Sales Outline

I.      Formation
A.    Intro to the Course
1.      Background to the UCC
a.       In the early-20th C Am law was rule oriented. Legal realism changed that with the belief that diff facts should yield diff results and the movement away from abstract rules.  The UCC was the brainchild of Carl Llewelyn, the father of the legal realist movement. The UCC is thus very particular to facts. Title (abstract) was the crux of the law of sales b4 the UCC. Now it’s CoD, CoP and UoT (more fact-oriented). 
b.       § 1-102—UCC shall be liberally construed.
c.       § 1-203—Parties to a K must act in good faith in performance/ enforceM.
2.      Functions of Sales Systems
a.       Formulation: Sales systems help Bs and Ss create legally enforceable ownership xfers.
b.       Terms: Sales systems provide a set of stnd terms unless B and S choose to modify them. 
c.       Performance: Sales systems provide a set of delivery institutions that facilitate the possessory, legal and symbolic xfer from S to B.
d.       Remedies: Sales systems enforce agreeMs to transfer ownership by giving the aggrieved buyer or seller various remedies for breach by the other.
B.    The Role and Scope of Codes
1.      The UCC is a Gap-Filler!
Express Termsà Implied Terms (CoPàCoDàUoT)à UCCà CL
a.       Express terms trump all.
b.       Implied terms trump UCC and CL
i.         § 2-208(1)/R1-303(a) = CoP
ii.        § 1-205(1) and (3)/R1-303(b) = CoD
iii.      § 1-205(2) and (3)/R1-303(c) = UoT
c.       The UCC fills gaps since parties to a sales agreeM cannot think of every contingency in advance. Makes transactions quicker when parties are willing to fall back on UCC. Plus it creates uniformity, as opposed to CL which varies by state. The content of UCC is itself mostly UoT.
d.       § 1-103: The CL is the second gapfiller; helps define terms UCC leaves undefined like “offer.” 
e.       Ragus Co. v. City of Chicago (1993)
i.         Ragus entered K to supply City w/ a certain number of rodent traps. The city says that it meant pairs of rodent traps and refused delivery of ind traps. Ragus sued for damages. The City showed the UoT was pairs of traps; everyone sold them in pairs. Therefore, City wins SJ. (Note: This case kind of ignores the parol evidence rule, but the modern trend is to admit evidence liberally).
2.      UCC applies to transactions in goods (movable at time of identification to K).
a.       § 2-102: Art 2 applies to transactions in goods (has nothing to do w/ merchant status).
b.       § 2-105/A2-103(1)(k): Goods are “all things (including specially mfg goods) which are movable at the time of identification to the K for sale.” (Also includes crops and unborn animals).
c.       Dakota Pork Indus. v. City of Huron (2002)
i.         DP gave City water rights in exchange for water supply. Is furnishing water the sale of goods? This ct (unlike some other cts) holds that the sale of water is the sale of goods governed by Art 2 bc it, like electricity, is a thing that is fairly identifiable as movable (by measure w/ flow meter) at the time of identification to the K of sale. 
ii.        Note: Cts can still apply Art 2 principles and policies even if Article 2 does not technically apply. 
d.       Problem 1.5: Are these the sale of goods such that Art applies? §§ 2-102, 2-105(1)/A2-103(1)(k).
i.         Sale by author of movable paper certificate representing author’s rights to future royalties.
1)       Answer: NO—paper is movable but it is not a good. The right/ability to sue/collect royalties is a thing in action, which the UCC specifically states is not goods. Therefore the CL applies.
ii.        Sale of natural gas
1)       Answer: YES (EXCEPT: If it will damage the realty, Art 2 only applies if the seller removes it. W/ natural gas you have to drill so probably will damage the land and must be removed by S.)
iii.      Sale of compact disc to a consumer by a retail music store
1)       Answer: YES. Buyer is buying the actual CD, not the IP—might be diff with a download but with a CD the form predominates.
iv.      Recording artist’s sale of an original recording on CD to a producer to produce/distribute the CD.
1)       Answer: NO. The artist is selling his IP; the IP predominates, not the technical CD form.
v.        A publishing company’s contract with an author to write a book
1)       Answer: NO- Book does not exist at time of identification to the K. Again this is an IP purchase.
vi.      A manufacturer’s K w/ a merchant buyer to specially manufacture and sell a custom-made machine.
