Advanced Sales

Question 1

A merchant is someone who ________ in the type of goods at issue

Answer 1

regularly deals

Question 2

You agree to buy 5 gallons of paint from lowes. Is this k governed by the UCC?

Answer 2

Yes.

Question 3

You agree to buy 5 gallons of paint from lowes. Is lowes a merchant?

Answer 3

Yes. They are in the business of selling paint all the time.

Question 4

You contract with Lowe’s to buy an old delivery truck that they no longer need. Is Lowe’s a merchant?

Answer 4

No, not for this contract, they are not regularly in teh business of selling this particular type of good.

Question 5

You contract to sell your home for $100,000. Is this governed by the UCC?

Answer 5

No, real estate is not a good.

Question 6

You contract to sell your ice fishing hut for $100,000. Is this governed by the UCC?

Answer 6

Yes, if the structure will be severed from the land by the seller.

Question 7

You contract to sell 100 trees for timber and 100 tons of potatoes growing underground. Are these deals governed by the UCC?

Answer 7

Yes, and it doesn’t matter who will sever the timber/crops from the land. If the buyer comes in and cuts down the trees - it doesn’t matter who severs these.

Question 8

Nokia contracts to sell a patent to Apple. Is this governed by the UCC?

Answer 8

No, intellectual property and other intangible assets are not goods.

Question 9

You contract to buy a share of Nokia stock. Is this governed by the UCC?

Answer 9

Yes, but the sale of investment securities is governed by Article 8, not Article 2, and outside our scope here.

Question 10

I agree to paint your house for $1,000 and I will supply the paint. Is our contract governed by the UCC?

Answer 10

No, it’s not. Two Rules:

The all or nothing rule: Mixed contracts must fall into one universe or the other.

The predominant purpose rule: Does a good or service play a bigger role in the overall nature of the contract?

The primary reason you’re paying someone 1000 dollars to pay the house is because they are painting the house, the service part is the predominant purpose.

Question 11

You commission the famous artist Andy Warhol to paint your portrait for $1 million. Does the UCC apply?

Answer 11

No, Under the all or nothing rule, and the predominant purpose rule - Andy Warhol would be supplying some physical items, but someone who is highly skilled is painting the portrait so it’s a service.

Question 12

You commission my mother-in-law, Mickey, to paint your portrait for $10. Does the UCC apply?

Answer 12

Yes, probably. Almost all of the value that you’re getting is the physical paint and the canvas. There is almost zero service value.

Question 13

The four main topics of formation are:

Answer 13

agreement, consideration, defenses to contract formation, and the statute of frauds.

Question 14

At common law, all ______ _____ must be covered in the agreement

Answer 14

essential terms. Typically means: parties, subject, price, and quantity

Question 15

In the UCC, to have a real offer, you need only identify the ________, the _______ and ________.

Answer 15

parties, subject matter, quantity. The price doesnt need to be stated. (trick)

Question 16

Bob offers to buy 500 windshield wiper blades next week from Sue for $5 each. Is it a valid offer?

Answer 16

Yes

Question 17

Bob offers to buy 500 windshield wiper blades next week from Sue for a “fair price.” Is this a valid offer?

Answer 17

Yes. It doesnt have the price but that’s ok under the UCC. The price is: a reasonable amount.

Question 18

Bob offers to buy windshield wiper blades from Sue for a “fair price.” Is this a valid offer?

Answer 18

No, this doesn’t include a quantity term.

Question 19

Sue offers to sell Bob “all the wiper blades that I make this week.” Is this a valid offer?

Answer 19

Yes, this is valid as an output contract. Both requirements and outputs contracts are specific enough even though they state no quantity term because there’s a formula for us to figure that out.

Question 20

I offer to sell you my car for $5,000, and I promise, promise, promise not to revoke this offer for a week. Five minutes later, I say, “Never mind…I revoke the offer.” Can you still accept?

Answer 20

No. The promise not to revoke is an unsupported gift promise.

Question 21

A _______ in the UCC universe can make a ________ to buy or sell goods. (It’s basically a binding free option)

Answer 21

merchant, firm offer.

Question 22

Requirements for a firm offer: _______, contain an ________ not to revoke the offer and ________ by the offeror.

Answer 22

written, explicit promise, signed

Question 23

A firm offer lasts for either as long as stated in the firm offer or for a reasonable tim period not to exceed ____ days.

Answer 23

90

Question 24

I offer to sell you my car for $5,000, and I promise via a signed writing not to revoke this offer for a week. Five minutes later, I say, “Never mind…I revoke the offer.” Can you still accept?

Answer 24

No, Professor Geis is not a merchant.

Question 25

Cars.com offers to sell you a car for $5,000, and it promises via a signed writing not to revoke this offer for a week. Five minutes later, it says, “Never mind…I revoke the offer.” Can you still accept?

Answer 25

Cars.com is a merchant who is in the business of selling cars. Their offer is irrevocable.

Question 26

Cars.com offers to sell you a car for $5,000. Five minutes later, it says, “Never mind…I revoke the offer.” Can you still accept?

Answer 26

No. They never made a firm offer. In order to have a firm offer they have to promise not to revoke.

Question 27

Cars.com offers to sell you a car for $5,000, and it promises via a signed writing not to revoke this offer for a week. Ten days later, you write back to accept the offer. Can you still accept?

Answer 27

Yes, as long as a reasonable time has not passed. Cars.com made you a firm offer, you didn’t accept within that one week period for one it was still effective, but all tha tmeant was that htey were not free to revoke within that first week but they still have the offer they put out there and they havent revoked it and 10 days still may be enough time, but cars.com could revoke it first but nothing here says they did that. The offer might only expire if a reasonable time has passed.

