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Marketing 310 CHAPTER 11 MANAGING MARKETING CHANNELS AND SUPPLY CHAINS John W Harder 2013 All rights reserved This material may not be reproduced or redistributed in any way without the express written permission of the original author andor compliance with the fair use doctrine as elucidated in 17 USC 107 S Nature and importance of marketing channels S S Reaching prospective buyers is a prerequisite for successful marketing Buyers benefit from distribution systems used by companies Marketing channel individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users value is created by intermediaries S types of intermediaries S middleman any intermediary between the manufacturer and end user markets agentbroker has legal authority to act on behalf of the manufacturer wholesaler sells to other intermediaries usually retailers term usually applies to consumer markets retailer sells to consumers U3 U3 U339U distributor imprecise term usually used to describe intermediaries who perform a variety of distribution functions including selling maintaining inventories extending credit and so on A more common term in business markets but may be used to refer to wholesalers S dealer Cody Eddie Also a more imprecise term than distributor that can mean the same as distributor retailer wholesaler etc S functions of intermediaries S transactional S buying purchasing products for resale or as an agent for supply of a product S selling contacting potential customers promoting products and seeking orders S risk taking assuming business risks in the ownership of inventory that can become obsolete or deteriorate producer doesn39t suffer the loss bc intermediary has already made purchase S Logistical S Assorting creating product assortments from several sources to serve customers S Storing assembling and protecting products at a convenient location to offer better customer service S Sorting purchasing in large quantities and breaking into smaller amounts desired by customers S Transporting physically moving a product to customers S Facilitating function S Financing extending credit to consumers S Grading inspecting testing orjudging products and assigning them quality grades S Marketing info and research providing info to customers and suppliers including competitive conditions and trends S Consumers also benefit from intermediaries S They get what they want when they want it and where they want it S Value through four utilities example S Time FedEx next morning delivery S Place gas station on empty stretch of highway S Form Coke manufactures Sprite flavor concentrate which is sold to bottlers who add sweeteners and concentrate to carbonated water and package the product Enhancing a product or service to make it more appealing to buyers S Possession airline tickets delivered by travel agency S Channel structure and organization S Marketing channels for consumer products and services S Direct channel producer ultimate consumers deal directly with each other S Insurance companies S Schwan Food Company S Producer performs all three channel functions transactional logistical facilitating see above S Indirect channel intermediaries bt producer and consumer and perform numerous channel functions S Producer gt retailer gt consumer S Most common when retailer is large and can buy in large quantities from producer S Or when the cost of inventory makes it too expensive to use a wholesaler S Car dealerships Toyota S Producer gtwhoesaergtretaiergtconsumer S Low cost low unit volume items that are frequently purchased by consumers S Ex candy magazines S Producer gtAgentgtwhoesaergtretaiergtconsumer S Most indirect channel S Many small manufacturers and retailers agent used to coordinate a large supply of the product S Ex Mansar Products Ltd Belgian producer of specialtyjewelry that uses agents to sell to wholesalers in US S Marketing channels for business products and services S Direct producergtindustria user S Maintain sales force perform all channel functions S Buyers are large and well defined S Sales effort requires extensive negotiations S Products are of high unit value and require handson expertise in terms of installation or use S Indirect S Producer industrial distributer industrial user S Industrial distributor performs functions including selling stocking and financing S Industrial distributors are similar in many ways to wholesalers in consumer channels S Ex Caterpillar construction and mining equipment S Producer agent industrial user S Agent serves as independent selling arm of producers represents a producer to industrial users S Producer agent industrial distributors industrial user S Ex Harkman Electric Co Electronic marketing channels employ the internet to make products and services available for consumption or use by consumers or organizational buyers S Combine electronic and traditional intermediaries to create time place form and possession utility for buyers Direct and multichannel marketing S Direct consumers can buy products by interacting with various advertising media without a face to face meeting with a sales person S Catalog sales mail order selling direct mail sales telemarketing HSN S LL Bean Neweggcom S Multichannel marketing the blending of different communication and delivery channels that are mutually reinforcing in attracting retaining and building relationships with consumers S Eddie Bauer S Leverages value adding capabilities of different channels S Retail stores