1)       Answer: YES. 2-105(1) expressly includes SOME specially manufactured goods. Machine v. book. For machine, specs are submitted so the B gets exactly what B wants. With book, even if B doesn’t nec know at time of identification to K exactly what finished product will be.
vii.     A sculptor’s K w/ a patron of the arts to create and sell an original sculpture to the patron.
1)       Answer: NO—this is a closer question, but still involves creativity so isn’t precisely id’d to the K.
viii.   The sale of a raffle ticket for a new car.
1)       Answer: NO- A chance to win the car is a thing in action—a right to claim the car IF your ticket gets picked. Any time a piece of paper represents something its almost always not a good.
3.      UCC applies to some Mixed Goods-Services Ks
a.       Predominant purpose test (maj): Is the predominant purpose of the transaction to sell goods or services? If goods, the UCC applies to the whole transaction. If services, UCC applies to none.
b.       Gravamen of the action test (min): Is the source of the complaint w/ the goods or the services portion of the transaction? (H prefers).
c.       Cook v. Downing (1994)
i.         D is a dentist who also sells dentures. P sued under IWF for ill-fitting dentures. IWF only applies to merchants. Dentists are medical service providers, not merchants under 2-104 and dentures are not goods under 2-105. JudgM for P rev’d.
ii.        Dissent: This is a mixed goods-services K. The predominance test applies, there was evidence that the dentures were the predominant part of the trans, and so judgM for P should be aff’d. Maj ignores the fact that nothing excludes dentures/dentists from the code’s definitions of goods/merchants.
d.       Problem 1.3: Aunt takes old-fashioned reels of home movies to local camera shop for xfer to VHS tapes. Shop messes up xfer process and ruins reels. Will Art 2’s warranties provide a remedy?
i.         Answer: § 2-102: Art 2 only applies to transactions in goods. This is a mixed services-goods K. Art 2 probably will not apply to her claim bc:
1)       Under the gravamen test it was the service that resulted in the damage.
2)       Under the predominance test she is probably paying more for the service than the tapes.
e.       Problem 1.4: Specialty Optometrists make and fit contact lenses for the problem wearer. Should they make customers sign disclaimer of UCC warranties?
i.         Answer: § 2-102 again. H doesn’t know the answer bc its difficult to pull apart the goods from the services. If we go by Cook v. Downing then its not a transaction in goods, but “medical services.” But under normal UCC definitions, maybe? Primarily buying the specialty contact lenses—so goods seem predominant. Plus the contacts and not the fitting will likely cause any damage.
4.      Merchants
a.       § 2-104(1): a merchant is “a person who deals in the goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employM of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill.
b.       Three Types of Merchants under UCC (§ 2-104 Cmt. 2):
i.         For § 2-201(2) (SoF), 2-205 (firm offers), 2-207 (confirmatory memoranda) and 2-209 (modification), almost every person in biz qualifies as a merchant by “hold[ing] himself out as having knowledge or skill peculiar to the practices … involved in the transaction …” This is bc the practices involved, e.g., answering mail, are typical biz practices for all bizs. Still must be in mercantile capacity.
ii.        § 2-314 (IWM), §2-402(2) and § 2-403(2) (entrustment) only apply to merchants who deal in goods of the kind (requiring professional status as to the particular kind of goods.)
iii.      § 2-103(1)(b) (good faith = reas comm stnds), §2-327(1)(c), § 2-603, § 2-605, § 2-509 (RoL) and § 2-609 apply to persons who are merchants under either of the above definitions: practices or goods so like i. every person in biz will qualify.
c.       Problem 1.6: Drunk lawyer friend agrees to sell you her car for $8,000 at reunion. You were told to bring the check to her house at end of month for pickup. Sent letter to confirm agreeM but she didn’t respond and refused to sell bc worth 15,000. Can you enforce oral K under §§ UCC 2-201(1) & (2), 2-104(1) & (3), and OC 2 to 2-104.
i.         Answer: Under OC 2, for SoF issues, any person in business qualifies as a merchant, so long as they are acting in their mercantile capacity…not to a lawyer buying fishing tackle. For 2-201(2) to apply, the sale must be between merchants. Deborah might be acting w/in her mercantile capacity due to her expertise of Rolls Royces. But B (me) probably is not—like buying fishing tackle. So probably not merchants, K exceeds $500 and there’s valid writing so Debo