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Commercial law > Article 2 > Flashcards

Article 2 Flashcards

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1
Q

definition of contract

A

the total legal obligation that results from the parties’ agreement as defined by the UCC and as supplemented by applicable laws

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2
Q

definition of agreement

A

the bargain of the parties in fact as found in the language or inferred from all the circumstances including course of performances, deals, and usage of trade

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3
Q

definition of agreement

A

the bargain of the parties in fact as found in the language or inferred from all the circumstances including course of performances, deals, and usage of trade

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4
Q

who does article 2 deal w/?

A

buyers and sellers of goods

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5
Q

does article 2 make contract b/t buyers and sellers of goods easier or harder?

A

easier

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6
Q

who does article 9 deal w/?

A

buyer/seller; borrower/lender, 3P that have rights

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7
Q

can parties easily contract out of article 9 rules?

A

no

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8
Q

can parties easily contract out of article 9 rules?

A

no

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9
Q

definition of goods

A

all things that are moveable at the time of the contract

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10
Q

can the definition of goods include oil, gas, minerals, timber?

A

yes, if they will be severed from the land to which they are attached

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11
Q

what are the 2 methods used to determine whether a contract for sale involves the sale of goods or services?

A
  1. predominate purpose test (what is the most important part of the contract)
  2. gravamen of the action test (which part of the agreement went wrong)
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12
Q

why is it important to determine if any of the parties in the transaction are merchants?

A

because certain warranties only apply to merchants

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13
Q

when there is an ambiguity in the K language, what first will be used to interpret that language?

A

the course of dealings b/t the parties and then the usage of trade

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14
Q

can the parties contract out of the usage of trade being used to interpret and ambiguity in the contract?

A

yes but the parties must be very specific in the contract that they are going against the usage of trade

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15
Q

can the parties contract out of the usage of trade being used to interpret and ambiguity in the contract?

A

yes but the parties must be very specific in the contract that they are going against the usage of trade

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16
Q

definition of merchant

A

a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practice or goods involved in the transaction

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17
Q

definition of between merchants

A

in any transaction with respect to which both parties are chargeable w/ the knowledge or skill of merchants

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18
Q

definition of bill of lading

A

a document evidencing the receipt of goods for shipment issued by a person engaged in the business of transporting or forwarding goods

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19
Q

what is the course of performance?

A

the conduct b/t parties in a particular transaction, which exists if:

  1. there’s an agreement calling for repeated performance AND
  2. the other party knew of the nature of the performance and had an opportunity to object but didn’t
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20
Q

what is the course of performance?

A

the conduct b/t parties in a particular transaction, which exists if:

  1. there’s an agreement calling for repeated performance AND
  2. the other party knew of the nature of the performance and had an opportunity to object but didn’t
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21
Q

what is course of dealing?

A

sequence of conduct b/t parties relating to transactions the parties had in the past that establishes a common basis of understanding for interpreting the parties’ expression and other conduct

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22
Q

what is usage of trade?

A

the method of dealing that is regularly observed in a place, vocation, or trade as to justify an expectation that it will be observed in the transaction in question

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23
Q

what is the difference b/t COP, COD, and UOT?

A 
COP = specific; relates to a specific transaction
COD = more general; relates to previous transactions
UOT = very general; industry standard
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24
Q

what is the hierarchy b/t express terms, COP, COD and UOT?

A

express terms>COP>COD>UOT

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25
Q

when does the hierarchy b/t express terms, COP, COD, and UOT come into play?

A

when there is an ambiguity in the contract for sale that needs to be interpreted

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26
Q

when must a contract for sale of goods be in writing to satisfy the SOF?

A

when the price is $500 or more (K must be in writing)

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27
Q

what must a contract for sale of goods be in compliance w/?

A

the SOF

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28
Q

under the SOF, will a contract for sale of goods be invalid if there is an incorrectly stated term?

A

No, but if such term is a quantity, then the contract will only be enforced for the quantity shown in the writing

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29
Q

under the SOF, will a contract for sale of goods be invalid if there is an incorrectly stated term?

A

No, but if such term is a quantity, then the contract will only be enforced for the quantity shown in the writing

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30
Q

what is the most common remedy when parties breach a contract for sale?

