Ch. 7 Consumer Law and Contracts

Ch. 7 Consumer Law and Contracts

7-1 Sales Contracts7-1 Sales Contracts

Bell Ringer #1Bell Ringer #1

What does UCC stand for?What is it’s purpose?

What does UCC stand for?What is it’s purpose?

Sales LawSales Law

Governs the sale of goodsUniform Commercial Code

Uniform set of laws developed to help with interstate commerce.

Relaxed some of the strict rules of contract law.

Governs the sale of goodsUniform Commercial Code

Uniform set of laws developed to help with interstate commerce.

Relaxed some of the strict rules of contract law.

Sale of goods vs. Service PerformedSale of goods vs. Service PerformedHow do you know which laws to

follow? Law of contracts or UCC? Look for which is dominant.

Ex: a business buys 3 new computers and has them installed.

Sale of goods is dominant, so law of UCC

Ex: a business has the computers serviced and some new hardware installed.

Service is dominant, so law of contracts.

How do you know which laws to follow? Law of contracts or UCC? Look for which is dominant.

Ex: a business buys 3 new computers and has them installed.

Sale of goods is dominant, so law of UCC

Ex: a business has the computers serviced and some new hardware installed.

Service is dominant, so law of contracts.

Special Rules for Sales ContractsSpecial Rules for Sales ContractsPrevious methods of dealingGood Faith Offer and Acceptance of a sales contract

Offers can be oral or writtenAcceptance can be done in any reasonable wayOccurs when sent!

Previous methods of dealingGood Faith Offer and Acceptance of a sales contract

Offers can be oral or writtenAcceptance can be done in any reasonable wayOccurs when sent!

Special Rules for Sales ContractsSpecial Rules for Sales Contracts Merchants are held to a higher standard than

non-merchants. Exception is Firm Offers - merchant’s

written promise to hold an offer open for the sale or lease of goods.

a) No consideration is needed when a merchant promises in writing to hold an offer open for the sale or lease of goods.

b) A merchant cannot revoke a firm offer during the time stated in the offer or for a reasonable time if none is stated.

c) No offer can last more than 3 months.

Merchants are held to a higher standard than non-merchants.

Exception is Firm Offers - merchant’s written promise to hold an offer open for the sale or lease of goods.

a) No consideration is needed when a merchant promises in writing to hold an offer open for the sale or lease of goods.

b) A merchant cannot revoke a firm offer during the time stated in the offer or for a reasonable time if none is stated.

c) No offer can last more than 3 months.

Special Rules for Sales ContractSpecial Rules for Sales ContractDifferent or Additional Terms

An acceptance may add different or additional terms without ending the original contract.

Statute of Limitations4 years for sales contracts

Different or Additional TermsAn acceptance may add different or additional

terms without ending the original contract.

Statute of Limitations4 years for sales contracts

Example:Example:

A sporting goods store prepares a written promise to sell a kayak to a customer for a certain price.

Do you think the store

can revoke the offer?

How long do they have to keep the offer open?

A sporting goods store prepares a written promise to sell a kayak to a customer for a certain price.

Do you think the store

can revoke the offer?

How long do they have to keep the offer open?

Oral Sale for GoodsOral Sale for Goods

If less than $500, it is still enforceable.If more than $500, it needs to be in

writing.

If less than $500, it is still enforceable.If more than $500, it needs to be in

writing.

When the rule doesn’t apply:When the rule doesn’t apply:1. A written confirmation of an oral contract

between 2 merchants is sent within a reasonable time and no objection is made within 10 days.

2. The contract involves specially manufactured goods that can’t be resold easily.

3. The buyer receives and accepts the goods or pays for them.

4. The parties admit in court that they entered into an oral contract.

1. A written confirmation of an oral contract between 2 merchants is sent within a reasonable time and no objection is made within 10 days.

2. The contract involves specially manufactured goods that can’t be resold easily.

3. The buyer receives and accepts the goods or pays for them.

4. The parties admit in court that they entered into an oral contract.

When does the right of ownership pass from the seller to the buyer?When does the right of ownership pass from the seller to the buyer?

The title passes from a seller to a buyer when the seller does what is required under the contract to deliver the goods.

