Lecture Notes CH 20, 22, 23

Lecture Notes CH 20, 22, 23 - LECTURE NOTES CHAPTER 20...

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Unformatted text preview: LECTURE NOTES: CHAPTER 20 “FORMATION OF SALES AND LEASE CONTRACTS” INTRODUCTION The Uniform Commercial Code (UCC) is probably the most important piece of commercial legislation in the history of the United States. The UCC created a nearly uniform body of law in each state, greatly facilitating interstate commerce. Because of its nearly uniform applicability, you may be confused about whether the UCC is a state or federal law. As discussed in Chapter 1, the UCC was (and remains) a joint effort of the National Conference of Commissioners on Uniform State Laws and the American Law Institute. All its articles have been adopted with few changes by every state (except Louisiana, which has not adopted Articles 2 and 2A) and the District of Columbia. Despite differences, the UCC contains many similarities to the common law contract principles discussed in the previous chapters. Indeed, such similarities should be expected, because the UCC represents the codification of much of the common law of contracts. This chapter also briefly reviews the United Nations Convention on Contracts for the International Sale of Goods (CISG) and special provisions in international contracts. I. Uniform Commercial Code A. COMPREHENSIVE COVERAGE OF THE UCC The UCC covers all of the phases of an ordinary sale or lease of goods, including the formation of the contract (Article 2 or 2A), payment (Articles 3, 4, and 4A), title documents during storage (Article 7), and security for unpaid amounts (Article 9). In addition, Article 6 concerns transfers by merchants selling off the bulk of their inventory at one time, and Article 8 deals with transactions involving negotiable securities. Article 6 has been repealed in most states. B. REVISIONS OF THE UCC AND AMENDMENTS TO ARTICLES 2 AND 2A Recent amendments to Articles 2, 2A, 3, and 4 are intended to accommodate the needs of e-commerce. For example, revised definitions match those in the Uniform Electronic Transactions Act and the Electronic Signatures in Global and National Commerce Act. Other changes are intended to clarify some sections or to make them more closely comport with business practices. Significant proposed amendments are noted in the text. II. The Scope of Article 2—The Sale of Goods A. WHAT IS A SALE? When the UCC speaks, its principles apply; when the UCC is silent, other state statutes and the common law apply. Article 2 deals with sales of goods. A sale is “the passing of title from the seller to the buyer for a price” [UCC 2–106(1)]. The price may be payable in money, goods, or services. B. WHAT ARE GOODS? Goods are tangible and movable. 1. Goods Associated with Real Estate A contract for a sale of minerals or the like (including oil and gas) or of a struc- ture (a building, a fence) is a contract for a sale of goods if severance is to be made by the seller. If the buyer is to sever the subject of the contract from the land, the contract is considered a sale of real estate subject to the principles of...
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This note was uploaded on 01/20/2012 for the course ACCOUNTING 101 taught by Professor Dubai during the Spring '11 term at Abu Dhabi University.

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Lecture Notes CH 20, 22, 23 - LECTURE NOTES CHAPTER 20...

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