Gale Encyclopedia Of American Law 3Rd Edition Volume 8 P50 pot

buyer and seller. A contract may be made verbally or in writing or through any other conduct by both parties that acknowledges the existence of a contract. To form a contract, one of the parties must make an offer, the other party must accept the offer, and consideration, or something of value, must be exchanged. An offer may be revoked without any loss to the offeror if the revocation is made before the other party accepts the offer and gives consideration. However, an of fer may not be revoked for up to 90 days if it is (1) accompanied by an assurance that the offer will be kept open; (2) made by a merchant; and (3) in writing signed by the offering merchant (U.C.C. § 2-205). If a party accepts an offer but in the process of accepting changes material terms of the offer, the acceptance may be considered a counterof- fer. A counteroffer eliminates the first offer, and no contract is formed until the original offeror accepts the counteroffer and consideration is exchanged. In contracts between merchants, additional or different terms by the offeree become part of the contract unless (1) the offer expressly limits acceptance to the terms of the offer; (2) the new terms materially alter the contract; or (3) the offeror objects within a reasonable time. Many basic principles of contract law also apply to the sale of goods. The STATUTE OF FRAUDS requires that an agreement to sell goods at $500 or more must be in writing or it cannot be enforced in court. The writing must be signed by the party to be charged, it must contain language indicating that a contract has been made, and it must identify the parties to the contract and the quantity of goods sold. There are a few exc eptions to the Statute of Frauds. A sales contract that is UNCONSCIONABLE may be struck down in whol e or in part by a court. A sale is unconscionable if a person in a superior bargaining position dictates terms that are grossly unfair to the other party. A court will determine whether a sale is unconscionable by examining the circumstances at the time the contract was made. Courts rarely find uncon- scionability in sales between merchants because merchants generally are more sophisticated in sales negotiations than are non-merchants. Parties to a sale sometimes do not include all the terms of the sale at the time the agreement is made. Such omissions will not destroy the agreement if the parties intend to add terms at a later date. If the parties wish to modify an existing sales contract, the modifica- tions should be in writing if they increase the value of the sale to $500 or more. Issues Arising Prior to Performance Performance is the fulfillment of a promise in the contract. Many issues can arise in a sales contract after the contract is made and before a party’s performance is required. Sometimes performance may be made im- practicable. If the goods are completely destroyed before the risk of loss has passed to the buyer, and the goods have not been destroyed through the fault of either party, the seller may be excused from performing. Risk of loss is responsibility for any damage or destruction of goods; the parties may decide in the contract when the risk of loss of the goods passes from the seller to the buyer. If the goods are only partially destroyed or have deteriorated, the buyer may demand to inspect the goods and either void the contract or accept the goods with a reduction in the contract price. A seller may avoid performing only if the destroyed goods were specifically identified when the sale was made. For instance, if the sale is of a lamp handpicked by the buyer, the destruction of that particular lamp would excuse the seller’s performa nce, and the seller would not be liable to the buyer for the loss. However, if the contract is simply for a lamp of a specific description, the seller could tender any lamp that meets the description, and the buyer would not be excused from performing. There are two situations in which a party must make a substituted performance in case the agreed method of performance becomes impracticable. First, when the goods cannot be transported by the agreed-upon method of transportation, the seller must use available transportation that is a commercially reasonable substitute. Second, if an agreed-upon method of payment fails, the buyer must use a commer- cially reasonable substitute method of payment if one is available. If a party fails to substitute transportation or payment, that person could be liable to the other party for losses resulting from the failure. In some cases the purpose of a sale may be frustrated by circumstances beyond the control of both buyer and seller. For example, assume GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 478 SALES LAW that a party agrees to buy one thousand T-shirts in anticipation of a local rock concert. If the concert is cancelled after the sales contract is made, the buyer may escape the contract under the doctrine of frustration of purpose. At times it may appear to a party that the other party will be unable to perform by the expected date. For example, assume that a party agrees to sell goods on credit. If the buyer becomes finan cially insolvent before the goods are delivered, the seller may demand cash before delivering the goods. If the goods are in transit, the seller may instruct the carrier to withhold delivery of the goods. A party is considered insolvent if he or she cannot pay debts as they come due, has ceased to pay debts, or has liabilities that exceed assets. If a party has reasonable grounds to feel insecure about the other party’s ability to perform, the insecure party may demand assurances before performing. For example, a seller may be insecure if a buyer falls behind in payments, or a buyer may feel insecure if a seller delivers defective goods to another