CPA Law Study Guide
CPA Law Exam II Notes
Chapter 19: Formation & Terms of Sales Contracts
Sale of Goods: UCC Article 2. Applies only to transactions involving goods. (Personal Property: Depends on how property is used. Ex: Brick in building = Real Property. Brick in riot = Personal). If it’s a mixed trxn, the predominant part determines which law is applied. If goods are the incidental part, common law applies. Common law is for services and sale of real property.
Lease: UCC Article 2A. Transfer of the right to possess/use goods belonging to another, but doesn’t constitute ownership for the lessee.
Higher Standards for Merchants: Buyers place more reliance on professional sellers because they are generally more knowledgeable and more able to protect themselves. A person who regularly deals in the kinds of goods being sold, claims to have special knowledge about the goods, or employs an agent who fits one of those descriptions.
Code Requirements: UCC requires parties to act in good faith & in a commercially reasonable manner.
Terms of Sales Contracts (Assume Contract Intent, ID Subj. Matter, & Price)
Gap Fillers: Contracts w/ indefinite, omitted, or unclear terms are filled in with blanks with common trade practices or by giving commonly used terms a specific meaning that is applied unless the parties’ agreement clearly indicates a contrary intent.
Price Terms: If price is omitted, the parties agreed to decide a price at a later date but cannot, or agreed price would be set by external agency, reasonable price at the time for delivery applies.
Quantity Terms
Output/Requirements Contracts: Contracts that obligate a buyer to purchase a seller’s whole output of a certain item or all of the buyer’s requirements (ex: Market price) have to be in good faith. Even good faith amounts may not be tendered if they are “unreasonably disproportionate to stated estimates.
Exclusive Dealing Contract: Contracts that obligate dealers to deal only in one
Chapter 19: Formation & Terms of Sales Contracts
Sale of Goods: UCC Article 2. Applies only to transactions involving goods. (Personal Property: Depends on how property is used. Ex: Brick in building = Real Property. Brick in riot = Personal). If it’s a mixed trxn, the predominant part determines which law is applied. If goods are the incidental part, common law applies. Common law is for services and sale of real property.
Lease: UCC Article 2A. Transfer of the right to possess/use goods belonging to another, but doesn’t constitute ownership for the lessee.
Higher Standards for Merchants: Buyers place more reliance on professional sellers because they are generally more knowledgeable and more able to protect themselves. A person who regularly deals in the kinds of goods being sold, claims to have special knowledge about the goods, or employs an agent who fits one of those descriptions.
Code Requirements: UCC requires parties to act in good faith & in a commercially reasonable manner.
Terms of Sales Contracts (Assume Contract Intent, ID Subj. Matter, & Price)
Gap Fillers: Contracts w/ indefinite, omitted, or unclear terms are filled in with blanks with common trade practices or by giving commonly used terms a specific meaning that is applied unless the parties’ agreement clearly indicates a contrary intent.
Price Terms: If price is omitted, the parties agreed to decide a price at a later date but cannot, or agreed price would be set by external agency, reasonable price at the time for delivery applies.
Quantity Terms
Output/Requirements Contracts: Contracts that obligate a buyer to purchase a seller’s whole output of a certain item or all of the buyer’s requirements (ex: Market price) have to be in good faith. Even good faith amounts may not be tendered if they are “unreasonably disproportionate to stated estimates.
Exclusive Dealing Contract: Contracts that obligate dealers to deal only in one