2. Hot Debate
• A bride to be wants her wedding gown
to be custom made form a unique new
fabric. A bridal shop quotes a price of $
1,750. when the bride-to-be orally
agrees, the shop places a special
order for the fabric and cuts it to fit.
Then the wedding is canceled. The
bride-to-be seeks to avoid the contract
because it was not in writing. The
bridal shop brings a lawsuit to recover
the agreed price.
• 1. Discuss the legal and ethical
reason for the plaintiffs suit.
• 2.Discuss the legal and ethical
reason in the defendant's favor.
3. Section 15-1 Goals
• Define sale and explain how the
UCC governs the sale of goods
• Identify unconscionable contracts
and contracts of adhesion
• Distinguish between payment,
deliver, and transfer of title of
goods
4. What’s Your Verdict?
• At the Dan-Dee Department Store, Jack and
Jean Medina signed a contract to buy a
clothes washer and dryer set. The Dan-Dee
salesperson explained that although the set
on display was not in stock, “we will deliver
and install it within two weeks.” while
shopping at the store, the Medina’s left their
car in the stores automobile service
department to have the engines idling speed
adjusted and to have squeaks in the door
eliminated. The charge for labor was $45.
There was no charge for parts or supplies.
The service attendant recommended
replacing the cars tires, and the Medina’s
agreed. The cost of the tires was $300, plus
$25 for balancing and installation. The
Medina also bought a new battery for $59. It
was installed free-of- charge.
• Were all of these agreements sales?
5. What is a Sale?
• Sale
– A contract in which ownership of (title to)
goods transfers immediately from the
seller to the buyer for a price
• Contract to Sell
– An arrangement for a future transfer of
something for a price
• Price
– Is the consideration for a sale or contract
to sell goods,
– Money, Services, and other goods
• Barter
– Exchanging of goods for goods.
6. Sale of Goods (UCC)
• Goods
– Tangible (touchable), movable
personal property, such as books,
clothing, cars.
– Items not considered goods
• Money
– Except collectable coins that exceed face
value
• Intangible
– Items such as legal rights to performance
• Patents and Copyrights
– Exclusive right to inventors and writers
• Land/Property
– Discussed more next unit
7. Sales Contract
• Happens in any manner
– Just needs to show agreement
• By action a contract is made
• Payment
– Once the buyer delivers the agreed
price and the seller accepts it.
• Receipt of Goods
– Buyer takes ownership and control
of the good(s).
8. Sales Contract
• Acceptance of Goods
– The buyer has agreed that the
goods received are satisfactory
• What was agreed upon prior to transfer.
• Acceptance
– Evident when goods are treated as
your own
• Fair Market Value
– When something is agreed upon but
no price is determined at the time
9. Contracts for Personal
Services
• No transfer of actual good but that
of specialty service
– Ex: Having a mechanic look at your
car.
• He/she might replace a physical part
but the job is still for the knowledge and
skill of the mechanic.
• Vendor
– Seller
• Vendee
– Buyer or purchaser
10. What’s Your Verdict?
• The Baumgartens bought
Hanukah gifts for their three
young children during the Sunrise
Center’s October layaway sale.
Delivery was scheduled for early
December, and payment was due
before January 15 of the following
year.
• When did the Baumgartens
become owners of the gifts
they had purchased?
11. Delivery and Payment
• Generally, payment, delivery, and
transfer take place at the same
time
• Neither party must perform until
the other
• Bill of Sale
– A receipt that serves as written
evidence of the transfer of
ownership of goods.
• Ex: Purchase of a vehicle
– Signed by both parties as the receipt of
transaction.
12. Bill of Sale
• Makes it easier to transfer
ownership
• Easy to prove value (in case of
damage or lost)
• Monthly Payments and Credit
Cards constitute ownership,
therefore the buyer receives both
title and possession before total
payment.
13. What Your Verdict?
• The Tastie Treat Shop mailed an order
for 500 one-pound boxes of fruit and
nut candies to the Chocolate Castle
Company. Chocolate Castle could
have accepted the order by mail,
telephone, wire or fax machine.
