Professional Documents
Culture Documents
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The sale of goods entails a broad area of the lawwhich is largelygoverned by legislation. Where
an aspect of the law is not regulated by legislption, it is governed by the commOnlaw or often by
general principles of laWl:nnOQ.,~pmmQi\1 .Iaw
The applicable legislationsets forth the nature of what is involvedin the sale of goods. Naturally,
this includes definitionsof what constitutes a sale and goodsl. A sale entails the transfer of title in
a good fromthe seller to the buyer.Goods can be defined broadlyas some type of tangible chattel.
Applicationof the legislation depends upon: the type sale} whether the mercbant or
not;'and, seHeris w.ftfiather'IJEHs in'the cd£1t'se bUS"ihess.
The aspects of sale of goods governed by legislation include such things as contract formation,
price, passage of title, warranties of title, implied warranties, express warranties, disclaimers
of warranties, remedies for breach delivery and acceptance of goods, and the
passing of risk. in the UKis the Sale
(including its amendments).
Contract formation in this context includes the requirements applied to contracts in general with
some added details such as agreements implied by conduct of the parties. The price to be paid for
the goods usually relevant legislation will
determine the price if this term left is generally required to pay a
reasonable price. Contractual provisions concerning the transfer of title dictate when good title is
transferred, for example between a person who has possession but not title to a third-party buyer.
Generally, good title cannot be transferred to a third party from a person not authorised to do so by
the holder of title. Naturally, aspects of good faith and apparent authority 'come into
context.
Differentwarranties playa major role in the sale of goods. Impliedwarranties are such
warranties which do not need to be expressed but whichthe law implies. Some of these types of
warranties would include warranties of title, fitness for a particular purpose, and quality or
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2 Warranties Match these types of warranties and concepts related to warranties
(1-7) with their definitions (a-g).
1 express warranty a a warranty that the goods being sold are suitable for the purpose
for which the buyer is purchasing them
2 implied warranty b a warranty that the seller of the goods owns them (e.g. the goods
have not been stolen or already sold to someone else)
3 warranty of fitness c a violation of a warranty when the goods do not comply in some
regard with an express or implied promise at the time of sale
4 warranty of merchantability d a spoken or written promise made by the seller about the quality,
performance or other considerations concerning the goods covered
by the contract which would affect the buyer's decision to purchase
5 warranty of title e a negation or restriction of the rights under a warranty given by a
seller to a buyer
6 breach of warranty f a warranty that the goods being sold are of a quality that generally
conforms to ordinary standards of similar goods sold under similar
circumstances
7 disclaimer of warranty g a warranty which is not explicitly stated but that is imposed by the
law due to the nature of the transaction
3 Buying and selling Complete the table below using the words in the box.
1 What do you think of the way vocabulary is recorded in the excerpt above?
2 How do you record vocabulary?
5 Choose one section of the table in Exercise 3, such as 'words for goods', and
look up each word in a dictionary. How do the meanings differ? Find out if a
word is used in some contexts but not in others.
9 e 1: n 0
Lawyers often assist suppliersof goodsin drawingup standardterms and conditionsof
sale. These terms and conditions may be incorporated into contracts for the sale of goods
or may be relied on as the legal framework of consumer sales. Legal counsel ensures that
the terms and conditions are relevant to the specific circumstances of the seller in his
particular trade, and that they provide adequate protection of the seller's rights.
6 These clauses are typically included in a company's general terms and conditions of sale. Match the
clause types (1-10) with their descriptions (a-j).
1 claims and credit a Contains provisions governing the payment of the monetary
consideration for the goods. It may include, among other things,
terms governing the manner and time of payment, as well as
modification of the amounts charged for the goods.
2 changes or cancellation b Contains, among other things, provisions governing the ownership
of the goods and exactly when the peril of loss is shifted from the
vendor.
3 delivery c Provides that, despite the fact that the purchaser has taken
possession of the goods, the vendor maintains ownership thereof
until some condition (usually payment) is fulfilled.
4 indemnification of vendor d Contains provisions governing the manner in which orders for
goods are submitted by the buyer and accepted by the vendor.
