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Chapter 12: UCC Sales and Lease Contracts and Warranties

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Uniform Commercial Code (UCC)
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A model act that includes comprehensive laws that cover most aspects of commerical transactions. All the states have enacted all or part of the UCC as statutes.
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Article 2 (Sales)
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An articles of the UCC that governs sales of goods.
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Sale
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The passing title of goods from a seller to a buyer for a price.
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Goods
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Tangible things that are movable at the time of their identification to a contract.
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Mixed sale
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A sale that involves the provision of a service and a good in the same transaction.
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Article 2A (Leases)
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An article of the UCC that governs leases of goods.
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Lease
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A transfer of the right to the posession and use of named goods for a set term in return for certain consideration.
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Lessor
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A person who transfers the right of possession and use of goods for certain consideration.
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Lessee
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A person who acquires the right to possession and use of goods under a lease.
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Firm offer rule
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A UCC rule which says that a merchant who makes an offer to buy, sell, or lease goods and assures the other party in a separate writing that the offer will be held open cannot revoke the offer for the time states or, if no time is stated, for a reasonable time.
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Additional terms
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A UCC rule that permits an acceptance of a sale contract to contain additional terms and still act as an acceptance rather than a counteroffer in a certain circumstances.
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Statute of frauds
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A rule in the UCC that requires all contracts for the sale of goods costing $500 or more and lease contracts involving payments of $1,000 or more to be in writing.
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Battle of forms
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A UCC rule which states that if both parties are merchants, additional terms contained in the acceptance become part of the sales contract unless (1) the offer expressly limits the acceptance to the term of the offer, (2) the additional terms materially alter the original contract, or (3) the offeror notifies the offeree that he or she objects to the additional terms within reasonable time after receiving the offeree’s modified acceptance. There is no contract if the additional terms so materially alter the terms of the original offer that the parties cannot agree on the contract.
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Written confirmation rule
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A rule which provides that if both parties to an oral sales or lease contract are merchants, the Statute of frauds writing requirement can be satisfied if (1) one of the parties to the oral agreement sends a written confirmation of the sale or lease within a reasonable time after contracting and (2) the other merchant does not give written notice of an objection to the contract within ten days after receiving the confirmation.
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Identification of goods
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Distinguishing of the goods named in a contract from the seller’s or lessor’s other goods.
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title
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Legal, tangible evidence of ownership of goods.
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Void title
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A situation in which a thief acquires not title to goods he or she steals.
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Voidable title
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A title that a purchaser has if goods were obtained by (1) fraud, (2) a check that is later dishonored or (3) impersonation of another person.
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Good faith purchaser for value
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A person to whom good title can be transferred from a person with voidable title. The real owner cannot reclaim goods from a good faith purchaser for value.
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Good faith subsequent lessee
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A person to whom a lease interest can be transferred from a person with voidable title. The real owner cannot reclaim the goods from the subsequent lessee until the lease expires.
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Buyer in the ordinary course of business
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A person who, in good faith and without knowledge that the sale violates the ownership or security interests of a third party, buys goods in the ordinary course of business from a person in the business of selling goods of that kind. A buyer in the ordinary course of business takes the goods free of any third-party security interest in the goods.
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Electronic record
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A record that is created, generated, sent, communicated, received, or stored by electronic means.
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Electronic agent
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A computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances in whole in part, without review or action by an individual.
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Liquidated damages
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Damages that will be paid upon a breach of contract that are established in advance.
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Warranty
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A seller’s or lessor’s express or implied assurance to a buyer or lessee that the goods sold or leased meet certain quality standards.
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Express warranty
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A warranty that is created when a seller or lessor makes an affirmation that the good he or she is selling or leasing meet certain standards of quality, description, performance, or condition.
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Implied warranty or merchantability
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Unless properly disclosed, a warranty that is implied that sold or leased goods are fit for the ordinary purpose for which they are sold or leased, as well as other assurances.
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Implied warranty of fitness for human consumption
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A warranty that applies to food or drink consumed on or off the premises of restaurants, grocery stores, fast-food outlets, and vending machines.
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Implied warranty of fitness for a particular purpose
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A warranty that arises where a seller or lessor warrants that the goods will meet the buyer’s or lessee’s expressed needs.
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Warranty disclaimer
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A statement that negates express and implied warranties.
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Magnuson-Moss Warranty Act
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A federal statute that regulates written warranties on consumer products.