ACCT Chapter 20 and 21
ACCT Chapter 20 and 21 ACCT 324 - 002
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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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