2.  Governs contracts for sale of “goods.”  UCC 2 preempts common law in sale of goods and modifies common law of contracts in some areas. But where UCC 2 is silent, common law governs.  © 2012 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

3.  Only applies to goods.  Common law governs real estate, services or intangible property. © 2012 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. 3

4. 4

5.  Article 2 applies to the “sale of goods.”  A “sale” is the passing of title from seller to a buyer for a price (payable in cash, goods, services). © 2012 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. 5

6.  Article 2 applies to the “sale of goods.”  A “good” must be tangible and movable.  Tangible: has physical existence.  Movable: carried from place to place.  © 2012 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. 6

7.  Goods Associated with Real Estate can fall within Art. 2:  (1) Contract for sale of minerals or a structure is a good IF severance is made by seller. If severance by buyer, sale is governed by common law.  (2) Sale of growing crops.  © 2012 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. 7

8.  Goods Associated with Real Estate can fall within Art. 2:  (3) Other “things” attached to real property, capable of being severed without harm to land. © 2012 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. 8

9.  Mixed Contracts: Goods and Services Combined. What law governs?  “Predominant Factor” Test – if goods, then UCC governs, if services then common law governs entire contract. © 2012 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. 9

10.  UCC Art. 2 imposes special standards upon a “merchant” who has special business expertise and is not a casual buyer/seller.  © 2012 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

11.  UCC Art. 2 defines merchant as someone who:  Deals in goods of the kind in the sale.  Holds herself out as having special expertise, knowledge, or skill.  Person who employs a merchant. © 2012 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

12.  Definition of a Lease Agreement: contract for lease of personal goods between a lessor and a lessee.  Lessor transfers right to possess and use goods under lease.  Lessee acquires right to possess and use goods.  © 2012 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

13.  Consumer Leases: lessor, lessee who leases for personal, family, or household use, and total payments less than $25,000.  Finance Leases (involves a 3rd party-supplier). © 2012 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

14.  OFFER: At common law once a valid offer is unequivocally accepted, a binding contract is formed.  UCC is more flexible, and allows for open pricing, payment, and delivery terms. © 2012 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

15.  UCC 2-204: even if terms of are undetermined, a contract may still exist.  Open Terms: “Indefiniteness” is OK as long as the parties intended to make a contract and there is a reasonable basis for a court to grant a remedy. © 2012 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

16.  Open Price Term: If parties have not agreed on pricing, court can determine “reasonable price at the time of delivery.”  Open Payment Term: unless otherwise agreed, payment is due on delivery (COD). © 2012 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

17.  Open Delivery Term: Unless otherwise agreed, buyer takes delivery at the Seller’s place of business. UCC2-308(a).  Seller has duty to make arrangements in good faith.  © 2012 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

18.  Open Quantity: generally courts will not impose a quantity and there is no remedy, unless the contract is either a requirements or output contract.  © 2012 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. 18

19.  Requirements Contract: buyer agrees to purchase what the buyer needs or requires.  Output Contract: buyer agrees to buy all of seller’s production or output. © 2012 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

20.  Offer made by merchant in a signed writing is irrevocable for reasonable period of time. No consideration necessary.  The Offer Must be in Writing and Signed by the Offeror. © 2012 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

21.  Methods of Acceptance: offeror can specify a means of acceptance.  Under the UCC an offeree can accept an offer to buy goods either by a prompt shipment of conforming or nonconforming goods. © 2012 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. 21

22.  Shipment of Non-conforming Goods: is both an acceptance and a breach unless goods sent as an “accommodation” to buyer, with prompt notice by buyer. © 2012 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. 22

23.  Communication of Acceptance.  Additional Terms.  If One Party is a Merchant: contract is formed according to original terms of the offer.  © 2012 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

24.  Additional Terms (cont’d).  When Both Parties are Merchants, contract incorporates new terms unless:  (1) original offer expressly limits terms, or  (2) material change, or  (3) offeror objects within reasonable time. © 2012 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