5 limitation of remedies e Contains, among other things, provisions regarding the time,
limitations and manner of which the sale of the relevant goods
becomes complete and final if payment has been made.
6 orders f Contains provisions governing the time and manner of any
complaints by the purchaser regarding the goods.
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7 prices and payment g Contains, among other things, the terms and conditions governing
any express warranties, often including provisions regarding
inspection of the goods by the seller and liability, and limitations
thereof, of the seller for breach of such warranties. Often matters
related to notice of defects and disclaimers are included.
8 retention of title h Contains provisions restricting the vendor's legal responsibility to
pay damages due to, among other things, errors in the goods and
in many cases governing the maximum amount payable by the
vendor for such things.
9 title and risk i Provides that the purchaser guarantees any possible loss the
vendor might incur connected with any use of the goods, including
violation of any intellectual property rights.
10 warranties j Contains provisions governing modifications by the purchaser
regarding, among other things, the character or manner in which
the goods are manufactured, payment of any expenses related
thereto and termination of any orders placed.
7 Decide which kind of clause each of the sentences (1-5) below would most
likely be found in. Then explain them in your own words.
EXAMPLE:
Prices and charges are subject to change without notice.
PrLces o..ncL p<A.ymeYlt cW..L.tse
It meRYlStYloJ; tYle prLces o..ncL otYler fees W-YI be d1o..ngecLoj; o..ny time,
o..ncLtYley cLoYl't Yleed.-to g~ve you o..ny GW"vo..nce
YlotLce.
1 Title in the goods shall pass to the buyer on delivery of the goods.
2 Vendor's interpretation of a verbal order shall be final and binding where
shipment is made prior to receipt of written confirmation.
3 Vendor does not make any representations or warranties except that those
goods shall conform to the specifications supplied by Purchaser and that all
processing applied by Vendor is performed in a good workmanlike manner in
accordance with applicable industry trade standards and practices subject to
any tolerances and variations consistent with the usual trade practices or as
specified by Purchaser.
4 Purchaser hereby agrees to indemnify and hold harmless Vendor from and
against all loss, damages, expenses, claims, suits and judgments arising,
directly or indirectly, out of the design, installation, maintenance or operation
of the goods.
5 Vendor may accept Purchaser's request to change the specifications or
processing of the goods, but shall reserve the right to charge Purchaser for
all costs and services necessary for such changes.
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In order to protect the rights and interests of a client, a lawyer will try to anticipate
possible disputes arising from contracts entered into by the client. Careful drafting of
contract clauses can provide protection for the contracting parties in the case of a breach.
The following listening text is an excerpt from a legal writing seminar on drafting
contracts, attended by both junior and senior members of a law firm. This part of the
seminar deals with the drafting of retention of title [ROT) clauses in contracts of sale.
9 .. ~ Listen to the second part and take notes as if you were attending the
seminar yourself. What are the five tips for drafting effective retention of title
clauses? Compare your notes with a partner.
3 Why does the speaker advise putting a serial number on all the goods sold?
a so the seller can prove to a liquidator which goods belong to him
b so the seller can keep a record of which buyer has bought his goods
c so the seller knows exactly how many goods he has sold
4 Why should an ROT clause say that the buyer has a right of entry to recover
the goods?
a so that the buyer will not claim additional property that does not belong to
him
b so that the goods are not used to produce a product, thus becoming
impossible to recover
c so that the buyer will have access to the place where the goods are
stored
1.1. Complete the retention of title clause below using the words in the box.
The ownership of the goods 1) . '''''''''''''''''''''. to the buyer shall remain with the
2) . until payment 3) for all the goods shall have been
received by the seller in accordance with the terms of this contract or until
such time as the 4) . sells the goods to its customers by way of
bona-fide sale at full market 5) . If such payment is overdue in
whole or in part, the seller may 6) or resell the goods or any part of
it and may enter upon the buyer's 7). for that purpose. Such payment
shall become 8) . . immediately upon the commencement of any act or
proceeding in which the buyer's 9) . is involved.
1.2 Does the clause above have the five characteristics of a well-drafted ROT
clause mentioned by the speaker?
