Sales Contracts/Ownership and Risk of Loss Flashcard

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

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