Chapter 12 Lesson

Chapter 12 Lesson - Chapter 12 - Principles of Contract Law...

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Chapter 12 - Principles of Contract Law OBJECTIVES: After completing this lesson, the required reading, and the assignments, learners will be able to: 1. Explain when you are required to keep your promise (the elements of a valid contract). 2. Understand and explain basic contract terms. 3. Determine when the Uniform Commercial Code applies to a contract. 4. Identify the remedies available for breaching contracts . 5. Discuss why an understanding of contract law is important for businesspeople. The Uniform Commercial Code As you may have learned in Chapter 1, many contracts are governed by common law. However, one particular type of contract is ruled by statute rather than common law - contracts for the sale or lease of goods . Goods are tangible, personal property. They do not include intangible property (such as bank accounts or shares of stock) or real property (the land or anything attached to it). Contracts for the sale of goods are governed by the Uniform Commercial Code ( UCC ). Usually, distinguishing between a contract for the sale of goods and another type of contract, such as a service contract, is quite easy. Some contracts, however, involve both goods and services. If a dispute involving such a contract arises, which law applies to resolve it, common law or the UCC? The answer depends on the predominant purpose of the contract. Several years ago, I decided to repaint my bedroom and bathroom. As often happens, that little project mushroomed into a much bigger one! My husband and I were forced to replace the carpet in our bedroom after a raccoon snuck in through our cat door at night and knocked a can of purple paint over. When I purchased the new carpet for my bedroom, I selected one of the many carpet dealers in town based on location and a personal relationship. I chose the carpet based on looks and price. The business provided me with an installer, who I paid separately and did not know until he arrived at the door with my carpet. Suppose we had had a problem with the carpet installation and were forced to file a lawsuit. Would the UCC or the common law apply? Another way you could answer that question would be to ask: what was the predominant purpose of the contract? I think the predominant purpose of the contract was to purchase the carpet rather than have it installed. I purchased carpet based on its look, price, durability, etc. The installation of it was incidental to that purchase. Thus, the
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UCC would probably apply because the predominant purpose of the contract was the purchase of a good (the carpet). We also decided to pull up the carpet in the living room and the vinyl in the kitchen and install hard wood. (A simple paint job turns into a major redecorating project.) I chose the company who installed the wood floor based on their reputation for good work and service and their low bid. The type of wood we chose would have been the same regardless of the company we had chosen. Now imagine that we had a problem with
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This note was uploaded on 09/02/2011 for the course GEN BUS 202 taught by Professor Parks during the Fall '11 term at Boise State.

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Chapter 12 Lesson - Chapter 12 - Principles of Contract Law...

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