Question 28

The offeror is ______ of teh offer

Answer 28

master

Question 29

If nothing is specified in the offer, the UCC permits acceptance to take place by _________ or by ________ (typically the shipping of the goods)

Answer 29

return promise, performance

Question 30

Bob sends a letter to Sue, reading “please ship me 500 windshield wiper blades next week for $5 each.” Sue mails back a letter: “I accept.” Is there a contract?

Answer 30

Yes by return promise.

Question 31

Bob sends a letter to Sue, reading “please ship me 500 windshield wiper blades next week for $5 each.” Sue ships 500 wiper blades the next day. Is there a contract?

Answer 31

Yes, by performance.

Question 32

What if the seller tries to accept by shipping the wrong goods? The UCC generally treats this as an ______ plus a _______

Answer 32

acceptance, breach (TRICK)

Question 33

Bob sends a letter to Sue, reading, “please ship me 500 Bosch windshield wiper blades next week for $5 each.” Sue ships 500 Sloshed wiper blades the next day. Is there a contract?

Answer 33

Yes, and a breach. (TRICK)

Question 34

If the seller seasonably notifies the buyer that the wrong goods are being shipped as an __________, then no acceptance occurs and you have a _________.

Answer 34

accomodation, counter offer.

Question 35

Bob sends a letter to Sue, reading “please ship me 500 Bosch windshield wiper blades next week for $5 each.” Sue ships 500 Sloshed wiper blades the next day, along with a short note: “I don’t have any Bosch blades; how about these Sloshed ones?” Is there a contract?

Answer 35

No, this is a counter offer because Sue is sending these as an accomodation.

Question 36

The common law universe uses the ______________ rule.

Answer 36

mirror image

Question 37

The terms in the acceptance must match the terms of the offer ______ or it is not an acceptance; it is a __________

Answer 37

exactly, counter offer

Question 38

The UCC is more forgiving for acceptances that do no match the terms of the offer exactly.

Replaces mirror image rule with

Answer 38

2-207

Question 39

Main intuition: A purported acceptance that does not match the terms of the offer exactly can still count as a legal acceptance in many circumstances.

Just because there is a contract, however, DO NOT assume that all of the terms in the purported acceptance are going to govern.

It does not matter whether the parties are _________ for 2-207(1)

Answer 39

merchants.

Question 40

Just because a slightly different acceptance makes a contract, it does not mean that that the new term in the acceptance will control. It might control but must look at 2-207(2).

The new term will only come in if the following are all true:

Answer 40

(1) Both parties are merchants. (Me)
(2) The new term does not materially alter the deal. (MA)
(3) The initial offer did not expressly limit acceptance to its terms. (C)
(4) The offeror does not object within a reasonable time to the new term. (D)

(FAMILY)

Very difficult for these new terms to govern the contractual relationship.

Question 41

What happens if there is not a real contract but the parties still act as if there is an agreement?

In that case, 2-207(3) gives parties a ________. All the terms are going to drop out except for those the parties have agreed to in writing. The court will look to the “gap-filling” provisions of the UCC for the other terms.

Answer 41

reset

Question 42

Auctions. Each individual bid should be understood as ____________

Answer 42

an offer.

Question 43

Auctions: Acceptance occurs with the __________

Answer 43

fall of the hammer.

Question 44

What happens if someone bids exactly when the hammer falls?

Under the UCC the auctioneer has discretion either to ____ ______

Answer 44

declare the auction final, or reopen the auction.

Question 45

A ____ _____ auction means the seller cannot withdraw the item after a bid has been received.

Answer 45

no reserve.

Question 46

Can bidders retract their offers? ____ as long as the auction is not finished. Does this revive the prior bid? ____

Answer 46

Yes. No (there’s now no bids out there)

Question 47

The UCC _______ the preexisting duty rule.

Answer 47

totally rejects

Question 48

On a UCC txn ask if the modification has been made in ____ ____. If so, it’s binding even without ____ ____

Answer 48

good faith, new consideration.

Question 49

Mickey contracts with Pabst to buy her weekly keg of beer for $75. Later in the week, Pabst calls back to say there is a worker shortage that week, and it can’t get her the beer unless she pays $100 so Pabst can outsource delivery. Mickey says, “OK charge what you must, I need my beer.” Is the price modification binding?

Answer 49

Yes, that’s made in good faith.

Question 50

Mickey contracts with Pabst to buy her weekly keg of beer for $75. Pabst knows that Mickey will do anything for her beer. On Friday morning, Pabst calls to say, “You better pay us $1,000 or we won’t deliver your keg.” Mickey says, “OK charge what you must.” Is the price modification binding?

Answer 50

No, this is not made in good faith.

Question 51

There are 7 defenses to contract formation:

Answer 51

Misunderstanding, Incapacity, Mistake, (Fraud, Misrepresentation, Nondisclosure), Duress, Illegality, Unconscionability (MNM, DUII)

Question 52

When it comes to unconscionability, under a UCC a term is unconscionable no _____ _____ in the position of the party would have agreed to it.

Answer 52

reasonable person

Question 53

There are two parts of unconscionability in the UCC -

Procedural unconscionability is _________

Answer 53

A fundamental flaw in the way the contract has been negotiated, or a hidden term or absence of meaningful choice.

(This is only one of the two types of unconscionability) Some jdns require both types to be present, others may be willing to invoke unconscionability when only one is present.

Question 54

There are two parts of unconscionability in the UCC -

Substantive unconscionability is _____________

Answer 54

Is it a rip off, is the term at issue a total rip off?

(This is only one of the two types of unconscionability)
Some jdns require both types to be present, others may be willing to invoke unconscionability when only one is present.

Question 55

I walk up to you one day and say, “I’m so glad that you agreed to sell me your car for just $1,000.” You stare at me puzzled and reply, “Who are you? We’ve never met.” I laugh and say, “See you in court.” Will I win the lawsuit?