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nUlg 2:
Law students are often required to summarise the facts and outcome of a case in the
course of their studies. Practising lawyers also encounter situations in which they are
asked to provide a case brief, either orally or in writing; a colleague may want to be
briefed on the particulars of a certain case, for example, or a superior will request a
written report on cases and rulings in an area of the law in which the firm is currently
preparing a case for trial.
In a university law seminar, students are often asked to present case briefs which then
form the basis of group discussion and debate. In the following exercise, you will hear a
law student presenting the brief of a case involving an issue related to the sale of goods.
The issue is known as 'shrink-wrap contracts'.
13 ..:;: Listen to the case brief. What exactly is the product involved in the
dispute? What is the central legal issue in the case?
14 Decide whether these statements are true or false.
1 In the first instance, the court held that the sales contract was binding and
in full force and effect.
2 In the view of the Court of Appeals, the purchaser could have returned the
software if he did not agree with the terms and conditions.
3 The Court compared buying shrink-wrapped software with buying an airline
ticket, as both involve payment before the terms of sale are fully known to
the consumer.
4 The UCCstates that a vendor may not propose limitations on the kind of
conduct that constitutes acceptance of the terms of a contract.
S Accordingto the Court, the respondent had to acknowledge the terms of
sale, since he could not use the software without doing so.
b
15 Read the transcript on pages 271-272 of the case brief of ProCD, Inc. v.
Matthew Zeidenberg and Silken Mountain Web Services. Underline the
paragraph where the speaker gives an overview of his brief. The speaker
explicitly mentions the sections of the brief. What are they?
Although
a typical one
Useful terms
6)
7)
3
ing ng: b
18 Following the guidelines for presenting a case brief given on page 126, prepare
a case brief dealing with an issue related to the sale of goods. (You will have
to research this issue first.)
.Ion
ng 2:
Thelaw-journal article on page 128 providesa summaryand discussionof a case
concerning a dispute between a seller and a buyer of goods in which a retention of title
clause plays a central role.
An important concept in the article is that of a trust, which refers to the setting aside of
the money or property of one person for the benefit of one or more persons. A trustee is a
person who holds something in trust for another. Does this concept exist in your
jurisdiction?
20 Read the text, then match these phrases (a-g) with the paragraphs (1-7) they
refer to.
22 Complete these phrases and collocations from the text using the prepositions
in the box.
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23 Underline the phrases in the text used to introduce these components.
24 Find the phrases in italics in the text which match these definitions.
ng 0 on ng
25 Work in pairs. Using the phrases above, explain your country's equivalent of:
1 the Companies Act
2 Companies House
3 the Uniform Commercial Code
D
(~\ Unit 9
:t. Vocabulary: distinguishing meaning Which \Nordin each group is the odd one
out? You may need to consult a dictionary to distinguish the differences in
meaning.
2 Word formation Complete these tables by filling in the correct forms. Ul1derline
the stressed syllable in each word with more than one syllable.
I acceptable
! implied
bind
ascertain
3 Prepositions Complete the sales contract clause below with the prepositions in
the box.
Governing Law
Anderson County, Texas, shall be the proper place of venue 1) suit
on or in respect 2) ., the Agreement. The Agreement and all of the
rights and obligations of the parties hereto and aU of the terms and conditions
hereof shall be construed, interpreted and applied 3) ,,'..,.., accordance
4) and governed 5) , , and enforced 6) , "... the laws
of the State of Texas.
Word ch()ic::eCompletethisparagrqph abput consurner rights by Ghoosing the
correct word each case.
When you bUygoods from any seller, you have the right to expect certain
standards...The UKSaTepf Goods Act 1979 states that the goods mustbe
1) for I@y in satisfactory qUqlity?) in Qomparisonto / by virtue of / in
respect ofthe appearqnce and fjqlsh of the goods,their safety and durability,
and theirfreedomfromdefects --'except where they have been. pointed out to
you before puxchase. They must also be ~) special/fit / made for their
pUrpose,including any particUJarpUxposementioned by yoUto the 4) vendor /
purchaser / consU.mer.1fthe 5) merchan.dise/ supply / sale does not meet
these standards, you are 6) obliged/ entitled / required to (eject it and get
your moneyback...YoU/havea/an 7) .reasonable / i3cceptable/ exclusive time
to return faulty goods, afterYVhichyou are 8) requested / deemedl implied to
have accepted the goods and their faults, although you may still be able to
9) claim / incur; charge damages.
