Chapter12Notes - Chapter 12 Sales Leases and Product...

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Chapter 12 Sales, Leases, and Product Liability State statutory law governing sales and lease transactions is based on the Uniform Commercial Code (UCC) which has been adopted as law by all states. The goal of the UCC is to simplify and to streamline commercial transactions. The UCC allows parties to form sales and lease contracts without observing the same degree of formality used in forming other types of contracts. The UCC provides a framework of rules that are readily applicable to the numerous difficulties that can arise during sales and lease transactions. The manufacturers and sellers of products may incur product liability when product defects cause injury or property damage to consumers, users, or bystanders. The Scope of Article 2 and 2A Article 2 of the UCC governs sales contracts. Sales contract - a contract for the sale of goods under which the ownership of goods is transferred from a seller to a buyer for a price. Article 2 deals with the sale of goods. It does not deal with real property (real estate), services, or intangible property such as stocks and bonds. Thus, if the subject matter of a dispute is goods, the UCC governs. If it is real estate or services, the common law applies. In some situations, the rule can vary depending on whether the buyer or the seller is a merchant. What is a Sale? Sale - the passing of title to property from the seller to the buyer for a price (which may be payable in cash or in other goods/services). What are Goods? To be characterized as a good, an item of property must be tangible, and it must be movable. Tangible property - property that has physical existence and can be distinguished by the senses of touch and sight.
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