Answer 55

No. This is a statute of frauds issue. This is a false assertion of a contract that was never created.

Question 56

There are two threshold statute of frauds questions:

Answer 56

(1) Are we in sof world?

(2) Has the sof been satisfied?

Question 57

Typically the sof requires a _________ signed by the other side or __________ made on the purported deal.

Answer 57

writing, some performance.

Question 58

The UCC will put parties in sof world for goods contracts for _____ or more.

Answer 58

$500.

Question 59

Mickey buys beer on credit from Pabst, promising to pay $499 at the end of the month for her 5 kegs. Pabst sues her at the end of the month for failure to pay. Are we in SOF world?

Answer 59

No.

Question 60

Mickey buys beer on credit from Pabst, promising to pay $500 at the end of the month for her 5 kegs. Pabst sues her at the end of the month for failure to pay. Are we in SOF world?

Answer 60

Yes.

Question 61

A _______ _______ will satisfy sof but the requirements differ from common law. There is no need to mention the ______ but you do need to mention the ______. If you mention the wrong ______, you can only enforce that amount.

Answer 61

signed writing, price, quantity, quantity.

Question 62

Mickey verbally contracts with Pabst to buy 100 kegs of beer for $75 each. Later, Pabst sends her a signed confirmation order stating that the parties agree to contract for 50 kegs of beer (no price is listed). Even later, Pabst asserts a SOF defense and refuses to sell Mickey any beer. Can Mickey satisfy the SOF?

Answer 62

Yes, but only for 50 kegs. That signed confirmation order which was mistaken will count but only for the 50 kegs. It doesn’t matter that no price is listed, that’s a red herring, it doesn’t matter for the UCC.

Question 63

____ _______ on a goods contract can satisfy the statute of frauds, but only for the quantity _______ and ________.

Answer 63

Part performance, delivered, accepted

Question 64

Mickey verbally contracts with Pabst to buy 100 kegs of beer for $75 each. Mickey changes her mind and decides to order some kegs of Fat Tire beer. Later, Pabst delivers 25 kegs to Mickey, and she eagerly stores the kegs in her basement. Can Pabst satisfy the SOF?

Answer 64

Yes, but only for the 25 kegs delivered and accepted. Mickey is not contractually obligated to buy the other 75.

Question 65

Custom made or specially manufactured goods are exempted from the sof. A maker can satisfy the sof as soon as it ____ ____ _____ the manufacturing of the goods.

Answer 65

substantially begins to perform

Question 66

I contract verbally with Brooks Brothers to buy 100 white dress shirts with a GSG monogrammed on the pocket for $10,000. Brooks Brothers sends me the shirts but I change my mind and send the shirts back. Can I assert a SOF defense if Brooks Brothers sues for the $10,000?

Answer 66

No, custom goods exception. There’s nothing in writing, however, it doesn’t matter. Brooks Brothers wouldn’t go to the trouble of making these if there was no contract.

Question 67

A ____ _____ will satisfy the statute of frauds. (Something that happens in court)

Answer 67

judicial admission

Question 68

The failure to object to a confirming memo within a ___ ____ period will satisfy the sof but only if _____ ____ ____ _____

Answer 68

10 day, both parties are merchants.

Question 69

Mickey verbally contracts with Pabst to buy 100 kegs of beer for $7,500. Later, Pabst sends her a signed confirmation memo with all material terms. Mickey has changed her mind, crumples up the memo and throws it in the corner. Ten days later, does Pabst satisfy the SOF?

Answer 69

No, Mickey is not a merchant.

Question 70

Whole Foods verbally contracts with Pabst to buy 100 kegs of beer for $7,500. Later, Pabst sends WF a signed confirmation memo with all material terms. WF has changed their mind, crumples up the memo and throws it in the corner. Ten days later, does Pabst satisfy the SOF?

Answer 70

Yes. This is a separate exception. Whole Foods has an obligation to deny.

Question 71

Suppose you have a deal that is in SOF world and the SOF requirements are met. Now the parties want to modify that deal.

Must the modification also satisfy the SOF requirements?

Answer 71

Not automatically. Only if this separate modification would be in sof world. Otherwise, there is no sof requirements even though the initial deal was in sof world.

Question 72

Mickey contracts with Pabst to buy 5 kegs of beer for $500. Are we in SOF world?

Answer 72

Yes

Question 73

Mickey contracts with Pabst to buy 5 kegs of beer for $500. Pabst sends her a signed confirmation memo with all material terms. Mickey alleges that they later modified the deal to 3 kegs only for $300. Does she need to supply written proof of this alleged modification?

Answer 73

No, the modification would not be in sof world.

Question 74

A contract modification is enforceable without new consideration (True/False)

Answer 74

True

Question 75

FILL IN THE BLANK. Under the UCC, the only term that must be contained in the writing is the _____________________ term.

Answer 75

quantity

Question 76

Under the Statute of Frauds, when is a writing not required?

(a) When the goods are specially manufactured and the seller has made substantial beginnings in their manufacture.
(b) When the party has made a judicial admission that a contract was made.
(c) When the goods have been received and accepted or paid for.
(d) All of the above

Answer 76

D

Question 77

Which of the following statements is TRUE regarding the effect of the Statute of Frauds on a contract modification?

(a) If the original contract was for $500, any subsequent modification of the contract must satisfy the Statute of Frauds.
(b) If the original contract was for less than $500, any subsequent modification of the contract does not need to satisfy the Statute of Frauds.
(c) If the original contract was for more than $500, a subsequent modification of the contract that brings the contract price below $500 does not need to satisfy the Statute of Frauds.
(d) None of the above

Answer 77

c

Question 78

Does the PER apply to later written or verbal statements about the deal?

Answer 78

No, that’s a modification. PER only blocks EARLIER statements.

