Business Law Today PDF - 12th Edition

Roger LeRoy Miller BUSINESS LAW Today STANDARD EDITION TEXT & SUMMARIZED CASES, 12e Miller, Business Law Today, Standard Edition: Text & Summarized...

Roger LeRoy Miller BUSINESS LAW Today STANDARD EDITION TEXT & SUMMARIZED CASES, 12e Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Miller, Business Law Today, Standard Reserved. Edition: May not Text &copied be scanned, Summarized Cases,or12th or duplicated, Edition. posted © 2020accessible to a publicly Cengage.website, All Rights Reserved. in whole May not be or in part. scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Sales and Lease Contracts Chapter 16 Chapter Outline 16-1 The Scope of Articles 2 and 2A 16-2 The Formation of Sales and Lease Contracts 16-3 Title and Risk of Loss 16-4 Contracts for the International Sale of Goods Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Learning Objectives 1. If a contract involves both goods and services, when does the UCC apply? 2. What happens if an acceptance to a sales contract includes terms additional to or different from those in the offer? 3. When does risk of loss pass in a shipment contract? 4. What law governs contracts for the international sale of goods? Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Landmark in the Law The Uniform Commercial Code UCC articles are periodically revised to adapt its provisions to changing business customs and practices. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-1 The Scope of Articles 2 and 2A (slide 1 of 3) 16-1a Article 2—Sales Article 2 of the UCC governs sales contracts, or contracts for the sale of goods What Is a Sale? Sale: The passing of title to property from seller to buyer for a price Case Example 16.1 Nautilus Insurance Co. v. Cheran Investments LLC (2014) Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-1 The Scope of Articles 2 and 2A (slide 2 of 3) 16-1a Article 2—Sales What Are Goods? A good is must be tangible and movable. Tangible property can be touched or seen. Intangible property has only conceptual existence and thus does not come under Article 2. Goods Associated with Real Estate Goods and Services Combined Case Example 16.2 Sack v. Cessna Aircraft Co. (2017) Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-1 The Scope of Articles 2 and 2A (slide 3 of 3) 16-1a Article 2—Sales Who Is a Merchant? A merchant is a person who deals in goods of the kind involved in the sales contract. A merchant is a person who, by occupation, holds himself or herself out as having special knowledge and skill related to the practices or goods involved in the transaction. A person who employs a merchant as a broker, agent, or other intermediary has the status of merchant in that transaction. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 16-1 The Law Governing Contracts Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-1b Article 2A—Leases Definition of a Lease Agreement An agreement in which one person (the lessor) agrees to transfer the right to the possession and use of property to another person (the lessee) in exchange for rental payments. Consumer Leases 1. A lessor who regularly engages in the business of leasing or selling. 2. A lessee who leases the goods “primarily for a personal, family, or household purpose.” 3. Total lease payments that are less than a dollar amount set by state statute. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16-2 The Formation of Sales and Lease Contracts (slide 1 of 2) 16-2a Offer Open Terms 1. Parties intended to make a contract 2. Reasonably certain basis for court to grant remedy Numerous open-term provisions can be used to fill the gaps in a contract in case of a dispute. Open Price Term Open Payment Term Open Delivery Term Duration of an Ongoing Contract Options and Cooperation Regarding Performance Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16-2 The Formation of Sales and Lease Contracts (slide 2 of 2) 16-2a Offer Open Terms Open Quantity Terms Requirements contract: The buyer agrees to purchase and the seller agrees to sell all or up to a stated amount of what the buyer needs or requires. Output contract: The seller agrees to sell and the buyer agrees to buy all or up to a stated amount of what the seller produces. Merchant’s Firm Offer When a merchant-offeror gives assurances in a signed writing that the offer will remain open Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-2b Acceptance (slide 1 of 2) The UCC permits acceptance of an offer to buy goods “either by a prompt promise to ship or by the prompt or current shipment of conforming or nonconforming goods” [UCC 2– 206(1)(b)]. Conforming goods accord with the contract’s terms, whereas nonconforming goods do not. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-2b Acceptance (slide 2 of 2) Shipment of Nonconforming Goods Communication of Acceptance Required Additional Terms Rules When One Party or Both Parties Are Nonmerchants Rules When Both Parties Are Merchants Prior Dealings Between Merchants Conditioned on Offeror’s Assent Additional Terms May Be Stricken Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-2c Consideration The common law rule that a contract requires consideration also applies to sales and lease contracts. Unlike the common law, the UCC does not require a contract modification to be supported by new consideration. In some situations, an agreement to modify a sales or lease contract without consideration must be in writing to be enforceable. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-2d The Statute of Frauds (slide 1 of 2) Sufficiency of the Writing Writing must meet the following requirements: 1. It indicates that the parties intended to form a contract. 