party and those goods are of a kind similar to those expected by the buyer. In such cases the concerned party may demand assurances such as an advance payment or some other AFFIRMA- TIVE ACTION , and if the other party does not provide any assurance, the concerned party may withhold performance. Alternatively, if the other party gives the assurance, the concerned party must follow through on his obligations. Precisely what constitutes an effective assurance is a QUESTION OF FACT that depends on the nature of the goods, the size of the contract, the length of time until performance, and similar con- siderations. In any case a concerned party may not make commercially unreasonable demands on a party prior to performance and then withhold performance if the other party does not meet the demands. If a party unequivocally declares an unwill- ingness to perfo rm prior to the time of performance, the other party may consider the declaration an anticipatory breach of the sales contract. An anticipatory breach operates in the same way as an actual breach and gives the non- breaching party the right to sue for losses resulting from the breach. A refusal to give assurances after a demand for assurances may be considered an anticipatory breach. A party may retract a repudiation if the retraction is made before the aggrieved party cancels the contract. Seller’s Obligations Generally, the seller’s primary obligations are to transfer ownership of the goods and deliver the goods. A seller may agree with the buyer to perform other obligations. For instance, a seller may agree to package or label the goods in a certain way or service the goods for a specific period of time. A seller should convey the title to the goods free from any security interest or other lien or claim, unless the buyer was aware at the time of the sale that other persons had a claim to the goods. If the sales contract does not specify a time of delivery, the seller should deliver the goods within a reasona ble time after the contract is made. Delivery should occur in one shipment unless the parties agree otherwise . If the sales agreement does not indicate where the goods are to be turned over, the delivery of the goods should occur at the seller’s place of business. The tender of the goods should be at a reasonable hour of the day, and the buyer should have the ability to take the goods away. If the goods are in the possession of a third party, or bailee, at the time of the sale, the seller must arrange matters with the bailee so that the buyer may take possession. If the goods are to be transported, there are two ways to handle delivery. The buyer and seller may agree to a shipment contract, in which case the seller must arrange for the transportation. In a shipment contract, the seller’s duties for delivery are complete as soon as the goods are delivered to the carrier. With a destinati on contract, the seller’s obligation to deliver does not end until the goods are delivered to the buyer or at a selected location. Warranties In the context of the sale of goods, a WARRANTY is concerned with identifying the kind and quality of the goods that are tendered by the seller. The two basic types of warranties are express warranties and implied warranties. An express warranty is any representation or affirmation about the goods made by the seller’s words or conduct. For example, the description of the goods in the sales contract constitutes an express warranty that the goods will conform to the description. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION SALES LAW 479 Implied warranties are warranties that are imposed on sellers by law. A warranty of merchantability is implied in every sales con- tract. This warranty is a promise that the goods pass witho ut objection in the trade, are adequately packaged, conform to all promises or affirmations of fact on the container, and are fit for the ordinary purposes for which such goods are used. The IMPLIED WARRANTY of merchantability also includes a promise that multiple goods will be of even kind and quality. Another implied warranty recognized by courts is the warranty of fitness for a particular purpose. This warranty requires that goods be fit for an identifiable, particular purpose. It is effective only if the seller has reason to know of any particular purpose for which the goods are required and also knows that the buyer is relying on the seller’s expertise to select suitable goods. Some sellers attempt to disavow any responsibility for the quality of their merchan- dise. Sellers may not disclaim the warranty of merchantability unless they use the word “merchantability” in the disclaimer, which may be oral or written. If written, the disclaimer clause or term must be conspicuous. The implied warranty of fitness for a particular purpose may be disclaimed in writing, but it cannot be disclaimed orally. In some states, statutes or court decisions prohibit the dis- claimer of warranties in consumer sales. If a seller fails to tender goods, the buyer may choose one of three remedies. First, the buyer may seek damages from the seller. Damages are the total financial losses resulting from the failure to tender. Generally, damages for non-delivery consist of the market price of the goods minus the sale price. Market price is figured by determining the market price at the time the buyer learned of the breach at the place the tender was to have been made. Second, the buyer may cover or purchase similar goods elsewhere and then recover for losses resulting from the purchase. If the purchase price of replacement goods is greater than the original sale price, the buyer may recover the difference from the seller. The buyer must cover in GOOD FAITH, without delay, and on reasonable terms. When a seller is unable to perform a sale as agreed, the buyer should try to minimize his or her damages by