the transaction. Made to a natural person who takes possession for personal use.
(B) Commercial Lease. A nonconsumer lease.
(C) Finance Lease. Three party transaction involving a lessor, lessee and supplier.
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
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in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

25. D. Leases of Goods Forms of Lease Contract: Warranties: Default:
Must be evidenced by record is the total of the payments under the lease is $1,000 or more.
Warranties:
Except in the case of finances leases, lessor makes all usual warranties that are made by a seller in a sale.
Default:
Both the lessor and the lessee have rights and remedies similar to those in a sales contract.
Twomey – Jennings, Anderson’s Business Law and the Legal Environment, 22nd Ed.
© 2014 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.