Sale Distinguished From Other Transactions

1
Sale Distinguished From Other Transactions
Sale of Goods Present transfer of title to
movable property for a price
BAILMENT (only possession is transferred to
bailee) No transfer of title
LEASE (transfer of possession and use for a
term) No transfer of title
GIFT (a free transfer of the title No price
OPTION TO PURCHASE (only a power to make
a contract to sell) No transfer of
title
CONTRACT TO SELL (title to goods has not
passed) No present transfer
2
UCC Rules for Additional Terms in Acceptance
Nonmerchants Nonmerchant/Merchant
Merchants
Additional Terms
Additional Terms
Material
Offer Is Limited
Objection
Contract with Additional Terms
Contract without Additional Terms
3
Chapter 25 Summary

• Contracts for services and real estate are
  governed by the common law. Contracts for the
  sale of goods are governed by Article 2 of the
  UCC. Goods are defined as anything movable at the
  time it is identified as the subject of the
  transaction. Goods physically existing and owned
  by the seller at the time of the transaction are
  existing goods.

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Chapter 25 Summary (cont.)

• A sale of goods is the transfer of title to
  tangible personal property for a price. A
  bailment is a transfer of possession and not
  title and is therefore not a sale. A gift is not
  a sale because there is no price paid for the
  gift. A contract for services is an ordinary
  contract and is not governed by the UCC. If a
  contract calls for both the rendering of services
  and the supplying of goods, the contract is
  classified according to its dominant element.

5
Chapter 25 Summary (cont.)

• The common law contract rules for intent to
  contract apply to formation of contracts under
  the UCC. However, several formation rules under
  the UCC differ from common law contract rules. A
  merchants firm offer is irrevocable without the
  payment of consideration. The UCC rules on
  additional terms in an acceptance permit the
  formation of a contract despite the changes.
  These proposals for new terms are not considered
  counteroffers under the UCC.

6
Chapter 25 Summary (cont.)

• If the transaction is between nonmerchants, then
  a contract is formed without the additional
  terms, which the original offeror is free to
  accept or reject. If the transaction is between
  merchants, the additional terms become part of
  the contract if those terms do not materially
  alter the offer and no objection is made to them.

7
Chapter 25 Summary (cont.)

• The same defenses available to formation under
  common law are incorporated in Article 2. In
  addition, the UCC recognizes unconscionability as
  a defense to formation.

8
Chapter 25 Summary (cont.)

• The UCC does not require the parties to agree on
  every aspect of contract performance in order for
  the contract to be valid. Provisions in Article 2
  will govern the parties relationship in the
  event their agreement does not cover all terms.
  The price term may be expressly fixed by the
  parties.

9
Chapter 25 Summary (cont.)

• The parties may make no provision as to price, or
  they may indicate how the price should be
  determined later. In output or requirements
  contracts, the quantity that is to be sold or
  purchased is not specified, but such contracts
  are nevertheless valid.

10
Chapter 25 Summary (cont.)

• A contract relating to a sale of goods may be
  modified even though the modification is not
  supported by consideration. The parole evidence
  rule applies to a sale of goods in much the same
  manner as to ordinary contracts that are not for
  the sale of goods.

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Chapter 25 Summary (cont.)

• There is the slight modification in that a
  writing is not presumed to represent the entire
  contract of the parties unless the court
  specifically decides that it does. The UCC
  permits the introduction of course of dealing and
  usage of trade as evidence for clarification of
  contract terms and performance.

12
Chapter 25 Summary (cont.)

• The UCCs statute of frauds provides that a
  sales contract for 500 or more must be evidenced
  by a writing. The UCCs merchants confirmation
  memorandum allows two merchants to be bound to an
  otherwise oral agreement by a memo or letter
  signed by only one party that stands without
  objection for ten days. Several exceptions to the
  UCC statute of frauds exist

13
Chapter 25 Summary (cont.)

• when the goods are specially made or procured for
  the buyer and are nonresellable in the sellers
  ordinary market, when the buyer has received and
  accepted the goods, when the buyer has made
  either full or partial payment, and when the
  party against whom enforcement is sought admits
  in court pleadings or testimony that a contract
  for sale was made.

14
Chapter 25 Summary (cont.)

• Article 2A of the UCC regulates consumer leases,
  commercial leases, finance leases, nonfinance
  leases, and subleases of tangible movable goods.
  A lease subject to Article 2A must be in writing
  if the lease payments will total 1,000 or more.

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Chapter 25 Summary (cont.)

• Uniform rules for international sales are
  applicable to contracts for sales between parties
  in countries that have ratified the CISG. Under
  the CISG, a contract for the sale of goods need
  not be in any particular form and can be proven
  by any means.