Question 79

Does the PER apply to earlier written documents?

Answer 79

Yes, PER applies to earlier written documents.

Question 80

Gateway inquiry for the PER is whether ______

Answer 80

the parties have created an integrated writing.

Question 81

Complete integration – the contract expresses ______ __ of the agreement.

Answer 81

all terms

Question 82

Partial integration – there is a written and final writing, but___ _____ may not have been included.

Answer 82

some terms

Question 83

Distinguishing between an agreement that is not integrated from one that is fully or partially integrated:

One powerful piece of evidence is whether…

Answer 83

there is a Merger Clause.

Question 84

PER. The presumption under the UCC is that a writing is, at most, only a ________ integration, unless the parties would have “_______” included the disputed term in the writing.

Answer 84

partial, certainly

Question 85

If the question does not have a signed writing, think _________.

Answer 85

SOF

Question 86

If the question does have a signed writing, along with an earlier discussion of the deal, think ___ ___ ___.

Answer 86

Parole Evidence Rule.

Question 87

A warranty is a ____________ about a term in the contract that _________________________ to the party making the promise.

Answer 87

promise, shifts the risk

Question 88

I agree to sell you my Jeep for $5,000 but we don’t discuss any other terms. If the wheel falls off as you drive away, can you get out of the deal?

Answer 88

It’s unclear. You need to go back and find a defense to contract formation, so it’s not going to be easy to do.

Question 89

I agree to sell you my Jeep for $5,000. If the wheel falls off as you drive away, can you get out of the deal if I include a warranty that the Jeep will run fine for the next 1000 miles?

Answer 89

Yes, you can back out of the deal or sue me for breach.

Question 90

Warranty of Title: All sellers warrant that title is ____ and that the transfer is ____.

Answer 90

good, rightful.

Question 91

I contract with Mickey to buy an antique chair. It turns out that Mickey stole the chair last weekend. Has she breached the contract?

Answer 91

Yes. She has breached the warranty of title.

Question 92

Express Warranty: A promise that affirms or describes the good that is a part of _______, it is an express warranty, unless it is merely the seller’s _____.

Answer 92

the basis of the bargain, opinion

Question 93

The use of a ______ or ______ creates an express warranty that the goods sold will be like the sample.

Answer 93

sample, model

Question 94

You walk into an AutoZone store to buy some hubcaps. The clerk shows you some floor samples that are bright gold and says, “These are our best model.” You buy that model of hubcaps, but find they are an ugly yellow when you pull them out of the box. AutoZone has breached an…

Answer 94

Express warranty.

Question 95

Implied Warranty of Merchantability. Only triggered when seller is a _______

Answer 95

merchant. Remember that merchants are only merchants when they are dealing with the goods they regularly sell.

Question 96

The merchant makes an implied warranty, unless disclaimed, that the goods are going to be fit for _____ ______ _____. This is true at the time of the _____

Answer 96

ordinary commercial purpose, sale.

Question 97

You walk into an AutoZone store to buy some polish for your hubcaps. The clerk waves you over to aisle 12 where you pick up a can of hubcap polish. When you spray it on your hubcaps, they turn an ugly yellow color. AutoZone has breached an

Answer 97

Implied Warranty of Merchantability. Remember, Autozone is selling something they usually sell, therefore they are a merchant.

Question 98

You walk into an AutoZone store and the clerk tells you that their delivery van is for sale. You buy it, but it breaks down right away. Has AutoZone breached the implied warranty of merchantability?

Answer 98

No, they are not a merchant as to this particular product.

Question 99

Can a merchant disclaim the implied warranty of merchantability?

Answer 99

Yes, if very clearly done.

Question 100

Can a merchant disclaim the implied warranty of merchantability? Yes, but only if very clearly done. Look for words like ___ ___ or very _____ language.

Answer 100

as is, conspicuous.

Question 101

Implied Warranty of Fitness for a Particular Purpose

Triggered whenever the buyer relies on the seller’s _______ to select a particular good that is going to be used for a _____ ____

Answer 101

expertise, particular purpose.

Question 102

You go to Autozone but you can’t decide between three different types of hubcap polish. You ask the clerk which one is right for your aluminum alloy hubcaps, and he picks up a can and says, “THIS is the brand you want.” When you spray it on your hubcaps, they turn an ugly yellow color. AutoZone has breached an…

Answer 102

Implied Warranty of Fitness for a Particular Purpose.

Question 103

Can a non merchant extend the Implied Warranty of Fitness for a Particular Purpose?

Answer 103

Yes.

Question 104

Can the Implied Warranty of Fitness for a Particular Purpose be disclaimed?

Answer 104

Yes, if very clearly done.

Question 105

Which of the following statements is FALSE regarding the implied warranty of merchantability?

(a) A breach of this warranty must have been present at the time of the sale.
(b) A seller may only disclaim this warranty in writing.
(c) The seller warrants that the goods are fit for ordinary commercial purposes.
(d) None of the above

Answer 105

d

Question 106

Under Article 2, which of the following will apply to goods sold by a non-merchant seller?

(a) The implied warranty of merchantability
(b) The implied warranty of fitness for a particular purpose
(c) Both A and B
(d) Neither A nor B

Answer 106

b

Question 107

TRUE OR FALSE. If an agreement is fully integrated, the court may consider extrinsic evidence of prior agreements that contradict its terms.

Answer 107

False.

Question 108

The constructive condition of exchange (common law) can be satisfied by _____ ______

Answer 108

substantial performance

Question 109

The UCC requires ______ _____ to satisfy performance obligations

Answer 109

perfect tender. Do not discuss substantial performance, or material breach unless there’s an installment contract.

Question 110

There are two main obligations of perfect tender. What are they?

Answer 110

Perfect goods and perfect delivery.