covering the loss. If an aggrieved buyer fails to make reasonable efforts to cover, a court may reduce any damage award to account for the failure. Third, a buyer may force the seller to per- form by taking the seller to court and obtaining an order for SPECIFIC PERFORMANCE or maintaining an action for REPLEVIN. An action for specific performance may be ordered if the goods are unique and in other proper circumstances. Goods may be considered unique if the buyer is unable to find the goods elsewhere. An action for replevin is a method of recovering goods that is similar to specific performance. Replevin is allowed where the goods are specifically identi- fied in the contract and the buyer is unable to cover the goods after a reasonable effort, or the circumstances indicate that the buyer will be unable to cover. If a buyer has paid only part of the sale price and the seller becomes financially insolvent within ten days of the first payment and is unable to tender the goods, the buyer may pay any remaining balance and sue to obtain the goods. This would give the buyer the goods and prevent the seller from using the goods to pay other debts. If the buyer elects to collect damages after covering or damages for non-delivery, the buyer may collect additional damages called incidental damages and consequential damages. Incidental damages are those resulting from the seller’ s breach. These include expenses incurred in inspection, receipt, transportation, care, and custody of goods rightfully rejected; any com- mercially reasonable charges or expenses in- curred in covering; and any other reasonable expense incident to a delay in tender of the goods or other breach on the part of the seller. Consequential damages include any loss that results from requirements of which the seller is aware at the time of contracting and that could not have been prevented by cover or other method, and foreseeable and avoidable injuries to persons or property resulting from a breach of warranty. In some cases the buyer and seller may agree in the sales contract to LIQUIDATED DAMAGES. Generally, a liquidated damages clause is placed into a sales contract to fix damages at a certain amount in case a party is unable to perform. A court may strike down a liquidated damages clause if it does not bear a reasonable relation- ship to actual damages or anticipated damages. If a seller tenders nonconforming goods, or goods that do not meet the specifications in the GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 480 SALES LAW sales contract, the tender constitutes a breach of the contract. In such a situation, the buyer may either accept or reject the goods. Any recovery by the buyer will depend on whether the buyer accepts or rejects the goods. A buyer has the right to inspect goods before accepting them. If the goods are non- conforming, the buyer may accept the goods and recover from the seller the difference between the value of the goods as warranted and their actual value with the defects. A buyer may elect to reject nonconforming goods. To reject goods, the buyer must take some positive action to give the seller notice of the rejection. If the seller can cure the problem, the buyer should tell the seller why he or she is rejecting the goods or risk a reduction in damages. In transactions between merchants, a buyer should specify the problem to the seller if the seller mak es a written request for a full and final written statement of all defects on which the buyer bases the rejection. A seller has the right to cure nonconforming goods if he gives notice to the buyer and if conforming goods can be delivered before the last date for delivery under the sales contract. In any case a buyer may agree to extend the time for delivery of conforming goods. In some cases a buyer may have no choice. Under section 2– 508(2) of the UCC, if a seller sends non- conforming goods that he reasonably believed would be acceptable, the seller has additional time to deliver conforming goods if he gives notice of such intent to the buyer. If a buyer rejects goods, the buyer may not exercise any ownership over the goods. The buyer must hold the goods for a reasonable time and permit the seller to remove them or await instructions from the seller. If the seller issues instructions to the buy er, the buyer should follow any reasonable requests. For example, if the goods are perishable and the seller has no local agent, the buyer should attempt to sell the goods for the account of the seller. The buyer then could recover the difference between the amount that the buyer could have made with the goods and the amount that the buyer actually received. If the buyer rejects nonconforming, non- perishable goods and the seller has no age nt near the buyer, the buyer should follow instructions from the seller. If the seller issues no instructions, the buyer may either store the goods for the seller’s account, reship the goods to the seller, or sell the goods for the seller’s account. An aggrieved buyer may then recover any losses incurred in storing, shipping, or reselling the goods. If a buyer rejects nonconforming goods and cannot sell them, the buyer may hol d the goods for the seller and recover the difference between the market price of the goods as warranted and the value of the goods as delivered. A buyer also may ask for specific performance. If the seller is unable to provide the goods as requested, the buyer may recover any money already paid toward the sale plus any consequential or incidental damages resulting from the breach. Buyer’s Obligations A buyer’s basic obligations are to accept the goods and pay the sale price. If the goods are nonconforming, the buyer may reject the goods. If the goods conform to the specifications of the sales contract and the buyer wrongfully rejects them, the seller may choose one of four options, or a blend of