Bài giảng Business Law (13th edition) - Chapter 19: Formation & Terms

SalesFormation & TermsProduct LiabilityPerformance of Sales ContractRemedies for Breach of Sales Contracts4McGraw-Hill/Irwin Business Law, 13/e© 2007 The McGraw-Hill Companies, Inc. All rights reserved.Formation & TermsPAETRHC19“Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains.”Thomas Jefferson, U.S. president and merchant, in a letter to Horatio G. Spafford (March 17, 1814)Learning ObjectivesDefinitions of basic terminologyTerms (details) of sales contractsThe nature of “title”Title & third partiesRisk of lossSales on trial, approval, or consignment19 - *Uniform Commercial Code (UCC) governs most commercial transactions in the United States and Article 2 covers the sale of goodsDoes not literally apply to trade in servicesUnited Nations Convention on Contracts for the International Sale of Goods (1980) provides rules governing risk of loss in international sale of goods contractsThe Sale of Goods19 - *Choice of Law 19 - *Title (evidence of legal ownership) to goods cannot pass from seller to buyer until goods are identified to the contract [UCC 2–401(1)]Fundamental rule: buyer cannot receive better title to goods than seller hadException: Seller who has a voidable title may pass good title to a good faith purchaser for valueTitle to Goods19 - *UCC 2– 403(2): a buyer in the ordinary course of business may gain good title because s/he (a) in good faith and without knowledge that the sale violates ownership rights of third party, and (b) buys the good(s) from a merchant selling goods of that kind [UCC 1–201(9)]Another Exception to Rule19 - *Trade practices are words commonly used in a particular industryIn an outputs contract, buyer purchases all the production of sellerIn a requirements contract, seller agrees to provide all buyer’s requirementsStandardized shipping term are used to identify which party bears risk of lossCommon Rules of Interpretation19 - *FOB (free on board) point of origin: Seller bears expense and risk to deliver goods to place designated FAS (free alongside ship): Seller bears expense and risk to deliver goods alongside vessel CIF (cost, insurance, and freight): Price includes seller’s cost to load, ship, and insure the goodsC & F: Same as CIF without insuranceCommon Shipping Terms19 - *Sale on approval, sale or return, or consignment is a common commercial practice in which seller of goods entrusts possession of goods to buyer to either give buyer an opportunity to decide whether to purchase or to resell them to a third personSales on Trial19 - *Test Your KnowledgeTrue=A, False = BUCC Article 2 governs most sale of goods transactions in the United StatesTom agrees to mow Katy’s lawn. Katy failed to pay Tom as agreed. UCC Art. 2 applies to the contract between Tom and Katy.An outputs contract is an agreement in which buyer purchases all the production of seller19 - *Test Your KnowledgeTrue=A, False = BCIF (cost, insurance, and freight) means buyer covers risk to load, ship, and insure goodsFOB (free on board) Port of Miami means that seller must deliver goods to the Port of Miami at seller’s risk and expense, including loading goods on boardFAS (free alongside ship) means that seller must deliver goods alongside the vessel at the port at seller’s own risk and expense19 - *Test Your KnowledgeMultiple ChoiceIke’s Bikes sells motorcycles. Sam’s Used Cars & Cycles (Sam’s) sold Ike a used motorcycle. Ike believes the bike belonged to Sam’s since Sam’s produced papers that looked official. Sam’s had stolen the bike from Ted. Ike may: (a) sell the bike since he was a buyer in the ordinary course of business and has good title(b) not sell the bike since it was stolen(c) sell the bike to any customer, but Ted will win a lawsuit against Ike for damages since Ted is the rightful owner of the bike19 - *Test Your KnowledgeMultiple ChoicePacific Paper Co. (Pacific) and BoxCo had a contract in which Pacific must provide all cardboard for BoxCo’s box production. This type of contract is known as a(n): (a) outputs contract(b) destination contract(c) supply contract(d) requirements contract(e) none of the above19 - *Test Your KnowledgeMultiple ChoiceChoi ordered 100 crystal vases from Kristal in New York. The contract stated the goods were to be delivered “FOB Choi’s, 111 Main, Cityville, TX.” The truck overturned en route and the vases were destroyed. Choi must: (a) pay Kristal the contract price and order again since Choi contracted for the risk of loss(b) notify Kristal to resend the order since Kristal contracted for the expense and risk of delivering to the destination19 - *Thought QuestionsJefferson said, “Merchants have no country.” Did globalization begin in his time? Do you agree with Jefferson?19 - *