Question 111

Mickey contracts for 500 pints of Fireball whiskey for $5,000. Fireball only sends Mickey 495 pints. Is this perfect tender? _______________.

Answer 111

No. Mickey can reject all of the whiskey. Note that rejection of the goods is not rejection of the offer. There is a contract here.

Question 112

In order to properly reject the goods, a buyer must: (3 things)

Answer 112

(1) Notify the seller of the rejection within a reasonable time;
(2) Notify the seller of the particular defect; and
(3) Hold the goods for a reasonable time so the seller can get them back.

Question 113

If the goods are rightfully rejected and the buyer has paid some or all of the price, then she will have a _____ ______ in the rejected goods.

Answer 113

security interest

Question 114

What if the seller fails to give reasonable instructions as to what the buyer should be doing once the bad goods have been delivered? Buyer has three options:

Answer 114

(1) Continue to store the goods on the seller’s account;
(2) Ship the goods back;
(3) Resell the goods for the seller.

Question 115

A buyer may _____ acceptance of the goods.

Answer 115

revoke. This happens when the goods seem ok at delivery; but the defect is difficult to detect; and the buyer discovers the defect within a reasonable time.

Question 116

Mickey contracts for 500 pints of Fireball whiskey for $5,000. Fireball delivers all 500 pints of the whiskey, and Mickey stores the bottles in her cellar. A month later, she cracks a bottle to find it is cola (not whiskey). What can she do?

Answer 116

She can revoke her acceptance and send the bottles back.

Question 117

Mickey contracts for 500 pints of Fireball whiskey for $5,000. Fireball delivers all 500 pints of the whiskey, and Mickey stores the bottles in her cellar. A month later, she cracks a bottle to find it is cola (not whiskey). Mickey decides to use 50 bottles of the cola as a mixer. Can she revoke her acceptance of the goods by saying they were not perfect tender because they were not whiskey?

Answer 117

No the goods must not be substantially changed.

Question 118

A buyer can revoke their acceptance as long as a ____ ____ has not passed.

Answer 118

reasonable time

Question 119

The buyer must give the seller a chance to cure if the seller fails to tender perfect goods when (2 elements)

Answer 119

(1) There is time left on the contract

(2) The seller had reasonable grounds to believe that the buyer would accept the tendered goods.

Question 120

Mickey contracts for 500 pints of Fireball whiskey for $5,000. Fireball delivers all 500 pints of the whiskey, and Mickey stores the bottles in her cellar. A month later, she cracks a bottle to find it is cola (not whiskey). When Mickey notifies Fireball of the “cola problem,” Fireball apologizes and sends over 500 bottles of whiskey before the contract deadline. Does Mickey have to pay?

Answer 120

Yes. She rejected the cola, fireball cured by producing perfect tender…so now she has to pay.

Question 121

Mickey contracts for 500 pints of Fireball whiskey for $5,000. Fireball delivers all 500 pints of the whiskey, and Mickey stores the bottles in her cellar. A month later, she cracks a bottle to find it is cola (not whiskey). When Mickey notifies Fireball of the “cola problem,” Fireball apologizes and delivers 500 bottles of scotch on the last day of the contract instead of whiskey, figuring this would be good enough for Mickey. If Mickey rejects the scotch, can Fireball still cure?

Answer 121

Yes, if they had reasonable grounds to believe Mickey would accept the scotch. How much time do they get? They get a little more time.

Question 122

The default method of delivery is ___ delivery of the goods. The UCC does allow for _____ contracts, however, which is delivery in separate lots.

Answer 122

one, installment

Question 123

The buyer can reject a specific delivery that is not perfect only when there is _______ ______ in that installment that cannot be cured.

Answer 123

substantial impairment (beware this is different than the perfect tender rule, it’s relaxed a bit more)

Question 124

Mickey contracts for 1 pint of Fireball whiskey to be delivered each day at 5:00 pm for 500 days. Delivery #345 comes at 5:15pm. Can Mickey reject that delivery?

Answer 124

No. It hasn’t been perfect delivery but there hasn’t been a substantial impairment.

Question 125

There are three common options for tender. They are:

Answer 125

Seller’s place of business; Shipment contract; Destination Contract.

Question 126

A contract that calls for tender at the seller’s place of business requires:

Answer 126

If the goods are tendered at the seller’s place of business, then the seller just needs to give the goods to the buyer.

Question 127

When a contract is a “shipment contract” - the UCC requires (3 things) (This is the default UCC option)

Answer 127

(1) Get the goods to a common carrier; (2) Make arrangements for delivery; (3) Notify the buyer.

Question 128

When a contract is a “destination contract” - the UCC requires:

Answer 128

Usually identified by “F.O.B. buyer’s business” - the seller must get the goods to the buyer’s business and notify the buyer.

Question 129

I contract with Brooks Brothers to buy “100 white dress shirts for $10,000 F.O.B. Charlottesville.” Has Brooks satisfied its delivery obligation when it gives the shirts to FedEx and sends me an email saying they are coming?

Answer 129

No. Identify what type of delivery we are talking about. FOB means its a destination contract. They now have to get the stuff over to Charlottesville.

Question 130

When there is a goods contract followed by damage or destruction of the goods before the buyer receives them you have a ___ ___ ___ problem

Answer 130

Risk of loss

Question 131

When you have a risk of loss problem, you will need to work through four different rules to determine who will suffer from the loss. What are they?

Answer 131

(1) Have the parties agreed to who shall bear the risk? Then their agreement will control.
(2) Has either party breached? If so, the breaching party bears the risk of loss. This is true even if the breach is totally unrelated to delivery.
(3) If there’s been no breach, ask what type of delivery contract there is. In a shipment contract the risk of loss during delivery rests with the buyer. In a destination contract, the risk of loss during delivery rests with the seller.
(4) If none of the above rules apply, ask if the seller a merchant. If yes, then the risk of loss stays with the seller until the buyer receives the goods. If not, the risk of loss moves to the buyer once the seller has tendered the goods.

