Wiley CPAexcel Exam Review 2014 Focus Notes: Regulation

Module 27: Sales

SALES

Contracts involving the sale or lease of goods are covered by the Uniform Commercial Code and are subject to special rules.

Offer, Acceptance, and Enforceability

Like other contracts, elements of a sales contract include offer, acceptance, and consideration.

Offer

An offer under sales law may be incomplete as to terms provided the parties intend to enter into a contract.

A firm offer cannot be revoked for a specified time of up to three months, regardless of a lack of consideration. A firm offer must be

• Made by a merchant
• In a signed writing

Acceptance

Acceptance of a sales contract does not have to mirror the offer. A timely and definite indication of acceptance with different or additional terms is valid.

1. 1)  The different or additional terms are generally considered proposals
2. 2)  If the contract is between merchants, the different or additional terms are part of the contract unless
   • The offer required acceptance of the specified terms
   • The changes materially change the offer
   • The other party objects on a timely basis

An offer to buy goods for prompt or current shipment

• May be accepted by a promise to ship promptly
• May be accepted by prompt shipment of conforming goods

Enforceability

Modifications of existing contracts are enforceable, even if or not supported by additional consideration.

Under the Statute of Frauds, sales contracts in the amount of $500 or more, including modifications, must be in writing to be enforceable.

• An oral contract between ...