Sales Contracts/Ownership and Risk of Loss – Flashcards
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Contract in which ownership of goods is immediately transferred from seller to buyer for consideration
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sale
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Type of consideration in a sales contract
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Price
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Personal property that is tangible or movable
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Goods
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Organization that governs sales contracts and "contracts to sell"
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Uniform Commercial Code
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Contracts that occur if transfer of ownership takes place in the future
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Contracts to Sell
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What does the UCC NOT cover?
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Contracts for rights; Real Property Contracts; Intangible Personal Property
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How to determine if a contract is NOT a sales
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If the basis of the contract is a service but there are some minor goods involved
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Characteristics of a Sales Contract (Consist of...)
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Payment, delivery, receipt of goods, bill of sale
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Action in a sales contract that occurs when a buyer transfers agreed upon consideration (price)
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Payment
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Action in a sales contract by which the subject mater is placed in possession of the buyer
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Delivery
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Occurs in a sales contract when the buyer takes physical possession or control of the goods
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Receipt of Goods
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Receipt serving as written evidence of transfer of ownership of goods (may be required by statute)
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Bill of Sale
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Contracts so grossly unfair that it shocks one's conscience
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Unconscionable Sales Contracts
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Type of Unconscionable Sales Contracts
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Contracts of Adhesion
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Parties in A Sales Contract
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Vendor and Vendee
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Seller of the goods
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Vendor
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purchaser of the goods
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Vendee
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Contract in which the stronger party dictates the terms of the sales contract
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Contract of Adhesion
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What will a court do if they deem the contract "unconscionable"?
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Refuse to enforce contract; Enforce without unconscionable clause; limit clause's application so it is fair
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One who regularly deals in type of goods exchanged or claims to have special knowledge in the type of sale being done; held to a higher standard of conduct than a casual seller
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Merchant
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Standards of a Merchant (May be Subject to...)
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Needing License; Paying Special Taxes; Closer Government Regulations
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One who sells on occasion
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casual seller
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Standards of Sales Under Statute of Frauds to be Enforceable
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Involve Sale of Goods over $500; Be in Writing
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Requirements of a Sales Contract to Satisfy Statute of Frauds
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Number/quantity of the goods; signatures; some terms may be left open
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Exceptions to the Statute of Frauds for Sales
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Goods Received and Accepted By Buyer; Buyer Pays For Goods and Seller Accepts Payment; Specially Manufactured Goods; Admit to Contract Existence in Legal Proceedigns
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How does acceptance to a sales contract occur? (3 ways)
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Buyer tells seller he will retain the goods; buyer acts inconsistently with seller's ownership; buyer fails to reject after reasonable time to inspect the goods
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If a buyer pays for goods and seller accepts the payment, contract is enforceable....
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For the paid goods ONLY
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When can contracts for the sale of specially manufactured goods be enforced?
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If seller has substantially begun to manufacture; If seller made contracts to obtain goods from third parties
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represents ownership of goods
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title
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Most common title?
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Bill of Sale
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Types of Title
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Valid Title; Voidable Title
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Type of title that, when transferred, is good with no imperfections
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Valid Title
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Type of title that, when transferred, may be voided/or cancelled
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Voidable Title
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Type of Title That One is Allowed to Transfer
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Can be the same type OR better
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Requirements of Ownership Transfer
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Goods must be existing and identified
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Goods that Physically exist and are owned by a seller
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Existing Goods
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Goods that have been designated specifically as subject matter of contract
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Identified Goods
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Goods that presently do not exist
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Future Goods
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Parties that May Transfer Goods (in addition to the actual owner)
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Authorized Persons, Merchants That Possess Sold Goods, Holders of Title Documents, Buyers in a Sale Induced by Fraud
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Parties that may pass on title even though they are not the owners
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Merchants That Possess Sold Goods
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Two Negotiable Documents of Title
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Warehouse Receipt; Bill of Lading
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Document given to a customer by warehouse whose goods the warehouse is storing
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Warehouse Receipt
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Receipt given by a transportation (shipping) company to a shipper when shipping company receives goods
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Bill of Lading
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Parties that have purchased goods from another party who has deceived the owner into selling the goods; Will receive the title
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Buyers in a Sale Induced By Fraud
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Describe what occurs if a buyer uses fraud to induce a sale.
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Transfer of title is voidable; Seller may cancel contract and get money back
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When Ownership Transfers (When the seller...)
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Delivers goods to next destination; Ships goods/Gives them to a carrier; delivers documents of title; tenders goods at time and place of sale
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True or False: Title can pass on stolen goods.
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False; Title can NEVER pass on stolen goods
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Occurs when a party suffers a loss if goods are destroyed or stolen
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Risk of Loss
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How may goods be transferred by parties in a contract?
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Face to Face; Through Seller's Delivery Service; Shipping Conracts
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Contracts that may use an independent third party carrier
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Shipping Contracts
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Types of Shipping Contracts
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FOB Shipping Point, FOB Destination
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Contract in which title and risk of loss pass from seller to buyer when goods are placed in carrier's possession; Buyer pays all freight charges
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FOB Shipping Point
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Contract in which title and risk of loss pass from seller to buyer when goods reach their destination; seller pays all freight charges
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FOB Destination
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Party that has temporary possession of another person's goods and are holding them in trust for a specific purpose
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bailee
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Events upon which Risk of Loss Transfers
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Buyer receives negotiable document of title; Bailee acknowledges buyer's right to possession of goods; buyer receives a non-negotiable document of title
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Transfers of Rights and Risks in Specific Sales Contracts (4 types)
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Cash and Carry Sales; Sales on Credit; COD Sales; Sale or Return; Sale on Approval
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Type of title transfer that plays no part in risk of loss passage
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Sales on Credit
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In COD Sales, when does risk of loss pass?
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When buyer pays for goods delivered by a carrier
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In sale or return sales, when does risk of loss pass if buyer has option of returning goods?
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Upon delivery
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In cash and carry sales, when does risk of loss pass if seller is a merchant?
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Buyer receives the goods
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In cash and carry sales, If seller is a casual seller, risk of loss passes
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When tender of goods is made
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Occurs when goods are sold on a trial or approval basis; prospective buyer is still liable for the goods while in their possession during the trial period
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Sale on Approval
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When does risk of loss pass in sale on approvals?
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When buyer conveys acceptance of goods (through actions or words)
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Special Types of Sales Under the UCC
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Auction Sales and Bulk Transfer
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When does title and risk of loss pass in auction sales?
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When seller acknowledges buyer's right to possess the goods
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Two types of aucitons
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With Reserve, Without Reserve
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Auctions in which the auctioneer may withdraw goods at anytime without selling to the highest bidder
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Auctions With Reserve
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Auctions in which goods must be sold to the higher bidder
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Auctions Without Reserve
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Sale in which entire or major parts of business are sold in one transaction
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Bulk Transfer
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What laws are designed to protect creditors of goods? (Laws stating that...)
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Seller must provide a list of all creditors, Buyer must notify creditors of bulk transfer, Creditors may void sale if rules are not followed
