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518Chap11Sales and Prod Liab.

518Chap11Sales and Prod Liab. - CHAPTER 11 SALES LAW AND...

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CHAPTER 11 SALES LAW AND PRODUCT LIABILITY Introduction Goods are defined as all items that are movable at the time they are identified to a specific contract Includes: 1. growing crops and 2. the unborn young of animals, plus 3. any other object that may be severed from real estate by the seller (tangible items) Money, negotiable instruments, and investment securities are not classified as goods (intangible items) The Sale of Goods is covered by Article 2 of the UCC Article 2A applies to leases such as cars and computer equipment Applies to the sale of goods, not real property, services, or intangible property such as stocks and bonds. Background of the Uniform Commercial Code A statutory scheme to cover intrastate and interstate commercial transactions All fifty states, D.C. and the Virgin Islands have adopted the UCC The code is consistent with the law merchant and common law, but expands and orders the principles General Terms of the UCC The UCC is designed to help determine the intentions of the parties to a commercial contract and to give force and effect to their agreement
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Businesspeople are assured that their contracts, if validly entered into, will be enforced Provides guidance to parties The UCC reinforces the principles of the freedom of contract The obligations of good faith, diligence and reasonableness are the standards set by specific provisions of the UCC for the courts to use when reviewing a contract If the parties specify a rule in their contract, that rule is controlling If the contract does not address a particular subject the UCC may control If the parties fail to include certain terms in the contract, the UCC encourages application of the rules of a particular trade to fill in the missing terms or to guide a court in interpreting a clause Called: Usage of Trade The UCC defers to the parties’ previous course of dealing Establishes a basis for understanding and interpreting their promises and conduct A merchant is a person who: (UCC imposes stricter regulation on merchants) 1. deals in goods and 2. holds himself out as having knowledge about the goods or skills peculiar to the practices involved in the contract Merchants are subject to special rules under the UCC Uniform Commercial Code and Contract Law If the UCC does not apply, the court will apply the common law The common law elements of a contract (offer, acceptance, etc.) are
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still necessary under the UCC The UCC changes some aspects of the common law: 1. An offer sometimes does not have to be definite and certain; 2. Some offers are not revocable; 3. Method of acceptance is treated differently; 4. The mirror-image rule may not apply; 5. Legal consideration is not always required 6. Certain contracts must be in writing if the value of the goods is more than $500 Missing Terms Under the common law, an offer must be definite and certain Under the UCC, even though one or more contract terms are not agreed to, a court may still enforce the contract If the parties clearly intended to enter into a contract, and
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