two or more options. First, the seller may sue for damages. The amount of damages for a wrongful rejection would be the sale price minus the market price of the goods, measured at the time and place of the tender. Second, the seller may sue for the price of the goods, but only if the goods cannot be resold in the seller’s ordinary course of business or if circumstances indicate that resale efforts will be fruitless. Third, the seller could cancel the contract, putting an end to shipments and reserving the right to sue for damages or collect unpaid balances. Fourth, the seller could resell the goods to a third party and recover the difference between the sale price and the resale price plus any incidental damages. The resale of wrongfully rejected goods presents a few special problems. Under section 2–706 of the UCC, the sale may be either public or private. A private sale is made personally by the seller, whereas a public sale is made with public notice and carried out by a sheriff or at a publicly held auction. In either case the sale must be commercially reasonable in method, manner, time, place, and terms. Furthermore, the seller must notify new buyers that the goods are being resold under a breached contract to disclose the potential for legal conflict. A seller who resells wrongfully rejected goods must inform the original buyer of the GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION SALES LAW 481 resale. If wrongfully rejected goods are perish- able, the seller need not give notice to the buyer of the time and place of the resale. If the resale of wrongfully rejected goods is at a public sale, only goods identified in the contract may be sold, and the sale must be made at a usual place for public sale, provided that such a site is reasonably available. If the goods are not in view of bidders at a public sale, the public notice of the sale must state the place where the goods are located, and the seller must give bidders an opportunity to inspect the goods. If the seller resells the goods for a price higher than the price in the original sales contract and the extra profit covers costs incident to the resale, the seller has no damages, and the original buyer is not liable to the seller for the wrongful rejection. In sales where the buyer pays a deposit and then wrongfully rejects the goods, the seller may keep the goods and the deposit. However, a seller is not entitled to a deposit that far exceeds his or her actual or expect ed damages. Under section 2–718 of the UCC, a buyer is entitled to restitution of any amount by which the sum of the payments already made exceeds either (1) the amount of any reasonable liquidated damages clause, or (2) 20 percent of the value of the total performance for which the buyer is obligated under the contract, or $500, which- ever amount is smaller. When a buyer accepts a seller’s tender of conforming goods, the buyer is obligated to pay the sale price contained in the contract for sale. In some cases the parties may fail to agree to a price or choose to leave the price terms open. Under section 2–305 of the UCC, if a price term is left open, the price should be set in good faith at a reasonable market price at the time of delivery. If the parties intend that there is to be no contract unless a price is agreed to or fixed by a particular market indicator and the parties ultimately are unable to agree to a price term, there is no contract . In such a case the buyer must return any goods rece ived, and the seller must return any money paid by the buyer. Generally, a buyer has the right to pay in any manner observed in the business unless the seller demands a particular form of payment. Unless the parties agree otherwise, payment should be made when the goods are delivered to the buyer. A buyer does not have the right to inspect the goods if they are delivered cash on delivery or on similar terms, or if the contract provides for payment before inspection. Installment Contracts Installment contracts have a few of their own special rules. An installment contract calls for periodic performances over a length of time. The parties may agree to make payments in any way, but if the sale price can be divided, the buyer usually makes payments on installment contracts upon each delivery of goods. Buyers in installment sales do no t have the same full rights of rejection as buyers in other sales. If a seller tenders an installment of nonconforming goods, the buyer may reject the installment only if it substantially impairs the value of that installment and cannot be cured. Under section 2–612 of the UCC, if the nonconformity is not substantial and can be cured by the seller, the buyer must accept a nonconforming installment and sue for damages. The tender of one nonconforming install- ment in an installment contract for sale does not always constitute a total breach of the entire installment contract. Generally, a non- breaching party to an installment contract may cancel the contract only when a breach or cumulative breaches substantially impair the value of the entire contract. The NCCUSL and the ALI began work in the late 1980s on a revision to Article 2 of the UCC. Work on the project seemed to be finished in 1999, when the ALI approved what it thought was the final draft of the revision. However, opposition from certain important industries, including software manufacturers, led to the withdrawal of the revision. It was feared that many states would refuse to adopt the changes because of this opposition. The controversy surrounding the revision has centered on software, downloadable infor- mation and “smart goods.” These types of goods, which include cars, refrigerators, and other appliances, use computer programs to enhance their performance. By 2002 the draf- ters’ latest revision excluded “ information” from the definition of goods, thus removing the downloading of electronic information from the reach of the Article. However, the comment section to the draft noted that Article 2 would cover the sale of smart goods, even though these goods include computer programs. