Chapter 22 and 23
Chapter 22 and 23 ACCT 324 - 002
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This 2 page Class Notes was uploaded by Kendall Davis on Friday September 16, 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 6 views. For similar materials see Survey of Commercial Law in Accounting at University of South Carolina.
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Date Created: 09/16/16
Chapter 22 September 16 Types of Sales Contracts o “Common carrier”FedEx, UPS o “Shipment Contract” or “Origin” Contract buyer bares risk once it is shipped o “Destination” Contract: seller bares the risk of loss until seller delivers goods to stipulated destination Free on board; seller bares risk during shipment FOB (“Free on Board”): Selling price includes transportation costs, and seller has risk of loss to either place of shipment, or place of destination FAS (“Free Alongside”): Seller, at seller’s expense, delivers goods alongside ship before risk transferred to buyer CIF or CF (“Cost, Insurance, and Freight”; “Cost and Freight”): Seller places goods in possession of carrier before risk passes to buyer Delivery “ExShip” (Delivery From Carrying Vessel): Risk of loss passes to buyer when goods leave ship o Buyer possesses risk Goods in bailment: identifies who has the risk while goods are in storage or a warehouse, etc. Conditional Sales o “Sale on Approval”: the opportunity to look at something before you buy o “SaleorReturn”: selling all that you can and then returning the rest Seller in Breach: failure to deliver goods or nonconforming goods: o Buyer may accept nonconforming goods or reject them Sellers right to “cure” Ex. delivering wrong grade of leather Risk of loss remains with seller until buyer accepts goods or deficiencies are corrected Buyer in Breach: buyer refuses to accept conforming goods, goods later lost or damaged: o Risk of loss depends on type of contract Chapter 23 Sellers and lesser rely on “good faith” Good Faith: honesty in fact o UCC imposes obligation to “commercial reasonableness” Perfect Tender Rule: if the goods or tender of delivery fail in any aspect of the contract, the buyer has the right to: o Accept the goods o Reject the entire shipment o Accept part or reject part Aim for total performance, but substantial performance Exceptions to “Perfect Tender” Rule o Industry standards Only 9099% is usually up to grade o Past dealings and performance between parties o Agreement between parties Contract; did both parties follow the rules of the contract? o Seller’s/Lessor’s right to cure Right to cure: Usually in the contract; they have the right to fix it within a certain number of days o Excuse from performance when identified goods destroyed through no fault of parties o “Substantial impairment”: if defects are so substantial that the goods cannot be cured, the buyer can revoke the goods o Commercial Impracticability Ex. if something becomes illegal underneath common law Inspection, Rejection and Revocation of Acceptance: o “Reasonableness” governs inspection process i.e. lettuce needs to be inspected faster than leather if there is a large number of a good, the buyer needs more time to inspect than if there was a smaller number o Must give reasonable notice upon exercising right of rejection /revocation of acceptance o Must give notice within a reasonable time that they are accepting/rejecting goods Exam tips: o Study in laws o Learn UCC, then Common Law separately and compare
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