leverage physical presence by allowing customers to pick up online orders at nearby store or return or exchange non store purchases if they wish S Staples Dual distribution and strategic channel alliances S Dual distribution an arrangement whereby a firm reaches different buyers by using two or more different types of channels for the same basic product S Strategic channel alliances one firm s marketing channel is used to sell another firm s products S Popular in global marketing when creating marketing channel relationships is expensive and time consuming Vertical marketing systems professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact S Corporate systems successive stages of production and distribution under a single ownership S Forward integration producer owns intermediary at next level down the channel Ralph Lauren Goodyear Apple Sherwin Williams Backward integration retailer owns manufacturing operation Kroger Tiffany jewelry Corporate systems are used by companies S S S seeking to reduce distribution costs and gain greater control over supply sources but both types of integration forward and backward increase a company39s capital investment and fixed costs As a result many companies favor contractual vertical marketing systems S Contractual systems independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional economies and marketing impact S Most popular among three types of vertical marketing systems S S Wholesaler sponsored voluntary chains wholesaler develops contractual relationships w small independent retailers S Standardize and coordinate S Buying practices S Merchandising programs S Inventory management efforts S Can lead to economies of scale and volume discounts that enable retailers to compete with larger chain retailers S IGA Ben Franklin variety and craft stores Retailers sponsored cooperative S Small independent retailers form organization that operates a wholesale facility cooperatively S Member retailers concentrate buying power through wholesaler S Member retailers plan collaborative promotional and pricing activities S Examples Associated Grocers ACE Hardware Franchising S contractual agreement between parent company franchisor and an individual franchisee S allows the franchisee to operate a certain type of business under an established name and according to specific rules S Four popular types of franchising S Manufacturer sponsored retail franchise system S Ford licenses dealers to sell its cars subject to various sales and service conditions S Manufacturer sponsored wholesale franchise system S PepsiCo licenses wholesalers bottlers that purchase concentrate and carbonate bottle promote and distribute its products to retailers vending machines etc S Service sponsored retail franchise system S Used by firms with unique approach for performing a service and wish to profit by selling the franchise to others S Holiday Inn Avis McDonald39s S Service sponsored franchise system S Franchisors license individuals or firms to dispense a service under a trade name with specific guitelines S Snelling and Snelling nc employment services and HampR Block S Administered vertical marketing systems S Coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership S Proctor and Gamble S Broad product assortment diapers to detergents S Obtains cooperation from supermarkets in displaying promoting and pricing its products S Walmart can obtain cooperation from manufacturers in terms of product specs price levels and promotional support S Marketing channel choice and management S Consider 3 questions when choosing channel and intermediaries S Which channel and intermediaries will provide the best coverage of the target market S Which will best satisfy the buying requirements of the target market S Which will be most profitable S Factors affecting channel choice and management S Target Market Coverage S Degrees of distribution density S Intensive distribution when a firm tries to place its products or services in as many outlets as possible S usually for convenience products or services candy fast food newspapers soda S Coca Cola products quotwithin an arm s reach of desire S Cash VISA atms S Exclusive distribution only one retailer in specified geographical area carries firm s products S usually for specialty products or services S Gucci Yves Saint Laurent S S Preferred for two reasons S Limits head to head competition for identical product S Provides point of difference for a retailer or distributor Saks Selective distribution S Firm selects a few retail outlets in a geo area to carry products S Dell inc S Coverage benefits of intensive distribution and control over resale like exclusive S Buyer Requirements S Gain access to channels and intermediaries that satisfy some of the interests buyers might want fulfilled when they purchase a firm s products or services S Information S Communication with buyers through in store displays demonstrations personal selling S Consumer electronics manufactures Apple stores Convenience S Proximity or driving time to retail outlet S 7 Eeven satisfies this interest for example S Minimum of time and hassles Jiffy Lube S Web sites designed clearly 8 second rule Variety S Buyers want numerous competing and complementary products from which to choose S Breadth and depth of products and brands carried by intermediaries is evidence of variety S Pet food and supply manufacturers distribute to pet superstores with lots of products Prepost sale service S Important for products like