The sale of goods is the transfer of ownership to tangible personal property in exchange for money, other goods, or the performance of services. The law of sales of goods is codified in Article 2 of the Uniform Commercial Code. While the law of sales is based on the fundamental principles of contract and personal property, it has been modified to accommodate current practices of merchants.

For many years, consumers dealt with merchants and providers of services on the basis of caveat emptor (let the buyer beware). Buyers were expected to look out for and protect their own interests. In addition, much of the law concerning the sales of goods and the extension of credit was structured to protect business interests rather than consumer interests. Beginning in the mid-1960s, at about the same time that the law of product liability was changing, many consumers recognized that these sales and credit laws put them at a disadvantage in trying to protect what they thought were their rights. Consumer groups lobbied Congress, state legislatures, and city halls to pass statutes or ordinances changing this body of law to make it more favorable to consumers.

STEP ONE:

ASSIGNED READING:Read Chapters 19, 22 and 46 of Law for Business (Barnes, 2012).

STEP TWO:

BACKGROUND:

Article 2 of the Code applies only to transactions in goods. Thus, it does not cover contracts to provide services or to sell real property. However, some courts have applied the principles set out in the Code to such transactions. When a contract appears to call for the furnishing of both goods and services, a question may arise as to whether the Code applies. In such cases, the courts commonly see whether the sale of goods is the predominant part of the transaction or merely an incidental part; where the sale of goods predominates, courts normally apply Article 2. The first question you should ask when faced with a contracts problem is whether this is a contract for the sale of goods. If it is not, then the principles of common law apply. If the contract is one for the sale of goods, then the Code applies.

HYPOTHETICAL:

Star Coach, LLC, is in the business of converting sport utility vehicles and pickup trucks into custom vehicles. Star Coach performs the labor involved in installing parts dealers. Heart of Texas Dodge purchased a new Dodge Durango from Chrysler Motors and entered into an agreement with Star Coach whereby Star Coach would convert the Durango to a Shelby 360 custom performance vehicle and then return the converted vehicle to Heart of Texas Dodge. The manufacturer delivered the dealer's Durango to Star Coach, and over a period of several months, Star Coach converted the vehicle using parts supplied by another company, Performance West. Several months later, Star Coach delivered the vehicle to Heart of Texas Dodge, and Heart of Texas Dodge paid Star Coach the contract price of $15,768 without inspecting the vehicle. Two days later, Heart of Texas Dodge inspected the vehicle and concluded that the workmanship was faulty. It stopped payment on the check and Star Coach filed suit against Heart of Texas Dodge. One of the issues in the litigation was whether the UCC applied to the contract in this case.

QUESTION:

Does the UCC apply to a contract for the conversion of a van that involves both goods and services?

STEP THREE:

BACKGROUND:

The Federal Trade Commission Act, which is the grandfather of "consumer protection" legislation, was passed in 1914. Under the act, the five-member Federal Trade Commission (FTC) has authority to decide whether specific marketing and sales practices are unfair or deceptive, and whether those practices may be harmful to competition among manufacturers, distributors, and sellers. After making such a decision, the FTC may order the company that is engaged in the unlawful conduct to cease and to take corrective action. It may also ask a federal court to award redress, such as giving refunds or damages to injured consumers.

HYPOTHETICAL:

Zuccarini did business under a variety of names. He diverted consumers from their intended Internet site to his by using domain names that were misspellings of, or confusingly similar to, domain names of other parties. He also made it difficult to exit his website by causing pop-up windows, multiple copies of browser windows, or multiple copies of browser software to launch when the consumer used a "Close," "Exit," or "X" function. He was compensated by the advertisers displaying their ads on these pop-ups. The FTC argued that these tactics were unfair under the FTC Act because they used misleading practices.

QUESTION:

Is the FTC correct? Explain.