Question 132

(Element 3 of Risk of Loss Workflow) In a shipment contract the risk of loss during delivery rests with the ____.

Answer 132

buyer

Question 133

(Element 3 of Risk of Loss Workflow) In a destination contract, the risk of loss during delivery rests with the _____.

Answer 133

seller

Question 134

I contract with Brooks Brothers to buy “100 white dress shirts for $10,000.” Brooks calls to tell me that the shirts are ready, and I can pick them up at the store when I like. That night, the store burns down, and my shirts are destroyed. Do I have to pay for them?

Answer 134

No. (1) Contract doesn’t deal with the risk (2) Neither party has breached (3) The goods are not being shipped (4) Because the seller is a merchant, the risk of loss stays with them until the buyer actually receives the goods.

Question 135

I contract with the law school bookstore to sell 10 used copies of my book for $10 each. I tell the bookstore manager that I’ve left the books outside my office, so she can get them whenever. That night, a pack of law review editors steal and burn all the books. Does the bookstore have to pay for them?

Answer 135

Yes. (1) The contract hasn’t dealt with the risk (2) There’s no breach (3) The goods are not being shipped (4) The seller is not a merchant, therefore the bookstore has the risk because the seller has tendered the goods.

Question 136

A seller has an insurable interest as long as she has _____ ___ __ ____ ____

Answer 136

title or a security interest

Question 137

A buyer has an insurable interest when the goods are

Answer 137

specifically identified

Question 138

I contract to sell you my Jeep for $5,000. Do you have an insurable interest?

Answer 138

Yes. That good has been specifically identified. You can take out insurance against the Jeep even before performance.

Question 139

I contract to sell you all of the potatoes that I harvest in my garden for $500. Do you have an insurable interest?

Answer 139

Yes, as soon as they are planted.

Question 140

TRUE OR FALSE. Following a proper rejection, the seller has an absolute right to cure.

Answer 140

F

Question 141

Which of the following is required for a buyer to properly reject goods?

(a) The buyer must notify the seller of the rejection within a reasonable time.
(b) The buyer must notify the seller of the particular defect.
(c) The buyer must hold the goods for a reasonable time.
(d) All of the above

Answer 141

d

Question 142

Which of the following statements is FALSE regarding a buyer’s obligation after rejection if the seller fails to give instructions within a reasonable time?

(a) The buyer can store the goods for the seller’s account.
(b) The buyer can reship the goods to the seller.
(c) The buyer can resell the goods for its own profit.
(d) None of the above

Answer 142

c

Question 143

TRUE OR FALSE. In an installment contract, a buyer may reject any nonconforming installment.

Answer 143

F

Question 144

Which of the following statements regarding the risk of loss is FALSE?

(a) Before the parties have formed a contract for the sale of goods, the seller bears the risk of loss.
(b) If the parties have a destination contract and the goods are lost in transit, it is the buyer’s loss.
(c) If the parties have a shipment contract and the goods are damaged in transit, it is the buyer’s loss.
(d) None of the above

Answer 144

B

Question 145

Payment is going to be due at the ____ and ____ at which the buyer is going to receive the goods.

Answer 145

time, place

Question 146

The tender of payment is a ________ to the seller’s duty to complete its obligation

Answer 146

condition

Question 147

A seller may ship under ________ - it is entitle to hold onto the goods until the buyer pays

Answer 147

reservation

Question 148

Tender of payment may be made in any reasonable manner but a seller can demand _____ _____ if she gives any extension of time necessary to procure it

Answer 148

cash payment

Question 149

For installment sales payment may be made or demanded _______

Answer 149

with each installment

Question 150

The buyer enjoys a right to _______ prior to payment. However, beware a contract that requires payment on delivery (COD) - in this situation the buyer does not have this right.

Answer 150

inspect

Question 151

___________ pays for any expenses associated with buyer inspection, unless the goods do not conform and are rejected.

Answer 151

the buyer

Question 152

The primary excuse to performance in the UCC is the doctrine of __________.

Answer 152

impracticability

Question 153

A common impracticability fact pattern on the bar is when performance becomes _______ after the contract is formed. Or when there is a failure of a particular ____ ___ _____. But something that just makes performance more _______ than was anticipated will not normally excuse performance.

Answer 153

illegal, source of supply, expensive

Question 154

For impracticability, look for something that hinders the _________ at all, not just the cost of performance.

Answer 154

ability to perform

Question 155

Does partial inability to perform due to a supply deficiency excuse the seller from performing?

Answer 155

No. If you’re running out of goods the seller has to allocate the available supply among all customers in a fair and reasonable manner.

Question 156

If the agreed upon method of delivery becomes commercially impracticable without the fault of either party then _________________.

Answer 156

any commercially reasonable method of delivery must be tendered and accepted.

Question 157

If identified goods are destroyed, then there are three elements, what are they:

Answer 157

First, ask whether the risk of loss has passed to the buyer, then the buyer is on the hook.

Second, ask whether there has been a total destruction. In that case the contract is avoided and neither side must perform or pay.

Third, if the goods are damaged but not destroyed, the contract is avoided unless the buyer wishes to take the damaged goods at a reduced price. If so, the buyer has no claim against the seller.

Question 158

When it comes to remedies in the UCC, remember that the UCC uses the perfect tender rule in all situations except for __________, where the rule is that the seller is in breach only when the breach is material, not imperfect.

Answer 158

installment contracts

Question 159

I agree on Jan. 1 to buy 100 white shirts from Crooks Brothers for $1,000. Shortly thereafter, I let it slip that I’m broke and never going to pay this money. Does Crooks have to keep making the shirts?

