Sales Law
November 19, 2009
Winn
Sales Law November 19
• Thursday 11/19
– Watch Monty Python Dead Parrot Sketch on
Youtube and identify the UCC Article 2 issue
– Introduction to Supply Chains handout
– Finish Chapter 3
• Monday 11/23
– Problems 4-1 to 4-4, 4-6 and 4-7
Markets, Relational Contracts, Bureaucracy
MBA: “Make or Buy”
Market
Commodity
Futures
Stock
Market
Relational Bureaucracy
Contract
Consulting
Supplier Employment
(Toyota)
Lending
Vertical
Integration
Outsourcing
Supplier
(Wal-Mart)
Article 2 Warranties
• Express warranties
– Contract terms created by words or conduct of seller
– [Can only be disclaimed with specific disclaimers]
• Implied warranty of merchantability
– Objective standard based on trade standards and reasonable
expectations
– [Can be disclaimed with conspicuous general disclaimers]
• Implied warranty of fitness for a particular purpose
– Implied in law based on individual requirements
communicated by buyer to seller and interpreted by seller
– [Can be disclaimed with conspicuous general disclaimers]
• Implied Warranty of Title
– Ownership of goods is a fundamental implied term
– [Can only be disclaimed with great difficulty with very specific
disclaimers]
Void versus Voidable Title
• Good Title
– Buyer cannot be forced by anyone to surrender goods due to superior
claim of ownership
– Warranty of good title implied in law, absolutely explicit disclaimer
required, nothing less works
• Compare: basis of bargain must be disclaimed explicitly, cannot be disclaimed
with general disclaimers
• Voidable Title
– Buyer has superior title to everyone in the world except former owner
• Bought jewelry from jewelry shop but rightful owner only “entrusted” for
repairs—only rightful owner can “avoid” the transfer to the buyer
• Minor child enters into an unenforceable contract selling an asset, has option to
“affirm” contract upon majority or to “avoid” it and reclaim goods
– If Buyer sells to “good faith purchaser for value” then GFP gets good title
• Void Title
– Buyer has mere possession, must surrender goods under many
circumstances
• Thief stole goods from rightful owner, police can always recover possession for
rightful owner from buyer or buyer’s buyer, etc.