Hofstra University
Zarb School of Business
Department of
Accounting, Taxation,
and Legal Studies
~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Assistant Professor
Glen M. Vogel, P.E., Esq.
Hypothetical
•
You are the owner of a company called
Compudata – a computer software & systems
company. You receive an inquiry from BMI, Inc.
regarding your company’s various services.
•
What are some of the legal issues you need to
consider?
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How do we enter into a contract?
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Contracts
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What happens if BMI breaches?
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Remedies
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How do we protect our product?
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IP
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Are we dealing with the right person?
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Agency
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What happens if we have a dispute?
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Litigation
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What happens if our product hurts
someone?
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Product Liability
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Does making our product impact the
environment?
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Environmental Law
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Do we have any competitors?
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Antitrust Law
Article 2
of the UCC
Sale of Goods
Except as otherwise provided in this section a
contract for the sale of goods for the price of
$500 or more is not enforceable by way of
action or defense unless there is some writing
sufficient to indicate that a contract for sale
has been made between the parties and signed
by the party against whom enforcement is
sought or by his authorized agent or broker.
Unless excluded or modified, a warranty that the goods
shall be merchantable is implied in a contract for their
sale if the seller is a merchant with respect to goods of
that kind.
Goods, to be merchantable, must:
(a) pass without objection in the trade under the contract description; and
(b) in the case of fungible goods, are of fair average quality within the
description; and
(c) are fit for the ordinary purposes for which such goods are used; and
(d) run, within the variations permitted by the agreement, of even kind, quality
and quantity within each unit and among all units involved; and
(e) are adequately contained, packaged, and labeled as the agreement may
require; and
(f) conform to the promise or affirmations of fact made on the container or
label if any.
As an example: if Alice lends Bob a $10 bill, she
does not care if she is repaid with the same $10
bill, two $5 bills, a $5 bill and five $1 bills or
bunch of coins that total $10 as currency is
fungible. However, if Bob borrows Alice's car she
will most likely be upset if Bob returns a different
vehicle--even a vehicle that is the same make and
model--as automobiles are not fungible with
respect to ownership.
A contract for sale of goods may be made in any manner
sufficient to show agreement, including conduct by both
parties which recognizes the existence of such a contract.
An agreement sufficient to constitute a contract for sale may
be found even though the moment of its making is
undetermined.
Even though one or more terms are left open a contract for
sale does not fail for indefiniteness if the parties have
intended to make a contract and there is a reasonably certain
basis for giving an appropriate remedy.
A valid contract requires 6 things:
1.
2.
3.
4.
5.
6.
Agreement
Consideration
Contractual Capacity
Legality
Genuineness of Assent
Proper Form
•
•
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Correct information about your PRODUCT/SERVICES
Correct information about you – the SELLER
Correct information about the BUYER
•
Terms – clear & bargained for:
•
•
•
•
•
•
•
•
•
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Amount to be paid
When will it be paid
What form will payment take
What happens if payment is not made – what are your rights
Interest on payments
Delivery of merchandise/product
Who pays for delivery
Insurance on delivery
Signatures!!
Agency issues
Agency: a fiduciary relationship that results when one person
(the principal) manifests his consent that another person
(the agent) will act on his behalf and subject to his
control and the agent manifests an intent to so act.
Specific Agency Rules:
1.
Partnerships – the act of any one partner binds all of the
partners & the partnership. They are all agents for the
business.
2.
Corporations & other business forms – it is less clear and
agency will depend on the title of the person involved and
their specific corporate duties/responsibilities.
•
Express Contracts: a contract in which the
terms of the agreement are explicitly stated
orally or in writing.
•
Implied Contract: a contract formed in whole
or in part by the conduct (as opposed to the
words) of the parties. In order to establish an
implied-in-fact in contract you need to show:
•
•
•
The plaintiff must have furnished some
service or property to defendant;
The plaintiff reasonably expected to be paid
and the defendant knew or should have known
that a reasonable person in the plaintiff’s
position would have expected to be paid, and;
The defendant must have had the opportunity
to reject the service or property and failed to
do so.
The following website produced by Cornell
University School of Law is a great
resource for issues surrounding the sale of
goods. It has all of the relevant sections of
the UCC available for your review.
http://www.law.cornell.edu/ucc/2/overview.html