25.  Additional Terms (cont’d):  Rules for Striking Additional Terms:  Contract will consist of terms in which the parties agree.  Court may strike conflicting or additional terms. © 2012 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. 25

26.  UCC adopts common law rule requiring consideration. However, modifications do not need consideration.  Modifications Must be Made in Good Faith. © 2012 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. 26

27.  When Modification Without Consideration Does Require a Writing.  Merchant and non-merchant contracts in which merchant supplies the forms.  Modifications that trigger Statute of Fraud issues.  © 2012 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. 27

28.  Sale of goods over $500 must have a signed writing to be enforceable.  Sufficiency of the Writing: signed by party against whom enforcement is sought. Normally not enforceable beyond quantity of goods shown in the writing.  © 2012 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. 28

29.  Special Rules for Contracts Between Merchants. After oral agreement, one of the merchants sends a signed, written memorandum containing essential terms to the other merchant within a reasonable time. © 2012 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. 29

30.  Specially manufactured goods.  Admissions by breaching party.  CASE 11.1 Glacial Plains Cooperative v. Lindgren (2009). What admission did Lindgren make? © 2012 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. 30

31.  Partial Performance: oral contract is enforceable IF payment has been made or goods have been accepted. © 2012 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. 31

32. © 2012 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. 32

33.  Sale of goods requires different rules than real property transactions: risk should not always pass with title.  UCC replaces title with identification, risk, and insurable interest.  © 2012 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. 33

34.  For any interest to pass to buyer, goods must be  (1) in existence and  (2) identified as specific goods in sales contract.  © 2012 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. 34

35.  Occurs when specific goods are designated as the subject matter of the contract.  Gives a buyer the right to obtain insurance on the goods, and recover from third parties who damage the good. © 2012 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. 35

36.  Existing Goods: if contact calls for ascertainable goods in existence, identification takes place at the time contract is made. © 2012 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. 36

37.  Future Goods.  Animals born within 12 months of contract, identification takes place at conception.  For crops harvested within 12 months of contracting, identification takes place at time of planting (or when crops begin to grow).  All others, when goods shipped, or marked or designated by seller. © 2012 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. 37

38.  Contract between seller and buyer usually determines when title passes.  Title can pass:  Upon physical delivery, or  When agreed to by the parties.  © 2012 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. 38

39.  If no agreement, title passes as follows:  Shipment Contract: title passes at time and place of shipment.  Destination Contract: title passes when goods are tendered at the destination. © 2012 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. 39

40.  With document of title (bill of lading): title passes when and where document delivered.  Without document: title passes when sales contract is made, if goods have been identified, or when identification occurs if they have not been identified. © 2012 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. 40

41.  ROL does not necessarily pass with title. ROL is important because of insurance concerns.  Unless agreed otherwise, ROL passes to Buyer depending on whether delivery is with or without movement of the goods.  © 2012 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. 41

42.  Shipment Contracts: Risk of loss passes to Buyer when goods tendered to Carrier.  If goods damaged in transit, Buyer’s bears risk of loss. © 2012 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. 42

43.  Destination Contracts.  ROL passes to Buyer when goods tendered at contractually specified destination.  Whether a contract is shipment or destination has significant consequences to all parties. © 2012 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. 43

44.  Often goods are held by a bailee on behalf of the seller in a bailment arrangement.  Documents of title give bailee possession of goods and/or contracts to deliver them.  Examples: warehouse, trucking company. © 2012 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. 44

45.  Goods Held by Seller:  Document of Title is generally not used.  If Seller is a merchant, risk of loss passes when buyer takes physical possession of goods. (ROL remains with seller until buyer takes physical possession.) © 2012 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. 45

