Section 13.1

1. Section 13.1

2. Section 13.1Assessment Reviewing What You Learned • When do you use the law of sales?

3. Section 13.1Assessment Reviewing What You Learned Answer For the sale and lease of goods.

4. Section 13.1Assessment Reviewing What You Learned • What special rules apply to sales contracts?

5. Section 13.1Assessment Reviewing What You Learned Answer Must be in good faith; may be supplemented with methods of dealing and usage of trade; may result from the parties’ conduct; offer may be accepted by any reasonable means;

6. Section 13.1Assessment Reviewing What You Learned Answer acceptance may include terms different than those in offer; consideration not required for firm offer; price need not be settled; out put and requirement contracts allowed; may be modified without consideration.

7. Section 13.1Assessment Reviewing What You Learned • When must sales contracts be in writing? What are the exceptions?

8. Section 13.1Assessment Reviewing What You Learned Answer For sale of goods for $500. Exceptions: oral contracts between two merchants when a confirmation is sent and no objection made; oral contracts for specially manufactured goods; admissions in court; executed oral contracts.

9. Section 13.1Assessment Reviewing What You Learned • What are some rules for auctions and bulk sales?

10. Section 13.1Assessment Reviewing What You Learned Answer In an auction with reserve, the auctioneer need not accept the highest bid. In an auction without reserve, the auctioneer must accept the highest bide.

11. Section 13.1Assessment Reviewing What You Learned Answer The UCC rules require that the buyer of bulk goods in a bulk transfer notify all of the seller’s creditors at least ten days before the transfer will take place.

12. Section 13.2

13. Title The right of ownership to goods is known as title. People who own goods have title to them.

14. Title • A bill of sale is formal evidence of ownership. • You receive this document when you buy goods. • It only proves that you once had title, not that you still own the goods.

15. Elements of a Bill of Sale • Price • Name and address of buyer and of seller • Receipt • Goods sold

16. Elements of a Bill of Sale • Warranty • Date • Signature of seller

17. Voidable Title Anyone who obtains property as a result of another’s fraud, mistake, undue influence, or duress holds only voidable title to the goods.

18. Voidable Title Voidable title means title that may be voided if the injured party elects to do so.

19. Buying from a Merchant The UCC has a special rule that allows merchants who have no title to goods to pass on good title to their consumers.

20. Buying from a Merchant This occurs when you entrust your own goods to a merchant who sells them in the ordinary course of business.

21. Buying from a Merchant • This gives consumers confidence that they will receive good title when buying from a merchant. • This rule does not apply to stolen goods. Only the rightful owner has title to stolen property.

22. Passage of Title and Risk of Loss Sometimes it is necessary to determine who has title to goods—the seller or the buyer.

23. Passage of Title and Risk of Loss Similarly, it is sometimes necessary to determine who must bear the risk of loss, or the responsibility for loss or damage to goods.

24. Passage of Title and Risk of Loss This is because goods may be stolen, damaged, or destroyed after the sales contract has been entered but before the transaction is completed.

25. Passage of Title and Risk of Loss • Title to goods cannot be transferred under a sales contract until the goods have been identified. • Identified goods are goods that presently exist and that have been set aside for a contract.

26. Passage of Title and Risk of Loss • Goods that are not both existing and selected are known as future goods, such as crops not yet grown or items not yet manufactured. • No one can have title to future goods.

27. Ed Johnson goes to the Buy-a-Heap car dealership and buys a used car. Later, the police pull him over and tell him that the car was stolen.

28. Assuming the police are correct, does Johnson have ownership of the car?

29. ANSWER No. Only the rightful owner has title to stolen property.

30. Shipment Contract A shipment contract is one in which the seller turns the goods over to a carrier for delivery to a buyer. A carrier is a transportation company.

31. Shipment Contract Both title and risk of loss pass to the buyer when the goods are given to the carrier.

32. Shipment Contract The term f.o.b., or free on board, means that goods will be delivered free to the designated place. The buyer must pay the freight charges from the shipping point to the destination.

33. Destination Contract When a contract requires the seller to deliver the goods to a destination, it is a destination contract.

34. Destination Contract Both title and risk of loss pass to the buyer when the seller leaves the goods at the place of destination.

35. No Delivery When no delivery is required and the contract calls for the buyer to pick up the goods, title passes to the buyer when the contract is made.

36. No Carrier When goods are not to be shipped by carrier, the passage of risk of loss depends on whether the seller is a merchant or not.

37. No Carrier If the seller is a not a merchant, the risk of loss passes to the buyer when the seller delivers the product, or the seller offers to turn the goods over to the buyer.

38. No Carrier If the seller is a merchant, the risk of loss is transferred from the seller to the buyer when the buyer receives the goods.

39. Documents of Title Sometimes when you buy goods you receive a document of title, rather than the actual goods.

40. Documents of Title A bill of lading is a receipt for shipment of goods given by a transportation company, or carrier, to a shipper when the carrier accepts goods for shipment.

41. Documents of Title A warehouse receipt is a document given to a customer by the warehouse that is storing his or her goods.

42. Remedies for Breach of Sales Contract The UCC prescribes specific remedies for both the buyer and the seller when there is a breach of a sales contract.

43. Seller’s Remedies • Cancel the contract. • Withhold delivery of goods.

44. Seller’s Remedies • Stop delivery of any goods that are still in the possession of the carrier. • Resell any goods that have been rightfully withheld.

45. Seller’s Remedies • Bring a claim against the buyer for the difference between the agreed price and the market price or for the price of any goods that were accepted by the buyer.

46. Buyer’s Remedies • Cancel the contract. • Bring a claim against the seller for the return of any money that has been paid or for the difference between the agreed price and the market price.

47. Buyer’s Remedies • Refuse to accept the goods if they do not conform to the contract. • Cover the sale.

48. Buyer’s Remedies • Give notice to the seller that the goods have been accepted but that they do not conform to the contract. • Revoke the acceptance and return the goods.

49. Section 13.2Assessment Reviewing What You Learned • When does title pass from the seller to the buyer in a sales contract? When does the risk of loss pass?

50. Section 13.2Assessment Reviewing What You Learned Answer Shipping contract: title and risk of loss pass to buyer when goods are given to carrier. Destination contract: title and risk of loss pass to buyer when goods reach destination.