Sales Outline
Beard
Spring 2016
Scope of Article 2
An Overview of Article 2
Ask the following questions
Is this a Transaction within the scope of Art. 2?
Was an enforceable contract created?
What are the rights and obligations created by the contract?
Did the parties perform their obligations?
What are the parties’ rights and responsibilities in the absence of full performance?
Using Cases
The statute is the primary authority
The court’s interpretation is secondary
Scope
Transactions in goods
Sales
Leases (Article 2 does not apply)
Gifts
Bailment
License
Bailment
Contracts to sell
Gift/Leases
Present sale
2-107
(1)
To be removed from the realty
Minerals or the like (such as oil and gas)
Structure or its materials
Must be severed by the seller
(2)
Apart from the land
Growing crops
Other things attached, capable of severance without material harm
Not already listed in (1)
Severed by buyer or seller
Goods
A thing (something tangible) movable at the time of identification
Sale
Passage of title from seller to buyer for a price
Scope and Mixed Transactions
1-103
Allows the principles of law and equity to supplement the UCC to the extent that the UCC does not displace other law on a particular issue
Courts can decide to:
Divide the contract into separate parts, with each part governed by the relevant law, OR
Treat the whole contract as falling entirely within the scope of one body of law
The parts of Article 2 dealing with formation and enforceability
if it involves goods or services
Predominant Factor (court adopted)
Looks at the transaction as a whole
Factors to look at
Language of the contract
Nature of the business (seller)
Reason for entering of the contract (buyer)
Prospective amounts charged for goods/services
3 steps
Divisibility
Intent by the parties to divide the contracts
Gravamen
What is the claim?
Predominant Purpose
Majority rule
Language
Provider’s business
What are they known for?
What else do they sell?
What % is customizing?
Parties Purpose – Buyer’s needs
Relative costs
“Smart Goods”
CD is a good
Software on the CD is not
Interpretive Guidelines for Construing the Code
Mandatory v. Default Provisions
Mandatory
Cannot be abrogated by the parties
1-102
1-103
2-306(1)
1-203
1-304
2-302
2-309
Default
(Gap-filler) becomes part of the contract if the parties do not expressly or impliedly agree upon their own terms on that topic
Not always marked with an “unless” provision
2-307
2-308
2-725
Course of Performance
This contract
Course of Dealing
Previous contracts
Usage of Trade
Regularity of observance
Hierarchy of Terms and Provisions (construe as reasonably consistent)
Mandatory Provisions
Language
Course of Performance
Course of Dealing
Usage of Trade
Default