large appliances that require delivery installation credit S Profitability S Determined by margins earned for each channel member and for the channel as a whole S Channel cost is the critical dimension of profitability S Channel costs include distribution advertising selling expenses associated w different types of marketing channels S Managing channel relationships conflict and cooperation S Channel conflict arises when one channel member believes another is engaged in behavior that prevents it from achieving its goals Disintermediation channel conflict that arises when channel member bypasses another member and sells or buys products direct S Logistics and SCM S Logistics those activities that focus on getting the right amount of the right product to the right place at the right time U3 U3 U3 U339U at the lowest possible cost logistics management practice of organizing the cost effective flow of raw materials in process inventory finished goods and related information from point of origin to point of consumption S flow of the product S cost effectiveness S satisfying customer requirements Supply chains versus marketing channels S Supply chain the various firms involved in performing the activities required to create and deliver a product or service to consumers or industrial users Sourcing assembling and delivering a new car the automotive supply chain SCM and marketing strategy S Aligning a SC with marketing strategy S Understand customer S Understand supply chain S Harmonize supply chain w marketing strategy S Concepts of logistics management in a supply chain S total logistics cost concept expenses associated with transportation materials handling and warehousing inventory stockouts order processing and return products handling customer service concept the ability of logistics mgmt to satisfy users in terms of time dependability communication and convenience Marketing 310 CHAPTER 13 RETAILING AND WHOLESALING JW Harder 2014 This material may not be reproduced or redistributed in any way without the express written permission of the author andor compliance with the fair use doctrine as elucidated in 17 USC 107 Key Terms Retailing all activities involved in selling renting and providing products and services to ultimate consumers for personal family or household use Scrambled Merchandising offering several unrelated product lines in a single retail store 7 Telemarketing using the telephone to interact with and sell directly to customers Retailing Mix the activities related to managing the store and the merchandise in the store Includes retail pricing store location retail communication and merchandise Multichannel Retailers retailers that use a combination of traditional store formats and nonstore formats such as catalogs television and online retailing Shopper Marketing the use of displays coupons product samples and other brand communications to influence shopping behavior in a store Category Management an approach to managing the assortment of merchandise that maximizes sales and profits my inner economist is having an absolute fit right meow Wheel of Retailing a concept that describes how new forms of retail outlets enter the market Retail Life Cycle the process of growth and decline that retail outlets experience over time Merchant Wholesalers independently owned firms that take title to the merchandise they handle Manufacturer39s Agents Agents who work for several producers and carry noncompetitive complementary merchandise in an exclusive territory Brokers independent firms or individuals whose main function is to bring buyers and sellers together to make sales S The Value of Retailing Not only do producers and consumers meet through retailing actions but retailing also creates customer value and has a significant impact on the economy Retaiing s economic value is represented by the people employed in retailing as well as by the total amount of money exchanged in retail sales S Consumer Utilities Offered by Retailing Example S Time Utility Sports Authority Finding the right athletic equipment during the offseason S Place Utility Wells Fargo worldwide ATM network online banking service S Form Utility Ralph Lauren Create Your Own program shirts meet customer specs S Possession Utility CarMax provides financingleasing taking tradeins S The Global Economic Impact of Retailing S Retailing is important to the US and global economies S 430 largest businesses in US are retailers WaMart Home Depot Target Costco and provide jobs for 29M employees total S Outside the US Aeon in JAP Carrefour in FR Metro Group in GERM Tesco in GB S A combination of local and global retailers is evolving in emerging economies like those of China and Mexico WaMart 5700 stores outside US S Classifying Retail Outlets t s easiest to understand the differences among retail institutions by recognizing that outlets can be classified in several ways S Form of Ownership Distinguishes retail outlets based on whether independent retailers corporate chains or contractual systems own the outlet S Independent Retailer S One of the most common forms of retail ownership is the independent business owned by an individual S Account for most of the 11 million retail establishments in the US and include hardware stores convenience stores clothing stores etc S Advantage for the owner he gets to be his own boss S Advantage for the consumer convenience personal service lifestyle compatibility S Corporate Chain Multiple outlets under common ownership EX Macy39s Inc