SALES & OTHER
CONTRACTUAL SITUATIONS
Mr. Valanzano
Business Law
Sales
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Sale – a contract in which ___________ of (_______ to)
________ transfers from the ________ to the ________
for a __________
If the transfer of ownership is set to take place in the
future, the transaction is a ______________________
rather than a sale.
Price – _______________________________________
___________________________________
When parties exchange goods for goods, the sale is a
____________ (_________).
Sales of Goods __________________
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The UCC ______________ the sale of goods and
contracts to sell goods in the future.
Goods – __________________________________
_________________________________
By UCC definition, __________ do not include:
___________ (except rare collectible currency or coins)
 _____________ (not touchable) ______________ property
 _____________ and ________________
 ___________ and other forms of _______________

UCC Sales Contracts
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Under the UCC, a sales contract may be made in any manner
_________________________________.
_____________ occurs when the buyer delivers the agreed ________
and the ___________ accepts it.
Receipt of Goods – ________________________________________
______________________________________
In a contract for a _____________, any goods involved are treated
as _______________.
_______________ – the buyer has agreed, by words or conduct, that
the goods received are satisfactory

Shown when the goods are __________, ____________, or treated as if
they were _____________ by the buyer.
_______________ Sales Contracts
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When a court finds that a ___________ or a ___________
____________of a contract is unconscionable, that means the
contract and/or clause is _______________and
____________.
____________________________ are the most likely to be
found unconscionable because 1 party dictates all the
important terms.
If a court decides a contract or clause is ________________,
they may do any of the following:


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_____________ to enforce the contract
_________ the contract ___________ the unconscionable _______
_____________ the clause’s application so that the contract is no
longer ____________
Quick Review

Answer the following questions on your handout:
 1)
Which of the following are considered goods under
the UCC? A) Rare coins B) Patents C) Neither D)Both
 2)
Which of the following would NOT be considered
goods under the UCC’s law of sales? A) Passenger plane
B) Computer C) 6 acres of land D) All of the above
ARE goods under the UCC
 3)
True or False: Contracts to sell are not governed by
the UCC’s of sales.
________________
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_______________ – a _________ who deals regularly
in a particular _________________ or otherwise claims
to have special ____________ or _______ in a certain
type of sales transaction
Casual Sellers – _______________________________
_________________________________
Special __________ and __________ of ownership:
______________________
 _____________
 __________________ regulations
 ___________________

Sales Compared to Other Transfers of
Ownership and Possession
Transaction
Type of property
Is a contract
involved?
Personal or real
No
Conveyance
Transfer of
ownership?
Transfer of
possession?
Evidence of
transaction
Yes (usually)
Usually none or
a deed
Usually (may be
gratuitous)
Real (usually)
Usually (may be
gratuitous)
Contract or deed
No
Sale
Yes (usually)
Goods
Yes (usually but
not immediately)
Barter
Yes
Negotiable
instruments
Assignment
Contract
Usually
Commercial
paper or
contract
Usually
Personal
Contract or bill
of sale
Usually
Yes, when
contract is
performed
No
Yes
Contract
Special Rules for ______________
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Under certain circumstances, oral contracts for the sale of
goods priced at _____________ may be a __________
and ______________.
Exceptions to these requirements of the __________
__________ include:

Goods __________ and ___________ by the buyer
buyer _________ goods and _________ seller of approval
 ________ or __________ goods
 does not ________ goods after a _______________ amount of time

______________ for goods and ________________ payment
 Sale of __________________ not suitable for sale to others

Quick Review

Answer the following questions on your handout:
TRUE OR FALSE
 1)
Generally, orally made sales or contracts to
sell are valid and enforceable in court.
 2)
If a buyer resells the goods, the UCC treats the
buyer’s actions as acceptance.
 3)
Both parties have to sign the writing to satisfy
the statute of frauds.
The ________ to _________ Ownership
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Generally, only the ______________ of goods may legally
_____________ ownership of those goods.
The ____________ of the goods receives only the property rights
that the _____________ and nothing more.
Exceptions to transfer of _____________ rules:
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Persons ___________ to do so may transfer __________________ title
Buyers in a sale ____________________ may transfer better title than
they have
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_________________________ – innocent third party that gives up value for
stolen goods and acquired rights in them
Holders of ___________________________ of title may transfer better
title than they have
Merchants who keep _____________ of _______________ goods they
have sold may transfer better title than they have
______________ for Transfer of Ownership
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For ownership of goods to be transferred in a sale, the
goods must be both ___________ and ____________.
_________________ – goods owned by the seller that
are physically in existence even though they may not be
in a fully assembled or immediately deliverable
condition
Identified Goods – _____________________________
____________________________________________
____________________________________________
Unless goods are both existing and identified, they are
then considered _________________.
When Does Ownership Transfer?

