Sales
Overview
Sales is UCC Article 2: formation, terms, risk of loss, warranties, and remedies for goods. It overlaps Contracts but applies Code-specific rules.
Scope and formation
Article 2 applies to transactions in goods - movable things at the time of identification. It does not cover services, real estate, or intangibles. Formation requires only a manner showing agreement; open terms are filled by the Code. A merchant's firm offer is irrevocable up to three months without consideration. Under §2-207, additional terms in an acceptance are treated differently between merchants and non-merchants.
Statute of Frauds and terms
A sale of goods for $500 or more requires a writing sufficient to indicate a contract, signed by the party to be charged. Merchant exception: a signed confirmation sent within a reasonable time and not objected to within ten days binds the recipient. Parol evidence may be explained by course of performance, course of dealing, and usage of trade.
Performance and risk of loss
- Shipment contract: risk passes to the buyer when the seller tenders the goods to the carrier.
- Destination contract: risk passes when the goods are tendered at the destination.
- If the seller breaches, risk does not shift to the buyer under §2-510.
- Under perfect tender, the buyer may reject goods that fail in any respect; the seller may cure within the contract time. Installment contracts require substantial impairment for rejection.
Warranties and remedies
Express warranties arise from affirmations, promises, descriptions, and samples. The implied warranty of merchantability applies to merchants; the implied warranty of fitness for a particular purpose arises when the seller knows the buyer's purpose and the buyer relies. Disclaimers must be conspicuous (AS IS) and cannot be unconscionable.
Buyer's remedies include cover, incidental and consequential damages, and specific performance for unique goods; seller's remedies include resale, market-price damages, and lost profits. Liquidated damages must be reasonable.
Worked example
A seller in Ohio contracts to ship goods to a buyer in Texas; the contract says F.O.B. seller's plant. Risk passes to the buyer when the seller delivers to the carrier. If the goods are damaged in transit, the buyer bears the loss unless the seller failed to tender conforming goods.
Traps
- Perfect tender does not apply to installment contracts.
- Implied warranties can be disclaimed, but only conspicuously.
- Risk of loss rules change if a party breaches.
- The UCC Statute of Frauds requires a writing signed by the party to be charged, not by both parties.