UNIT 4
DOMESTIC AND INTERNATIONAL
SALES AND LEASE CONTRACTS
ANSWERS TO DISCUSSION QUESTIONS
1. The concepts of good faith and commercial reasonableness permeate the UCC. They are
thereby read into every sales and lease contract, and impose duties on all of the parties. Reasonability in
the formation, performance, and termination of contracts also runs through most of the UCC’s
2. The concepts of good faith and commercial reasonableness permeate the UCC and help
to prevent unethical behavior by businesspersons. These two key concepts are read into every contract
and impose certain duties on all parties. Courts frequently look to course of dealing, usage of trade, and
the surrounding circumstances in determining what is commercially reasonable in a given situation.
3. Reasonability in the formation, performance, and termination of contracts underlies
almost all of the UCC’s provisions. The concept of good faith is closely linked to commercial
reasonableness. All commercial actions—including the performance and enforcement of contract
obligations—must display commercial reasonableness. A merchant is expected to act in a reasonable
4. The concept of the good faith purchaser reflects the UCC’s emphasis on protecting
innocent parties. Suppose, for example, that you innocently and in good faith purchase a boat for a fair
market price from someone who appears to have good title. Under the UCC, you are protected from the
possibility that the real owner—from whom the seller may have fraudulently obtained the boat—will
later appear and demand his boat back.
But another ethical issue is raised when the purchaser of goods is not quite so innocent. Suppose
that the purchaser has reason to suspect that the seller may not have good title to the goods being sold
but nonetheless goes ahead with the transaction because it is a “good deal.” Has this buyer crossed the
boundary that separates the good faith purchaser from one who purchases in bad faith? This boundary
5. Conducting business internationally presents unique challenges including, at times,
ethical challenges. This is understandable, given that laws and cultures vary from one country to
another. In the United States, for example, equal employment opportunity is a fundamental public
policy. This policy is clearly expressed in Title VII of the Civil Rights Act of 1964, which prohibits dis-