Common situations involving _________ of ________:
 Seller
delivers goods to their __________________
 __________________________
– the seller places the proper
goods at the buyer’s disposal and notifies the buyer so that
delivery can be received
 Seller
________, but does not ______________, goods to
their _________________
 Seller delivers ______________________
 Buyer takes ______________ at __________________

Neither the _____________________ nor the ______
___________ governs the outcome of these situations.
Risk of Loss
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_______________ does not always transfer from seller
to buyer when __________ transfers.
Possible alternatives to when _________ of __________
take place:

Seller ships goods by ____________

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__________________________ – seller agrees to deliver goods to
a specific destination and retains risk of loss until goods reach said
destination
Goods held by ___________

Bailee – _______________________________________________
______________________________________________________
Either party ____________ after goods are _____________
 Goods neither _______________ nor ___________________
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Insurable Interest
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The buyer obtains a special _______________________ in
goods at the time of their __________________ to the
contract. This gives the buyer the right to buy ____________
on the goods.
The physical act of ___________ goods can include: setting
aside, ___________, tagging, _____________, boxing,
_______________, or shipping.
In addition to _____________________, the buyer has the
following rights:
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To ___________ the identified goods at a ______________ hour
To compel ___________ if the seller
___________________________ delivery
To collect ____________ from third parties who
__________________ the goods
Transfer of __________ and ___________
in Specific Transactions
Type of Transaction When does transfer occur?
Title passes to buyer at time of transaction when they pay cash and take
immediate delivery
Sales on credit
Buyer receives title ______________ even though _______________ or
____________ is ______________
Title goes to buyer once seller delivers and buyer pays at time of
delivery
Sale or return
Title passes to buyer on ___________ but can be passed ___________
__________ if goods are ___________ within ___________ or
_______________ amount of time
Title does not pass to buyer until they approve of the goods
Sale of an
undivided interest
Title passes to buyer at the ___________________________________
_________________________________________
Ownership passes to buyer at time of auction close. Risk of loss passes
to buyer upon tender of goods in exchange for payment.
Quick Review

Answer the following questions on your handout:
 1)
FOB means: A) First of Business B) First on Board
C) Free of Business D) Free on Board
 2)
True or False: The transfer of the risk of loss from
seller to buyer always occurs when title transfers.
 3)
The carrier collects the price and transportation
charges upon delivery, then transmits this amount to the
seller in: A) COD sales B) Cash-and-carry sales
C) A sale or return D) Sales on credit
Consumer Protection
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______________ – an individual who acquires ______
that are primarily intended for _________, _________,
or ______________ use
It was once thought that consumers would do business
living by the phrase “_______________________” or
“___________________________.”
As society progressed to a more __________________
society, it became more difficult for _____________ to
judge a product’s _____________, _____________,
_______________, and ____________________.
________ Protection for Consumers
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________________________ – allows 1 or more people to ______
not only on behalf of ______________, but also on behalf of many
______________________________
__________________________ – an ______________ requiring a
_______________ to stop the specified conduct (severe _________
penalties occur if this order is violated)
Consent Order – ________________________________________
______________________________________________________
In settling a __________ with a business, a consumer may seek help
or advice from the:
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State ______________________ office
_______________________________ (local)
__________________________ department of the business involved
What Do Federal Consumer Laws Do?
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Protect against the ____________ and __________
of _____________ or _______________ consumer
goods
Prohibit _______________________________
Require _____________ and _______________ to
help ensure ______________ with the law
Provide _______________________________
Protection Against __________ Goods
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_________________________
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___________, _________, and ______________
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Consumer Product Safety Commission (_________)
Any company that finds its products ______ to comply with safety
regulations must _____________ that fact to the commission.
Products can be ___________ and repaired, ______________, or
the price can be refunded.
___________________________________________ (FDA)
Production facilities for food, drugs, and cosmetics must be _______
and ingredients must be _________________________________.
FDA requires ________ on regulated products and must give name
and address of manufacturer, ________________, or distributor, as
well as nutritional info for food.
Standards for ___________ and ____________

Weighing and measuring devices are inspected and tested at least
___________________ to ensure accuracy.
Protection Against __________________
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Unfair Trade Practice – _________________________
____________________________________________
Companies sometimes agree to __________ or ______
prices to ensure their survival and ________________.
These agreements are ________ and _____________.
_____________________________ – advertising that
intentionally _________, makes untrue claims of quality
or effectiveness, or fails to revel important facts

The _______________________ (FTC) has the responsibility
of preventing these types of ads.
Other Unfair Trade Practices
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Illegal ________________
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Unfair _________ and ___________
_______________ Goods
_________ Goods Sold as _______
Confusing _____________ or ______________
________________ Merchandise
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Lotteries must require a __________, be won by ________,
and have a __________ to be won.
Sending _________ merchandise and _________ payment.
Commercial ____________
Fraudulent ____________ and ________________
FTC Guidelines
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The ______ has adopted many guidelines intended to
_____________________________ by requiring
businesses to act in certain ways including:

Potential ______________ must explain to their intended
borrowers their methods of _________________________.

Under certain circumstances, ________, _______________,
or both must provide ________________________ to their
customers.