Contract eXf)re~siol'1sMqtch eqCh of the words and phrases used in sales
contracts Ui=7)'vV.jththe phrase that best expresses its meaning (a--'g).
a financial
b told about
c suitability
d resulting from
e denies
f acceptable quality
g restriction D
h for no reason D
i in the present condition OJ
Contract
law
e e
Yourlaw firm hasaskedyou to reviewthe following UScontractlaw caseand the relevant
documentsin preparationfor a meetingwith a client.
Read the facts of the case. Why is this type of case referred to as a 'battle of forms'?
Colonial Incorporated makes cooling units that contain steel tubing supplied by a company called Lehigh
Steel Incorporated. Each year, Colonial sends a purchase order to Lehigh for the tubing Colonial will need
for the year. During the year, Colonial sends out release orders to receive parts of the year's order from
Lehigh. In return, Lehigh sends acknowledgement forms in response to the release orders to Colonial and
then ships the tubing.
Lehigh's acknowledgement form disclaims all liability for consequential damages (such as lost profits)
and limits Lehigh's liability for defects. These terms are different from Colonial's purchase order and, of
course, are not contained in it.
Unfortunately, some of the tubing supplied by Lehigh, which Colonial incorporated into a cooling unit,
was defective and burst, causing considerable damage and loss to one of Colonial's customers, Best
Produce Corporation. Best Produce Corporation is claiming damages against Colonial, including
consequential damages. In turn, Colonial has claimed recovery from Lehigh. In response, Lehigh argues
that it has disclaimed all liability for any damages in accordance with the terms set out on its
acknowledgement form.
Task1: Speaking
Work with a partner. Follow steps 1-3 below for each role-play.
Role-play 1 Role-play 2
Student A: You are the client, a representative Student A: You are the lawyer.
from Lehigh Steel. Student B: You are the client, a representative
Student B: You are the lawyer. from Colonial.
1 If you are the client, prepare for the meeting by becoming familiar with the facts of the case.
If you are the lawyer, prepare for the meeting by:
0 identifying the legal issues of the case and determining arguments for your side
0 listing the strengths and weaknesses of your side of the case
0 deciding which parts of the relevant legal documents most strongly support your case and can be
used to argue against the other party's case
0 making notes for the meeting: What course of action do you think your client should take?
2 Lawyers: pair up with your client to explain the legal issue involved and review the relevant documents.
Remember to paraphrase their contents so that they are easy to understand. Advise your client on a
course of action.
3 Report the results to the group, focusing on the client's willingness or unwillingness to settle.
Task2: Writing
You are an associate at the law firm representing Colonial Incorporated. The senior lawyer handling the
case needs assistance regarding Colonial Incorporated's legal argument. Write a memo to the senior
lawyer based on all the information you have.
3
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Text1: statementprintedon Lehigh'sform
u.c.c, §2-207
Additiol1al terms in acceptal1ce or confirmation.
(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within
a reasonable time operates as an acceptance even though it states terms additional to or
different from those offered or agreed upon, unless acceptance is expressly made conditional on
assent to the additional or different terms.
(2) The additional terms are to be construed as proposals for addition to the contract. Between
merchants suchterms become part of the contract unless:
(a) the offer expressly limits acceptance to the terms of the offer;
(b) they materially alter it; or
(c) notification of objection to them has already been given or is given within a reasonable time
after notice of them is received.
(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a
contract for sale although the writings of the parties do not otherwise establish a contract. In
such case, the terms of the particular contract consist of those terms on which the writings of
the parties agree, together with any supplementary terms incorporated under any other
provisions of the Uniform Commercial Code.
impose
all of the terms
not agree drop out,
terms.
both parties
in their contract.
a contract and
whatever reason, they
neither party should