Centralization in decision making and purchasing is common Advantages in dealing with manufacturers esp as size grows S Can bargain to get good service or volume discounts S Target s large volume makes it a strong negotiator with most manufacturers S Buying power leads to lower prices S Consumers benefit from multiple outlets with similar merchandise and consistent management practices S Hightech business for many large chains S Wamart sophisticated inventory mgmtcost control system that allows for rapid price changes for each product in every store S RFID tags better information flow for large chains Track and analyze purchase trends of consumers S Contractual Systems involve independently owned stores that band together to act like a chain S Retailer sponsored co ops S Associated Grocers neighborhood grocers that agree w several other independent grocers to buy their goods directly from food manufacturers S Members take advantage of volume discounts S Customers get benefit of the impression of a large chain S wholesaler sponsored voluntary chains try to achieve similar benefits as coops S Franchise systems S Parent company franchisor usually helps in selecting the location setting up the storefacility advertising and training personnel S Franchisee usually pays onetime franchise fee and an annual royalty usually tied to the franchise39s sales S Two general types of franchises S Business format franchises McDonald39s Radio Shack Subway S Franchisor provides step by step procedures for most aspects of business guidelines for most likely decisions a franchisee will face S Product distribution Ford dealership or CocaCola distributor S Franchisor provides a few general guidelines but franchisee is largely independent or at least much more independent than business format franchises S By selling franchises organization reduces cost of expansion but loses some control S A good franchisor maintains strong control of outlets in terms of delivery and presentation of merchandise S Important to enhance recognition of franchise name S Level of Service describes the degree of service provided to the customer self limited or full S Sef service customers perform many functions during the purchase process S Warehouse clubs like Costco Redbox S The trend is toward retailing experiences that make customers cocreators of the value they receive S Limited service Provide some services credit and merchandise return but not others clothing alterations S General merchandise stores like Walmart Kmart Target usually considered limited service S Customers responsible for most shopping activities although salespeople are available in departments like electronics jewelry and lawn and garden S Full Service Specialty stores and department stores S Neiman Marcus Nordstrom and Saks Fifth Avenue rely on better service to sell more distinctivehigher margin goods and retain customers S Free exchanges easy returns gift cards credit cards customer service line live chat with specialists personal shoppers concierge service S Nordstrom stores typically have 50 more salespeople on the floor than other similarly sized stores U5 U539U S Type of Merchandise Line describes how many different types of products a store carries and in what assortment S S Depth of Line number of items within product line S Sports Authority limited line Victoria39s Secret single line Both are considered specialty outlets S Often focus on one type of product Best Buy Staples Barnes and Noble at competitive prices Referred to in the trade as Category Killers bc they often dominate the market BB Breadth of Line number of different product lines S General merchandise stores carry a broad product line with limited depth Large department stores like Macy39s Dillards etc carry a wide range of products but not unusual sizez Traditionally outlets carried related lines of goods Today however scrambled merchandising offering several unrelated product lines in a single store is common Think Walgreens S Making Responsible Decisions Green isn39t just a color to retailers it39s a value S Retailers have come to realize that consumers want products that are consistent with their values and they want to purchase them from retailers with similar values S S US Green Retail Association offers guidance for retailers implementing quotgreen practices provides a third party certification that recognizes commitment to green values Encourage use of reusable shopping bags Installing LED lighting Using nontoxic cleaning products Reducing CO2 emissions with economical delivery vehicles Using rainwater for landscape maintenance Finding alternative uses for landfill waste These environmental initiatives often have financial benefits as well S Home Depot switch to compact fluorescent light bulbs saved S16Myear Many retailers also requiring that suppliers make similar efforts S Walmart notices that packaging leads to waste Required toy suppliers to trim an inch of packaging from its lines reduced packaging by 3500 tons S Target requiring advertising agency to recycle or compost waste from shooting new commercials U5 U5 U5 U5 U5 U539U S Nonstore Retailing occurs outside a retail outlet through activities that involve varying levels of customer and retailer involvement Six forms S Automatic Vending S S S S Vcommerce makes it possible to serve customers when and where stores cannot Machine maintenance operating costs and location leases can add to the cost of products the same products are usually more expensive at vending