Instead, it immediately shipped the
candy and simply added the usual
amount to the next invoice and mailed
to the Tastie Treat Shop.
• Was the Chocolate Castle
Company’s acceptance of the order
valid?
14. Methods of Sales Contracts
• Traditionally, offer and
acceptance
• After offering something for an
item that company may send the
offer to you, in order for an
acceptance you must take
possession of the item(s) and or
renegotiate with the vendor.
15. What’s Your Verdict?
• FrostiFresh corporation sold a refrigerator to
Nguyen. A recent immigrant, Nguyen spoke,
read, and wrote Vietnamese and French, but
he did not speak English. The refrigerator
was sold on an installment payment contact.
The negotiation and sale of the refrigerator
were made in French. However, the written
contract was entirely in English, although the
seller knew that Nguyen could not read
English. FrostiFresh paid the manufacturer
$348 for the refrigerator. FrostiFresh then
sold it to Nguyen on the installment plan for
$3,146, plus a credit charge of $546.
• Was this agreement unconscionable?
16. Unconscionable Sales
Contracts
• Unconscionable means grossly
unfair and oppressive
• An unconscionable contract or
clause offends an honest
person’s conscience and sense of
justice
– In other words, unethical
• Contracts of Adhesion
– Contracts in which the more
powerful party dictates all the
important terms.
17. What Courts Will Do With
Unconscionable Sales
Contracts?
• Refuse to enforce the contract
• Enforce the contract without the
unconscionable clause
• Limit the clause’s application so
that the contract is no longer
unfair
• The law is designed to relieve a
person of a bad bargain.
18. End of Section 15-1
• THINK ABOUT LEGAL
CONCEPTS
• THINK CRITCALLY ABOUT
EVIDENCE
19. Section 15-1 Goals
• Define sale and explain how the
UCC governs the sale of goods
• Identify unconscionable contracts
and contracts of adhesion
• Distinguish between payment,
deliver, and transfer of title of
goods
20. Sections 15-2 Goals
• Discuss the benefits of burdens of
ownership of property
• Compare the various methods of
acquiring property
• Explain the unique role of merchants
and why and how they are treated
specially by the law
21. What’s Your Verdict?
• Leister won $2 million in a state lottery.
When he receive the first of 20
promised annual payments, he went
on a spending spree. He bought a new
car which he carelessly wrecked,
clothes which he never even wore, and
a mink coat for a casual friend he met
in a bar. He staged a wild New Years
Eve party for 50 new friends during
which the relatives smashed their
crystal champagne glasses in a
fireplace. Through court action,
relatives now seek to stop leister form
using his money and goods so
wastefully.
• Will they succeed?
22. Results of Ownership
• IMPORTANT
– KNOW THE DIFFERENCE BETWEEN
SALE AND CONTRACT TO SELL
• Know when ownership transfers
• Person selling says:
– “I hereby transfer to you the legal right to
use, control, and dispose of these goods.”
• Ownership
– Any rise in value after transfer is your
profit.
23. Results of Ownership
• Ownership involves duties and
burdens
• Owners suffer loss from
depreciation
24. What’s Your Verdict?
• Both Brian and Claire became electronic data processing
specialist during their service in the U.S. army. When they
retired from the army, they decided to open a retail
electronics specialty store. Using savings, borrowed funds,
and (A) money donated by their parents, they (B)
purchased a parcel of land that was suitable for building.
They (C) rented the empty lot next to the building to use as
parking space, under a five year contract. They (D) bought
a supply of personal computers and related equipment and
(E) agreed to purchase an equal quantity of new PC
models, scheduled for production within six months. They
(F) traded their two sports cars for a company truck, and
(G) raised additional money by transferring to a buyer , a
note receivable for $27,000 that Brian had received in
partial payment when he sold his house trailer. To get
more cash for working capital, (H) Brian and Claire
transferred to a bank all right to collect on a group of
accounts receivable they had obtained form sales made
on credit. They (I) obtained all their store display cases,
renting them from the manufacturer. In every instance
noted, Brian and Claire obtained possession of property
needed for their business.
