Chap 21 Sales and Leases

Question 1

sale

Answer 1

sale is a transfer of title to goods from a seller to a buyer for a consideration known as the price (UCC2-106)

Question 2

goods

Answer 2

goods are defined as movable, tangible, personal property (UCC2-105(1))

Question 3

sales transactions are governed by

Answer 3

article 2 of the code

general contract law continues to apply when the code has not specifically modified the law

Question 4

general contract law

Answer 4

also continues to govern all contracts outside the scope of the code, including employment contracts, service contracts, insurance contracts, contracts involving real property and contracts for the sale of intangibles such as stock, bonds, patents and copyrights and AR

Question 5

transactions which are not sales but which affect goods include

Answer 5

bailments
leases
gifts
security interest

Question 6

bailments

Answer 6

transfer of possession of personal property and generally presence of consideration, however no transfer of title

Question 7

leases

Answer 7

transfer of possession of personal property and presence of consideration, however no transfer of title

Question 8

gifts

Answer 8

transfer of title and possession, however no presence of consideration

Question 9

security interest

Answer 9

transfer of possession and presence of consideration, however, title or right to repossess property is reserved in seller

Question 10

good faith

Answer 10

all parties to a contract or duty under the code are required to act honestly in fact in their dealings with others

Question 11

good faith in the case of merchants

Answer 11

involves honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade

Question 12

unconscionability

Answer 12

a contract or portion of a contract that is regarded as imposing an unfair burden on one of the parties to the point that the courts conscience is offended thereby precluding enforcement

in such cases the court may:

1. refuse to enforce the entire contract
2. it may enforce the contract after exercising (removing) the unconscionable provision
3. it may modify the contract in such a manner as to make it conscionable

Question 13

where are you likely to find unconscionability

Answer 13

adhesion contract - one where you can negotiate provisions, like a mortgage

Question 14

course of dealing

Answer 14

is a sequence of previous conduct between the parties that may fairly be regarded as establishing a common bassi of understanding for interpreting their expressions and greement

Question 15

usage of trade

Answer 15

is a practice of method of dealing regularly followed in a place, vocation or trade

Question 16

sales by and between merchants

Answer 16

the code established different and more stringent rules for transactions involving merchants

Question 17

a merchant may be

Answer 17

1. a dealer in the goods, involved in the transaction or
2. by his occupation hold himself out as having knowledge or skill peculiar to the goods or practices involved or
3. employ and agent or broker whom he holds out as having such knowledge or skill

Question 18

freedom of contract

Answer 18

within certain parameters the parties to a contract may alter the effect of some code provisions (good faith, however, is always required and cannot be contracted away)

Question 19

validation and preservation of sales contracts

Answer 19

the code reduces the formal requisites of a valid agreement to the bare minimum and attempts agreements whenever the parties manifest an intent to enter into a contract

Question 20

formation of sales contract

Answer 20

the code will strive to recognize a contract if the intent of the parties is consistent with such a conclusion

Question 21

definiteness of an offer

Answer 21

the code has rejected the strict approach of the common law which required that the term must be definite and complete. the code provides that even though one or more terms to have been omitted the contract need not fail for indefiniteness

Question 22

the code provides rules

Answer 22

when the parties do not agree, as to the terms of payment, duration, and the particulars of performance

Question 23

an offer is definite

Answer 23

if it defines the goods and fixes that price or makes provision to do so

Question 24

open price

Answer 24

if no price is stated in the agreement, the price is a reasonable price

Question 25

open delivery

Answer 25

must be reasonable; is place of sellers business unless otherwise agreed

Question 26

open quantity: output and requirements contracts

Answer 26

an output is the agreement to purchase the entire output of a seller for a stated period, and a requirements contract is an agreement to supply a buyer with all her requirements of certain goods

enforceable based on good faith of both parties

Question 27

irrevocable offers

Answer 27

an offeror may general withdraw or revoke her offer at any time before it is accepted

to be effective, the notice revoking the offer must reach the offeree before he has accepted

Question 28

an option is a contract

Answer 28

by which the offeror is bound to hold an offer open for a specified period of time; it requires consideration, but can apply to all types of contracts, including sales of goods and, because consideration is involved, it not limited to a certain time as below