Businesses that sell ________________ must give purchasers
_____ days to _____________ contracts for purchases of
_______ or more.
Quick Review

Answer the following questions on your handout:
 1)
Which of the following is regulated by the Consumer
Product Safety Commission?
A) Drugs B) Firearms
C) Toys D) Cosmetics
 2)
True or False: Legally, a person buying goods for
their business is not a consumer.
 3)
The elements of a lottery are ________, chance, and
consideration.
A) Price B) Money C) Luck D) None of the above
_______ and ________ Protection
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________________________
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______________ for _____________ Consumers
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_____________________, cease-and-desist orders
_________________ and __________ Adulteration Laws
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Examples of licensed professionals: ___________, nurses, pharmacists,
__________, teachers, _________________, realtors, insurance agents,
beauticians.
Certain professionals need to earn _____________ in order to meet
standards and requirements to ________________________.
Businesses where food is handled need to be ________________ and
_______________ need to be _________________.
______________________
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State and local laws are in place to govern ____________, accessibility,
____________________, and type of usage.
Detailed regulations apply to _______________, elevators, _________,
sprinkler systems, _______ location and marking, and sanitary facilities.
Product Liability
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______________________ – the relationship that exists between or
among the contracting parties as a result of their _______________
_________________
A _________________ suit may be based on a breach of ________,
or on the torts of ________, _____________, or ________________.
Consumers injured by a _________ product are most likely to recover
damages by relying on ____________________.
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The defect caused the product to be ________________________.
It is difficult for an injured consumer to _________________ because:
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_____________ may not be ___________, __________, or ___________
The seller’s ______________________ is hard to prove
___________________ can be difficult to prove in certain situations
Warranties
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____________ – a statement about a product’s ______________ or
____________ that the seller __________ the buyer is ________
Warranties can be either ___________ or _____________ and are
governed by the UCC.
Express Warranty – ______________________________________
______________________________________________________
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____________________ – an express warranty that obligates the seller
to repair or replace a defective product ____________________ to the
buyer in a reasonable amount of time
____________________ – any warranty that provides _____________
______________ than a full warranty; a seller must __________ buyers
when there is a limited warranty
Implied Warranty – ______________________________________
______________________________________________________
Required Information for a Warranty
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Under the ________________________________, the FTC has established
minimum standards for warranties for goods that cost more than ________.

____________ are _______ required to give warranties.

Information that must be included in a warranty:
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________ the warranty is extended to
Description of ____________ and any _____________ parts
What the ___________ will and will not to in the event of a _______________
When the warranty ____________ and _________
________________ procedure to obtain ___________ of warranty obligations
Availability of any _______________________________________
Any limitation on _________________________________________
If there are any _______________ or ___________________ on incidental or
consequential damages
These exact words: “______________________________________________
______________________________________________________________.”
___________ Warranties
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Implied warranties are made to ____________________________.
These warranties are _______________________ and do not need to
be mentioned in a contract. Only if the parties specifically agree is
any one or more of these warranties excluded.
Types of implied warranties:
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Warranty of Title – _________________________________________
_________________________________________________________
_______________________________ – the goods should be delivered
free of all claims of third parties if which the buyer is not aware of at the
time of contracting
___________________________________ – a buyer who needs goods
for a certain purpose tells the seller about that purpose then:



relies on the seller’s ________ and _________ for selecting appropriate goods
the seller has _________ reason to know of the buyer’s _____________
the implied warranty here is that the goods delivered to the buyer are _______
_______________________________________
Warranties Implied by Law for ________

In addition to the warranties made by all sellers, the
following are warranties also made by _________
___________:
 _________________________
– the goods in which a
merchant normally deals with will be delivered to a
buyer free of any _____________________________
____________________________________________
 _________________________ – requires that the
goods be ____________________________________
______________________________
______ Warranties Made by All ______

Warranty of Conformity to ______________________
___________
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Every seller is bound by any __________________________
_____________ that is part of the agreement.
A buyer should want these statements in ____________.
Warranty of Conformity to __________________________
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
Used when a _____________ of the goods or a ___________ or
___________ of the goods is made ________________.
The goods need to __________ the description, sample, or model
used in the words of the contract.
__________ of Warranties

A seller may offer to sell goods ________ warranties when:

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To sell goods _________ a warranty, the seller must _____
_________________________, and use language that will
exclude implied warranties.
Disclaimer – ______________________________
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The goods are ________________________
A new __________ or ___________ is being used
A disclaimer must be ______________ and be ______________
_____________________.
An implied warranty can be excluded by using expressions
such as “_________,” “________________,” or other similar
words.
Quick Review

Answer the following questions on your handout:

1) Caveat emptor means let the _________ beware.
A) Buyer B) Seller C) Ruler D) Student

2) True or False: Although several legal theories are available to form the
basis for a product liability suit, injured consumers may find it difficult to
recover damages.

3) Detailed safety regulations apply to:
A) Elevators B) Sprinkler systems C) Fire escapes
E) All of the above

4) True or False: A warranty that obligates the seller to repair or replace the
defective product with only a labor cost to the buyer is still a full warranty.

5) Claims of third parties that a buyer is not aware of at the time of
contracting is called a(n):
A) Fitness B) Encumbrance C) Infringement D) Conformity
D) Exit signs