University of Georgia Terry College of Business LS 470 - Business Law I Dr. B-A's Word Outlines INTRODUCTION TO SALES CONTRACTS Concerns Article 2 of UCC Covers sales of goods specially manufactured goods serving of food or drink to be consumed there or elsewhere minerals, wood, etc, if to be served by Seller if severance by Buyer (B), then its sale of int in land Sale - exchange of title to goods for a price S's oblig - tender gds to B B's oblig - accept gds & pay price Merchant Good faith - honesty in fact w/merch, incls observg reasbl comm stands of trade Sale on approval - gds deliv primarily for use as consumer pruchase title & ROL stay w/S till gds accepted failure to notify of rej reasbl time is acceptance not subj to B's creditors till B accepts Sale or return gds deliv primarily for resale title & ROL pass to B until deliv back to S subj to B's creditors while in B's possn FOB place of shipment - S oblig to place gds in possn of carrier for shpmt to B Shipment contract default to this title & ROL pass at time & place of shipment if B rejs (rtful or wrongful) upon tender, title returns to S same if B justifiably revokes accceptance FOB place of destinatn - S oblig to cause gds 2B deliv to B at S's own expense & risk destination contract title & ROL pass at time & place of tender of gds to B at destination see above for B's rejectn & revocatn of acceptance FOB vessel, car or other vehicle - S at own risk loads the gds on board FAS (free alongside) vessel at named port S at own risk & expense deliv gds to alongside vessel or on dock designated & provided by B CIF - lump sum of cost of gds, ins & freight to named destnatn S loads gds makes provisn for pmt of freight - consid 2B shpmt K obtains ins policy in favor of B gen pties will deal thru the gds' documts S perfs by tendering to B the docs (invoice & nego BOL) B perfs by paying agnst the tender of the req'd docs Pties free to make K anything they wish, thats legal can't disclaim UCC req of GF, diligence & due care Pmt due at time & place B to rec gds concurrent conds of exchange are delivy & pmt UOA credit must be negotiated for most domestic sales done on "open acct" where S ships to B on B's prom to pay in 30, 60, 90 days Documentary exch - "cash agnst documents" S uses docs of title (DOT) to control gds till she's pd DOTs act as a receipt for gds states terms of shpmt or storage betw S & whse co or mover DOT incl bill of lading (BOL) by RR or steamship co warehouse receipt any other doc showing one in possn of doc entitled to gds Shipping under reservatn (one type of documentary transac) S recs negobl DOT & keeps sec int S indorses DOT & sends to his bank attaches signt draft or demand for immed pmt by B S's bank forward doc to bank in B's city that bank only releases BOL to B after pmt B can't get gds w/o BOL Course of dealing - sequence of prior conduct betw pties Usage of trade - practice or custom in the particular trade Course of performance - K that reqs repeated perf When there's conflict, UCC heirarchy for eliminating it is express terms course of perf, cse of dealing, usage of trade Gap filling - used when K doesn't incl term. UCC fills it in Price - reasbl price at time of deliv Quantity - Output & requirement Ks ok Delivery - S phys transfers into B's possn conforming gds Tender - meets deliv req S makes conforming gds availbl to B notifies B tender must be at reasbl hour must keep gds availbl for reasbl time Place - S's place of bus if none, S's residence if for identified gds known to B&S 2B at some other place, then that place Gds w/bailee - to deliver, S must tender nego DOT for the gds get ack by bailee that B is entitled to gds Delivery - UOA, S mst tender in sngl deliv, not installmts if S can't deliv all at once or B can't take deliv all at once, more than single deliv ok Time of perf - K unenforbl if integrated & time left out gen if not in K, reasbl time pmt due at time & place B to rec (phys possn) gds B may inspect before paying if COD, B must pay 1st if open ended K for successive perfs (1000 lbs flour p/wk), valid for reasbl time & UOA & pty can terminate any time Transfer of Title Gen - title passes to B at time & place where S completes perf re phys deliv of gds Gds must be identified (IDd) to K i.e., S specifies particular gds B then has spec prop int in gds & can insure if gds exist & are designated when pties enter K, ID occurs & title passes at time & place of contracting if gds in whse & S delivs whse receipt to B ID occurs & title passes at time & place DOT is deliv if future gds, gds IDd when S ships or marks as B's gds if crops 2B grown, IDd when crops planted if unborn young of animals, IDd when conceived Shipmt Ks - title passes at time & place of shpmt Destinatn Ks - title passes upon tender of gds at destinatn If B rtfully or wrongfully rejs or rtfully revokes accep, title automatically returns to S if gds shipped under reservatn of title so price must be pd before B obtains title, title still passes to B, tho S retains in the gds a sec int, which must be perfected under Art 9 Purchaser of gds acqs title her T'or had or had power to transfer if S has no title, P recs none if S has voidbl title, GFPV recs good title incl entrusted or other bailee merch who sells gds in OCOB Risk of Loss (ROL) who bears loss in event of theft, destructn or dam to gds during perf of K UOA, depends on whe br of K or no br of K Breach of K cases basic rule is that loss shd be borne by pty who br if B rtfully revokes accep of gds ROL goes back to S to exten loss not covered by B's ins if loss occurs after gds IDd but while in S's control & B brs S can impose ROL on B for reasbl time Non-Breach cases (3 situatns) 1. K calls for shpmt of gds Shipmt K-ROL passes when gds arrive at destinatn & are availbl to B for deliv 2. Bailments (gds w/bailee such as warehouser) Gds rep by negobl DOT ROL passes when S tenders doc to B or when bailee acknowledges B is entitled to gds Gds rep by nonnegobl DOT ROL passes when B has had reasbl time to present doc to bailee if bailee refuses to honor DOT tender, ROL remains w/s 3. Other cases Depends on status of S If S is merchant ROL passes when B recs gds even if B PIF & S notified B gds at B's disposal bec S more likely than B to carry ins on gds If S is nonmerchant ROL passes upon tender of gds tender incls making conforming gds availbl to B and giving B reasbl notice so she can take deliv Sale on approval ROL passes upon B accepting gds or failure to seasbly notify S of decision to return gds after notificatn of electn to ret gds, S pays ex penses of return & bears ROL Sale or return ROL passes upon gds giving deliv to B