2. It is signed by the party (or agent) against whom enforcement is sought. Special Rules for Contracts between Merchants Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-2d The Statute of Frauds (slide 2 of 2) Exceptions Specially Manufactured Goods Goods are specially manufactured for a particular buyer or specially manufactured or obtained for a particular lessee. Goods are not suitable for resale or lease to others in the ordinary course of the seller’s or lessor’s business. Seller or lessor has substantially started to manufacture the goods or has made commitments for the manufacture or procurement of the goods. Admissions Partial Performance Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Exhibit 16-2 Major Differences between Contract Law and Sales Law Exhibit 16–2 Major Differences between Contract Law and Sales Law TOPIC CONTRACT LAW SALES LAW Contract Terms The contract must Open terms are acceptable, if the parties intended to contain all material terms. form a contract, but the quantity term normally must be specified, and the contract is not enforceable beyond the quantity term. Acceptance Mirror image rule applies. Additional terms will not negate acceptance unless If additional terms are acceptance is made expressly conditional on assent to added in acceptance, a the additional terms. counteroffer is created. Contract Modification Modification requires Modification does not require consideration. consideration. Irrevocable Offers Option contracts (with Merchants’ firm offers (without consideration) are consideration) are irrevocable. irrevocable. Statute of Frauds All material terms must Writing is required only for the sale of goods priced at Requirements be included in the writing. $500 or more, but the contract is not enforceable beyond the quantity specified. Merchants can satisfy the requirement by a confirmatory memorandum evidencing their agreement. Exceptions exist for (1) specially manufactured goods, (2) admissions, and (3) partial performance. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-2e Parol Evidence (slide 1 of 2) Course of Dealing and Usage of Trade Course of Dealing: Prior conduct between parties that establishes common basis for understanding Usage of Trade: Any practice or method of dealing that is so regularly observed in a place, vocation, or trade that parties justifiably expect it will be observed in their transaction. Course of Performance Conduct which indicates what parties intended the agreement to mean Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-2e Parol Evidence (slide 2 of 2) Rules of Construction 1. Express terms 2. Course of performance 3. Course of dealing 4. Usage of trade Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-2f Unconscionability The court can: 1. Refuse to enforce the contract. 2. Enforce the remainder of the contract without the unconscionable part. 3. Limit the application of the unconscionable terms to avoid an unconscionable result. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  Classic Case 16.2 Jones v. Star Credit Corp. (1969) Why would the seller’s knowledge of the buyers’ limited resources support a finding of unconscionability? Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-3 Title and Risk of Loss 16-3a Identification Identification: Express designation of goods provided for in the contract Existing Goods Identification takes place at the time the contract is made. Future Goods Various rules apply to identification of future goods, depending on the goods. Goods That Are Part of a Larger Mass Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-3b Passage of Title (slide 1 of 2) Without an explicit agreement to the contrary, title passes to the buyer at the time and the place the seller performs by delivering the goods [UCC 2–401(2)]. Spotlight Case Example 16.22 United States v. 2007 Custom Motorcycle (2011) Shipment and Destination Contracts Shipment contract: Seller is required or authorized to ship the goods by carrier. Seller assumes liability for any losses or damage to the goods until they are delivered to the carrier. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-3b Passage of Title (slide 2 of 2) Shipment and Destination Contracts Destination contract: Seller is required or authorized to ship the goods by carrier and tender delivery of the goods at a particular destination. Seller assumes liability for any losses or damage to the goods until they are tendered at the destination specified in the contract. Delivery without Movement of the Goods Passage of title depends on whether the seller must deliver a document of title (such as a bill of lading) to the buyer. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-3c Risk of Loss (slide 1 of 3) Under the UCC, risk of loss does not necessarily pass with title. Case Example 16.24 Person v. Bowman (2013) Delivery with Movement of the Goods—Carrier Cases Shipment Contracts Destination Contracts Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-3c Risk of Loss (slide 2 of 3) Delivery without Movement of the Goods Bailment: A temporary delivery of personal property, without passage of title, into the care of another, called a bailee. Goods Held by the Seller Case Example 16.26 Adams v. Sears Roebuck and Co. (2014). Goods Held by a Bailee Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-3c Risk of Loss (slide 3 of 3) Risk of Loss When the Contract Is Breached When the Seller or Lessor Breaches Risk of loss passes to the buyer when one occurs: 1. The defects are cured. 2. The buyer accepts the goods in spite of their defects. When the Buyer or Lessee Breaches Rule limitations: 1. The seller of lessor must already have identified the contract goods. 2. The buyer or lessee bears the risk for only a commercially reasonable time after the seller or lessor has learned of the breach. 3. The buyer or lessee is liable only to the extent of any deficiency in the seller’s insurance coverage. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-3d Insurable Interest Insurable interest: A property interest in goods being sold or leased that is sufficiently substantial to permit a party to insure against damage to the goods. Insurable Interest of the Buyer or Lessee A buyer or lessee has an insurable interest in identified goods. Insurable Interest of the Seller or Lessor A seller has an insurable interest in goods as long as she or he retains title to the goods. Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  16-4 Contracts for the International Sale of Goods 16-4a Applicability of the CISG 16-4b A Comparison of CISG and UCC Provisions Statute of Frauds Offers 1. Offeror states orally that offer is irrevocable 2. Offeree reasonably relies on offer as being irrevocable Acceptances Miller, Business Law Today, Standard Edition: Text & Summarized Cases, 12th Edition. © 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.