Overview: Sales and Lease Contracts
Read/Watch:
Saylor: Advanced Business Law and the Legal Environment
· Introduction to Sales and Lease Contracts, Uniform Commercial Code, Contracts for International Sale of Goods (CISG)
· Title of Goods and Risk of Loss
· Performance of Duties and Remedies for Breach
· Products Liability and Sales Contacts
1.Background: The PI owners are aware of the importance of contracts used in business to both buy and sell goods and services. They are reviewing the Uniform Commercial Code (UCC), Article 2, that covers contracts for sales of goods.
In sales contracts, it is important to consider allocation of risk between a buyer and a seller to define value, and typically each party will want to shift as much risk as possible to the other party.
The PI owners understand that they would want different terms in their purchase contracts and sales contracts. First, they want to focus on their sales contracts for selling paint and other supplies, and have asked BCA to prepare a memorandum that recommends desired contract positions on a variety of terms for PI’s contracts for sale of goods.
Instructions: You are tasked with preparing a memorandum to Pat, Gale and the PI owners to make recommendations for sales contracts.
The terms below are just a few of the terms that you, Pat and Gale determined should be included in a sale of goods contract for PI.
· For each of these terms, recommend and explain details and policies for each of these terms in a contract for a PI sale of goods to a buyer.
· For each of these terms, also include the UCC, Article 2, section that applies to the term.
1. Payment terms
2. Transfer of title and risk of loss or damage to goods PI is delivering to buyers
3. Inspection of delivered goods: how long a buyer has to inspect goods after delivery
4. Rights and obligations of seller and buyer if delivered goods conform to the order
5. Rights and obligations of seller and buyer if delivered goods do not conform to the order
Format for Memorandum: number each term/section
TO: PI Owners
FROM: your name
RE: Sales Contract Terms
DATE:
1. Payment terms
2. etc.
2. Background: Jo, Maddy and Taylor, the prospective owners of PI, wanted to order personal business cards for each of them and general informational brochures to be used to introduce themselves and the new business to various contacts as they plan the new PI business. Jo, Maddy, and Taylor sent an email, followed by a written confirmation letter to Professional Cards, Inc. ordering 900 business cards (300 for each of the prospective owners) and 900 informational brochures. They requested the cards and brochures be delivered to Jo’s personal address not later than April 1. The email/letter order did not include a price.
Professional Cards did not respond but shipped the cards and brochures as ordered by April 1 at a price totaling $1800. The price was higher than expected. The PI owners wonder whether they are bound to accept the cards and brochures from Professional Cards since there was no formal acceptance or written correspondence from Professional Cards.
After discussing the contract issues with Pat and Gale, you agree to email the PI owners. The email should address the following.
Analyze and explain whether this is a valid contract between Jo, Maddy, and Taylor, with Professional Cards, and why or why not.
Consider in the analysis that the purchase was a personal purchase by the three potential owners, not a business purchase on behalf of PI because PI is not yet a formal business entity. Consider whether the Statute of Frauds applies to this purchase and, if so, whether the Statute of Frauds was satisfied.