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in whole or in part.
in whole or in part.
in whole or in part.
4 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
in whole or in part.
4A. Oral agreement
This oral agreement would not be enforceable, because its amount, which is over $500, would
bring it within the Statute of Frauds. The Statute of Frauds requires that sales contracts for
goods priced over $500 be in writing to be enforceable.
ANSWER TO DEBATE THIS QUESTION IN THE REVIEWING FEATURE
AT THE END OF THE CHAPTER
The UCC should require the same degree of definiteness of terms, especially with
respect to price and quantity, as contract law does. Contract law requires definiteness
agreements. The UCC creates a sales contracting environment that promotes exchange rather
than one that encourages parties to find ways to back out of sales agreements. Sometimes,
parties to a sales contract truly wish to reach an agreement but do not specify certain elements
to the sales contract. That does not necessarily mean that they weren’t serious about entering
into the agreement.
is it a breach of the contract? Why or why not? What if Fav-O-Rite told E-Design it was
sending the printer stands as “an accommodation”? A shipment of nonconforming goods
constitutes an acceptance and a breach, unless the seller seasonably notifies the buyer that the
nonconforming shipment does not constitute an acceptance and is offered only as an
accommodation. Thus, since there was no notification in this problem, the shipment was both an
merchants, the requirement of a writing is satisfied if one of them sends to the other a signed
written confirmation that indicates the terms of the agreement, and the merchant receiving it has
CHAPTER 16: THE FORMATION OF SALES AND LEASE CONTRACTS 5
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
reason to know of its contents. If the merchant who receives the confirmation does not object in
writing within ten days after receipt, the writing will be enforceable against him or her even
though he or she has not signed anything.
ANSWERS TO BUSINESS SCENARIOS AND BUSINESS CASE PROBLEMS
AT THE END OF THE CHAPTER
16–1A. The Statute of Frauds
(Chapter 16—Page 314)
100 bushels of corn (which, at $1.25 per bushel, totals $125).
16-2A. Additional terms
(Chapter 16—Pages 311 and 312)
The answer falls under UCC 2–207. Bailey is incorrect in claiming that the modification of
to the modifications within a reasonable time after receiving notice of them. Three weeks after
Strike received the acceptance with the modification, she had still not notified Bailey of her
objection to the modification. Therefore, unless the change of truck lines is a material alteration
(involving cost or availability, for example), the terms of shipment by Yellow Express have
become a part of the contract, and Strike is in breach in using Dependable. The concept of
Yes. The contract was valid because the UCC’s Statute of Frauds did not apply. Although the
contract involved the provision of goods (food) and services (entertainment and
accommodations), the holiday resort package was an overall experience, with the predominant
part of the contract delivering services. Therefore, under the predominant-factor test, the
6 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
in whole or in part.
contract was primarily for the sale of services and was not governed by the UCC. The food was
16–4A . BUSINESS CASE PROBLEM WITH SAMPLE ANSWER—Additional terms
No. Under the common law, variations in terms between the offer and the offeree’s acceptance
violate the mirror image rule, which requires that the terms of an acceptance exactly mirror the
terms of the offer. The UCC dispenses with this rule. Under the UCC, a contract is formed if the
original offer stated, “By signing below, you agree to the terms.” This statement could be
construed to expressly require acceptance of the terms to make the offer a binding contract
(exception no. 1 above). The contract stated that JMAM was to receive credit for any rejected
merchandise. Nothing indicated that the merchandise would be returned to BSI. Baracsi, BSI’s
owner (the offeree), signed JMAM’s (the offeror’s) letter in the appropriate location. This
16–5A. Partial performance and the Statute of Frauds
(Chapter 16—Page 315)
Florida Statutes Section 672.103(3)(c) states that a contract that does not satisfy the Statute of
Frauds may nonetheless be enforceable “with respect to goods for which payment has been
made and accepted or which have been received and accepted.” Given that Bonilla had proof
16–6A. The Statute of Frauds
(Chapter 16—Page 314)
Yes, Gardner and B&C Shavings had a contract enforceable under the Statute of Frauds. The
Statute of Frauds applies to contracts for the sales of goods for more than $500. Those
in whole or in part.
8 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
in whole or in part.
agreed-upon terms were for the sale of goods. In any event, there was no agreement for a
lease.”
Of course, it can be fair to hold a party to a contract to buy a business’s assets when a
lease of the premises on which the assets are located cannot be negotiated favorably for the
buyer. Unless the execution of a lease is a condition of the parties’ agreement, it would most
likely be unfair to hold that the agreement was not enforceable on this basis. The UCC provides
that a contract will not fail for indefiniteness if one or more of the terms are left open, but there
must be a reasonably certain basis on which a court can grant a remedy. In this case, Fox and
Craftsmen did not discuss Fox’s lease with the Hussongs, nor did they indicate in their writings
that a lease was a condition of their deal. Even if they had discussed a lease, its introduction as
course of dealing, and course of performance. Under the UCC, the meaning of an agreement is
interpreted in light of commercial practices and other surrounding circumstances. Thus, in
interpreting a commercial agreement, a court will assume that the usage of trade and course of
dealing between the parties was considered when the contract was formed. Also, the conduct
that occurs under an agreement—the course of performance—is the best indication of what the
terms to which they agreed. And the terms of the written contract should be as clear and
unambiguous as possible.
in whole or in part.
in whole or in part.
