Quiz 16: Formation of Sales and Lease Contracts


Article 2 of Uniform Commercial Code (UCC): Article 2 of UCC is related to sales. This article applies to all the contract of sale of goods. Article 2 also applies to mixed sales. Mixed sales refer to a sale that includes provision of both a good and a service. This article can only be applied to a case where the goods are primarily the part of a transaction. Person G entered into a contract with Company S for construction of swimming pools. Company was supposed to furnish all the labor and material for the construction. When the pool was installed, its sides started to bow out. A wooden support of the pool started rotting and misaligned. The whole pool project was ruined as the entire pool became tilted. G sued Company S for violating various provision of Article 2 of UCC. Article 2 of Uniform Commercial Code (UCC) also applies to mixed sales. Mixed sales are those which include both goods and services. Company S provided goods in form of materials and all, and services in form of expertise and knowledge. Thus, it can be called a contract of mixed sale. Since the contract in the given case is of mixed sale and Article 2 applies to mixed sales, the article also applies in this case.

Yes , the sales contract existed between Company C and Company E. Company C had made the deal on phone and confirmed the contract by providing partial payment and accepting delivered goods. The acceptance, payment, and return of the defective units constitute a sales transaction and perfected the agreement. Hence payment has to be cleared by Company C to Company E.

Facts of the Case The case is related to a commercial photographer naming DM. He clicked a number of photographs which appeared in the New York Times. After some time, Newsweek wanted to obtain the photos. In order to obtain few of these photographs N magazine made one of its employees named D speak to Miller. During their conversation DM informed D that around 72 photos were available. D further said he wanted to inspect the photographs and offered a certain sum of money for each photo N magazine used. The price and rate of the delivery of the photos was decided by them plus a condition was also agreed upon where the sole owner of the photographs would be DM. The photos were to be sent through a courier. In an attempt to avoid any chances of losing the photographs DM provided a note which mentioned the specific instructions on how to use the photographs. This note was called delivery memo. There was a clause included in the memo that N magazine would pay a sum of $1500 per photo in the event of losing or destruction of any photo. After receiving the package of the photographs N magazine decided to abandon further usage of these photographs. Thereafter when DM asked N magazine to give back these photos he was told that all the photos have been lost. Accordingly DM demanded $1500 for each of 72 lost photos. Issue concerning the case The issue is that whether the clauses in delivery memo are part of the sales contract. Findings and Decision of the Court The decision in this case was given under two counts, which are mentioned below: • Count One was a breach of contract claim where DM contended N magazine breach of the contract by being unable to give back the negatives. • Count Two was related to Tort where DM contented that N magazine has been negligent in its role as a bailee by losing the negatives. The Court "found that the terms and conditions mentioned in the Delivery Memo are not enforceable against N magazine as they have materially altered the original offer over the phone".Therefore DM's cannot make any claim with regard to damages for liquidation as well for late penalties. Accordingly, the Court granted "N magazine's motion for summary judgment as to Count One of DM's complaint, denied DM's summary judgment motion as to Count One, and dismiss Count One". The court found that there was a bailment relationship between two of them which was done for the mutual benefit of both parties. Further there was evidence which showed that there were no procedures in place by Newsweek for safeguarding the negatives which came under its possession. Therefore the Court granted "DM's motion for summary judgment with regard to the liability issue of Count Two of his complaint and deny N magazine's summary judgment motion on that count" Lastly there was a dispute with regard to the actual worth of the negatives for which Newsweek was liable to pay. The court found "this dispute of fact is both genuine and material under the standard and denied both parties' motions for summary judgment on the damage issue of Count Two".

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