Sales Law

Question 1

What is the UNIFORM COMMERCIAL CODE for sales law?

Answer 1

1. Governs the sale of goods
2. Sale of goods has three elements needed for a contract
   o Offer
   You offer to sell something at a price
   o Firm Offer
   You offer to sell something at a price and keep that offer open for a set period of time
   3 months max
   Only merchants can make firm offers
   Must be in writing and signed
   o Acceptance
   The other party accepts
   o Consideration
   Something of value has been exchanged for the goods

Question 2

What are the Statute of Frauds for Sales Law?

Answer 2

If value of goods >$500, contract must be in writing
o Exception
Merchants can enter into oral contracts
o Oral contracts are binding for special or uniquely made items
Custom Cabinets
Custom Furniture
Something the seller couldn’t resell at market price because you reneged

Question 3

What are the two methods of transfer of title?

Answer 3

FOB Shipping Point

FOB Destination

Question 4

What is FOB Shipping Point?

Answer 4

o Title transfers (and liability of risk for the item) transfers at the point of shipment – once it’s loaded onto the truck

Question 5

What is FOB Destination?

Answer 5

o Title transfers (and liability of risk for the item) once the truck arrives at the buyer’s place and is delivered

Question 6

What is Warranty of Title?

Answer 6

o The seller has the right to sell the good and no one else can stake claim to that good
o All items sold must have Warranty of Title
o Can be Disclaimed or Modified
What is Warranty of Merchantibility?
o This good will do its intended purpose
o Can be disclaimed
o A CPA Exam study book can disclaim Warrant of Merchantibility in case someone wants to use it for tax law purporses. It’s not a tax law book; it’s a tool to help you pass the CPA Exam.

Question 7

What is Warranty of Fitness?

Answer 7

o This good is the right choice for you based on the seller’s expert opinion
o A golf pro helps a golfer select a club that helps them compensate for a slice problem
o Can be disclaimed

Question 8

What is Buyer Protection?

Answer 8

1. Strict Liability
   o Manufacturers of goods cannot disclaim that their products will be safe
   o Can be liable if negligent
2. Non-Conforming Goods
   o Buyer can reject some or all of the shipment if seller didn’t perform as agreed
   o Must give notice to Seller
   o Must give Seller a chance to remedy the situation