Chapter 21 Summary Nature of Sales and Leases Definitions Goods movable personal property Sale transfer of title to goods from seller to buyer for a price Lease a transfer of right to possession and use of goods in return for consideration Consumer Leases leases by a merchant to an individual who leases for personal, family, or household purposes for no more than $25,000 Finance Leases special type of lease transaction generally involving three parties: the lessor, the supplier, and the lessee Governing Law . Sales Transactions governed by Article 2 of the Code, but where general contract law has not been specifically modified by the Code, general contract law continues to apply Lease Transactions governed by Article 2A of the Code, but where general contract law has not been specifically modified by the Code, general contract law continues to apply Transactions Outside the Code include employment contracts, service contracts, insurance contracts, contracts involving real property, and contracts for the sale of intangibles Fundamental Principles of Article 2 and Article 2A Purpose to modernize, clarify, simplify, and make uniform the law of sales and leases Good Faith the Code requires all sales and lease contracts to be performed in good faith, which means honesty in fact in the conduct or transaction concerned; in the case of a merchant (and a nonmerchant under Revised Article 1), it also includes the observance of reasonable commercial standards Unconscionablety a court may refuse to enforce an unconscionable contract or any part of a contract found to be unconscionable . Procedural Unconscionablety unfairness of the bargaining process Substantive Unconscionablety oppressive or grossly unfair contractual provisionsExpansion of Commercial Practices Course of Dealing a sequence of previous conduct between the parties establishing a common basis for interpreting their agreement Usage of Trade a practice or method of dealing regularly observed and followed in a place, vocation, or trade Sales by and between Merchants the Code establishes separate rules that apply to transactions between merchants or involving a merchant (a dealer in goods or a person who by his occupation holds himself out as having knowledge or skill peculiar to the goods or practice involved or who employs an agent or broker whom he holds out as having such knowledge or skill) Liberal Administration of Remedies Freedom of Contract most provisions of the Code may be varied by agreement Validation and Preservation of Sales Contract the Code reduces formal requisites to the bare minimum and attempts to preserve agreements whenever the parties manifest an intention to enter into a contract Formation of Sales and Lease Contracts Manifestation of Mutual Assent Definiteness of an Offer the Code provides that a sales or lease contract does not fail for indefiniteness even though one or more terms may have been omitted; the Code provides standards by which missing essential terms may be supplied for sales of goods Irrevocable Offers Option a contract to hold open an offer . Firm Offer a signed writing by a merchant to hold open an offer for the purchase or sale of goods for a maximum of three months Variant Acceptances the inclusion of different or additional terms in an acceptance is addressed by focusing on the intent of the parties Manner of Acceptance an acceptance can be made in any reasonable manner and is effective upon dispatch Auction auction sales are generally with reserve, permitting the auctioneer to withdraw the goods at any time prior to saleConsideration Contractual Modifications the Code provides that a contract for the sale or lease of goods may be modified without new consideration if the modification is made in good faith Firm Offers are not revocable for lack of consideration Form of the Contract Statute of Frauds sale of goods costing $500 or more (or lease of goods for $1,000 or more) must be evidenced by a signed writing to be enforceable Writing or Record the Code requires some writing(s) or record sufficient to indicate that a contract has been made between the parties, signed by the party against whom enforcement is sought or by her authorized agent or broker, and including a term specifying the quantity of goods Alternative Methods of Compliance written confirmation between merchants, admission, specially manufactured goods, and delivery or payment and acceptance Parol Evidence contractual terms that are set forth in a writing intended by the parties as a final expression of their agreement may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement, but such terms may be explained or supplemented by course of dealing, usage of trade, course of performance, or consistent additional evidence