• What types of transaction did they utilize?
25. Sales , Transfers,
Possession, Ownership
• UCC
– Mostly treat ALL buyers and sellers alike
– Treat merchants differently
• Merchant
– A seller who deals regularly in a particular kind of
goods or claims to have special knowledge or skill
in a certain type of sales transaction.
– Held to a higher standard of conduct
– Required to have license to sell
– Special Taxation and Closer Regulation
• Casual Sellers
– Sell only occasionally or do not otherwise meet the
definition of merchant
• Read Chart on Page 220
26. End of Section 15-2
• THINK CRITICALLY ABOUT
EVIDENCE
• THINK ABOUT LEGAL
CONCEPTS.
27. Sections 15-2 Goals
• Discuss the benefits of burdens of
ownership of property
• Compare the various methods of
acquiring property
• Explain the unique role of merchants
and why and how they are treated
specially by the law
28. Section 15-3 Goals
• Explain the need for the statute of
frauds
• Discuss the instances in which
the statue of frauds will be
applied.
29. What’s Your Verdict?
• Chilton orally agreed to buy an imported
camera from the Open Shutter Shop for
$748.98. the camera she wanted was not in
stock, but a shipment was expected any day.
Therefore the sales clerk prepared a
memorandum of the sale, signed it, and gave
Chilton a copy. A week later the clerk phoned
and said, “Your camera is ready!” Chilton
replied that she did not want it because she
had learned that the identical model could be
purchased for much less by mail from a New
York City discount store.
• Is Chilton liable to Open Shutter for breach of
contract?
30. Statute of Frauds
• Sales Contracts are valid and
held in court if oral, written, or
implied
• Sales for $500 or more must be
evident in writing
– Under Statute of Fraud
• If breach in sale contract, injured
party may sue.
• Variation applies when merchants
sell under the statute of frauds
31. What’s Your Verdict?
• La Fargo telephoned an order to
Hoban’s Brick and Tile Works for
ceramic tiles imported from Mexico
priced at $663. In accordance with the
oral contract order, the proper tiles
were delivered. Later that day, La
Fargo notified Hoban’s that she
refused to accept the goods. Hoban’s
insisted that the oral contract was
binding and sued for damages.
• Who should win?
32. Signed Writing Under Statute
• Certain contracts over $500 or more
may be valid and enforceable even if it
was an oral contract. Includes the
following:
– Goods received and accepted by the
buyer
– Buyer pays for goods and seller accepts
payment
– Goods specially made not suitable for
seller to others
– Party against whom enforcement sought
admits oral contract made
33. Goods Received and
Accepted by the Buyer
• Both receipt and acceptance are
necessary
• 3 Ways to Accept
– After a reasonable opportunity to inspect
the goods the buyer signifies to the seller
that the goods conform to the contract, or
will be retained in spite of their
nonconformity.
– The buyer acts inconsistently with the
seller’s ownership (Use, Consume, Sell)
– The buyer fails to make an effective
rejection after having a reasonable
opportunity to inspect the goods
34. Buyer Pays for Goods and
Seller Accepts Payment
• When payment in full has been
accepted by the seller, the oral
contract is enforceable in full.
• Partial Payment only enforceable
for goods paid for.
35. Goods Specially Made Not
Suitable for Sale to Others
• A seller can enforce an oral
contract for non-salable goods if:
– The seller has substantially begun
to manufacture them
– The seller has made contracts to
obtain the goods from third parties
36. End of Section 15-3
• THINK CRITICALLY ABOUT
EVIDENCE
• THINK ABOUT LEGAL
CONCEPTS.
37. Section 15-3 Goals
• Explain the need for the statute of
frauds
• Discuss the instances in which
the statue of frauds will be
applied.
