Sales Outline Fall 2020
1. Scope
Article 2: Limits to certain types of transactions
2-102 Transactions in goods
“Transactions” no definition in the UCC, but synonymous with “Sale”
2-106(1) “Sale” passing title from seller to buyer for a price (some consideration) (“passing title” not in UCC, think bundle of sticks)
2-103(1)(d) Seller:
Sells or contracts to sell
2-103(1)(a) Buyer:
Buys or contracts to buy
2-304(1) Price:
Payable in money or otherwise (trade, barter)
1-201(b)(24) Money: Any medium of exchange authorized by a sovereign (any government entity with power to issue currency)
2-105(1) Good
All things including specially manufactured goods which are moveable at time of identifications of contract
EXCEPT:
1. Money solely as a medium of exchange, money is not a good unless purchasing collectable money or trading currency
2. Investment Securities (Article 8, don’t need to know)
3. Things or Choses in Action
Something that derives its value SOLELY from your ability to enforce it in court, like insurance policy, abstract concept, the piece of paper does not have any value, but bought the right to enforce it in court, think hunting license
Specially Manufactured: to avoid any combination with service
Movable: Not in the code, but must be capable of physical movement
Meant to exclude abstracts:
Services
Real Property Transactions
At time of Identification of Contract: moment that thing is identified to contract (identified to contract once specific to contract)
1: Unique item identified at the time of contract formation, like a contract for a specific painting
2. For fungible goods that are interchangeable (500k blue pens) become IDENTIFIED when specific to contract- when you address them for shipping they are identified.
3. Car any Volvo Xc… choose which Volvo off the lot and then assess the moveability, if a VIN is assigned at contract then it is identified
2 Hybrid Types of Transactions
Hybrid Mixture of Goods and Services: (not foreseen by code drafters)
Court crafted rule to find if service or code agreement
Hair Cut and Color- the price is for the service of the cut and the good of the color
Predominant Purpose Test (is it more like code or common law) (factors test, consider all factors and weigh them, they do not all need to be present)
1. Language of the contract, what have parties said
a. “provider” usually indicates service
“buyer/ Seller” usually indicates goods
2. Nature of business/ supplier- whoever performing services (salon- primary goal to get service) or selling goods (advanced auto parts, primary goods, but they will put wipers on for you)
3. Allocation of value, is the value in the purchase attached to the goods portion or the services portion (hospital bill- there are medications on there (good) but the primary expense is the doctor (service)
Hybrid Mixture of Goods and Real Property (foreseen by code drafters as 2-107 (1) & (2))
1 and 2 together decide whether more real property or goods, if severance would cause material harm to real property then transaction is NOT goods UNLESS seller is going to sever (remove the thing from property)
Hypo 1: Sell a loose diamond- goods- code
Hypo 2: I’ll sell you all the diamonds that can be found on blackacre and I’ll do all the severing, so bag of diamonds- goods- code
Hypo 3: I’ll sell you all the diamonds on blackacre, but you have to do severing (have to figure out access restrictions to property, ect) not a good-
EXCEPTION: Standing Timber is ALWAYS a goods transaction
Formation and Terms
Proof of Terms
Parole Evidence Rule
First under the common law, then under the code, code only changes two things from common law
Common Law PER:
Protect the terms of an INTEGRATED agreement
Rule of Evidence under certain circumstances will prohibit admission of extrinsic evidence for certain purposes
Can never make it admissible, but can make it inadmissible, if violates PER, cannot be admitted
Certain circumstances: for integrated agreements (reduced to a writing), cannot apply to purely oral agreement
Extrinsic Evidence: outside the 4 corners of the writing
Certain Purposes: never prohibits effect, prohibits types of purposes, what are you trying to prove with it
Completely Integrated: Writing was intended to be a final expression of parties agreement
If completely integrated, legal effect of decision is parties are prohibited from introducing extrinsic evidence for the purpose of contradicting or supplementing
Terms of integration are not what we agreed to, can introduce if has effect of contradicting but NOT if that’s the sole purpose
Partially Integrated: not intended to be a final expression of parties agreement
Not prohibited for introducing extrinsic evidence for purpose of supplementing but they
are prohibited for purposes of contradicting
Will ALWAYS be judge who decides level of integration
At Common Law Never prohibited these for PER:
Condition Precedent
Rights in Equity
Explain: Not add or subtract, just explain integration, attempting to achieve what’s already there
@ common law first have to demonstrate ambiguity
Modify
Invalidity
Collateral Agreements
Parole Evidence Rule under the Code 2-202
Only 2 changes to common law, and can ONLY apply to Big 3 Evidence
If Big 3:
Exception 1: Not prohibited from admitting Extrinsic Big 3 Evidence for the purpose of supplemented even IF Completely Integrated agreement
Exception 2: Not Prohibited from admitted extrinsic evidence for purpose of explaining EVEN in the absence of an ambiguity
1-303 Also Known as Big 3 Evidence: (need repetition)
Course of performance: some behavior or conduct repetitiously adopted within THIS (the same) contract
Course of dealings: course of conduct or behavior parties have adopted in previous, independent agreements
Trade Usage Evidence: some conduct that is so readily observable in the location, vocation, or trade such that the parties SHOULD HAVE known it was part of the agreement (this is how we do it)
Has to be...
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