Part 4- Sales, Chapter 19: Formation and Terms of Sales Contracts, Doc 4

Key Points Summary 1. Case 1: Buying Beer on the Internet (Butler v. Beer Across America) o Facts: Hunter Butler, a minor, ordered beer online from Beer Across America, an Illinois company, while in Alabama. His mother sued the company for damages under Alabama’s Civil Damages Act, which holds parties accountable if they knowingly furnish alcohol to minors. o Legal Issue: The core question was whether the sale occurred in Alabama (giving Alabama jurisdiction) or in Illinois, as title and responsibility under Alabama’s legal reach depend on this. o Ruling: The court determined the sale occurred in Illinois because the contract specified a "FOB seller" (freight on board) arrangement, meaning the title passed to the buyer at the Illinois shipping point, not in Alabama. Therefore, the case was transferred to an Illinois court. 2. Case 2: State of Connecticut v. Cardwell o Facts: Roderick Cardwell, through Ticketworld, sold tickets for Connecticut events from his Springfield, Massachusetts, office, charging more than Connecticut’s legal markup cap. The state argued these sales violated Connecticut’s ticket scalping law. o Legal Issue: Cardwell argued that since the transactions physically occurred in Massachusetts, they did not fall under Connecticut law. o Ruling: The court reversed the lower court’s ruling, concluding the transactions were legally considered Massachusetts sales as they were executed via shipment contracts, where delivery and title transfer happened upon shipment, not in Connecticut. 3. Voidable Title and Third-Party Good Faith Buyers o Concept: Generally, a buyer cannot obtain better title to goods than the seller possessed. However, exceptions exist, such as cases of voidable title, where sellers who obtained goods through certain wrongful means (e.g., fraud or bounced checks) can still pass good title to a buyer in good faith who is unaware of the wrongdoing. o Example: If a fraudster buys an item under a false identity or with a bad check, and sells it to an innocent third party, the third party gains good title, leaving the original owner to pursue claims against the fraudulent intermediary. This rule prioritizes the protection of goodfaith buyers over original owners who may have had better preventive options. 4. Case 3: Tempur-Pedic International, Inc. v. Waste to Charity, Inc. o Facts: Tempur-Pedic donated goods to Waste to Charity (WTC) for Hurricane Katrina victims, with the condition that items would not be resold. However, WTC sold the goods, violating the agreement. o Investigation: TP and federal investigators discovered the donated products were being sold, including through eBay and direct retail. o Outcome: The case underlined the importance of enforcing agreements regarding donation restrictions and highlighted how failure to adhere to such terms could lead to legal action, especially when public benefit clauses are violated. Legal Principles • • • • Jurisdiction in Internet Sales: Internet-based sales are subject to the laws where title and risk transfer if the contract specifies. Ticket Scalping Laws and Contract Types: Location of title transfer under shipment versus destination contracts affects the applicable jurisdiction and laws. Voidable Title and Bona Fide Purchasers: Good faith buyers can obtain valid title from sellers with voidable (but not outright void) titles. Breach of Donation Terms: Agreements restricting resale are enforceable, and resale can lead to legal penalties if terms are violated.