Question 29

firm offers

Answer 29

firm offers are irrevocable without requiring consideration. a merchant must keep an offer open for up to three months if the merchant gives assurance in a signed writing that it will be held open for that time, or if no time is stated, for a reasonable time (again, not to exceed three months)

Question 30

variant acceptances battle of the forms

Answer 30

the code does not follow the common law mirror image rule regarding acceptances

under the common law rule where two businesses exchange pre-printed forms with varying terms no contract exists, even if the parties intend that there be a contract

the code addresses this battle of the forms problem by focusing on the intent of the parties

as to nonmerchants, the additional terms are construed as proposals for addition to the contract

as to merchants, additional terms (those proposed by the offeree) become part of the contract is 1. the offer has no limited acceptance to the terms of the offer; 2. they do not materially alter the agreement and 3. the terms are not objected to by the other party

Question 31

the courts are divided as to

Answer 31

how to handle different, conflicting terms

the majority of the courts hold that the different terms cancel each other out and look to the code to supply the missing terms

Question 32

unless clearly specified by the offer,

Answer 32

an acceptance may be by any reasonable means, as opposed to the common laws authorized means of acceptance

Question 33

auction sales

Answer 33

is an auction is explicitly advertised as without reserve, the items being sold cannot be withdrawn unless no bid is made

in a with reserve auction, goods may be withdrawn up until the sale is final

an auction is generally considered to be with reserve unless otherwise advertised

Question 34

statute of frauds

Answer 34

the code provides that a contract for the sale of goods costing $500 or more is not enforceable unless there is some writing - or record - sufficient to evidence the existence of a contract between the parties

40 states have adopted the uniform electronic transactions act (UETA) which gives full effect to contracts formed by electronic records and signatures

Question 35

modification of contracts

Answer 35

an agreement modifying a contract must be in writing or record if the resulting contract modification brings the contract into or keeps the contract within the statute of frauds

Question 36

written compliance

Answer 36

the statute of frauds compliance provisions under the code are more than the rules of general contract law
the code merely requires a writing or record 1 sufficient to indicate that a contract has been made between the parties 2 signed by the party against whom enforcement is sought or by her authorized agent or broker and 3 including terms specifying the quantity

the quantity need not be specified if the contract is a valid requirements or output contract

a writing or record may be sufficient even if it omits or incorrectly states the term, however it is not enforceable beyond the quantity stated in the writing

Question 37

under the code the term signature

Answer 37

is liberally interpreted and can include any mark made with the intent to authenticate the writing, such as a thumb print initials or an x

Question 38

exceptions to USS 2-201

Answer 38

confirmatory memo
specially manufactured goods
admissions
partial performance
parol evidence

Question 39

confirmatory memo

Answer 39

between merchants, a written confirmation of the contract sent within a reasonable time and sufficient against the sender is likewise sufficient against the recipient of it, unless the recipient who has knowledge of its contents gives written notice of objection to it within ten days after receipt of the confirmation

this means that if these requirements have been met, the recipient of the writing or record is in the same position he would have assumed by signing it, and the confirmation, therefore, is enforceable against him

Question 40

specially manufactured goods

Answer 40

the code permits enforcement of an oral contract for specifically manufactured goods where the goods are not readily marketable and where there has been a substantial beginning on their manufacture or where there have been commitments for procurement made by the manufacturer

Question 41

admissions

Answer 41

the code permits enforcement against a party to the extent that the party in his pleading, testimony or otherwise in court admits that a contract was made

Question 42

partial performance

Answer 42

enforcement of an oral contract is also possible where a contract has been partially performed

partial performance is sufficient to enforce the contract to the extent that the goods have been delivered and accepted or to the extent that the payment has been made and accepted

Question 43

paroles evidence

Answer 43

contractual terms that are set forth in a writing intended by the parties as a final expression of their agreement may not be contradicted by evidence of any prior agreement or of a contemporaneous agreement, but they may be explained or supplemented by course of performance, course of dealing, usage of trade or by consistent additional evidence

note: subsequent modifications of the contract are not prohibited by the parol evidence rule