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 482 SALES LAW After years of work, the NCCUSL and ALI in May of 2003 adopted the revised versio n of Article 2. After its final review, which w as completed in 2003, the revised Article 2 was sent to the states for their considerations in adopting the revised version. No states have adopted the revision. FURTHER READINGS American Law Institute. Available online at www.ali.org (accessed January 28, 2010). National Conference of Commissioners on Uniform State Laws. Available online at www.nccusl.org (accessed January 28, 2010). White, James J. and Robert S. Summers. 2009. Principles of Sales Law. 1st ed. St. Paul, Minn.: West. CROSS REFERENCES Carriers; Consumer Protection; Model Acts; Product Liability; Shipping Law. SALES TAX A state or local-level tax on the retail sale of specified property or services. It is a percentage of the cost of such. Generally, the purchaser pays the tax but the seller collects it as an agent for the government. Various taxing jurisdictions allow exemptions for purchases of specified items, including certain foods, services, and manufactur- ing equipment. If the purchaser and seller are in different states, a use tax usually applies. The vast majority of states impose sales taxes on their residents. The only exceptions are Alaska, Delaware, Montana, New Hampshire, and Oregon. Some states rely more heavily on sales taxes for a significant portion of revenue. Tennessee, for instance, does not impose an INCOME TAX, so it relies heavily on sales taxes. The combined state and local sales taxes average about 9.25 percent per sale. The state of Michigan imposes a six percent sales tax, which accounts for about 28 percent of the state’s total revenue. In 2002, the state collected $6.5 billion in sales taxes. States have faced a long struggle to collect sales and taxes from retailers that are based outside the state and have no contacts with the state seeking to collect taxes. This is particularly true of companies that sell goods through mail orders or on the INTERNET. Even if an out-of- state retailer is not required to pay sales taxes within a state, the purchaser is nevertheless required to pay the sales tax on goods and services purchased through the Internet or by mail order. However, states rarely collect these taxes from the purchasers. According to a study by researchers at the University of Tennessee, states and cities in the United States lost an estimated $13.3 billion in uncollected sales taxes in 2001. The U.S. Supreme Court has addressed the issue of states requiring out-of-state retailers to pay sales taxes on several occasions. In Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 97 S. Ct. 1076, 51 L. Ed. 2d 326 (1977), the Court required a showing of a “substantial nexus” between a taxing state and the company providing goods and services before the taxing state can require the company to pay taxes. Without this substantial nexus, a state that taxes an out-of-state retailer has violated the COM- MERCE CLAUSE of the U.S. Constitution. Subsequently, the Court applied this test to a case involving a state’s attempt to tax a mail order company. Quill Corp. v. North Dakota, 504 U.S. 298, 112 S. Ct. 1904, 119 L. Ed. 2d 91 (1992). In Quill Corp., the state of North Dakota sought a DECLARATORY JUDGMENT that Quill Corporation, which had is main offices in Illinois, California, and Georgia, was required to pay taxes on sales with North Dakota customers. Quill had no outlets or any sales representatives in North Dakota, though it received $1 million of its annual $200 million in sales nationally from the state. The Court held that North Dakota could not tax Quill because Quill did not have a substantial nexus with the state. In order to address the problems associated with the collection of sales taxes on the Internet, the National Governors Association drafted the Streamlined Sales and Use Tax Agreement, whereby states would agree to modify their sales and use tax laws to a more uniform structure. Thirty-one state representatives signed the agree- ment, though individual state legislatures would have to modify their tax statutes to conform. The agreement is designed to remove complications among the sales and use tax laws in the different states and to eliminate the potential for double taxation. Several commentators, however, have noted that such an arrangement could violate the Commerce Clause based on the decisions in Quill Corp., Brady, and similar cases. FURTHER READINGS Chi, Keon S. 2000. Electronic Commerce: Revenue Implica- tions for States. Lexington, Ky.: Council of State Governments. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION SALES TAX 483 Chriqui, Jamie and Shelby Eidson. 2008. “State Sales Tax Rates for Soft Drinks and Snacks Sold through Grocery Stores and Vending Machines.” Journal of Public Health Policy 29. Due, John Fitzgerald. 1994. Sales Taxation: State and Local Structure and Administration. 