46.  Goods Held by a Bailee (Warehouse). Risk of loss passes to buyer when:  Buyer receives document of title; bailee acknowledges Buyer’s right to goods and buyer receives title and has reasonable time to pick up. © 2012 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. 46

47. © 2012 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. 47

48.  Generally breaching party bears risk of loss.  If seller delivers noncon- forming goods, ROL stays with seller.  ROL does not pass to buyer until seller “cures” defect, or buyer accepts goods in spite of defect. © 2012 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. 48

49.  ROL immediately shifts to buyer, with limitations:  Seller must identify the goods.  ROL passes to buyer for a commercially reasonable amount of time after seller learns of breach.  Buyer only liable to extent that seller’s insurance does not cover loss. © 2012 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. 49

50.  Buyer has an insurable interest in identified goods.  Seller has an insurable interest as long as she retains title or a security interest in goods.  Both buyers and sellers can have an insurable interest at the same time. © 2012 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. 50

51.  Mutual Duties:  Seller must transfer and deliver conforming goods.  Buyer must accept and pay for conforming goods.  In the absence of an agreement between Seller and Buyer, UCC Article 2 controls as set out below.  © 2012 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. 51

52.  Good faith means honesty in fact.  For a merchant, it means honesty in fact and observance of reasonable commercial standards of fair dealing in the trade.  Merchants are held to a higher standard of care than non- merchants. © 2012 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. 52

53.  Tender of Delivery: occurs when seller delivers conforming goods to buyer.  Requires reasonable notice.  Reasonable hour and manner.  Generally, all goods in one installment (unless agreed upon by parties). © 2012 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. 53

54.  Place of Delivery: parties can agree goods tendered at a particular destination for buyer to take possession.  If the contract does not specify, then it is the seller’s place of business (or the location of the goods.) © 2012 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. 54

55.  If goods, or tender of delivery, fail in any respect to conform to the contract, the Buyer has the right to:  Accept the goods;  Reject the entire shipment; or  Accept part and reject part. © 2012 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. 55

56.  Agreement of the Parties: agree that some defective goods will be acceptable.  Cure: seller has right to repair or replace defective goods within the time of contract performance.  © 2012 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. 56

57.  Cure (cont’d).  Substantially restricts right of rejection; buyers must act in good faith and give specific reasons for refusing acceptance. © 2012 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. 57

58.  Substitution of Carriers. If a carrier becomes impracticable or unavailable through no fault of either party, a commercially reasonable substitute is acceptable. © 2012 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. 58

59.  Commercial Impracticability.  If unforeseeable event occurs, the perfect tender rule no longer applies.  Seller must notify the buyer as soon as practicable the shipment is delayed or undeliverable.  © 2012 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. 59

60.  Destruction of Identified Goods.  If no fault of either party and it occurs,  Before risk passes to Buyer then,  Both Seller and Buyer are excused from performance. © 2012 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. 60

61.  Assurance and Cooperation.  One party has “reasonable grounds” to believe other party will not perform, she can ask for written assurance, or ‘suspend’ performance or delivery.  Failure to respond may constitute a repudiation of the contract. © 2012 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. 61

62.  Payment: make payment at the time and place the Buyer receives the goods.  Credit has to be prearranged.  Pay with cash, credit card, check. © 2012 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. 62

63.  Right of Inspection. Buyer has absolute right to inspection before payment, unless C.O.D.  CASE 11.2 Romero v. Scoggins- Dickey Chevrolet-Buick, Inc. (2010). Why wasn’t the ‘contract order’ a binding contract for sale of goods? © 2012 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. 63

64.  Acceptance. Buyer can accept goods:  By words or conduct.  If Buyer had reasonable amount of time and failed to reject.  Buyer performs an act which indicates he thinks he is the owner. © 2012 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. 64

65.  Partial Acceptance.  If some of the goods do not conform to the contract, and seller has failed to cure, buyer can make a partial acceptance.  But buyer cannot accept less a single commercial unit. © 2012 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. 65

