The Uniform Commercial Code is a set of acts used in all the fifty states of the USA to harmonize business transactions that include sales, insurance policies, real estates, secured transactions and negotiable instruments among others.
The act was published singly in 1952 and adopted in the various states in forms that best suited the laws of the particular state. However, on adopting this act, major changes were not advocated, since this would have changed the entire meaning of the act.
Buy Law of Sales and the Uniform Commercial Code essay paper online
The act ensures that business transactions can be carried out in the various states and are not just limited to one state, hence the similarity in the terms of the act. Article 2 of the UCC deals primarily with the sales of goods. Article 2A, on the other hand, deals with leases of goods. Article 2-103 gives definitions of the terminologies used therein.
Analysis of the Sample Sales Contract
The sample contact is between two companies within the United States, Traxys North America LLC and Molycorp Minerals LLC. This conforms to the stipulations of the UCC, since the companies involved should be within the United States. The act allows the companies to be from different states, in this case Delaware and New York (Law.cornell.edu).
In the contact, there have been given definition of terms. This is in agreement with Article 2-UCC (Law.cornell.edu), since it helps in clarification of the conditions and gives a better understanding of the document. The terms defined are equally given in Article 2-UCC, which are party, product and recommended price among others.
The good referred in the contract as product is didymium oxide. This good qualifies as per the terms in Article 2, where it is stated that the goods should be both moveable and identifiable at the time of sale (Law.cornell.edu).
Clause 2.2 states the price of the good and gives various forms in which the price is adjustable. This is a type of modification without consideration (Law.cornell.edu) as it is already given in the contract.
Clause 2.4 states that the transfer of ownership to Traxys shall only be complete upon the receipt of the product. This clause conforms to the FOB place of business clause of Article 2 that states that the seller shall assume risk of loss of goods when they are being transported, until the time the goods have reached the buyer’s place of business or any other one indicated in the contact. The buyer’s place of business in this case is Traxys warehouse, and the evidence of transfer of goods shall be the warehouse receipt (Law.cornell.edu).
The contract gives further information concerning the conditions in which marketing of the products will be done. This does not conform to Article 2, since the article deliberately deals with goods and not services. The jurisdiction under which this kind of business transaction will fall is Article 8 of UCC.
Article 4.1 states the conditions of a settlement. In this case, Molycorp shall re-purchase the goods that have not been sold at a unit price per unit product. In addition, the clause states that other charges such as the direct costs, finance charges and handing fees shall at that point become due and payable. Such a condition is provided in the Article 2-UCC (Law.cornell.edu). The Article also provides a condition where Traxys would be allowed to sell the products in auction, at which 0.10% of the proceeds would go towards Traxys. The former settlement appears to be a better one, given that Traxys may not be in a position to sell the goods once more. Even in auction given they are a marketing company and must have unsuccessfully attempted sale.
The contact gives terms for shipping and storage. These include packaging, delivery schedule and details on delivery location. Unlike in Article 2-UCC, which states that the seller shall assume full risk of loss until the goods have been delivered to the buyer (Law.cornell.edu), the contract transfers some of that liability to the buyer in its Article 6.4. It states that Traxys would be required to pay $1.00 per month for storage of the goods. In addition, Article 6.3 of the contract does not allow modification with consideration.
Upon signing the document, the two limited liability companies will be subjects to the offeror, offeree terms as of Article 2-UCC. The terms of consideration, i.e. in case of a termination, have been given near the end of the contract (Law.cornell.edu). These are important as they give flexibility to the parties.
Related Free Economics Essays
- How to Avoid Transactions or Business Arrangements that may be Potentially in Violation of Antitrust Laws
- Antitrust Law
- Hostess Brands Inc. Debt Financing and Bankruptcy Case
- XYZ Corporation: Financial Statement Analysis
- Business Structure of Del Monte Foods
- Legal Structure of Business
- Introduction to Economic Analysis
- Global Compensation
- Men’s Beauty Salon Business Plan