2d ed. Washington, D.C.: Urban Institute Press. Murray, Matthew N., and William F. Fox, eds. 1997. The Sales Tax in the 21st Century. Westport, Conn.: Praeger. CROSS REFERENCE Taxation. SALT See ARMS CONTROL AND DISARMAMENT. SALVAGE The portion of goods or property that has been saved or remains after some type of casualty, such as a fire. The term salvage is defined more specifically depending on the industry referring to it. In business, salvage is any property that is no longer useful but has scrap value. An example of business salvage is obsolete equipment. In insurance, salvage is the portion of property that the insurance company takes after paying the claim for the loss. The insurance company may deduct the salvage value from the amount of the claim paid and leave the property with the insured. In ADMIRALTY or maritime law, salvage is the compensation allowed to persons who voluntarily save a ship or its cargo from impending danger. In addition to compensa- tion, maritime salvage may be property that is recovered from vessels that were shipwrecked, derelict, or recaptured. Salvage as a legal concept typically concerns maritime salvage. To establish a valid salvage claim under maritime law, the claimant must prove the following: the salvage was needed because of a marine peril; the claimant’s service was ren- dered voluntarily and not because of an existing duty or contract; and the claimant’s service contributed to the success of the salvage in whole or in part. The element of peril is an important, yet misunderstood, element. The maritime inter- pretation of peril is broad and liberal. Imminent and absolute danger is not a requirement for maritime peril. If the property is in danger, or stranded “so that it [is] subject to the potential danger of damage or destruction,” then peril exists (McNabb v. O. S. Bowfin, 565 F. Supp. 22 [W.D. Wash. 1983]). Also, the degree of peril does not determine whether the salvor will be entitled to a salvage award, but it will be considered in determining the amount of the award. According to the admiralty law of the United States, a stranded vessel that may be exposed to wind, weather, and waves is considered to be in a position where it may be destroyed and is therefore in peril. A wide variety of services can support a claim for a salvage award . For example, a claim for salvage has been granted where the salvor provided assistance in putting out a fire when the fire was not under immediate control. A salvage service claim may even succeed where the salvor assisted in putting out a nearby fire that had the potential to endanger the vessel. Voluntarily towing a drifting vessel to safety has also supported a claim for salvage award, even where the drifting vessel was not in danger of immediate or absolute harm and apprehen- sion of danger was minimal. Along the same lines, towing a stranded vessel has also consti- tuted salvage service. In the towing situation, courts have held that although there is no apprehension of immediate harm or danger, a stranded vessel is subject to high winds and other severe weather, placing the vessel in peril. Courts have also upheld a salvage service claim when the crew, master, or officers were incapacitated, and when the vessel was exposed to a hazard of the sea as a result of its master’s uncertainty. In all situations of salvage service, the service must be entirely voluntary. The salvor cannot have provided the service pursuant to any type of contract or agreement or other existing duty. When the U.S. Navy or Coast Guard provi ded the salvage service, the issue as to whether those services were in fact voluntary has arisen. When the Navy performs the salvage service, courts have held that, because salvage is not one of the function s of the Navy, any assistance provided by the Navy is voluntary, regardless of whether the Navy is in the area where the salvaged vessel is in peril. Federal law now provides that “the Secretary of Navy may settle any claim by the United States for salvage services rendered by the Department of Navy and may receive payment of any such claim” (10 U.S.C.A. § 7363 [1996]). GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 484 SALT Similar claims by the Coast Guard have had different outcomes. According to statute, the Coast Guard may “perform any and all acts necessary to rescue and aid persons and protect and save property” (14 U.S.C.A. § 88 [1996]). Most courts and commentators have interpreted this language as creating a legal duty. Therefore, under this interpretation the government would not have a right to a salvage award for services rendered by the Coast Guard. The Fifth Circuit Court of Appeals declined to follow this interpretation in the case of United States v. American Oil, 417 F.2d 164 (1969). In its decision, the court held that the Coast Guard did not have a preexisting duty to perform salvage services and that the statutory language defining the Coast Guard’s duties was permis- sive. Although the Fifth Circuit Court of Appeals may allow the United States to recover salvage awards for services rendered by the Coast Guard, other courts have declined to follow this interpretation, leaving the right of the govern- ment to recover salvage awards for services rendered by the Coast Guard still under debate. The salvage service rendered must also have been successful, either in whol e or in part. Furthermore, the salvor must have contributed to the success. The salvor, however, does not have a right to force his or her services on a distressed vessel. The doctrine of rejection applies when the master of a distressed vessel directly and unequivocally rejects the salvor’s services. In that situation, the salvor does not have a right to a salvage award. In determining the amount of the salvage award, the court will go beyond the value of the services. In 1869 the U.S. Supreme Court, in The Blackwall, 77 U.S. (10 Wall.) 1, 19 L. Ed. 870, set forth the following criteria in determining the amount of the award: (1) the labor expended by the salvors in rendering the salvage service; (2) the promptitude, skill, and energy displayed in rendering the service and saving the property; (3) the value of the property employed by the salvors in rendering the service and the danger to which such property was exposed; (4) the risk incurred by the salvors in securi ng the property from the impending peril; (5) the value of the property saved; and (6) the degree of danger from which the property was rescued. When a salvage award is granted, all of the parties who participated