CHAPTER 13 Sales Contracts 13-1 Sales 13-2 Special Rules for Sales Contracts Teacher Version
13-1 Sales GOALS Define sale and explain how the UCC governs the sale of goods Explain how the UCC treats unconscionable contracts and contracts of adhesion The Law of Sales SLIDE 2
WHAT IS A SALE? A contract in which ownership of goods transfers immediately from to seller to buyer for a price. Sales are governed by the UCC Tangible, moveable items of personal property: airplanes books clothing Not goods: money Intangible personal property: legal rights Patents, copyrights, trademarks Real property: land, bldg SLIDE 3
Contracts that are NOT Sales: When primary purpose of contract is a service Installation of good is dominant part of contract Goods supplied are merely incidental Payment and delivery: transfer/possession Bill of sale: written evidence; makes resale easier (automobile) Use of credit: buyer gets title & possession at same time Acceptance of goods: buyer agrees goods conform Other ways to contract: just ship goods SLIDE 4
Indicate acceptance in the following sales: Purchase of a car Purchase of a meal in a restaurant Purchase of a meal from a drive-thru Signing contract Consuming food in the restaurant Payment at drive-thru window SLIDE 5
UNCONSCIONABLE SALES CONTRACTS Offends an honest person s conscience and sense of justice SLIDE 6
UNCONSCIONABLE SALES CONTRACTS Contracts of adhesion One party dictates terms Leaves weaker party with take-it or leave-it option What s Your Verdict? Page 238 Section 13-1 Assessment page 239 1-8 SLIDE 7
Who is Correct? John Leonard vs PepsiCo Pepsi Points DRINK PEPSI-GET STUFF PepsiCo Ad SLIDE 8
13-2 Special Rules for Sales Contracts GOALS Compare the status of a casual seller with a merchant Explain how the Statute of Frauds is applied to sales SLIDE 9
SPECIAL RULES FOR MERCHANTS What s Your Verdict? Page 240 What is a merchant? Proposals for additions to sales offers Not a counteroffer New terms are proposals New term (offeree) becomes part of contract unless offeror fails to object SLIDE 10
HOW DOES THE STATUTE OF FRAUDS APPLY TO SALES? Exceptions to the Statute of Frauds for sales contracts Goods received and accepted by the buyer Buyer pays for goods and seller accepts payment Goods specially made not suitable for sale to others Party against whom enforcement sought admits oral contract made SLIDE 11
PREVENT LEGAL DIFFICULTIES In sales, be aware that... During your lifetime, you will probably enter into more sales contracts than any other type of contract as both buyer and seller. Knowledge of the law of sales will help you to make successful transactions. Your best protection against poor quality merchandise is knowledge of goods and their value, followed by careful comparison shopping. Continued on the next slide SLIDE 12
PREVENT LEGAL DIFFICULTIES Your best protection against sales fraud is the integrity of the seller (as reflected in the seller s established reputation) coupled with your caution. When you make a major purchase, make sure your insurance is adequate. It should provide for coverage against possible loss of valuable purchased property beginning at the time of purchase. If appropriate (as in automobile purchases), it also should provide protection against possible liability for injury to others. Continued on the next slide SLIDE 13
PREVENT LEGAL DIFFICULTIES It is a good idea to put a sales agreement in writing even if it is for goods worth less than $500. Although this is not required by the Statute of Frauds, doing so can avoid misunderstandings and prevent costly litigation. If the goods are worth $500 or more, insist on compliance with the Statute of Frauds. To have an enforceable writing be sure the other party signs the contract or memorandum and gives you a copy. The other party may properly require that you do likewise. Continued on the next slide SLIDE 14
PREVENT LEGAL DIFFICULTIES You are bound by oral contracts for goods priced at $500 or more if you have received them and accepted delivery. You may be bound in full or in part if you have made some payment. You usually are bound when you order custom-made goods. For expensive items, you should get a bill of sale marked paid in full when you pay the full price. SLIDE 15