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Sales > Basic Concepts > Flashcards

Basic Concepts Flashcards

1
Q

What is a Sale?

A

passing of title for a price between a buyer and seller

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2
Q

What is a good?

A

o Goods means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale

Doesn’t apply to investments or things in action (contract, insurance policy)

Goods includes unborn young of animals and growing crops and other identified things attached to realty as described in the section on goods to be severed from realty

Doesn’t matter on quantity or size of goods

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3
Q

What is the scope of UCC article 2

A

It applies to the sale of goods, both present and future. It does not apply to things in action. • “Thing in action” is an intangible personal property right recognized and protected by the law

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4
Q

Are minerals or crops considered goods?

A

Minerals or structures to be removed from the land are goods if they are severed by the seller.

Crops, timber are goods if they are severed by either.

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5
Q

What is a merchant?

A
  1. Holds himself out as having skills or knowledge 2. Deals in goods of that kind 3. Employs someone who holds themselves out as having skills or knowledge.
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6
Q

What is the Predominant Purpose Test?

A

If predominant purpose of the K is for the good the UCC applies. If the pp of the k is for service the UCC does not apply.

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7
Q

What is the Gravamen Test

A

If the Gravamen of the complaint involves the good the UCC applies, otherwise the UCC does not apply.

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8
Q

Can common law principles be used in conjunction with UCC?

A

Yes. Unless it seeks to displace the UCC.

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9
Q

What is a firm offer

A

An offer in writing. Signed. Can’t last longer than 3 months.

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10
Q

What is the Statute of Frauds

A

Precludes oral contracts over $500 which are not in writing.

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11
Q

Four exceptions to statute of frauds

A

Four Exceptions

  1. Merchant confirmation letter (Must have quantity, signature and acknowledge the agreement). Merchant has 10 days to disavow this.
    1. Partial performance
    2. Special purpose
    3. Evidence in a preceding
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12
Q

Parole Evidence Rule

A

Used to supplement never to contradict.

i. Course of performance: One contract with a series of performance dates
ii. Course of Dealing: Prior contracts or dealings between the parties
iii. Usage of Trade: Common practice in the industry

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13
Q

What is acceptance

A

Acceptance: Any manner reasonable to the circumstances. Includes conduct of the parties.
Actions can establish a contract. Statute of Frauds may be an applicable defense. Prompt or current shipment is an acceptance
Non-conforming goods is a contract & breach at same time.

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14
Q

Battle of the Forms: How do you treat additional terms?

A
  1. Non-merchants: Additional Terms are proposals
  2. Merchants- included unless
    i. materially alter contract. (surprise & hardship) or
    ii. expressly limited by the contract.
    iii. Notification of objection given within a reasonable time
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15
Q

What is the definition of Surprise and Hardship?

A

Surprise: Subjective & objective. Party must not have anticipated it, not reasonable for objective person to have anticipated it.

Hardship: open ended or prolonged liability

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16
Q

What is an Express Warranty

A

Affirmation of fact or promise. Any description of the goods. Any sample or model. Must be the basis of the bargain.

Puffing: or statement of opinions are not express warranties.

Express warranties can NEVER be excluded or modified

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17
Q

What does the basis of the bargain mean?

A

One of the reasons the buyer bought the goods.

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18
Q

Types of Implied Warranties?

A

Warranty of title; Warranty of merchantability; warranty of fit for a particular purpose.

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19
Q

Can you disclaim the warranty of title

A

Can exclude warranty of title by express language or circumstances (watch guy in bathroom).

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20
Q

Void vs. voidable title?

A

Voidable title: transferor was deceived as to identity of purchaser, hot check, cash sale, delivery was procured through fraud. Hot check. (can pass title; need to take affirmative action to void the title)

Void title: Theft. (Cannot pass title)

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21
Q

What is the implied warranty of merchantability?

A

Goods will be fit for their ordinary purpose (restaurants: applies to the glass and plates you use to eat.)

Must be a MERCHANT!

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22
Q

How do you disclaim the implied warranty of merchantability?

A

Must stand out. Express language or AS IS or WITH ALL FAULTS.

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23
Q

Casual seller vs. merchant:

A

Frequency matters. Selling at a farmers market once a year maybe not every week yes. Also volume matters. Can sale crops once, but if substantial enough will qualify as a merchant.

24
Q

Definite and Seasonable expression (Proviso Language)

A

A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon unless acceptance is made conditional on assent to the additional or different terms.

25
Q

Entrusting

A

deals with goods of that kind can go ahead and sale it. Includes any delivery of goods…effectively transfers ownership of the car to a buyer. (example a car mechanic who sales cars; don’t pay your bill he can sale your car.)

26
Q

What is the implied warranty of fit for a particular purpose?

A

Seller has reason to know any particular purpose which the item is to be used for. Any seller, not just merchant.

Can be made by anyone; not limited just to merchants.

27
Q

Limited Remedies

A

Limit the remedy. If they state sole remedy this will be it. Unless it fails in its essential purpose. Most courts require Limitations to be conspicuous.

28
Q

Incidental Damages

A

expenses reasonably incurred in the inspection, receipt, transportation and care

29
Q

Consequential Damages

A

results from the sellers breach. The seller had reason to know and otherwise could have prevented at the time of contracting. {may include loss profits, good will}. Hospital bill is a good example.

