Sales Contracts and Warranties. Now we focus on the UCC, in other words Commercial Law How the UCC governs Sales contracts. OBE 118, Section 10, Fall 2004 Professor McKinsey. The UCC. Article 2 Governs the Sales of Goods. Definition of “Goods” Definition of “Merchant”.
Sales Contracts and Warranties
OBE 118, Section 10, Fall 2004
Article 2 Governs the Sales of Goods
A standardized law document adopted in part or in full by all states
The UCC applies to the sale of goods.
Goods are things that are moveable:
A tree growing in the forest?
A tree cut down for lumber?
A floppy disk containing software?
An email containing software?
If a contract involves “goods” the UCC will most likely govern the making, execution and obligations of the contract.
If merchants are involved the rules of contracts will be even further changed. A merchant is one who:
routinely deals in the type of goods or
has special knowledge or uses those that do.
Contract Formation Under the UCC
Contracts can be created without key terms such as price
Acceptance does not have to be a mirror image of offer
“Any Manner that shows agreement”
Writing requirement for goods greater than $500: sufficient to indicate a contract, signed by defendant. But only enforceable to quantity stated
Merchants and the UCC
Merchants can use a confirming memo sent to other party to satisfy the writing requirement of the UCC
“Firm Offers” between merchants create an un-revocable offer for a reasonable or specified time.
3 ways to create:
Examples (yes or no?)
This blade will last for over 100 hours
Will kill any weed you spray it on
I think this car is the best
I think this car will last another 100,000 miles without any major maintenance
This is the best product on the market
Arises when any seller recommends goods to the buyer for a particular purpose:
1) Seller aware of particular use
2) Buyer relies on seller’s knowledge or skill
3) Seller aware of buyer’s reliance
4) Seller recommends goods for particular use
A warranty creates terms in the contract
Warranty failure is a potential breach of contract
The act of ensuring no warranties is called “disclaiming”
Warranty disclaimers often have to meet requirements to be effective
Conspicuous disclaimer with “merchantability” in it
Use the words: “as is” and “with all faults”
1. D sold product in defective condition
2. D normally in business of selling product
3. Product unreasonably dangerous*
4. P suffers physical harm through use of product
5. Defective condition is proximate cause
6. No substantial changes to product since sold
This week we study the world of notes, loans, collateralized loans, purchase agreements, security interests and the like. This is the real world of most personal property acquisition.
Security Agreement, $$
This exchange of a security agreement for goods creates a valid security interest in the goods.
The goods are “secured property”
The Seller is a “secured party”
The buyer has less than full rights in the goods