Download BBA 3210Unit VI Case Study: Contract TermsColumbia Southern and more Lecture notes Accounting in PDF only on Docsity! BBA 3210 Unit VI Case Study: Contract Terms Columbia Southern University Unit VI Case Study: Contract Terms Is this contract subject to Article 2 of the Uniform Commercial Code (UCC)? Why, or why not? Uniform Commercial Code is a state act that that covers commercial activities such as sales and transactions. It is a model formulated to enhance consistency and uniformity in commercial activities within the states. Article 2 of UCC is generally sales and specifically for contracts carried out during sales. It covers sales of movable goods at the time of contract with limited sale and purchase of goods worth $500 and above (Gabriel, 2017). Therefore, the agreement of purchase of an arctic air commercial freezer between Scott Restaurant Company and Big Refrigeration Company is subject to article 2 of UCC since it involves the sale of a movable commodity at the time of contract worth $5000. Does it make a difference if Scott Restaurant Company or Big Refrigeration Company are merchants? Why, or why not? The model generally applies to a contract that involves two parties, in which either one is a merchant or both. A merchant can be defined as a person who has a unique skill in provision or dealings with certain peculiar commodities covered by the contract. UCC puts a higher price on the merchant than it does on the buyer to protect buyers from unfair dealings and fraudulence. Therefore, the merchants are obligated to deal in good faith with high regard on the industry’s standards that measures standards (White, 2018). In the case, Big Refrigeration Company is specialized in the provision of refrigeration commodities which makes it a merchant in this contract. It would not be covered under UCC if neither of the parties was a merchant. Consider that Big Refrigeration Company delivered an Admiral Craft commercial freezer to Scott Restaurant Company on the date the contract required but, before the freezer was installed, a representative of Scott Restaurant Company recognized that the freezer that was delivered was not the brand that the contract specified. Did Big Refrigeration Company breach the contract? If there was a breach of contract, what can Scott Restaurant Company do about the breach of contract? In this case, there would be no breach of contract. It would be considered a contract breach if the installation was done, and later on, Scott Restaurant Company finds out. This case would be considered minor negligence, corrected by immediate replacement of the wrong product with the one specified in the contract. If there was a breach of contract, for example, complete transaction and installation of a wrong commodity, the Scot Restaurant Company would be entitled to compensation at the merchant's expense. UCC sets remedies to contract breach. For this instance, the buyer will be paid damages worth the difference price quoted in the contract and the price of the commodity delivered. The price is determined by the price quoted at the tender or the price of the same commodity in the market at the time. The damages or expenses caused due to the seller's breach can be included in the damage's cost. This can also include time wasted and damaged goods caused by the inconvenience. For example, suppose Scott Restaurant Company had bought perishable products targeting the freezer, and they go bad due to the inconvenience. In that case, they will be compensated the equal amount of the damaged commodities after proving the claim beyond a reasonable doubt. Common contract law targets fairness by putting back the buyer where he was before the contract or making him whole. This is achieved by ensuring the buyer is issued the equivalence of what is quoted in the contract. In conclusion, Uniform Commercial Code is legislation formulated to cover commercial activities such as sales and transactions. It is a model formulated to enhance consistency and
