Chapter 14 - Sales

Question 1

Contracts for the sales of goods

Answer 1

• tangible personal property

Question 2

Offer

Answer 2

• terms can be vague
  
  • past dealings
  • only type and quantity be stated
• intent
• communication to offeree

Question 3

Acceptance

Answer 3

• minor change is okay
  
  • payment terms
  • change a warranty
• major change not ok:
  
  • material price increase
  • quantity
  • delivery date
• early acceptance (mailbox rule)

Question 4

Auction

Answer 4

• invitation to offer, not offer
  
  • with reserve - right to withdraw goods prior to acceptance
  • without reserve - property will be sold to highest bidder. cannot be withdrawn unless no bid is made.

Question 5

Consideration

Answer 5

• Of value - legally sufficient
• no need for new consideration for modification of offer.

Question 6

Firm offer

Answer 6

• cannot be revoked even without consideration
• all three are satisfied (SUM):
  
  • signed by offeror
  • up to 3 months (enforceable for 3 months)
  • Merchant

Question 7

Title and risk of loss transfer based upon

Answer 7

1. agreement/sales
2. shipping terms:
   
   1. shipment - shipped/placed with common carrier
   2. destination - received/ “tendered” to buyer
3. no contract terms and no common carrier
   
   1. title - when formed
   2. risk of loss is transferred:
      
      1. merchant - received
      2. non merchant - tendered

Question 8

Common carrier liability

Answer 8

• based on strict liab. (irrespective of negligence)
• not liable for losses due to causes of deemed natural disasters and other “acts of God”.

Question 9

bailment

Answer 9

• bailor (title) entrust good to bailee (risk of loss)
• if goods are sold to good faith buyer, then bailor cannot retrieve items from buyer but can be entitled to damages from bailee.

Question 10

Sale on approval

Answer 10

• buyer obtains good for use and decides later to purchase them
  
  • title and risk of loss remains with seller until buyer approves (pays for)

Question 11

Sale or return

Answer 11

• buyer buys to resell and returns if they cant sell
  
  • title and risk loss based on shipping terms stated earlier (like normal sales)

Question 12

Buyer rejects goods

Answer 12

• title reverts back to seller
• risk of loss:
  
  • rightful rejection (non conforming goods)
    
    • reverts back to seller
  • wrongful rejection (conforming goods)
    
    • stays with buyer

Question 13

Warranty of title and infringement

Answer 13

• implied
• good title, transfer is rightful, no liens or encumbrances, doesnt violate laws
  
  • disclaimer must be explicit (cannot use “as is”

Question 14

Express warranty

Answer 14

• any statements or claims that become a “basis of the bargain”
• description, sample
• cannot be disclaimed

Question 15

Implied warranties of merchantability and fitness for particular or ordinary purpose

Answer 15

• merchantibility (ordinary purpose)
  
  • fair condition and ordinary purpose
    
    • disclaimer: as is, with all faults
• Fitness for particular or ordinary purpose
  
  • disclaimer - as is, with all faults.

Question 16

Product liab.

Answer 16

• strict liab.
  
  • manufacturer and seller may be liable
• injured party must prove:
  
  • suffered injury
  • seller was in business of selling product
  • product was defective
    
    • defect made product unreasonably dangerous
  • seller is liable regardless:
    
    • unaware of defect and were not negligent
    • injured party didnt exercise due care
    • not in privity with injured party
      
      • cannot disclaim product liab.
        *

Question 17

Seller’s remedies

Answer 17

• right to resell the goods
• right to stop carrier from delivering
• cancel the contract
• recover damages:
  
  • incidental damages
  • consequential damages
  • not punitive damages
• Liquidated damages - must be reasonable
  
  • valid if reasonable and not a penalty
  • if no clause then:
    
    • can keep lesser:
      
      • $500 or 20% of down payment made.

Question 18

Buyers remedies

Answer 18

• accept all, some, or non of goods
• cover - recover excess of substitute
• specific performance - very unique goods (seller has to give goods to buyer)
• recover damages:
  
  • incidental
  • consequential
  • not punitive
• rescission of contract