BL-Chapter 18 - 1 CHAPTER 18 FORMATION OF SALES AND LEASE...

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CHAPTER 18 FORMATION OF SALES AND LEASE CONTRACTS Uniform Commercial Code (UCC) Model act Common law of contrats governs if either Article 2 or Article 2A are silent on the risk of loss of the goods on the party most able to either bear the risk or insure against it Comprehensive statutory scheme to cover most aspects of commercial transactions Overview of UCC Article 1: General provisions Article 2 : Sale of goods Article 2A: Leases of goods Article 3: Negotiable instruments Article 4: Bank deposits, collections Article 4A: Wire transfers Article 5: Letters of credit Article 6: Bulk transfers Article 7: Documents of title Article 8: Investment securities Article 9: Secured transactions 1
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Article 2 (Sale of goods) All states except Louisiana have adopted. Article 2 is also applied by federal courts to sales contracts governed by federal law. If Article 2 is silent on an issue, common law of contracts applies.\ What is a Sale? What is a sale? The passing of title from a seller to a buyer for a price. What are Goods? Tangible things that are movable at the time of their identification to the contract. E.g., car, book, sweater, corn. Specially manufactured goods and unborn young animas are goods Money and intangible items such as stocks, bonds, and patents are not tangible goods. Real estate because it is not movable and services are not goods. Minerals, structures, growing crops, etc. that are severable from the real estate may be classified as goods Services Services are not covered by Article 2 (legal, medical, dental). 2
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Mixed sales involve both goods and services. E.g., contract to buy carpet and have it installed; contract to have medical device implanted. Article 2 applies to mixed sales only if the goods are predominant part of the transaction. Who is a Merchant? Generally Article 2 applies to all sales contracts regardless whether it involves a merchant, but it has provisions that impose a greater duty on merchants A merchant is someone who: 1. One who deals in the goods of the kind involved in the transaction, or 2. By his or her occupation holds himself or herself out as having knowledge or skill peculiar to the goods involved in the transaction. -E.g., appliance dealer is merchant with respect to refrigerators. Not a merchant when sells a car. Article 2A (Leases) Article 2A applies only to leases involving goods . Article 2A does not apply to real estate or other leases. What is a Lease? Transfer of right to possession and use of named goods for a set term, in return for certain consideration. Lessor – person who transfers right of possession and use of goods.(seller) Lessee – person who acquires right to possession and use of goods. (renter) 3
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Finance Lease Three-party transaction consisting of lessor , lessee , and supplier (or vendor) . Lessor does not select, manufacture, or supply the goods.
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BL-Chapter 18 - 1 CHAPTER 18 FORMATION OF SALES AND LEASE...

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