30
Q

How does a limited remedy fail in it’s essential purpose?

A

Can fail of its essential purpose if they refuse or are unable to fix according to remedy. Unconscionability is another issue.

See Catalina Yachts

31
Q

Notice of defect

A

Must notify seller that there is a defect within a reasonable time.

32
Q

What must you prove in a breach of warranty claim?

A
  1. creation of warranty
  2. breach
  3. causal connection
  4. fact and extent of injury
33
Q

Vertical Privity

A

Up and down the manufacturing chain

34
Q

Horizontal privity

A

the relationship between the original supplier of a product and an ultimate user or a bystander affected by it used esp. in connection with breaches of warranty -

35
Q

Contract formation: Open terms?

A

You can still have a contract even though many of the terms are left open or undetermined.

36
Q

What is a shipping contract?

A

F.O.B. the place of shipment.

If goods were shipping FROM San Antonio: F.O.B. San Antonio.

Risk of Loss transfers as soon as goods are shipped.

37
Q

What is a destination contract?

A

F.O.B. destination

If goods are going to Houston: F.O.B. Houston.

Risk of Loss DOES NOT transfer until goods are delivered in Houston.

38
Q

What three things are necessary in a merchant confirmation letter?

A
  1. it must evidence a contract for the sale of goods;
  2. must be “signed”, a word which includes any authentication which identifies the party to be charged;
  3. it must specify a quantity.
39
Q

What does “signed” mean?

A

“Signed” includes any symbol executed or adopted by a party with present intention to authenticate a writing.

40
Q

What is Course of Performance?

A

a sequence of conduct between the parties that involves repeated occasions for performance by a party

41
Q

What is Course of Dealing?

A

a sequence of conduct concerning previous transactions between the parties

42
Q

What is Trade Usage?

A

any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question

(Industry practice)

43
Q

If the court does allow Parole evidence how much weight should it afford each type?

A

(1) express terms prevail over course of performance, course of dealing, and usage of trade;
(2) course of performance prevails over course of dealing and usage of trade; and
(3) course of dealing prevails over usage of trade.

44
Q

When would the court not allow parole evidence?

A

See Test from Comment 3 - if true certainly would have been included in the contract.

If the additional terms are such that, if agreed upon, they would certainly have been included in the document in the view of the court, then evidence of their alleged making must be kept from the trier of fact.

45
Q

If there are open terms is there still a contract?

A

Yes, if the parties intended there to be a binding agreement, you would use gap fillers to fill in the missing terms.

However, The more terms the parties leave open, the less likely it is that they have intended to conclude a binding agreement

46
Q

How are additional terms treated between merchants.

A

Between merchants such terms become part of the contract unless:

(a) the offer expressly limits acceptance to the terms of the offer;
(b) they materially alter it; or
(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

47
Q

What does the court do if it finds that an additional term materially alters the contract?

A

It will excise that term and the rest of the contract will be valid.

Examples of materially altering terms include a disclaimer of warranties when such warranties normally attaches and arbitration clauses (according to most courts).

48
Q

What does materially altering mean?

A

Surprise & Hardship.

Surprise: The party must not have expected it and it must not have been reasonable to expect it.

Hardship requires that the term be one that creates an open-ended and prolonged liability

49
Q

What happens when the terms differ? Meaning they are conflicting.

A

Use knock out rule. Differing terms cancel each other out and use UCC gap fillers.

50
Q

When would a definite and seasonable expression of terms of acceptance inspite of differing or additional terms NOT create a contract?

A

When acceptance is expressly made conditional on assent to the additional or different terms.

51
Q

How are additional terms made to non-merchants treated?

A

As proposals.

The consumer must expressly assent to the terms.

52
Q

What if you think you have good title when making warranty of title. Does this defense work?

A

The warrantor’s state of mind and/or freedom from negligence are irrelevant to liability for breach of warranty. Warranty creates an absolute obligation which the warrantor either meets or does not.

53
Q

What is Vouching - in?

A

Where the buyer is sued for breach of a warranty or other obligation for which his seller is answerable over

(a) he may give his seller written notice of the litigation. If the notice states that the seller may come in and defend and that if the seller does not do so he will be bound in any action against him by his buyer by any determination of fact common to the two litigations, then unless the seller after seasonable receipt of the notice does come in and defend he is so bound.

54
Q

Can you disclaim a warranty of title with As IS language or AS IS posted in car window?

A

No. General disclaimers of warranty are understood by everyone to refer to quality problems and will not get rid of the warranty of title.

The warranty of title must be specifically excluded by 1. specific language or 2. circumstances

55
Q

What is entrustment and what does it allow the merchant to do?

A

Any entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer in ordinary course of business.

(3) “Entrusting” includes any delivery and any acquiescence in retention of possession regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor’s disposition of the goods have been such as to be larcenous under the criminal law.

56
Q

What is an Express Warranty?

A
  1. Any affirmation of fact or promise made by the seller to the buyer which relates to the goods
  2. Any description of the goods
  3. Any sample or model

which is made part of the basis of the bargain creates an express warranty.

Sales (3 decks)

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