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Sales & Leases
University of Toledo School of Law
Tierney, James Edwin

Sales and Leases
Spring 2008
Professor Tierney
 
I.             Scope
a.     Article 2: Sales
i. Applies to transactions in goods UCC § 2-102
1.     Transactions   
a.     Sales—passing of title from seller to buyer for a price UCC § 2-106(1)
i. Seller: One who sells or contracts to sell UCC § 2-103(1)(d)
ii.Buyer: One who buys or contracts to buy UCC § 2-103(1)(a)
b.     Exchanges
2.     Goods
a.     Things which are movable at the time of identification of the contract for sale UCC § 2-105(1)
i. Minerals removed from realty UCC § 2-107(1)
1.     Removed by the seller
ii.Growing crops, building materials inside of building UCC § 2-107(2)
1.     Attached to realty
2.     Severed without material
3.     Removed by buyer or seller
b.     Manufactured goods UCC § 2-105
i. Specially manufactured goods
1.     appear to request service of mfg. the good BUT
2.     the mfg of goods is covered under Article 2 (see below: hybrid transactions)
ii.Hybrid Transactions
1.     Predominate Purpose Test (all or nothing: either Article 2 applies or it does not)
a.     If the primary purpose for entering into the contract was for the goods, Article 2 applies
b.     If the primary purpose for entering into the contract was for the service, Article 2 does not apply: common law will apply
c.     Doctors—under this test, doctors are presumed to provide services; thus, Article 2 will not apply to doctors
2.     Gravamen Test (Modern Law) (Both Article 2 and the common law can apply)
a.     If the point of complaint is towards the good, Article 2 (and common law) applies
b.     If the point of complaint is towards the service, Article 2 will not apply: common law will apply
c.     Benefits
i. Draft the complaint under the UCC (because UCC and Common law can apply)
ii.Broadens the scope of the UCC
iii.               Fairness
1.     Focus on the substance of the transaction rather than the form
d.     Applies primarily in Consumer transactions, not between businesses
 
 
3.     Examples
a.     P goes to eye doctor for glasses. On one contract, P pays 100 for exam, 175 for glasses. They break and injure P. Under predominate purpose test, P has no Article 2 relief because healthcare is predominately a service. Under the gravamen test, P may have a ca

as not a merchant with respect to saws, but a merchant with respect to lumber.
c.     Good Faith UCC § 2-103(1)(b)
i. Any person in the business acting in mercantile capacity
1.     Good Faith Standard for merchants UCC § 2-103(1)(b)
a.     Honesty in fact UCC § 1-201(19) AND
b.     Observance of reasonable commercial standards of fair dealing in the trade
d.     New Merchants
i. Comparable to other new merchants
e.     ALL MERCHANTS MUST FOLLOW GOOD FAITH STANDARD FOR MERCHANTS
f.     “Between Merchants” UCC § 2-104(3)
i. Both buyer and seller must be merchants
b.     Article 2A: Leases Applies to any transaction that creates a lease UCC § 2A-102
i. Definition of a Lease UCC § 2A-103(j)
1.     Transfer of the right to possess and use
2.     Goods
3.     For a term
a.     Finite, fixed amount of time—at end of term, goods return to lessor
4.     In exchange for consideration (not gratuity—$$$)