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MGMT 212
The Formation of Sales and Lease Contracts (Ch. 20)
30
Management
Undergraduate 2
06/23/2009

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Term
The Uniform Commercial Code (UCC)
Definition
A comprehensive statute providing a consistent and integrated framework of rules to deal with all phrases of an entire "commercial transaction for the sale and payment for goods."
Term
The Sale of Goods (article 2)
Definition
If article 2 doesn't provide a rule regarding a particular issue, another statute or common law of contracts will apply. Article 2 does NOT deal with real property, services, or intangible personal property.
Term
What is a sale? What are goods?
Definition
Sale: passing of title from seller to buyer for a price. Goods: Tangible and movable items.
Term
A contract for sale of minerals/structure/crops/timber to be cut or the like // Goods v. Realty
Definition
A contract for the sale of goods if severance (removal of such minerals) is to be made by the seller. // If made by buyer, common law.
Term
Sale of other "things attached" // Goods v. Realty
Definition
As long has no material harm to the land, item is considered a "good."
Term
Goods v. Services
Definition
General rules: 1.) The serving of food and beverages have been treated as contracts for the sale of goods. 2.) Contracts for specially manufactured goods is one for goods, not services. 3.) Goods include unborn animals, rare coins, and other forms of money that are treated as commodities.
Term
Merchant
Definition
A person who 1.) deals in goods of the kind involved in the sales contract, 2.) holds himself out, b/c of his occupation, as having knowledge and skills peculiar to the business or goods involved in the transaction; or employs other people who are merchants to act on his behalf.
Term
Lease Agreement
Definition
agreement b/w Lessor (sells right to possess or use goods) and Lessee (receives right to possess or use goods).
Term
Consumer Lease
Definition
A lessor who regularly engages in the business of leasing or selling. A lessee (except an organization) who leases goods for personal or household purposes; and total lease payments are less than $25,000.
Term
Offer (UCC)
Definition
An agreement sufficient to constitute a contract can exist even if the moment the agreement is formed isn't determined.
Term
Open terms (UCC Offer)
Definition
A contract will not fail for indefiniteness b/c some terms are left open, as long as: 1.) the parties intended to make a contract; 2.) there is a reasonably certain basis (quantity) for the court to grant a remedy.
Term
Open Price Term (UCC Offer)
Definition
If the parties intended to form a contract but didn't set a price, the price will be the reasonable price at the time of delivery. If the buyer/seller is to set price, he must do so in good faith. If the price isn't fixed through the fault of one party, the other party may cancel the contract or fix a reasonable price.
Term
Open Payment Term (UCC Offer)
Definition
If the terms of the payment are not specified, payment is due at the time and place at which the buyer is to receive goods.
Term
Open Delivery Term (UCC Offer)
Definition
When the place of delivery isn't specified: 1.) goods are to be delivered at the seller's place of business. 2.) If the seller has no place of business, the goods are to be delivered at the seller's residence. 3.) If the goods are at a location other than the seller's place of business, and both parties know this, the goods are to be delivered at that location. 4.) When time for delivery isn't specified, the goods are to be delivered within a reasonable time.
Term
Open Quantity Term (UCC Offer), Two Exceptions
Definition
Generally essential to the contractual offer. Exceptions: 1.) Requirements contracts (buy all required). 2.) Output contracts (buy seller's entire production).
Term
Merchant's Firm Office (UCC)
Definition
a.) Offer for the sale of goods made by a MERCHANT; b.) in which the merchant gives assurances in a signed writing; c.) that the offer will remain open for the stated period (or reasonable amount) of time; d.) NO consideration is necessary; e.) the merchant's firm offer is irrevocable for the period. // Similar to option contracts minus consideration.
Term
Acceptance (UCC)
Definition
Means of acceptance: if no method for communication of acceptance is specified, any reasonable means of communication may be used. In general, an acceptance is effective when SENT (like common law contract rules). // Promise to Ship or Prompt shipment.
Term
Promise to Ship or Prompt Shipment (UCC)
Definition
An offer to buy goods for current or prompt shipment is accepted when the seller promises to ship or promptly ships CONFORMING goods. // The shipment of nonconforming goods constitutes both an acceptance and breach of contract UNLESS seller notifies buyer of nonconforming goods. This constitutes a counteroffer.
Term
Communication of Acceptance (UCC)
Definition
If an offeree to a unilateral contract doesn't notify the offeror within a reasonable period of time that the offeree is beginning performance, "the offeree may treat the offer as having lapsed before acceptance." // HUGE difference from common law.
Term
Additional Terms
Definition
When the offeree communicates that he intends to accept an offer but adds different or new terms: a.) If oferee's response indicates acceptance of the offer, a contract is formed, even if the acceptance includes additional or different terms. b.) It isn't an acceptance if the modifications are conditional on the offeror's assent. c.) See: Merchant v. Non-merchant rules.
Term
Additional Terms Rule when Either OR Both Party is a Non-merchant
Definition
New additional terms are viewed as mere proposals and contract is formed under offeror's original terms.
Term
Additional Terms Rule when Both Parties are Merchants
Definition
New or different terms become a part of the contract unless: 1.) the offer expressly limits acceptance to its terms. 2.) If terms materially alter the offer (unreasonable surprise/hardship). 3.) If offeror objects to new terms within a reasonable amount of time.
Term
Consideration (UCC)
Definition
Consideration isn't necessary for a modification of a contract if it is made in good faith. A writing is necessary if: 1.) agreement of the parties provides that any modification must be in writing; 2.) any modification that brings the contract under the Statute of Frauds must be in writing.
Term
UCC Statute of Frauds (Written Confirmations)
Definition
1.) If the price of the goods is $500 or more, a contract for their sale is not enforceable unless there is a writing that is signed by the party against whom it is sought to be enforced (unless between MERCHANTS).
Term
Written Confirmations Between Merchants (UCC Statute of Frauds)
Definition
1.) The buyer and seller are both merchants and have entered into an oral agreement. 2.) one of the merchants sends a signed written confirmation to the other. 3.) the written confirmation must indicate the terms of the agreement. 4.) the merchant receiving the confirmation must have reason to know of its contents. 5.) the merchant receiving does not object within 10 days after receiving the confirmation. 6.) the contract is enforceable against both parties, even though the receiving merchant has not signed anything.
Term
Exceptions to UCC Statute of Frauds (3 Types)
Definition
Specially manufactured goods, admissions, partial performance.
Term
Specially Manufactured Goods (an Exception to UCC Statute of Frauds)
Definition
A contract for goods to be a.) specially manufactured for a particular buyer when b.) the goods are not suitable for resale in the ordinary course of business and c.) the seller has began production. // If these things are present, contract is enforceable.
Term
Admissions (Exception to UCC Statute of Frauds)
Definition
A party admits in court or pleadings that the contract had been formed.
Term
Partial Performance (Exception to UCC Statute of Frauds)
Definition
Payment for the goods or receipt and acceptance of goods by the buyer, to the extent of performance.
Term
Parol Evidence
Definition
Same rules as before.
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