Business Law - Sale of Goods Flashcards
What comes under Common Law contract rules?
Real Estate
Services
Sale of a Business
Under Common Law Rules, acceptance must be the ____ _____ of the offer.
Mirror image.
Under UCC rules (sale of goods), does acceptance have to be the mirror image?
NO, acceptance with additional terms is OK and NOT considered a counteroffer. = VALID ACCEPTANCE
Is it easier to form a contract under Common Law or the UCC?
The UCC, because contract terms can be changed and it is still considered valid acceptance.
Do UCC rules apply to merchants and NON-merchants?
Yes, all sales of goods are under UCC rules.
What is the definition of a MERCHANT?
-Sell goods everyday
What does UCC stand for and what does it apply to?
Uniform Commercial Code
Applies to the SALE OF GOODS
What is a firm offer under the UCC rules?
Valid and does not require CONSIDERATION
Must be in writing and signed
Irrevocable for time stated.
Must be made by a merchant.
What are some OPEN TERMS allowed under the UCC rules?
-Price
What are some things NOT allowed to be left open under UCC terms?
-Quantity
Modification of terms of a contract, what is the difference between UCC and Common Law?
If a contract is for the Sale of Goods (UCC), consideration is not necessary for modification.
Is required under common law.
Custom made goods > $500 - oral contract vs. written contract to be enforceable?
Exception to Statute of Frauds. Does not need to be in writing. Enforceable.
Oral contract between merchants that is followed up by a written contract. Is this valid?
Exception to Statute of Frauds, does not need to be in writing originally
-Written confirmation of oral agreement later = valid contract
Buyer has 10 days to object.
What type of contracts does the Mailbox Rule apply?
Both Common Law and UCC allow early acceptance.
Who has the title and risk during a trial sale?
The seller retains title and risk of loss during the trial period. If not returned, title and risk of loss transfers to the buyer.
When a seller sells goods and the buyer has the right to return for 10 days, buyer is not the ultimate consumer and plans to resell. Who has title during the 10 days?
For a merchant to merchant sale, title and risk passes immediately to buyer.
Which of the following is considered a sale prior to the expiration period of the trial period?
- Sale on approval
- Sale or Return
Sale or return. Merchant to merchant.
F.O.B. destination - when is seller’s last responsibiility?
Until the goods reach their destination.
Who bears the risk of loss once goods are placed on the loading dock? Terms are F.O.B. shipping point.
Still on seller’s property. Seller bears risk.
Who bears the risk of loss once goods are placed on the truck? Terms are F.O.B. shipping point.
Once shipped, on truck, buyer bears risk.
Under the Sales Article of the UCC, under FOB shipping point, risk of loss passes to the buyer when the goods are:
Under the Sales Article of the UCC, under FOB shipping point, risk of loss passes to the buyer when the goods are:
delivered to the carrier.
In the case of unique goods that were not made as promised, the buyer can sue for what, even if the contract was FOB shipping point.
Specific performance.
In this instance, risk remains with the seller.
Are punitive damages awarded for contract breaches?
No, pain and suffering awards are NOT part of contract breaches.
If goods are not to be transported, the risk of loss transfers to the buyer when
the buyer gets possession of the goods.
If the seller is a non-merchant (ex: neighbor sells to neighbor), when does risk of loss transfer?
Upon tender.
Person buys guitar from store, leaves at store for additional improvements. Guitar store sells to different merchant. Must store return to the first person?
No, under Entrustment Rule, the new customer gets title (good faith purchaser).
Store must pay first person money and damages.
Under the UCC, what rights does a seller have if a buyer materially breaches a contract?
- Right to cancel contract
- Recover damages
- Right to resell goods
- Right to stop delivery
- Right to cancel contract - YES
- Recover damages - YES
- Right to resell goods - YES
- Right to stop delivery - YES
Normally the buyer can inspect the goods prior to payment. The exception is:
C.O.D. - Cash on delivery
-can inspect after. if non-conforming, can reject.
In the event that a contract is breached, when does the statute of limitations begin?
Begins when the breach arise (not when the contract begins, is signed, etc.)
Express warranty means what?
Statement of fact made by the seller that the buyer relies upon. Written/oral statements, etc. Basis for buyer’s purchase.
“Eric Clapton played this guitar on stage.”
If false = fraud.
What is an example of an implied warranty?
That the seller has title.
Both a merchant seller and non-merchant seller have to have title.
What is the implied warranty of merchantability?
That the item is fit and safe for normal use.
Only applies to a MERCHANT SELLER.
Implied warranty - fitness for a particular use, what does it mean?
Where the seller knows the particular purpose for which the buyer is buying the goods. Buyer relies on the seller’s skill or expertise.
Can you disclaim implied warranties?
Yes.
“all sales final” = no warranty of merchantability
Can you disclaim warranty of title?
Only if you specifically disclaim warranty of title.
Can you disclaim an express warranty?
No because you can express a warranty and simultaneously disclaim it. Disclaiming an express warranty = FRAUD.
If someone is injured who can they sue?
Manufacturer
Wholesaler
Retailer
Consumer/Consumer’s friend
*Must prove they sold the product in a defective condition.
If you ever see “must be performed in good faith” as an answer choice it is…
ALWAYS THE ANSWER
because there is never a situation that the parties do not have to act in good faith.
Does an express warranty assert the value of goods based on the sellers opinion?
No, a mere affirmation of the value of goods based on the sellers opinion does not create an express warranty.
If the seller is a non merchant, risk of loss passes to buyer upon
Tender of delivery
If goods are not to be transported and the seller is a merchant, when does risk of loss pass?
Upon receipt of the goods
A minor who lives 300 miles from his parents must pay for what the minor already received if the subject of the contract was
Seemed necessary such as MEDICAL CARE
Which type of bankruptcy can only be filed voluntarily?
Chapter 12 farmer/fisherman
Chapter 13 ind w/regular income
Does a trustee have the power to use any means available to the debtor to obtain the return of the debtors property?
Yes
Is an oral contract for services okay?
Yes, unless impossible to complete within 1 year
What describes the authority Zack has to act on behalf of Scott as seen through the eyes of the third party Skilo Inc?
Apparent authority
Chapter 9 allows for
The adjustment of debts of an insolvent municipality and can be filed voluntarily
With regard to a surety agreement does the creditor have to proceed against collateral before suing?
Does the creditor have to proceed against the debtor before suing the surety?
No and no
The creditor can go after The surety without proceeding against the collateral or the principal debtor first
An agent will not be personally liable for contracts entered into when the principal’s identity is
Disclosed to the third party at the time of contract
What is allowed to be left open in a contract under the UCC?
- price?
- delivery terms?
Both
Just not quantity
Can a minor be an
Agent for a principal?
Partner in a partnership?
Yes and yes
Does a manufacturer avoid liability simply by establishing that it followed the custom of the industry?
No because the custom of the industry may be flawed and dangerous