Answer 159

No, as long as my repudiation is clear and unequivocal.

Question 160

When you see a clear and unequivocal repudication, the non breaching party has two options:

Answer 160

(1) Treat the repudiation as a present breach and sue immediately for damages; or ignore the repudiation, demand performance and see what happens.

Note: If you have completed the entire performance and are only waiting for the other side to pay you and the time of the contract has not come due, you cannot sue early.

Question 161

A party can retract its repudiation as long as…

Answer 161

the other side has not commenced a lawsuit for breach or acted in reliance on that repudiation by changing its position.

Question 162

What if you are unsure if the other side has repudiated?

Answer 162

UCC - reasonable grounds for insecurity about the other sides performance allows you to demand an adequate assurance of performance.

If the questionable party fails to respond within a reasonable time, the other party can treat it as a repudiation.

Question 163

I agree on Jan. 1 to buy 100 white shirts from Crooks Brothers for $1000. Half the money is due on Feb. 1; the balance and the shirts are due Mar. 1. In the middle of January, I see a news exposé about financial trouble at Crooks Brothers and they fail to return my phone calls. I send a letter demanding adequate assurance of performance on Jan. 15. If they say, “Don’t worry, we’re almost done with the shirts,” must I make the $500 Feb. 1 payment?

Answer 163

Yes. And if Crooks Brothers does not respond, then you don’t have to make that payment.

Question 164

Which of the following statements is TRUE regarding the buyer’s obligation to pay?

(a) Payment is due at the time and place at which the buyer is to receive the goods.
(b) A seller may send the goods under reservation, which permits the carrier to hold the goods until the buyer pays.
(c) Tender of payment may be made in any reasonable manner unless the seller demands payment in cash and gives any extension of time reasonably necessary to procure the cash.
(d) All of the above

Answer 164

d

Question 165

TRUE OR FALSE. When a seller is partially unable to perform due to a deficiency in supply, the seller is fully excused from the contract.

Answer 165

False.

Question 166

Which of the following statements regarding anticipatory repudiation is FALSE?

(a) Anticipatory repudiation can occur if one party fails to provide adequate assurances of performance within a reasonable time after demand by the other party.
(b) A party can retract its repudiation unless the non-breaching party has since canceled the contract, changed her position, or otherwise indicated a belief that the repudiation is final.
(c) Upon repudiation, the non-breaching party must immediately seek available remedies under Article 2 for breach of contract.
(d) None of the above

Answer 166

c, because it’s anticipatory repudiation, so the non breaching party can ignore the repudiation and demand performance also.

Question 167

Buyer breach. Mickey contracts with Pabst to buy a keg of beer for $100. Mickey repudiates the contract, and Pabst sells the keg to a liquor store for $80. What are Pabst’s expectation damages?

Answer 167

$20. Their contractual price was $100. They resold for $80. 100-80 = 20

Question 168

Same facts as Example 56 but no one else wants to buy this beer and Pabst cannot resell the keg at any price. What are Pabst’s expectation damages?

Answer 168

$100. They tried to mitigate but nobody wants it.

Question 169

Buyer refusal to pay. Mickey contracts with Pabst to buy a keg of beer for $100. Mickey gets the keg but breaches the contract by refusing to pay. The current price for a keg of Pabst has risen to $110. What are Pabst’s expectation damages?

Answer 169

$100. Don’t get slipped up by market value because it is irrelevant. Contract price is all that matters.

Question 170

Seller breach. Mickey contracts with Pabst to buy a keg of beer for $100. Pabst fails to deliver the keg, and Mickey has to buy her keg from Blatz for $120. What are Mickey’s expectation damages? _________________. When Pabst refuses to deliver, can Mickey buy a keg of Utopia Beer for $25,000 and sue Pabst for $24,900?

Answer 170

(1) $20. (2) No, she can’t do that because the cover must be similar.

Question 171

Mickey contracts with Pabst to buy a keg of beer for $100 (paid up front). When Pabst delivers the keg, it is only half full but Mickey is desperate to have her beer and keeps the half keg. It can be shown that a half keg of Pabst costs $60 at the corner liquor store. What are Mickey’s expectation damages? Same facts as Example 60. Can Mickey send the keg back instead?

Answer 171

$60. That is going to give her the benefit of her contract.

Yes.

Question 172

Unforeseeable consequential damages are not recoverable unless

Answer 172

the breaching party had some reason to know about these damages.

Question 173

__________ damages are the types of losses almost anyone would suffer if there was a breach.

Answer 173

general. This can include things like incidental damages such as the cost of storing rejected goods, finding a new buyer, or finding a replacement vendor.

Question 174

__________ damages are losses that are unique or special to this plaintiff.

Answer 174

consequential

Question 175

consequential damages are only recoverable if

Answer 175

Only recoverable if reasonably foreseeable or if the non-breaching party notified the other party at the time of contract about the special damages if a breach was to occur.

Question 176

I hire FedEx to deliver Super Bowl tickets to a buyer on eBay for $20. FedEx refuses to honor the contract, and I have to pay UPS $50 for rapid delivery to get the tickets there in time. I also use up $5 in gas driving over to UPS. What are my expectation damages against FedEx?

Answer 176

(50 - 20) + 5 = 35.

Question 177

I hire FedEx to deliver Super Bowl tickets to a buyer on eBay for $20. FedEx refuses to honor the contract. I cannot get another carrier to deliver the tickets in time and as a result the buyer doesn’t pay me the $2,000 ticket price. Since I bought the tickets for $200, can I sue FedEx for my lost profits of $1,800?

Answer 177

No, this is an unforeseeable consequential damage.