66.  A party communicates intention to not perform.  Constitutes breach of contract.  Nonbreaching party may suspend performance and treat the AR as material breach and pursue a remedy; or wait a reasonable time.  © 2012 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. 66

67.  A Repudiation May Be Retracted.  Breaching party may ‘retract’ repudiation by any method that clearly indicates their intent.  However, no retraction if the nonbreaching party has materially changed their position. © 2012 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. 67

68.  Remedies of the Seller or Lessor.  When buyer breaches, seller has various UCC remedies, depending on circumstances:  Who has possession of the goods?  Are goods in transit?  Has buyer rejected or accepted the goods? © 2012 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. 68

69.  When Goods in Possession of the Seller:  Right to Cancel (Rescind) the Contract.  Seller must notify buyer.  Buyer is not discharged from remaining obligations. © 2012 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. 69

70.  Goods in Possession of Seller.  Right to Withhold Delivery.  If material breach by buyer, seller can withhold delivery of all goods.  If non-material breach, seller can withhold delivery of this installment. © 2012 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. 70

71.  Goods in Possession of Seller.  Right to Resell or Dispose of Goods.  Seller can resell and keep profits from sale and hold buyer liable for difference.  Seller must give buyer notice of sale, unless goods are perishable. © 2012 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. 71

72.  Goods in Possession of Seller.  Right to Recover Purchase Price or Lease Payments Due.  Seller can bring action to recover purchase price or lease payments.  If seller must sue, he must hold goods for buyer, and sell anytime before collecting the judgment. © 2012 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. 72

73.  Goods in Possession of Seller.  Right to Recover Damages for Buyer’s Nonacceptance.  If buyer repudiates or wrongfully chooses to accept goods, seller can bring action to recover damages.  Damages: market price at the time & place of tender + incidentals. © 2012 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. 73

74.  Goods are “in transit” when Seller has tendered goods to Carrier.  Seller can stop goods in transit if:  Buyer is insolvent.  Buyer is in breach. © 2012 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. 74

75.  Seller may sue for the purchase price.  Seller may also sue Buyer if goods were “specially-made” which Seller cannot resell.  Seller may also sue for the purchase price if the goods were destroyed and the risk had already passed to the Buyer. © 2012 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. 75

76.  When Seller or Lessor Refuses to Deliver the Goods.  Buyer has the right to:  Cancel (rescind) the contract.  Recover Goods paid for if seller insolvent: whether partial or full payment.  © 2012 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. 76

77.  When Seller or Lessor Refuses to Deliver the Goods.  Buyer has the right to :  Sue for specific performance and recover damages.  Cover: in some situations.  Replevy goods.  Sue to Recover Damages. © 2012 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. 77

78.  Right to Reject Goods.  Buyer must timely notify seller of rejection and reasons and follow seller’s directions.  Merchant-buyer has good faith obligation to follow reasonable instructions. © 2012 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. 78

79.  Revocation of Acceptance for substantial nonconformity, and:  Acceptance assumed defect would be cured, or  Nonconformity was discovered after acceptance.  Effective upon notice to seller. © 2012 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. 79

80.  Right to Recover Damages for Accepted Goods.  Buyer may keep the goods and recover any loss in ordinary course of events.  Measure of damages: difference between value of accepted goods and goods as warranted. © 2012 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. 80

81.  Exclusive Remedies.  Consequential Damages.  Lemon Laws. © 2012 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. 81

82.  A warranty is an assurance or guarantee by the seller of certain facts concerning the goods being sold or leased.  If seller breaches a warranty, buyer can recover damages, or rescind the contract. © 2012 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. 82

83.  Warranties automatically arise in most commercial sales transactions.  Normally warranties can be disclaimed or modified with specific language in the contract.  © 2012 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. 83

84.  Under the UCC, three types of warranties arise in sales and lease contracts:  Good Title.  No Liens.  No Infringements. © 2012 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. 84

