CHAPTER 21: SALES CONTRACTS: FORMATION AND PERFORMANCE

Learning Objectives:• General Aspects of Article 2 of the Code• Formation of a Contract for Sale of Goods• Title to Goods• Risk of Loss

Breach of Contract No Breach

Chapter 21 2

CHAPTER 21: SALES CONTRACTS: FORMATION AND PERFORMANCE

1. Summary of Common-Law Changes

– See Table 21-1

2. Scope of Article 2– Coverage of Leases– “Mixed” Contracts: Goods and

Services

Chapter 21 3

GENERAL ASPECTS OF ARTICLE 2 OF THE CODE

3. Definitionsa. Goods: “tangible, personal property”

b. Sale: “transfer of title in exchange for an agreed-upon price”

c. Merchant: “person who deals in goods of the kind sold or who has special knowledge peculiar to the goods”

d. Good faith: “honest in fact”

4. AbbreviationsChapter 21 4

GENERAL ASPECTS OF ARTICLE 2 OF THE CODE

1. Introduction

2. Sources of Termsa. Sales Contract

i. Express Agreementi. Power of Parties to Craft Agreement

ii. Role of Code

ii. Documentary TransferI. Types

A. Bill of Lading

B. Warehouse Receipt

II. Process

Chapter 21 5

FORMATION OF A CONTRACT FOR SALE OF GOODS

1. Introduction

2. Sources of Termsa. Sales Contract

b. Previous Arrangementsi. Course of Dealing

ii. Usage of Trade

iii. Course of Performance

Chapter 21 6

FORMATION OF A CONTRACT FOR SALE OF GOODS

1. Introduction

2. Sources of Termsa. Sales Contract

b. Previous Arrangements

c. Gap Filling Under the Codei. Price

ii. Quantity

iii. Delivery

iv. Time of PerformanceChapter 21 7

FORMATION OF A CONTRACT FOR SALE OF GOODS

1. Definition: “bundle of rights that constitute ownership”

2. Position of Code

3. Requirement of Identification of Goods

4. Transfer of Title

5. Good-Faith Purchasers

Chapter 21 8

TITLE

1. Breach of Contract

2. No Breach of Contracta. Shipment Contract

i. General Rule

ii. Use of “F.O.B. shipping point, F. O. B. destination”

b. Bailments

c. Other Cases

Chapter 21 9

RISK OF LOSS

CHAPTER 21: SALES CONTRACTS: FORMATION AND PERFORMANCE