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Ch. 7 Consumer Law and Contracts

Ch. 7 Consumer Law and Contracts. 7-1 Sales Contracts. Bell Ringer #1. What does UCC stand for? What is it’s purpose?. Sales Law. Governs the sale of goods Uniform Commercial Code Uniform set of laws developed to help with interstate commerce.

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Ch. 7 Consumer Law and Contracts

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  1. Ch. 7 Consumer Law and Contracts 7-1 Sales Contracts

  2. Bell Ringer #1 • What does UCC stand for? • What is it’s purpose?

  3. Sales Law • Governs the sale of goods • Uniform Commercial Code • Uniform set of laws developed to help with interstate commerce. • Relaxed some of the strict rules of contract law.

  4. Sale of goods vs. Service Performed • 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.

  5. Special Rules for Sales Contracts • Previous methods of dealing • Good Faith • Offer and Acceptance of a sales contract • Offers can be oral or written • Acceptance can be done in any reasonable way • Occurs when sent!

  6. Special 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. • No consideration is needed when a merchant promises in writing to hold an offer open for the sale or lease of goods. • A merchant cannot revoke a firm offer during the time stated in the offer or for a reasonable time if none is stated. • No offer can last more than 3 months.

  7. Special Rules for Sales Contract • Different or Additional Terms • An acceptance may add different or additional terms without ending the original contract. • Statute of Limitations • 4 years for sales contracts

  8. 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?

  9. Oral Sale for Goods • If less than $500, it is still enforceable. • If more than $500, it needs to be in writing.

  10. When the rule doesn’t apply: • A written confirmation of an oral contract between 2 merchants is sent within a reasonable time and no objection is made within 10 days. • The contract involves specially manufactured goods that can’t be resold easily. • The buyer receives and accepts the goods or pays for them. • The parties admit in court that they entered into an oral contract.

  11. 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 goods • Bill 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.

  12. 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.

  13. Who’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.

  14. 1. 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.

  15. 2. 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.

  16. Remedies For Breach of Sales Contracts • Seller’s Remedies - when buyer refuses to accept or pay for goods they ordered. • Cancel the contract • Withhold delivery • Stop delivery of goods held by a carrier • Resell 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.

  17. 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 contract • Bring 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)

  18. More Buyer’s Remedies • 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.

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