Question 178

I hire FedEx to deliver Super Bowl tickets to a buyer on eBay for $20. FedEx refuses to honor the contract. I cannot get another carrier to deliver the tickets in time and as a result the buyer doesn’t pay me the $2,000 ticket price. Since I bought the tickets for $200, can I sue FedEx for my lost profits of $1,800 if I also provide FedEx with the exact details of my transaction?

Answer 178

Yes, unless there are other disclaimers.

You can’t recover unforeseeable damages unless you tell seller at the time about the potential consequential damages, which you’ve done here.

Question 179

Consequential damages can be limited or excluded entirely unless

Answer 179

it would be unconscionable.

Question 180

Limiting consequential damages for personal injury is

Answer 180

prima facie unconscionable. We want people to be responsible for things that cause personal injury.

Question 181

Limiting consequential damages for commercial loss is

Answer 181

ok and common, such as when FedEx puts this in their shipping contract.

Question 182

Lost Volume Profits arise when the paying party breaches. In this case the seller normally has to attempt to sell the goods to someone else. In some circumstances, if the seller is a retailer, if they then sell the good to someone else it isn’t right to count the new sale as a mitigation. LVP says we should ….

Answer 182

award the seller the lost profits from that first lost sale in order to compensate them for the breach of the original contract.

Question 183

Outrigger contracts to sell Mickey a speedboat for $15,000 which cost Outrigger $10,000 to buy from the manufacturer. The following week Mickey repudiates the sale. The very next day, Tronald Dump walks in to buy the same boat for $15,000. Mickey argues that Outrigger’s damages are zero because it fully mitigated her breach with the sale to Dump. Is she right?

Answer 183

No, as long as outrigger can show it had plenty of boats and only a few buyers. Calculate LVP 15-10 = 5.

Question 184

Which of the following statements is FALSE regarding consequential damages?
A Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable.
B Limiting consequential damages for commercial loss is prima facie unconscionable.
C Limiting consequential damages for personal injury in the case of consumer goods is prima facie unconscionable.
D None of the above

Answer 184

B

Question 185

FILL IN THE BLANK. \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ damages include the cost of storing rejected goods, finding a new buyer, or finding a replacement vendor.
A Incidental
B Consequential
C Liquidated
D Punitive

Answer 185

a

Question 186

TRUE OR FALSE. Under UCC Article 2, if the buyer has breached the contract, the seller’s damages can be measured by lost profit if the seller could have supplied both the breaching purchaser and the resale purchaser with the goods.

Answer 186

True

Question 187

Liquidated damages are going to be ok as long as the amount is not __________

Answer 187

a penalty because its unreasonably large.

Question 188

A buyer may request specific performance if the goods

Answer 188

are unique or in other proper circumstances

Question 189

Mickey contracts for 500 pints of Fireball whiskey for $5,000. The whiskey is specifically identified from a special month of production. Fireball breaches and Mickey cannot locate similar whiskey elsewhere. Can Mickey get her whiskey?

Answer 189

Yes. She has a good argument for replevin because the whiskey has been specifically identified.

Question 190

_________ is where the buyer can recover specifically identified goods when she cannot cover a breach by the seller after making reasonable efforts.

Answer 190

replevin

Question 191

A buyer can also assert replevin when partial payment has been made and the seller goes insolvent within ___ days of the payment.

Answer 191

10

Question 192

Mickey contracts for 500 pints of Fireball whiskey for $5,000 with $1,000 down. The whiskey is specifically identified from a special month of production. Fireball becomes insolvent one week later. Can Mickey get her whiskey? __________________. Does she have to pay the other $4,000? ___________.

Answer 192

Yes. Yes. She can’t get away from paying the 4k because that’s the contractual bargain.

Question 193

_____________ is an equitable right of an unpaid seller to reclaim the goods when the buyer goes insolvent.

Answer 193

Right of reclamation

Question 194

Right of reclamation elements:

Answer 194

(1) Buyer is insolvent at the time of purchase and
(2) The seller must demand return of the goods within 10 days of receipt, or within a reasonable time if the buyer misrepresented his solvency to the seller; and
(3) the buyer must still have the goods.

Question 195

Mickey is broke, but she contracts for 500 pints of Fireball whiskey for $5,000. Fireball sends all 500 pints but learns of her financial situation and asks for the whiskey back five days later. Must Mickey return the whiskey?

Answer 195

Yes.

Question 196

The seller may stop goods that are in transit if

Answer 196

(1) it learns that the buyer is insolvent or
(2) if the buyer fails to make a payment that is due.

However, the goods may not be stopped once the buyer or its bailee receives the goods.

Question 197

The UCC governs whether a buyer or seller can sue a third party for damage to the contract goods.

Answer 197

The seller can sue if she retains title or has a security interest.

The buyer can sue if the goods are specifically identified.

Question 198

Statute of limitations is normally __________ after the cause of action occurs. This can be modified down by the contract, but not to less than ______. It cannot be increased.

Answer 198

4, 1

Question 199

A buyer who obtains title unlawfully possesses a _________ title.

Answer 199

voidable

Question 200

A person with voidable title can transfer good title to a ________________ for value.

This is true even when: (3)

But title cannot be obtained through ______

Exceptions: (2)

Answer 200

The seller was deceived by the buyer’s identity;

The buyer’s check bounced; and

Theft
-
The buyer has made improvements to the goods; or
• The true owner indicates, by words or conduct, that the thief had good title.

Question 201

FILL IN THE BLANK. Under Article 2, a seller who has delivered goods to an insolvent buyer has the right to reclaim the goods if the seller demands their return within \_\_\_\_\_\_\_\_\_\_ of the buyer’s receipt of the goods.
A 7 days
B 10 days
C 21 days
D one month

Answer 201

b

Question 202

TRUE OR FALSE. Under Article 2, an action for breach of any sales contract must be commenced within two years after the cause of action accrues.
ATRUE
BFALSE

Answer 202

B