A

discontinuation of the business relationship

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31
Q

can a memo satisfy the SOF?

A

yes if it is b/t merchants. See detailed requirements in 2-201

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32
Q

which section of the UCC contains the SOF?

A

2-201

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33
Q

when is a writing not required under the SOF?

A

SWAP

  1. specially manufactured goods
  2. written confirmation by a merchant
  3. admission in court OR
  4. performance
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34
Q

when is a writing not required under the SOF?

A

SWAP

  1. specially manufactured goods
  2. written confirmation by a merchant
  3. admission in court OR
  4. performance
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35
Q

what are the 2 implied warranties?

A
  1. implied warranty of merchantability

2. implied warranty of fitness for a particular purpose

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36
Q

what are the 2 promises made by the warranty of merchantability?

A
  1. the goods that are being sold are at least as good as other, similar goods in the trade
  2. goods are fit for the ordinary purposes for which goods of that description are used
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37
Q

when does the warranty of merchantability apply?

A

when the seller is a merchant

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38
Q

does the implied warranty of merchantability apply to used goods?

A

yes

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39
Q

can the implied warranties be modified or disclaimed?

A

yes

40
Q

what are the elements of the implied warranty of fitness for a particular purpose?

A
  1. seller, at time of K, has reason to know
  2. of buyer’s particular purpose
  3. buyer relies on seller’s skill or judgment
41
Q

when does the implied warranty of fitness not apply?

A

when the sale of goods is ordinary (ex. shoes are sold for the purpose of walking)

42
Q

when does a fact, promise, description, sample or model become an express warranty?

A

when it becomes part of the basis of the bargain (2-313)

43
Q

is puffing a warranty

A

no

44
Q

T/F: specific language is more likely to be an express warranty

A

true

45
Q

T/F: a written statement is more likely to be an express warranty

A

true

46
Q

what are the 4 types of warranties?

A
  1. implied warranty of merchantability
  2. implied warranty of fitness for a particular purpose
  3. express warranties
  4. warranty of title and against infringement
47
Q

what does the warranty of title and against infringement promise?

A

that the seller has good title to the goods that it is selling

48
Q

what does the warranty of title and against infringement promise?

A

that the seller has good title to the goods that it is selling

49
Q

what are the requirements to exclude or modify the implied warranty of merchantability?

A
  1. language must mention “merchantability” AND

2. in case of a writing, must be conspicuous

50
Q

what standard is conspicuousness determined under?

A

what a reasonable person would have noticed

51
Q

what are the requirements to exclude or modify the implied warranty of fitness?

A
  1. in writing AND

2. conspicous

52
Q

in excluding or modifying the implied warranty of fitness, does such exclusion or modification need to mention “implied warranty of fitness” specifically?

A

no

53
Q

to exclude/modify the implied warranty of fitness, is it sufficient to say “there are no warranties which extend beyond the description on the face hereof”

A

yes

54
Q

is saying “as-is,” “with faults” or something similar sufficient to exclude all implied warranties?

A

yes. if it is something other than “as is” or “with faults” it must be recognized language that calls the buyers attention to the exclusion of warranties and makes plain there is no warranty

55
Q

are there implied warranties w/ regard to defects which an exam ought to have revealed when the buyer (before entering the K) examines the goods or model/sample or refuses to examine the goods or mode/sample?

A

no

56
Q

what are the requirements in order for the selling to conclude that the buyer has “refused to examine” the goods

A
  1. goods are available for inspection

2. seller demands the buyer examine the goods fully

57
Q

when the seller makes a demand that the buyer examine the good fully, what purpose does that demand serve?

A

Notice to the buyer that he is assuming risk of defect that the exam should reveal

58
Q

which defects are excluded by the buyer’s exam of the goods/model/sample?

A

defects that would not have been notice b/c of the buyer’s skill and normal method of examining goods

59
Q

for implied warranty purposes, is the buyer excused if the buyer fails to notice an obvious defect in the goods?

A

no

60
Q

T/F: implied warranties can also be excluded or modified by COD, COP, or UOT

A

true

61
Q

how can a lessor disclaim the implied warranty of merchantability?

A
  1. using a conspicuous written disclaimer AND

2. using the word merchantability

62
Q

how can a lessor disclaim the warranty of fitness?

