Chapter 14: Sales and Lease Contracts Vocabulary

Vocabulary flashcards covering key legal terms, concepts, definitions, and rules governing sales and lease contracts under UCC Articles 2 and 2A.

Sales Contract

A contract for the sale of goods under which the ownership of goods is transferred from a seller to a buyer for a price.

Sale

The passing of title (evidence of ownership rights) from a seller to a buyer for a price [UCC 2-106(1)].

Tangible Property

Property that has physical existence and can be distinguished by the senses of touch, sight, and so on.

Intangible Property

Property that is incapable of being apprehended by the senses (such as by sight or touch), having only conceptual existence and not coming under Article 2.

Predominant-Factor Test

A test courts use to determine whether a contract involving a combination of goods and services is primarily for the sale of goods or for the sale of services.

Merchant

A person who is engaged in the purchase and sale of goods, possessing a relatively higher degree of commercial expertise than casual or inexperienced sellers or buyers.

Lease

A transfer of the right to possess and use goods for a period of time in exchange for payment.

Requirements Contract

An agreement in which a buyer agrees to purchase and the seller agrees to sell all or up to a stated amount of what the buyer needs or requires.

Output Contract

An agreement in which a seller agrees to sell and a buyer agrees to buy all or up to a stated amount of what the seller produces.

Firm Offer

An offer by a merchant concerning the sale or lease of goods that is irrevocable without consideration for a period of time not longer than three months [UCC 2-205, 2A-205].

Conforming Goods

Goods that accord with or conform to contract specifications.

Unconscionable Contract

A contract that is so unfair and one-sided that it would be unreasonable to enforce it.

Identification

The express designation of the specific goods provided for in the contract.

Fungible Goods

Goods that are alike by physical nature, by agreement, or by trade usage, and are of an identical grade or type.

Shipment Contract

A contract in which the seller is required or authorized to ship goods by carrier, where the buyer assumes liability for any losses or damage after delivery to the carrier.

Destination Contract

A contract in which the seller is required to ship the goods by carrier and deliver or tender them at a specified destination.

Document of Title

A writing exchanged in the regular course of business that evidences the right to possession of goods, such as a bill of lading or warehouse receipt.

Bailment

A situation in which the personal property of one person (a bailor) is entrusted to another (a bailee), who is obligated to return the bailed property or dispose of it as directed.

Cure

Under the Uniform Commercial Code, the right of a party who tenders nonconforming performance to correct or repair their performance within the contract period.

Insurable Interest

A property interest in goods being sold or leased that is sufficiently substantial to permit a party to insure against damage to the goods.

Tender of Delivery

A seller's or lessor's act of placing conforming goods at the disposal of the buyer or lessee and giving whatever notification is reasonably necessary to enable them to take delivery.

Perfect Tender Rule

A common law rule preserved and modified by the UCC under which a seller is required to deliver goods that conform perfectly to the contract requirements.

Commercial Unit

A unit of goods that, by commercial usage, is viewed as a single whole for purposes of sale and cannot be divided without materially impairing its character, market value, or use.

Anticipatory Repudiation

A breach of contract in which, before the time for contract performance, one party clearly communicates to the other the intention not to perform.

Warranty

An assurance or guarantee by the seller or lessor about the quality and features of the goods being sold or leased.

Express Warranty

A seller's or lessor's oral or written promise, ancillary to an underlying sales or lease agreement, as to the quality, description, or performance potential of the goods.

Implied Warranty

A warranty that the law derives by implication or inference from the nature of the transaction or the relative situation or circumstances of the parties.

Implied Warranty of Merchantability

A warranty that goods being sold or leased are reasonably fit for the ordinary purpose for which they are sold or leased, properly packaged and labeled, and of fair quality.

Implied Warranty of Fitness for a Particular Purpose

A warranty that goods sold or leased are fit for a particular purpose, arising when the seller or lessor knows the buyer's or lessee's purpose and reliance on their skill and judgment.