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5-16 Law, Business & Government [CH 5

laborer for the work without a written contract. When you go to the store, purchase a shovel,
pay the clerk cash and walk out with your merchandise, again there is no written contract. In
these examples, how can it proved that a contract exists or existed? In the first case, the worker

performed his work and was paid. In the second transaction, the merchant gave the purchaser a
receipt for the transaction, indicating the item and amount paid, evidence of a transaction and
evidence of a contract.
However, for more involved transactions, written agreements are important because they
spell out all of the conditions of the agreement. Examples of valid contracts are purchase
breach of contract
Violation of a valid legal agreements with suppliers or real estate transactions, labor contracts, group insurance policies
agreement. for employees, franchise agreements, and sales contracts.
Breach of Contract occurs when one party violates the terms of a valid contract. The injured
damages
Financial payments made party can go to the court system to enforce the contractual provisions and, in some cases,
for a loss and related collect damages—a financial payment for any loss.
suffering.
The Law of Sales
Sales law that we have today has its basis in merchant law and is a development of
sales law
Body of law pertaining to contract law involving the sale of products for money or credit. Sales transactions and
the sale of goods or agreements are a special kinds of agreements that occur millions of times each day. Under
products for money or Article 2 of the UCC provides that some sales contracts are binding even when all of the
credit. requirements for a contract are not met (agreement of the complete terms). To illustrate, a sales
agreement is binding when the purchase price is not included in the agreement; the buyer must
pay a reasonable amount for the value of the purchase.

The Uniform Commercial Code
The Uniform Commercial Code (UCC) addresses the law of sales as well as other specific

areas of commercial law. Drafted in 1952, the UCC is one of the uniform acts that has been
promulgated in an attempt to harmonize the law of sales and other commercial transactions in
the Union.
The UCC was the first of the Uniform Acts to be proposed, and is the longest and most
elaborate such act. It is a joint project of the National Conference of Commissioners on

Uniform State Laws (NCCUSL) and the American Law Institute (ALI). The Code, as the
product of private organizations, is not itself the law, but only has the force of law when
enacted by states. The ALI-NCCUSL has also established a permanent editorial board for the
Code which has issued a number of official comments and other published papers concerning
the Code. Although these commentaries do not have the force of law, courts interpreting the
Code will often cite them as persuasive authority in determining the effect of one or more

provisions.
The UCC, in one or another of its several revisions, has been enacted in 49 of the 50 states.
Louisiana, the sole holdout, has enacted most of the Code, but because that state's commercial
law is based on civil law and the Napoleonic Code, rather than on common law, it is difficult
to harmonize procedure and terminology with the UCC. Louisiana has adopted the following

Articles of the UCC: Article1: General Provisions: UCC Article 1 deals with definitions and
also the rules of interpretation of the provisions. Article 3: Negotiable instruments: UCC
Article 3 applies to negotiable instruments.
Article 2 of the UCC specifies the circumstances under which sales contracts are entered
into by seller and buyer: an offer to sell is made and an acceptance to purchase is given. Under

the UCC, enforceable sales contracts must also generally be in writing if goods worth more
than $500 are involved. A sales contract under the UCC is quite flexible, allowing
enforceability even if certain terms are missing or other ambiguities are present. A court will
look to past dealings, commercial customs, and other standards of reasonableness in evaluating
the existence of an enforceable contract.

Article 2 of the UCC also defines warranty and sets forth the law of warranty for sales
express warranty transactions. A warranty is in the nature of a guarantee, though no formal words of warranty or
Warranty with specific guaranty need be present. Warranties are of two types: express and implied. An express
representations made by warranty is a specific representation made by the seller regarding the goods. When you
the seller regarding the purchase an automobile where the manufacturer guarantees the drive train free of mechanical
goods. defects for 50,000 miles of five years is giving an express warranty.

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