Law for Business and Personal UseLaw for Business and Personal Use© Thomson South-Western

CHAPTER 12Sales Contracts

12-1 Sales

12-2 Special Rules for Sales Contracts

Law for Business and Personal UseLaw for Business and Personal Use© Thomson South-Western

Chapter 12Slide 2

12-112-1 Sales

GOALS Define sale and explain how the UCC

governs the sale of goods Explain how the UCC treats

unconscionable contracts and contracts of adhesion

Law for Business and Personal UseLaw for Business and Personal Use© Thomson South-Western

Chapter 12Slide 3

What is a sale?

A sale is a contract in which ownership of goods transfers immediately from the seller to the buyer for a price.

Ownership – a collection of rights that allows the use and enjoyment of property

Price – consideration, money, services or other goods (barter)

Law for Business and Personal UseLaw for Business and Personal Use© Thomson South-Western

Chapter 12Slide 4

Sales Contract Information

Payment and delivery information1. Bill of sale – receipt, it is written evidence

of the transfer of ownership

2. Use of credit cards – buyer gets title and possession before he pays for it. Wow!

3. Acceptance of goods – buyer has agreed either by words or conduct that the goods are received in satisfactory condition.

Law for Business and Personal UseLaw for Business and Personal Use© Thomson South-Western

Chapter 12Slide 5

What are and are not Goods

Tangible which means touchable Moveable personal property What is not goods?

Money Intangible Patents and copyrights Land, and other forms of real property

Law for Business and Personal UseLaw for Business and Personal Use© Thomson South-Western

Chapter 12Slide 6

Other forms of Sales Contracts

Fax Mailing an acceptance US Mail Email Just ship the goods, if the buyer

accepts you have a contract Wow

Law for Business and Personal UseLaw for Business and Personal Use© Thomson South-Western

Chapter 12Slide 7

Legal parties to a sale

Vendor- seller Vendee – the buyer Definitions we need to know

Payment occurs when the buyer transfers the money and the seller accepts it.

Delivery – place subject matter of sale in possession of buyer

Law for Business and Personal UseLaw for Business and Personal Use© Thomson South-Western

Chapter 12Slide 8

What is the definition of a bill of sale?

A B of S is the receipt that serves as written evidence of the transfer of ownership of goods.

Law for Business and Personal UseLaw for Business and Personal Use© Thomson South-Western

Chapter 12Slide 9

UNCONSCIONABLE SALES CONTRACTS

What are they? Offends an honest person’s conscience and sense of justice –What can the courts do?1. Courts may refuse to enforce2. Enforce without unconscionable clause3. Limit the clause

Contracts of adhesion – one of the parties dictates all the important terms, the weaker accepts meekly.

Law for Business and Personal UseLaw for Business and Personal Use© Thomson South-Western

Chapter 12Slide 10

12-212-2 Special Rules for Sales Contracts

GOALS Compare the status of a casual

seller with a merchant Explain how the Statute of Frauds is

applied to sales

Law for Business and Personal UseLaw for Business and Personal Use© Thomson South-Western

Chapter 12Slide 11

FOCUS

How do you distinguish between a merchant and a casual seller?

In life, if you do not qualify as a business merchant, you are then known as a casual seller.

Law for Business and Personal UseLaw for Business and Personal Use© Thomson South-Western

Chapter 12Slide 12

SPECIAL RULES FOR MERCHANTS

Merchant status in sales contracts If you change a contract in business law, the

contract become void and unenforceable. If you change a sales contract between

merchants, most of the time the contract remains enforceable and the new changes are called proposal for addition to the contract.

The merchant has a reasonable time to object to the changes…..if he doesn’t it becomes enforceable unless it is a material change.

Law for Business and Personal UseLaw for Business and Personal Use© Thomson South-Western

Chapter 12Slide 13

How do merchants differ from casual buyers in a sales situation?

And the answer is different rules

Law for Business and Personal UseLaw for Business and Personal Use© Thomson South-Western

Chapter 12Slide 14

HOW DOES THE STATUTE OF FRAUDS APPLY TO SALES….it governs them.

Exceptions to the Statute of Frauds for sales contracts (when oral contracts over $500 become enforceable.

1. Goods received and accepted by the buyer2. Buyer pays for goods and seller accepts

payment3. Goods specially made not suitable for sale to

others if seller starts manufacturing4. Party against whom enforcement sought admits

oral contract made