Chapter 15SALES AND LEASES OF

GOODS

Chapter Objectives:
1. Determine when to apply the law of sales
under the UCC.
2. Describe the special rules for sales
contracts.
3. Explain the four exceptions to the rule
requiring contracts for the sale of goods
costing $500 or more to be in writing.
 Chapter 15SALES AND LEASES OF
GOODS

Chapter Objectives (continued):

4. Judge, in a given situation, whether a

writing satisfies the requirements of the
UCC.
5. Contrast an auction with reserve with an
auction without reserve.
6. Determine, in the case of a bulk transfer,
whether the four requirements of the UCC
have been met.
15-1
The Sale and Lease of Goods
•Leases of Goods.
•Computer Information
Transactions.
•Contracts for Both Goods and
Services.
Chapter 15

LawLINKS

Look for UCC Article 2--Sales at

http://www.law.cornell.edu/ucc.
table.html
Chapter 15

LawLINKS

Check out UCC Article 2A--

Leases at
http://www.cornell.edu/ucc.table.
html
 Chapter 15
A Question of Ethics
You are aware from your study of
Chapter 7 that two of the
advertisements mentioned in the
opening case of this chapter are
invitations to deal rather than offers
and are not binding on the advertiser.
How would you advise the two
merchants to deal with the
disappointed consumers from an
ethical point of view?
 15-1
Topic Quiz
Answer the following true/false questions:

1. Forty-nine states have adopted, either

in whole or in part, the Uniform
Commercial Code (UCC).

FALSE

All fifty states.

 15-1
Topic Quiz
Answer the following true/false questions:

2. Money, stocks, and bonds are

movable items that are not
goods.
TRUE
 15-1
Topic Quiz
Answer the following true/false questions:

3. The dominant element of a

contract determines whether it
is a sales contract or a services
contract.
TRUE
15-2

The Sales Contract

A sales contract may be either

a sale or a contract to sell.
 15-2
Topic Quiz
Answer the following true/false questions:

1. Every time anyone buys goods

and receives title to them, a
sale occurs.
TRUE
 15-2
Topic Quiz
Answer the following true/false questions:

2. A contract to sell, rather than a

sale, occurs when title is to
pass at some future time.

TRUE
 15-2
Topic Quiz
Answer the following true/false questions:

3. A gift is considered to be a sale.

FALSE

It is not a sale – there was no price.

 15-3

Special Rules for Sales Contracts

• Good Faith
• Course of Dealings and Usage
of Trade
• Formation of a Sales Contract
• Offer and Acceptance
 15-3
Special Rules for Sales Contracts
(continued)
• Firm Offer
• Open-Price Terms
• Output and Requirements
Terms
• Additional Terms in
Acceptance
• Modification
 15-3
Topic Quiz
Answer the following true/false questions:

1. Under the UCC, a contract

comes into existence when the
acceptance is sent if the
method used is reasonable.
TRUE
 15-3
Topic Quiz
Answer the following true/false questions:
2. No consideration is necessary to
establish a firm offer when a consumer
promises in writing to hold an offer
open for the sale or lease of goods.
FALSE

Consideration is necessary.
 15-3
Topic Quiz
Answer the following true/false questions:

3. Under the UCC, a contract for

the sale of goods may be
established even though the
price is not settled.
TRUE
15-4

Form of Sales Contracts

• Exceptions to the General

Rule.
• Requirements of Writing.
 15-4
Topic Quiz
Answer the following true/false questions:

1. A lease of goods must be in writing if

the total payments to be made under the
lease are $500 or more.

FALSE

$1000.
 15-4
Topic Quiz
Answer the following true/false questions:

2. Contracts for goods that have

been received and accepted for
$500 or more need not be in
writing.
TRUE
 15-4
Topic Quiz
Answer the following true/false questions:

3. A required writing under the

UCC must indicate the
quantity of goods being sold.

TRUE
15-5

Auction Sales

In an auction sale, the auctioneer

presents goods for sale and
invites the audience to make
offers, which are known as bids.
15-5
Did You Know?
The federal government auctions cars,
trucks, real estate, airplanes, boats,
jewelry, office equipment, heavy
equipment, and many other items. For
information about government auctions,
log onto the Internet and, using the
search engine Excite, type in the words
“government auction.” You may find
something you need at a bargain price.
 15-5
Topic Quiz
Answer the following true/false questions:

1. In an auction sale, the auctioneer makes

offers to sell goods to members of the
audience.
FALSE

The auctioneer presents goods for sale,

and the audience makes offers to buy.
 15-5
Topic Quiz
Answer the following true/false questions:

2. In an auction sale “without reserve,”

the auctioneer may withdraw the goods
at any time before announcing
completion of the sale.
FALSE

Goods may be withdrawn at any time only

in an auction “with reserve.”
 15-5
Topic Quiz
Answer the following true/false questions:

3. The practice of planting persons in the

crowd for the purpose of raising bids by
innocent purchases is allowed.

FALSE

The practice is not allowed.

15-6

Bulk Transfers
Any transfer of a major part of
the materials, supplies,
merchandise, or other inventory
of an enterprise that is not in the
ordinary course of the
transferor’s business.
 15-6
Topic Quiz
Answer the following true/false questions:

1. A bulk transfer is any transfer

of a major part of the
materials, supplies,
merchandise, or other
inventory of an enterprise that
is not in the ordinary course of
the transferor’s business. TRUE
 15-6
Topic Quiz
Answer the following true/false questions:

2. When there is a bulk transfer, the

transferee is required to furnish a list of
creditors.
FALSE

The transferor is required to furnish a list

of creditors.
 15-6
Topic Quiz
Answer the following true/false questions:

3. Creditors must be notified at least 7

days before a bulk transfer takes place.

FALSE

Ten days.
 SUMMARY
15-1 The Uniform Commercial Code (UCC)
which contains the law of sales, has been
adopted, either in whole or in part, by every
state in the United States.
15-2 A sales contract may be either a sale or a
contract to sell.

15-3 There are special rules that are different

from general contract law that apply to
sales contracts.
 SUMMARY
(continued)

15-4 With four exceptions, a contract for the sale

of goods for $500 or more and the lease of
goods for $1,000 or more must be in writing.
15-5 In an auction sale, offers are made by the
people in the audience. The acceptance
takes place when the auctioneer bangs the
gavel.
15-6 To protect creditors from losing access to
goods, creditors must be notified at least ten
days before a bulk transfer takes place.
 Chapter 15
Key Terms
auction without reserve auction with reserve
bulk transfer computer information
conforming goods contract to sell
Convention on Contracts for the International Sale of Goods (CISG)
firm offer future goods
goods merchant
nonconforming goods open-price terms
output contract requirements contract
transactions in computer information sale
Uniform Commercial Code usage of trade
 Chapter 15
Investigating on the Internet
Log onto the Uniform Commercial Code
Locator at
http://www.law.cornell.edu/uniform/ucc.
html
This links to state statutes that
correspond to Articles of the UCC. Find
the statutory location of UCC Articles 2
and 2A in your state. Check, also, to
see if there are any proposed revisions
of the articles.