Title - right of ownership to goodsBill of sale - formal evidence of ownership -

proves you once had ownership not that you currently have the item.

Insurable Interest - legal interest in the protection of property from injury, loss or destruction.

The title passes from a seller to a buyer when the seller does what is required under the contract to deliver the goods.

Title - right of ownership to goodsBill of sale - formal evidence of ownership -

proves you once had ownership not that you currently have the item.

Insurable Interest - legal interest in the protection of property from injury, loss or destruction.

Voidable Titles Occur When:Voidable Titles Occur When:You obtain property as a result of

someone’s fraud, mistake, undue influence, or duress.

You buy or sell goods to a minor or mentally challenged person.

If you transfer goods with a voidable title to someone they gain a valid title.

You obtain property as a result of someone’s fraud, mistake, undue influence, or duress.

You buy or sell goods to a minor or mentally challenged person.

If you transfer goods with a voidable title to someone they gain a valid title.

Who’s ResponsibleWho’s Responsible

Risk of Loss - who is responsible if the goods get lost or damaged.

When the title passes the risk of loss also passes!

You can’t have a title to goods that don’t yet exist, for example, CROPS.

Risk of Loss - who is responsible if the goods get lost or damaged.

When the title passes the risk of loss also passes!

You can’t have a title to goods that don’t yet exist, for example, CROPS.

1. Shipment Contracts1. Shipment Contracts

Seller gives goods to a carrier for deliver to a buyer

Title and risk of loss pass to the buyer when the goods are given to the carrier.

Seller gives goods to a carrier for deliver to a buyer

Title and risk of loss pass to the buyer when the goods are given to the carrier.

2. Destination Contracts2. Destination Contracts

When the contract requires the seller to deliver the goods to a destination.

Both title and risk of loss pass to the buyer when the seller turns the goods over at the shipping destination.

When the contract requires the seller to deliver the goods to a destination.

Both title and risk of loss pass to the buyer when the seller turns the goods over at the shipping destination.

Remedies For Breach of Sales Contracts

Remedies For Breach of Sales Contracts

Seller’s Remedies - when buyer refuses to accept or pay for goods they ordered.Cancel the contractWithhold deliveryStop delivery of goods held by a carrierResell any goods, bring a claim against the buyer

(agreed price - resale price)If you can’t resell the goods, bring claim against

the buyer (agreed price - market price)Bring claim against the buyer for the price of any

goods the buyer accepted.

Seller’s Remedies - when buyer refuses to accept or pay for goods they ordered.Cancel the contractWithhold deliveryStop delivery of goods held by a carrierResell any goods, bring a claim against the buyer

(agreed price - resale price)If you can’t resell the goods, bring claim against

the buyer (agreed price - market price)Bring claim against the buyer for the price of any

goods the buyer accepted.

Remedies for Breach of Sales Contracts

Remedies for Breach of Sales Contracts

Buyer’s Remedies - when the seller fails to deliver goods or sends incorrect, damaged or defective goods.Cancel the contractBring a claim against the seller for return of

money that was paid.Bring a claim against the seller (agreed price -

market price)Refuse to accept the goods if something is wrong

with them (buyer must notify the seller and give them a chance to correct the problem)

Buyer’s Remedies - when the seller fails to deliver goods or sends incorrect, damaged or defective goods.Cancel the contractBring a claim against the seller for return of

money that was paid.Bring a claim against the seller (agreed price -

market price)Refuse to accept the goods if something is wrong

with them (buyer must notify the seller and give them a chance to correct the problem)

More Buyer’s RemediesMore Buyer’s RemediesBuy similar goods from someone else and

bring a claim against the seller (agreed price - cost of purchase)

Give notice to the seller that the goods have been accepted but there is something wrong with them (if nothing is done, buyer can bring a claim against the seller for breach of contract or warranty)

Revoke the acceptance and return the goods if a serious defect was undetectable or if the buyer was led to believe that the seller would fix the defect.

Buy similar goods from someone else and bring a claim against the seller (agreed price - cost of purchase)

Give notice to the seller that the goods have been accepted but there is something wrong with them (if nothing is done, buyer can bring a claim against the seller for breach of contract or warranty)

Revoke the acceptance and return the goods if a serious defect was undetectable or if the buyer was led to believe that the seller would fix the defect.