85.  Seller can create warranty by making representations about quality, condition, or performance of good.  Can be created by:  Any Affirmation or Promise.  Any Description.  Any Sample or Model. © 2012 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. 85

86.  Seller does not have to use the words “guarantee” or “warranty.”  Reasonable buyer must only believe warranty was ‘basis of the bargain.’  Buyer must rely on warranty when he enters into contract.  © 2012 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. 86

87.  Statements of Opinion and Value.  Only statements of fact create express warranties.  Exception for Statements of Opinion by Experts.  Puffery versus Express Warranties. © 2012 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. 87

88.  Inferred at law based on the circumstances or nature of the transaction.  © 2012 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. 88

89.  Automatically arises from sale of goods by merchants.  Merchantable Goods:  “Reasonably fit for ordinary purposes for which such goods are sold.”  Conform to promises on label.  Adequately packaged and labeled. © 2012 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. 89

90.  Merchantable Food.  Fit to eat based on consumer expectations.  CASE 11.3 Webster v. Blue Ship Tea Room, Inc. (1964). Was the soup fit to eat on the basis of consumer expectations? © 2012 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. 90

91.  Arises by any seller who:  Knows the particular purpose for which the goods are being bought; and  Knows the buyer is relying on seller’s skill and judgment to select suitable goods. © 2012 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. 91

92.  Ordinary vs. Particular Purpose: Goods can be merchantable but unfit for a particular purpose.  Knowledge and Reliance Requirements: seller must have reason to know purpose, and buyer must have relied on the recommendation. © 2012 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. 92

93.  Arises when both parties to a contract have knowledge of a well-recognized trade custom. Courts infer that both meant this custom to apply to their transaction. © 2012 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. 93

94.  Online Offers.  Displaying the Offer. Seller’s website should include hyperlink to page with full contract.  Provisions to Include.  © 2012 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. 94

95.  Provisions to Include:  Acceptance of Terms: what constitutes an acceptance.  Payment: how payment is made.  Return Policy.  Disclaimer: of liability for certain uses of the goods.  Limitations on Remedies: if goods defective or contract is breached.  © 2012 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. 95

96.  Provisions to Include:  Privacy Policy.  Dispute Resolution: usually arbitration or forum-selection clauses.  Choice-of-law clause. © 2012 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. 96

97.  Click-On Agreements.  Courts have concluded a binding contract can be formed by clicking on a box indicating “I Accept” or “I Agree.” Contract can be formed via website or software.  Law does not require parties read all the terms. © 2012 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. 97

98.  Shrink-Wrap Agreements.  Contract terms are inside the box.  Party opening box agrees to terms by keeping merchandise.  Enforceable vs. Unenforceable Terms. © 2012 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. 98

99.  Browse-Wrap Terms.  Like click-on agreements, browse-wrap terms can occur in transactions over internet.  Unlike click-on agreements, browse-wrap terms do not require assent and are usually unenforceable. © 2012 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. 99

100.  E-Signature: electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.  Digitized Signature: graphical image of a handwritten signature. © 2012 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. 100

101.  E-SIGN (2000) gives e- signatures and e-documents legal force.  For an e-signature to be enforceable, the contracting parties must have agreed to use electronic signatures. © 2012 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. 101

102.  Applicability of the CISG.  Comparison of CISG and UCC.  Mirror Image Rule.  Irrevocable Offers.  Statute of Frauds.  Necessity of a Price Term.  Time of Contract Formation.  © 2012 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. 102

103.  Remedies for Breach of International Sales Contracts.  CISG provides remedies similar to the UCC.  Article 74 provides for money damages, foreseeable consequential damages.  © 2012 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. 103

104.  Remedies (continued).  Damages are difference between contract price and market price.  Article 28 provides for specific performance where a country would normally grant it in their own law.  Parties can agree to what law they will use. © 2012 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. 104