A

by using a more specific disclaim that states “there is no warranty that the goods will be fit for a particular purpose”

63
Q

how can a lessor disclaim the warranty of fitness?

A

by using a more specific disclaim that states “there is no warranty that the goods will be fit for a particular purpose”

64
Q

can the seller limit remedies?

A

generally yes

65
Q

can the seller limit consequential damages?

A

yes unless the limitation is unconscionable

66
Q

what happens if a seller limits consequential damages for injury to a person for consumer goods?

A

the limitation is considered prima facie unconscionable

67
Q

if the seller limits consequential damages for commercial loss, is such limitation prima facie unconscionable?

A

no b/c it is commercial

68
Q

what is risk of loss?

A

determine which party (buyer or seller) is responsible for the destruction of or damage to goods that occurs b/t the time the K is entered into and the time that the buyer receives possession of the goods

69
Q

if the goods are damages through no fault of the B or S, which rules come into play to determine who is responsible for those damages?

A

risk of loss rules

70
Q

can the parties modify the default risk of loss rules through an agreement?

A

yes

71
Q

if either the buyer or the seller negligently causes a loss, will the risk of loss rules come into play?

A

no and the negligent party assumes the loss

72
Q

which section operates on the ROL when neither party has breached the contract?

A

2-509

73
Q

what is a shipment contract?

A

a contract where the seller is not required to deliver the goods to a particular destination

74
Q

what words will signal a shipment contract?

A

FOB seller’s place

75
Q

what does FOB stand for?

A

free on board

76
Q

when does the ROL shift to the buyer in the case of a shipment contract?

A

when the goods are delivered to the carier

77
Q

what must the seller do when shipping goods to the buyer?

A
  1. put the goods in possession of the carrier
  2. make a reasonable contract for their transportation AND
  3. obtain necessary shipment documentation
  4. promptly notify the buyer of the shipment
78
Q

what is a destination contract?

A

a contract where the seller must deliver the goods to a particular destination

79
Q

what words will signal a destination contract?

A

FOB Buyer’s place

80
Q

when does the ROL shift to the buyer in the case of a destination contract?

A

when the goods are tendered to the buyer at the stated destination

81
Q

what are the requirements for tender regarding a destination contract?

A
  1. put and hold the goods at the buyers disposition of the period necessary for the buyer to take possession
  2. give the buyer notice of tender AND
    3 give the buyer any documents that are needed for the buyer to take delivery (specific to destination K)

2-503

82
Q

when the seller is using a 3P (bailment K) to hold the goods for the buyer, when does ROL pass to the buyer?

A
  1. when the buyer receives a negotiable document of title covering the goods
  2. when the bailee acknowledges to the buyer the buyer’s right to possession of the goods
  3. when the buyer receives a non-negotiable document of title or other written direction to the bailee to deliver
83
Q

what section applies to shifting the ROL when a party has breached?

A

2-510

84
Q

what happens (in terms of ROL) when a tender or delivery of goods fails to conform to the contract as to give a right of rejection

A

the risk of the loss remains on the seller until seller cures or buyer accepts

85
Q

if the buyer rightfully revokes acceptance, may the buyer treat the ROL as if it has rested on the seller from the beginning, but only to the extent of a deficiency in the buyer’s insurance coverage?

A

Yes

86
Q

in terms of ROL, what happens if the buyer breachers?

A

the seller may treat the ROL as with the buyer for a commercially reasonable time subject to insurance.

87
Q

in terms of ROL, what happens if the buyer breachers?

A

the seller may treat the ROL as with the buyer for a commercially reasonable time subject to insurance.

88
Q

what is the default type of delivery contract when the parties fail to specify?

A

shipment K

89
Q

what are incidental damages?

A

damages stemming from the breach

90
Q

can a seller get consequential damages?

A

no

91
Q

what are the 4 ways a buyer might breach?

A
  1. wrongfully reject goods
  2. wrongfully revoke acceptance
  3. failing to make a payment when due
  4. anticipatory repudiating contract
92
Q

how many remedies does a seller have?

A

7

93
Q

how many remedies does a seller have?

A

7

94
Q

can an aggrieved buyer get consequential damages?

A

yes

95
Q

what type of damages can both the buyer and the seller get?

A

incidental

Commercial law (5 decks)

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