Business in the Scenario Presented

Business In the Scenario presented in Unit 4, there are several questions that need to be answered in regard to the actions of Burnham and the effect of those actions on the overall transaction that took place, all of which involves certain legal issues. Burnham as Merchant under Uniform Commercial Code First, the issue of whether Burnham is merchant for the purposes of the UCC.

In terms of the broad definition of a merchant under the UCC, Burnham certainly qualifies- they provided goods to another party; to be more specific in the language of the UCC, they transferred and delivered goods to a seller in exchange for some form of consideration. Because Burnham qualifies as a merchant, and according to the Scenario there was no specific sales contract to the contrary, it is safe to say that they fall under the regulations of the UCC in terms of this transaction.

Therefore, there are specific effects on the transaction which took place when the risk of loss for the chairs passed from Burnham to the 3rd party they contracted to deliver the goods to their buyer, Megalo, in good condition. When the 3rd party caused the goods to be damaged in such a way, they became liable for the damage.

While Megalo's path of recourse would take them back to Burnham, because they originally purchased the chairs from Burnham, the liability for the damage falls on the company that was entrusted with the chairs and subsequently damaged them.

This is because the UCC automatically provides for the provision of warranties on goods that are sold and purchased- specifically, when one party purchases goods from another, unless expressly stated from the outset that the goods have certain limitations or damages, it is expected that the goods will be received in a condition that is reasonably expected for such goods.

The chairs would not normally be expected to be received in a damaged state, so the argument could be made that these chairs were not received in the condition that one would expect from chairs that cost $1,000 each. Security Interest On the financial end of this transaction, the bank that lent the funds to Megalo for the purchase of the chairs did not perfect security interest in the chairs from the standpoint of Article 9 of the UCC.

In the most strict interpretation of the perfecting security interest, the bank should have taken possession of the chairs once the loan went delinquent. Of course, this as well is subject to certain restrictions and details, and Burnham did not tender the goods in accordance with the requirements of the UCC. Blank Endorsement Also in regard to finances, the legal effect of the blank endorsement of the bank check presented for the purchase of the chairs is important, according to Article 3 of the UCC.

Under the Code, the use of the blank endorsement made it possible for.