MODULE 24 SALES 161

SALES
Overview disclaimers; risk of loss; and remedies, rights, and duties
The law of sales governs contracts for the sale of of the buyer and seller.
goods. Since a sale of goods is involved, Article 2 of the You should understand that a binding contract may
UniformCommercial Code (UCC) applies. A sale of be present under the UCC if the parties had intended to be
goods under the UCC is the sale of tangible, moveable bound, even though certain elements of a contract may be
property. missing. These open terms will be filled by specific pro-
One of the areas tested in sales is product liability. visions of the UCc. The parties to a sale need not be
When studying this area, you should pay particular atten- merchants for the UCC to apply; however, some rules
tion to the different legal theories under which an injured vary if merchants are involved in the sales contract.
party may recover. Realize that an injured party may re- As you study this area, note that it builds on much of
cover under the legal theories of breach of warranty, neg- the material under contracts in the previous module.
ligence, and strict liability. It is important that you know Therefore, as you study this area you should review the
the circumstances under which these theories may be contract law rules, especially those in the previous mod-
used. Other areas that are often tested are warranties; ule that apply to the UCC"
1. Contracts for Sale of Goods
2. Article 2 of the Uniform Commercial Code, in general, controls contracts for the sale of goods for
any
dollar amount
3. "Goods" include tangible personal property (whether specially manufactured or not)
(1) Do not include sales of investment securities, accounts receivable, contract rights, copyrights,
or patents
EXAMPLE: S sells B a stereo. The UCC applies.
EXAMPLE: S sells a home to B. The common law rules rather than the UCC rules apply to this contract
since it involves the sale of real property.
EXAMPLE: F sells to M several bushels of wheat. The UCC applies to fungible goods also (i.e., goods in
which one unit is considered the equivalent of the other units).
4. In general, UCC applies to sales and leases of hardware as well as to sales and licensing of soft-

ware.
(1) However, if software is heavily customized based on services of consultant, common law ap-
plies.
5. Article 2 of UCC has been passed into law by every state (except Louisiana which has adopted

only portions of UCC)

(1) Federal courts also use principles in Article 2 for sales of goods.
6. UCC applies whether sale is between merchants or consumers but some rules change if merchant
involved
EXAMPLE: S sells his used refrigerator to B, a neighbor. The UCC applies to this transaction.
7. Thrust of UCC is to find a contract in cases where it is the intent of the parties to do so, even

though some technical element of contract may be missing

8. Unlike general contract law, open terms (missing terms) will not cause a contract for sale of goods
to fail for indefiniteness if there was intent to contract and a reasonable basis for establishing a
remedy is available
(1) Elements of sales contracts are generally same as common law contracts
9. General concepts
10. Merchant-one who deals in the kind of goods being sold, or one who holds self out as having su-
perior knowledge and skills as to the goods involved, or one who employs another who qualifies
as a merchant
11. Firm offer-a written, signed offer concerning the sale of goods, by a merchant, giving assurance
that it will be held open for a specified time is irrevocable for that period, not to exceed three
months
(1) Note that only offeror need be a merchant under this rule
(2) If firm offer does not state specific time, it will remain open for reasonable time, not to exceed
three months