machines than at stores Improved technology is making this a more viable option S Touch screens credit card readers wireless technology S quotGreen machines consume less energy Vending machines represent an extension of brands that are already available in stores through catalogs and online S Direct Mail and Catalogs S S quotthe store that comes to the door Attractive for several reasons Can eliminate cost of store and clerks Dell Improve marketing efficiency through segmentation and targeting Create customer value by providing a fast and convenient means of making a purchase Catalogs often serve as tools to encourage customers to visit web sitessocial media pagesphysical stores 39U39U39U39U S Recently impacted by factors like S Influence of large retailers has been positive increased number and variety of products being purchased through direct mailcatalogs 10 S Higher paper costs increasing postage rates green initiative such factors have caused direct mail and catalog retailers to search for ways to provide additional customer value S LL Bean identify market niches catalog for fly fishing enthusiasts S Television Home Shopping S Traditionally attractive to 4060 yo women S Inviting celebs to the show to attract a younger audience Kardashian sluts for example S Using other forms of retailing as well S Physical retail locations QVC S Online platform development technological links S Interactive technology remote control ordering S Online Retailing S Advantages 24 hr access comparison shopping ability in home privacy and variety S Traditional and online retailers are melding quotbricks and clicks and using experiences from both approaches to create better customer vaueexperiences S Walmart quotPick Up Today service S Site to store services S Mobile apps Big days include Black Friday and Cyber Monday Online auctions quotbot shopping online discount services Problems S Nearly 23 online shoppers make it to checkout and then leave the site to compare shipping costsprices on other sites 70 of those who leave don t return This issue is being addressed by offering customers comparisons of competitive offerings S Online retailers should think of their websites as dynamic billboards and that the sites should be visible to search engines S Experimental or interactive activities on sites BMW build your own S Telemarketing using the telephone to interact with and sell directly to consumers S Often viewed as a more efficient means of targeting consumers than direct mail S Used by insurance companies brokerage firms and newspapers as a way to cut costs while still maintaining access to their customers S Recent dramatic changes as a result of new legislation S Consumer privacy industry standards ethical guidelines S Congress FTC legislation that created the National Do NotCall Registry S Companies have adapted by adding compliance software S Direct Selling aka door todoor retailing direct sales of goods and services to consumers through personal interactions and demonstrations S Avon Fuller Brush Mary Kay World Book created an industry by providing consumers w personalized service and convenience S Industry growth resulting from two trends S Expansion into markets outside US Avon Amway S Growing number of companies using direct selling to reach consumers who prefer oneonone service and a social shopping experience S Pampered Chef S Interest among potential sales reps has grown during the economic downturn as people seek independence and control of their work activities S Retailing Strategy In developing a retailing strategy managers work with the retailing mix which includes activities related to managing the store and the merchandise in the store Retailing mix is similar to the marketing mix and includes retail pricing store location retail communication and merchandise S Retail Pricing S Markup how much should be added to cost retailer paid to find final selling price S By the time the product is sold they have moved from original markup to maintained markup U3 U3 UT 11 39U39U Original markup initial selling price retailer cost When products don t sell as quickly as anticipated their price is reduced S Difference bt final selling price and retailer cost is the maintained markup S Maintained markup final selling price retailer cost Gross Margin Markdown occurs when product does not sell at original price and adjustment is necessary S Often caused by new models or styles S May also be used to increase demand for complementary products S Timing is important S Some stores markdown as soon as sales fall off to free up valuable selling space and cash S Other stores delay markdowns to discourage bargain hunters and maintain image of quality S Research indicates that frequent promotions increase consumer ability to remember regular prices Price discounts used by many retailers as part of regular merchandising policy Wamart S quoteveryday low pricing Wamart Home Depot S Since consumers often use price as an indicator of quality brand name and image become important decision factors in these situations quotEvery day fair pricing advocated by retailers that might not have the lowest price but try to create customer value through service and total buying experience Consumers often use prices of benchmark items to form an overall impression of a store39s prices Price is most likely factor to influence consumers assessment of value retailers must be careful to avoid negative consumer perceptions if the rebate processing time is long Off price