Sales Law

November 19, 2009Winn

Sales Law November 19• Thursday 11/19– Watch Monty Python Dead Parrot Sketch on

Youtube and identify the UCC Article 2 issue– Introduction to Supply Chains handout– Finish Chapter 3

• Monday 11/23– Problems 4-1 to 4-4, 4-6 and 4-7

Markets, Relational Contracts, Bureaucracy

ConsultingCommodityFutures Employment

Market Bureaucracy

Stock Market

Supplier(Toyota)

RelationalContract

Lending

MBA: “Make or Buy”

Supplier(Wal-Mart)

OutsourcingVertical

Integration

Article 2 Warranties• Express warranties

– Contract terms created by words or conduct of seller– [Can only be disclaimed with specific disclaimers]

• Implied warranty of merchantability– Objective standard based on trade standards and reasonable

expectations– [Can be disclaimed with conspicuous general disclaimers]

• Implied warranty of fitness for a particular purpose– Implied in law based on individual requirements communicated by

buyer to seller and interpreted by seller– [Can be disclaimed with conspicuous general disclaimers]

• Implied Warranty of Title– Ownership of goods is a fundamental implied term– [Can only be disclaimed with great difficulty with very specific

disclaimers]

Void versus Voidable Title• Good Title

– Buyer cannot be forced by anyone to surrender goods due to superior claim of ownership

– Warranty of good title implied in law, absolutely explicit disclaimer required, nothing less works• Compare: basis of bargain must be disclaimed explicitly, cannot be disclaimed with

general disclaimers

• Voidable Title– Buyer has superior title to everyone in the world except former owner

• Bought jewelry from jewelry shop but rightful owner only “entrusted” for repairs—only rightful owner can “avoid” the transfer to the buyer

• Minor child enters into an unenforceable contract selling an asset, has option to “affirm” contract upon majority or to “avoid” it and reclaim goods

– If Buyer sells to “good faith purchaser for value” then GFP gets good title• Void Title

– Buyer has mere possession, must surrender goods under many circumstances• Thief stole goods from rightful owner, police can always recover possession for rightful

owner from buyer or buyer’s buyer, etc.