in the salvage service will share in the award based on their participation. In addition, the owner, master, and crew of the salvaged vessel are entitled to share in the award. If the salvaged property is damaged as a result of the salvage effort, the owner may claim that the salvor was negligent. If the court finds that the salvor did not adhere to a standard of reasonable care, the salvage award will be reduced depending on the degree of NEGLIGENCE. An action for salvage is generally an in rem action. This means that the suit is brought against the property saved, such as the ship or its cargo. In the event that the property is no longer wit hin the jurisdiction or has been destroyed, an in personam action may be brought to recover the salvage award. These salvage actions fall under the jurisdiction of the admiralty courts. Anyone with a direct pecuniary interest in the property salved, such as the owner, may be liable for the salvage award. In addition, anyone who may be liable for the property, for instance a bailee, may also be liable for the salvage award. The persons liable for the salvage award are not necessarily the individuals who requested the salvage services. In the event that the salvage claim involves a shipwreck, the court has “qualified jurisd iction” when the wreck site is exclusively within the waters of the contiguous zone of the United States. In addition, U.S. admiralty courts have asserted jurisdiction of wrecks in international waters when certain pieces of the wreck were brought into the jurisdiction of the court. This is based on the “first salvor rule,” which protects the first salvor from losing the “trove” once it has started salving the wreck to other parties who may intervene and attempt to take over the salvage operations. Most countries recognize the right of the first salvor and will uphold a lien issued by another jurisdiction according to this rule. According to the agreement, the convention was to become effective one year after 15 states had expressed their consent to be bound by it. In 1996 the agreement became binding, or entered into force, upon 22 countries. FURTHER READINGS Burstein, Susanne M. 2002. “Saving Steel over Souls: The Human Cost of U.S. Salvage Law.” Tulane Maritime Law Journal 27 (winter). Clift, Rhys and Robert Gay. 2005. “The Shifting Nature of Salvage Law: A View from a Distance.” Tulane Law Review 79. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION SALVAGE 485 Forrest, Craig J.S. 2003. “Has the Application of Salvage Law to Underwater Cultural Heritage Become a Thing of the Past?” Journal of Maritime Law and Commerce 34 (April). Landrum, Bruce. 1989. “Salvage Claims for the Navy and Coast Guard: A Unified Approach.” Naval Law Review 38 (winter). Morton, C. W. 1999. Sea Trials. New York: St. Martin’s. Neilson, William L. 1992. “The 1989 International Conven- tion of Salvage.” Connecticut Law Review 24 (summer). CROSS REFERENCES Admiralty and Maritime Law; Negligence. SAME CONDUCT TEST The same conduct test for analyzing DOUBLE JEOPARDY cases under the FIFTH AMENDMENT was established by the SUPREME COURT in Grady v. Corbin (495 U.S. 508, 110 S. Ct. 2084, 109 L. Ed. 2d 548 [1990]). Under this test, a criminal DEFENDANT was extended double jeopardy pro- tection beyond the “same elements” test announced in Blockburger v. United States (284 U.S. 299, 52 S. Ct. 180, 76 L. Ed. 306 [1932]). In Blockburger, the Court held that the double jeopardy clause prohibits a subsequent prosecution if the crimes charged in the prior prosecution are identical to or included within the crimes charged in the subsequent prosecu- tion. A lesser offense is included within a greater offense if it is established by proof of the same facts which must be proved to establish the greater offense. Thus, every MURDER includes an ASSAULT AND BATTERY, but not every murder includes an ASSAULT with a deadly weapon, because possession of a deadly weapon need not be proved to establish murder. This is known as the “same elements” test. In Grady v. Corbin, the Court held that an individual could not be prosecuted twice for the same criminal behavior, regardless of the actual evidence introduced during trial or the statutory elements of the offense. Therefore, prosecutors had to satisfy both the same elements test and the same conduct test. Under the same conduct test, the Court stated that the test is not whether the lesser offense is included within the greater offense, but whether the prosecution, in proving the greater offense, will have to prove conduct that constitutes an offense for which the defendant has already been prosecuted. The critical inquiry is what conduct the state will prove, not the evidence the state will use to prove that conduct. The same elements test was developed to prevent the imposition of multiple punishments in a single prosecution. Beyond the possibility that the defendant would receive a stronger sentence by going through multiple prosecutions, the double jeopardy clause would relieve a person of enduring embarrassment, expense, and emotional insecurity. Using the same conduct test also prevented the prosecu- tion from rehearsing its presentation of the evidence, which would increase the risk of an erroneous conviction for one or more of the charges. Courts found the same conduct test confus- ing. In 1993, the Supreme Court reversed Grady in U.S. v. Dixon (495 U.S. 508, 113 S. Ct. 2849, 125 L. Ed. 2d 556 [1993]). The Court cited Blockburger’s “deep historical roots” and the fact that Grady lacked “constitutional roots.” In addition, Grady misread “the clear common- law understanding of double jeopardy” upon which the Blockburger test rested. The Court also concluded that the same conduct test had “proved unstable in application” and was a source of confusion. The Court returned to the same elements test as the way to analyze double jeopardy claims. FURTHER READINGS LaFave, Wayne, and Jerold Israel. 