retailing TJ Maxx Burlington Coat Factory Ross Stores S Selling brand name merch at lower than regular prices S Difference between off price retailer and discount store retailer buys off price merchandise from manufacturers with excess inventory at prices below wholesale prices whereas discounter buys at full wholesale prices but takes less of a markup than traditional dept stores S Selection at an off price retailer is unpredictable and searching for bargains has become a popular activity for many consumers S S 12 39239 BLAW Chapter 11 39239 True impossibility I Destruction of subject matter I Death of promisor in a personal services contract I Illegality O 3939 Commercial impracticability and frustration of purpose I Discharge sometimes permissible for major unforeseen disruptions I CI fulfilling would be extraordinarily difficult and unfair to one party I FoP contract now has no value for one party 0 3939 Remedies I Decide what interest should be protected I In contracts interest comes from benefit from agreement I Expectation interest what injured party thought they would get from contract 9 Put plaintiff in position that would have resulted from full performance 9 Most common remedy 9 Should account for all gains and expenseslosses 9 Injured party shouldn39t end up better off 9 Damages divided into 3 parts I Direct result from breach I Consequential special harm caused by injured party s unique situation 0 Only available for foreseeable consequences of breach I Incidental minor costs not as important 0 Incurred when injured party suffers while responding to a breach 0 Storage advertising costs examples 9 No punitive damages give plaintiffs benefit of bargain don t punish defendant I Punitive damages only applicable in tort claim I Reliance interest injured party can t demonstrate expectation interest based on unclear profit 9 May still prove that money was spent on reliance and in fairness there should be compensation 9 Puts the injured party in the position he would have been in had the parties never entered into a contract 9 Focuses on time and money injured party spent performing his part of the agreement 13 O 9 Hard to quantify courts prefer to assign damages based on numbers provide in a contract Industry track record helps plaintiff prove losses based on market prices I Restitution may be unable to show expectation or reliance but conferred a benefit on other party 9 Restore injured party the benefit she has conferred to the other party who unjustly benefited I Equitable interest money isn t enough to help the injured party 9 9 Maybe a transfer of property specific performance or injunction Specific performance forces both parties to complete the deal gt Only in cases involving the sale of land or some other unique asset gt Used when money damages are inadequate compensation for injured party gt Always available in real estate contracts I Also applicable to family heirlooms and works of art secret formulas and patents and shares in a closely held corporation I Buyer must have been ready willing and able to purchase property on time Preliminary injunction prohibits party from doing something during the course of a lawsuit Permanent injunction occurs if after trial it appears that the plaintiff has been injured and is entitled to an injunction I Mitigation of damages injured party may not recover for damages that he could have avoided with reasonable efforts 0 When one party perceives a breach it must try to prevent unnecessary loss 9 Expected to mitigate their own damages keep them as low as reasonable I Liquidated damages clause stating in advance how much a party must pay if it breaches 0 Sometimes difficult or impossible to prove how much damage injured party has suffered 0 Enforced if 9 9 Estimating actual damages was difficult at the time of the creation of the contract Liquidated amount is reasonable 14 CONTRACT LAW INTRODUCTION AND FORMATION 214229 Appendix B sections 2102 and 2105 0 00 Contracts gt A contract is merely a legally enforceable agreement gt Elements necessary for enforceable contract I Offer proposed deal I Acceptance I Consideration there has to be bargaining that leads to an exchange between the parties Both sides must receive some measurable benefit I Legality must be for a lawful purpose Courts won t enforce agreements to sell coke I Capacity parties must be adults of sound mind I Consent I Writing some gt Other important issues I Performance and discharge if a party fully accomplishes what the contract requires his duties are discharged But what if duties were performed poorly or not at all I Remedies a court will award money or other relief to a party injured by a breach of contract Types of Contracts gt VVV Bilateral contract both parties make a promise I Make up majority of contracts I A promise for a promise Unilateral contract one party makes a promise that the other party can only accept by doing something I Less common I Binding agreement in which one party has made an offer that another party can accept only by action not words Executory contract one or more parties have not yet fulfilled their obligations Executed contract all parties have fulfilled their obligations Valid contract one that satisfies all of the law39s reqs I No issues with seven elements I Will be enforced by courts Unenforceable agreement I Parties intend to form valid bargain but court declares that rule of law prevents enforcing it Voidable contract I Occurs when the law permits one party to terminate the agreement 