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ACCT Chapter 20 and 21

by: Kendall Davis

ACCT Chapter 20 and 21 ACCT 324 - 002

Kendall Davis
GPA 3.8

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About this Document

Examples from class and stuff not on the slides
Survey of Commercial Law
Julius David Johnson (P)
Class Notes
25 ?




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This 3 page Class Notes was uploaded by Kendall Davis on Wednesday September 14, 2016. The Class Notes belongs to ACCT 324 - 002 at University of South Carolina taught by Julius David Johnson (P) in Fall 2016. Since its upload, it has received 5 views. For similar materials see Survey of Commercial Law in Accounting at University of South Carolina.


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Date Created: 09/14/16
Chapter 20 and 21 September 14, 2016 Equitable Remedies  Rescission: termination of contract  Restitution:  Return of any property transferred under contract o Court ordered  Specific Performance (Specific Enforcement):  Order requiring breaching party to fulfill  obligations under contract.  Usually awarded only when monetary damages inadequate,  and subject matter of contract unique  o Example:  Contract for sale of real estate  Injunction:  Order forcing person to do something, or prohibiting person from doing  something (usually a prohibition against certain actions)  Reformation:  Contract rewritten to reflect parties’ actual agreement  Quasi­Contract:  “Contract­like” obligation imposed on party to prevent “unjust  enrichment”  Promissory Estoppel** everything relates Chapter 21­ Introduction to Sales and Lease Contracts  The Uniform Commercial Code: a uniform/model law that governs commercial  transaction, including contracts for the sale of goods, leases, and secured transactions o Regulates trade from state to state o Clarity and predictability o Sale of goods only (article 2)  UCC Article 2: applies to contract for the sale of goods o Sale:  The passing of title from seller to buyer for a price o Goods:  Tangible things that can be moved (Examples:  Automobiles, furniture,  electronics) o Mixed goods and services contracts:  Contracts that include both goods and  services.  UCC Article 2 applies to contract if goods are “predominant part” of  transaction  Ex. selling TV with instillation is primarily a good  If not, back under common law of contracts o Merchants:  Buyers or sellers who  Deal in goods of the kind involved in contract  By occupation, represent themselves as having knowledge and skill unique to goods involved in transaction, or  Employ a merchant as a broker, agent, or other intermediary o Merchants held to higher standards than just regular buyers and sellers o Entrustment: giving your goods to a merchant to sell  How Sales and Lease Contracts are Formed Under the UCC o Mirror image rule does not apply under the UCC o Even if terms are left open, there is still a valid offer; very different than common  contract law  Needs to be “reasonable”  UCC Statute of Frauds: Contracts for sale of goods must be in writing if goods valued at  $500 or more; lease contracts that require payments of $1,000 or more must also be in  writing o In order to take to court o Exceptions:  Specially manufactured goods  Ex. monogrammed/ logo clothing  If there is no market for the good  Can sue even if it is not in writing o Evidence Not Written in Contract Admissible if:  Additional terms consistent with written terms  History  Info  Priority of Evidence:  Express contract terms  Course of performance (regarding subject contract)  Course of dealing  Usage of trade  Unconscionability: In context of UCC contract for sale of goods or lease, an agreement  that is so unfair or “one­sided” that court refuses to enforce it o When one party has too much power  International Sale of Goods: treaty governing international sales contracts o CISG replaces UCC in international cases Chapter 22­Title, Risk of Loss, and Insurable Interest  If goods are damaged during shipment who is liable?  Good Title: acquired from someone who owned the goods “free and clear” o Acquiring Good Title: If “third party purchaser” makes “good­faith” purchase for  value, he/she gets good title (not void/voidable title) o If owner entrusts possession of goods to merchant who deals in goods of that  kind, merchant can transfer all rights in the goods to a buyer in the “ordinary  course of business” o Ex: tempurpedic donated mattresses to a charity to give them out to people that  needed them; company sold mattresses; third party buyers did not get good title  Void Title: not true title o Stolen goods always remain stolen goods o Regardless of whether the buyer knows the goods are stolen, still void  Void title results when: o Buyer deceived seller regarding his/her identity o Buyer wrote bad check o Buyer committed criminal fraud in securing goods o Buyer and seller agreed title would not transfer until later time o Buyer is a minor  UCC Terminology Regarding Transfer of Title o “Ownership”—Transfer of Title o “Encumbrance”—Goods used as collateral for debt o “Loss”—Refers to which party has “risk of loss” when goods damaged/destroyed  when you buy a refrigerator and Lowes delivers it to you and they drop it  while delivering it, they are liable  Not transferred o “Insurable Interest”—Right to insure goods against any risk exposure o “Simple Delivery”­ Buyer and seller contract, buyer leaves with goods  only when you have taken possession, do you have good title


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