Sales Contracts
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Derreon Underwood
Do Now
At the Dan-Dee Discount Department Store, Jack and
Jean Medina signed a contract to buy a clothes washer
and dryer set. The Dan-Dee salesperson explained
that although the set on display was not in stock, “We
will deliver and install it within two weeks.” The
Medinas left their car in the store’s automobile service
department to have the engine’s speed adjusted and to
have squeaks eliminated. The charge for labor was
$45.There was no charge for parts or supplies. The
service attendant recommended replacing the car’s
tires and the Medinas agreed. The cost of the tires was
$300, plus $25 for balancing and installation. The
Medinas also bought a new battery for $59. It was
installed free of charge.
Were all of these
agreements sales?
Answer
No, the work on the car engine and the
doors was a contract for services not a
sale. The goods supplied were
incidental. The transfer of ownership of
the tires and battery was a sale. The
agreement of the washer and dryer was
a contract to sell.
Vocab pt. 1
Sale – contract in which ownership of goods transfers
immediately from seller to buyer for a price.
Contract to sell – if the transfer of ownership is to take place in
the future.
Price – is the consideration for a sale or contract to sell goods.
Barter – when parties exchange goods for goods
Goods – tangible and movable personal property
Payment – occurs when the buyer delivers the agreed price
and the seller accepts it.
Vendor – the seller in an agreement
Vocab pt. 2
Vendee – the buyer in an agreement
Bill of sale – receipt that serves as written evidence of the transfer
of ownership of goods
Unconscionable – grossly unfair and oppressive
Contracts of adhesion – one of the parties dictates all the
important terms
Merchant – is a seller who deals regularly in a particular kind of
goods
Casual Sellers – someone who sells on occasion
Sales
- Sales of goods and contracts to sell goods are governed by a
combination of basic contract law.
- Transfers of ownership of other types of property such as
intangible personal property and real estate are governed by
different laws.
- The Uniform Commercial Code (UCC) governs sales of goods
and contracts to sell goods in the future.
- Under the UCC, a sales contract may be made in any manner
sufficient to show agreement.
- The resulting contract is acceptable if the parties recognize the
existence of a contract
Ownership
- Any rise of value belongs to the current owner and may be used
by the owner however they please even squandered or destroyed.
- When goods are destroyed or damaged without legal fault of a
person the owner loses unless covered by insurance.
- Both benefits and burdens go with ownership of goods. The
owner may be taxed in proportion to what is owned and the
freedom to use one’s property may be limited by government
regulations.
- Merchants are held at a higher standard than casual sellers by
the UCC.
Special Rules
- Sales of goods for $500 or more must be evidenced by a writing
to be enforceable in court.
In good business practice both parties sign a written sales
contract and each party gets a copy.
- Not all terms of a sales contract have to be in writing to satisfy
the statue of frauds.
- The writing must specify at least a quantity of goods involved
and must be signed by the party who is sued or by that party’s
agent.
- A variation of the statue of frauds can occur between
merchants.
Closing Questions
1. Under the statue of frauds, sales of goods valued at _______ or
more need to be evidenced by a writing to be enforceable in court.
2. A bill of sale provides _______ .
Answers
1. $500
2. Useful evidence of the transfer
of title to goods.