0 Sometimes happens when other party has committed fraud 0 May happen when an agreement has been signed under duress Void agreement I neither party can legally enforce because the I bargain is illegal or one party has no legal authority to make it Express contract I Agreement with all the important terms explicitly stated I Vast majority of contracts are express I Some are oral some written I May be bilateral or unilateral I It is wise to make express contracts and put them in writing 15 gt Implied contract I The words and conduct of parties indicate that they intended an agreement I Hottest disputes arise in the employment setting I quotcommon understanding gt Promissory estoppel and quasi contracts unusual circumstances I Promissory Estoppel defendant made promise that plaintiff relied on Possible remedy for an injured plaintiff in a case with no valid contract Plaintiff can show 9 Promise was made by defendant knowing that plaintiff would likely rely on it 9 Reasonable reliance on the promise by the plaintiff 9 Injustice can only be avoided by enforcing the promise I Quasi contract defendant received benefit from plaintiff 9 Plaintiff must show that gt Plaintiff gave some benefit to defendant gt Plaintiff reasonably expected to be paid for the benefit and the defendant knew this gt The defendant would be unjustly enriched if he did not pay 9 Quantum meruit damages awarded to plaintiff gt quotas much as he deserves 9 Court awarding money that it believes plaintiff morally ought to have 392 Sources of contract law gt Common Law I Express and implied contracts I Promissory estoppel and quasi contract gt Uniform Commercial Code I Executives lawyers and judges wanted a body of law for transactions that reflected modern commercial methods and provided uniformity throughout the US This desire gives birth to the Uniform Commercial Code in 1952 Intended to facilitate the easy formation and enforcement of contracts in a fastpaced world I Goods anything movable except money securities and certain legal rights 0 V The agreement gt Offer an act or statement that proposes definite terms and permits the other party to create a contract by accepting those terms Is a statement an offer 6 Do the offeror s words and actions indicate an intention to make a bargain 9 Are the terms of the offer reasonably definite Statements that usually don t amount to offers 9 Invitations to bargain 6 Letters of intent summarize negotiating process gt Can be binding if language of letter indicates that parties intended to be bound 9 Advertisements they are merely requests for offers gt Some are binding when they are too specific distinct promise Problems with definiteness terms of offer must be definite Termination of offers 9 Revocation gt Offerer takes it back before offeree accepts 9 Rejection gt Offeree clearly indicates that he does not want to take the offer gt Counteroffer responding to an offer with a new and different proposal I A counteroffer constitutes a rejection 9 Termination by expiration binding time period 16 gt No specific time limit reasonable period to accept 9 Termination by Operation of Law gt Offeror dies or becomes mentally incapacitated gt Destruction of subject matter gt Acceptance unconditional agreement to terms of offer I Saying or doing something that a reasonable person would understand to mean that he definitely wants to take the offer I Mirror image rule requires that acceptance be on precisely the same terms as the offer I UCC and the battle of forms 0 For sale of goods most important factor is whether parties believe they have a binding agreement If their conduct indicates that they have a deal they probably do 0 If the offeree adds new terms to the offer acceptance by offeror generally creates a binding agreement 0 If the offeree changes the terms of the offer a court will probably rely on general principles of UCC 0 If a party wants a contract on its terms only with no changes it must clearly indicate that 2 UCC 2102 gt Article applies to transactions in goods unless context otherwise requires I Does not apply to any transaction which although in the form of an unconditional contract to sell or present sale is intended to operate only as a security transaction I Article does not impair or repeal any statute regulating sales to consumers farmers or other specified classes of buyers 3 UCC 2105 gt gt Goods means all things which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid investment securities and things in action Goods must be both existing and identified before any interest in them can pass I Goods that are not both existing and identified are future goods I Purported present sale of future goods or of any interest therein operates as a contract to sell There may be a sale of a part interest in existing identified goods 17 are Q v F 3 000 U00 7 SM gf WNCE 8 OLA aVtaL 0V LAIL iroau lM1 7 IA1 v T 0 4u Mquot lt3crzgt 7 MA H 391171tquotVLC 11mz5zAslr11 2014 7372 Wu aw omU Po Mu popwwoyof A L t cu mL cwwmzwb rv WV W Fquot 39 quot quot 39 V I R C0quot 439U 1 um 5390 4Mquot wvmrm 30 Iv v quotquotW ow L01 M ru54 MW ggwmgmrx CUV V V lL c3V VI b1 bIK wAJVCHWfhM mL 4 4M01xw 1V quot FYV LUXSSICIUXTWD0 quotr HquotEquot p0 ELL IA9 rvuK qVD orfL10J 1b WMl Lo 1 CV P L77 TDW 3 Cy quot roU INr L V quotL 1 Cyt 6PVH 3 LrYL m royv frwfmf VW774 W nuMuc c 0r cz46 quotgt4 Lou 539L L56ONyv lt cL7 Pmrnlavrms V L0quot quotH7rv 39Svr4r2mg zrmn399 pmyvcr MW CWV SCVLVE rlruuvyum f 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