4 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
in whole or in part.
4A. Oral agreement
This oral agreement would not be enforceable, because its amount, which is over $500, would
bring it within the Statute of Frauds. The Statute of Frauds requires that sales contracts for
goods priced over $500 be in writing to be enforceable.
ANSWER TO DEBATE THIS QUESTION IN THE REVIEWING FEATURE
AT THE END OF THE CHAPTER
The UCC should require the same degree of definiteness of terms, especially with
respect to price and quantity, as contract law does. Contract law requires definiteness
agreements. The UCC creates a sales contracting environment that promotes exchange rather
than one that encourages parties to find ways to back out of sales agreements. Sometimes,
parties to a sales contract truly wish to reach an agreement but do not specify certain elements
to the sales contract. That does not necessarily mean that they weren’t serious about entering
into the agreement.
is it a breach of the contract? Why or why not? What if Fav-O-Rite told E-Design it was
sending the printer stands as “an accommodation”? A shipment of nonconforming goods
constitutes an acceptance and a breach, unless the seller seasonably notifies the buyer that the
nonconforming shipment does not constitute an acceptance and is offered only as an
accommodation. Thus, since there was no notification in this problem, the shipment was both an
merchants, the requirement of a writing is satisfied if one of them sends to the other a signed
written confirmation that indicates the terms of the agreement, and the merchant receiving it has
CHAPTER 16: THE FORMATION OF SALES AND LEASE CONTRACTS 5
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
reason to know of its contents. If the merchant who receives the confirmation does not object in
writing within ten days after receipt, the writing will be enforceable against him or her even
though he or she has not signed anything.
ANSWERS TO BUSINESS SCENARIOS AND BUSINESS CASE PROBLEMS
AT THE END OF THE CHAPTER
16–1A. The Statute of Frauds
(Chapter 16—Page 314)
100 bushels of corn (which, at $1.25 per bushel, totals $125).
16-2A. Additional terms
(Chapter 16—Pages 311 and 312)
The answer falls under UCC 2–207. Bailey is incorrect in claiming that the modification of
to the modifications within a reasonable time after receiving notice of them. Three weeks after
Strike received the acceptance with the modification, she had still not notified Bailey of her
objection to the modification. Therefore, unless the change of truck lines is a material alteration
(involving cost or availability, for example), the terms of shipment by Yellow Express have
become a part of the contract, and Strike is in breach in using Dependable. The concept of
Yes. The contract was valid because the UCC’s Statute of Frauds did not apply. Although the
contract involved the provision of goods (food) and services (entertainment and
accommodations), the holiday resort package was an overall experience, with the predominant
part of the contract delivering services. Therefore, under the predominant-factor test, the
6 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
in whole or in part.
contract was primarily for the sale of services and was not governed by the UCC. The food was
16–4A . BUSINESS CASE PROBLEM WITH SAMPLE ANSWER—Additional terms
No. Under the common law, variations in terms between the offer and the offeree’s acceptance
violate the mirror image rule, which requires that the terms of an acceptance exactly mirror the
terms of the offer. The UCC dispenses with this rule. Under the UCC, a contract is formed if the
original offer stated, “By signing below, you agree to the terms.” This statement could be
construed to expressly require acceptance of the terms to make the offer a binding contract
(exception no. 1 above). The contract stated that JMAM was to receive credit for any rejected
merchandise. Nothing indicated that the merchandise would be returned to BSI. Baracsi, BSI’s
owner (the offeree), signed JMAM’s (the offeror’s) letter in the appropriate location. This
16–5A. Partial performance and the Statute of Frauds
(Chapter 16—Page 315)
Florida Statutes Section 672.103(3)(c) states that a contract that does not satisfy the Statute of
Frauds may nonetheless be enforceable “with respect to goods for which payment has been
made and accepted or which have been received and accepted.” Given that Bonilla had proof
16–6A. The Statute of Frauds
(Chapter 16—Page 314)
Yes, Gardner and B&C Shavings had a contract enforceable under the Statute of Frauds. The
Statute of Frauds applies to contracts for the sales of goods for more than $500. Those
in whole or in part.
8 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS
in whole or in part.
agreed-upon terms were for the sale of goods. In any event, there was no agreement for a
lease.”
Of course, it can be fair to hold a party to a contract to buy a business’s assets when a
lease of the premises on which the assets are located cannot be negotiated favorably for the
buyer. Unless the execution of a lease is a condition of the parties’ agreement, it would most
likely be unfair to hold that the agreement was not enforceable on this basis. The UCC provides
that a contract will not fail for indefiniteness if one or more of the terms are left open, but there
must be a reasonably certain basis on which a court can grant a remedy. In this case, Fox and
Craftsmen did not discuss Fox’s lease with the Hussongs, nor did they indicate in their writings
that a lease was a condition of their deal. Even if they had discussed a lease, its introduction as
course of dealing, and course of performance. Under the UCC, the meaning of an agreement is
interpreted in light of commercial practices and other surrounding circumstances. Thus, in
interpreting a commercial agreement, a court will assume that the usage of trade and course of
dealing between the parties was considered when the contract was formed. Also, the conduct
that occurs under an agreement—the course of performance—is the best indication of what the
terms to which they agreed. And the terms of the written contract should be as clear and
unambiguous as possible.
