BLAW - Chapter 21 - Chapter 21 Sales and Lease Contracts...

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Chapter 21 Sales and Lease Contracts The common law—what we have been studying so far Statutory law—state legislatures pass laws that only apply within the borders of their states o The Uniform Commercial Code (a.k.a. the “UCC” or the “Code”) is a uniform statutory law that state legislatures have passed governing commercial transactions, including contracts for the sale of goods , leases , and secured transactions o General contract law continues to apply where the Code has not specifically modified the law. General contract law also continues to govern all contracts outside the scope of the Code, including employment contracts, service contracts, insurance contracts, contracts involving real property, and contracts for the sale of intangibles such as stocks, bonds, patents, and copyrights. We will focus our studies on article 2, which governs sales contracts—meaning contracts for the sale of goods—and to a lesser extent, 2A, which governs leases Article 2 modifies some of the common law contract requirements that we have just finished studying. In general, the rules is that whenever there is a conflict between a common law contract rule and a UCC rule, the UCC rule controls. In other words, when the UCC addresses a certain issue, the UCC rule is the one we follow. When the UCC does not address a particular issue, we follow the common law. Leases (Article 2A) A lease is defined as a "transfer of rights to possession and use of goods for a term in return for consideration, UCC §2A- 103(1)(j). Stated another way, a lease of goods is a transfer of the right to possess and use goods belonging to another for some form of payment. The person who gets the goods does not actually own the goods. Leasing is just a way for a lessee to get the benefits of using goods without having to actually spend all the money to purchase the goods Note that this does not cover leases related to real property (it doesn’t govern your lease with your landlord) The lessor is the person who transfers the right to possession (the right to use) The lessee is the person who, because of the lease, gets the right to use the good Sales A sales transaction consists of transferring title of goods for a price by an owner to the buyer. (§2-106) The “price” can be money, other goods, real estate, or services A gift is not a sale because, although title to the object passes, it was not passed for a “price” "Goods" are defined as movable, tangible, personal property. §2-105 Tangible property has a physical existence, it can be touched or seen and “moveable” means that the item can be carried from place to play Article 2 and Article 2A are intended to modernize, clarify, simplify and make uniform the law of sales and leases while providing the flexibility to expand as unforeseen and new circumstances demand. The Code's policy is to promote commercial transactions. It is based on the following concepts:
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This note was uploaded on 05/31/2010 for the course ACCT 1237 taught by Professor Hillman during the Spring '10 term at Drake University .

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BLAW - Chapter 21 - Chapter 21 Sales and Lease Contracts...

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