2006. Criminal Procedure: Constitutional Limitations. 7th ed. St. Paul, Minn.: West. Rudstein, David. 2004. Double Jeopardy: A Reference Guide to the United States Constitution. New York: Praeger. CROSS REFERENCES Double Jeopardy; Fifth Amendment; Same Elements Test. SAME EVIDENCE TEST A method used by courts to assess whether a criminal prosecution is barred by the DOUBLE JEOPARDY CLAUSE of the FIFTH AMENDMENT to the U.S Constitution, which guarantees that no individual shall “be subject for the same offense to be twice put in jeopardy of life or limb.” Under this test, if the evidence required to support a conviction in one crime also would have supported a conviction in another, then double jeopardy exists. SAN FRANCISCO VIGILANCE COMMITTEES OF 1851 AND 1856 The San Francisco Vigilance Committees of 1851 and 1856 were self-appointed law enforcement committees organized to maintain order in San Francisco, California, during the mid-nineteenth century. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 486 SAME CONDUCT TEST As a result of the Treaty of Guadalupe Hidalgo in 1848, which concluded the Mexican War, the United States acquired a vast territory in the Southwest, including California and New Mexico. After gold was discovered at Sutter’s Mill in 1848, thousands of gold hunters flocked into northern California. Many of the gold rush towns where the immigrants settled had been little more than villages before the gold rush, and they lacked the municipal institution s that were needed to cope with the rapidly expanding populations. Government and law enforcement became increasingly disorganized and chaotic, and respect for the RULE OF LAW disappeared. As a result , vigilance committees were formed in many towns. The San Francisco Vigilance Committe es of 1851 and 1856 provide two of the most famous examples of vigilante activity. Before gold was discovered in 1848, the population of San Francisco had been around 800 persons. By 1851 nearly 25,000 gold seekers had arrived, most of whom settled in or near the city. Crime quickly became a problem. In 1856 a Sacramento newspaper claimed that there had been 1,400 murders in San Francisco in the previous six years and that only three murderers had been hanged. In 1851 a group of citizens, including a large number of business people, under the leader- ship of Sam Brannan, formed the first San Francisco Vigilance Committee. The city gov- ernment had failed to curb GANGS of outlaws known as the “Regulators” or “Hounds,” who preyed upon the inhabitants of the city and were suspected of having set a series of fires that had destroyed much of the city. The committee promptly sought out several of the alleged outlaws and sentenced them to death, DEPORTA- TION , or whipping. In 1856, after the county supervisor James P. Casey killed newspaper editor James King, the committee came back into existence under the leadership of William T. Coleman to combat lawlessness among the general population and corruption and mismanage- ment in the city government. The committee began by trying and executing Casey and Charles Cora, a notorious criminal. Next the committee barricaded the streets in an area where the crime rate was high and captured and punished all the criminals it could find within the barricades. In the meantime, other citizens, including a number of city officials and attorneys, had formed the “Law and Order” faction to oppose the vigilantes. DAVID SMITH TERRY, a justice of the California Supreme Court, tried to prevent one of the vigilantes from arresting a certain Reuben Maloney on the grounds that the committee had no legal authority to conduct arrests. A fight ensued in which Terry stabbed Sterling A. Hopkins, the vigilante. Although Terry was imprisoned for a few weeks, the vigilantes’ attempt to put him on trial failed, and the committee disbanded a short time later. By that time, it had lost most of its supporters and its power had waned. Although the committees declared that the safety of the public was their purpose, the committees ignored the principles of govern- ment on all levels. Their trials did not follow standard procedures but used only a skeletal version of established legal practices. FURTHER READINGS Gordan, John D., III. 1987. Authorized by No Law: The San Francisco Committee of Vigilance of 1856 and the United States Circuit Court for the Districts of California. San Francisco: U.S. District Court for the Northern District of California Historical Society. McDowell, Andrea. 2007. “Criminal Law beyond the State: Popular Trials on the Frontier.” Brigham Young Univ. Law Review. Morriss, Andrew P. “Hayek & Cowboys: Customary Law in the American West.” NYU Journal of Law & Liberty. 1. Mullen, Kevin J. 1989. Let Justice Be Done: Crime and Politics in Early San Francisco. Reno: Univ. of Nevada Press. CROSS REFERENCE Self Help. Violence ensued when San Francisco Vigilance Committee members attempted to arrest Reuben Maloney in 1856. California Supreme Court Justice David Smith Terry (top hat, center) stabbed to death vigilante Sterling A. Hopkins. CORBIS. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION SAN FRANCISCO VIGILANCE COMMITTEES OF 1851 AND 1856 487 . include computer programs. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 482 SALES LAW After years of work, the NCCUSL and ALI in May of 2003 adopted the revised versio n of Article 2. After its. during the mid-nineteenth century. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 486 SAME CONDUCT TEST As a result of the Treaty of Guadalupe Hidalgo in 184 8, which concluded the Mexican War,. the purpose of a sale may be frustrated by circumstances beyond the control of both buyer and seller. For example, assume GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 4 78 SALES LAW that a party