Commercial Law Flashcards
UCC Article 2
Defines “goods” as property that is tangible and movable, other than money
Sale on approval
Sale to a consumer who wants to try the goods before buying them
Title and risk of loss remain with seller until acceptance
Sale or return
Buyer has right to return if they do not sell
Seller retains title until payment or resale
Return of goods at buyer’s risk
Under UCC, minimum sale requiring written contract
$500
Exclusions: partial receipt of goods
FOB place of shipment
Ownership shifts to buyer once delivered to carrier
FOB place of destination
Ownership passes to buyer when carrier delivers goods
FAS vessel
Ownership psses when seller delivers goods alongside vessel for loading
FOB vessel
Ownership passes once goods are loaded on board the vessel
CIF (cost-insurance-freight)
Seller obligated to pay for insurance and freight charges for delivery
CAF (cost and freight)
Seller is obligated to pay for freight but not insurance for delivery
Two situations with no right to inspect
- When carrier delivers goods COD
- When contract requires buyer to pay at time of delivery of document of title
Express warranty
If a statement forms the basis of the sale
Three kinds of express warranties
- An affirmation of fact about the goods
- Any description of the goods in a contract
- A contract based on sample or model must conform to that sample or model
Implied warranty of merchantability
Only when seller is a merchant
Product deemed fit for ordinary purpose for which it is used
Implied warranty of fitness for a particular purpose
Product is fit for particular purpose and applies if the seller knows about the buyer’s purpose for the product
Implied warranty of title
Promise that the seller has legal ownership of goods and has no knowledge of any security interest or other lien on the goods
Revocation of acceptance
Buyer assumed defect would be cured but it was not
Buyer accepted goods before discovering nonconformity
Buyer accepted goods because it would have been difficult to discover defect and seller gave assurances
Excuses for nonperformance
Loss of identified goods
Substituted performance
Failure of a presupposed condition
Four types of commercial paper
Draft (check)
CD
Promissory note
Trade acceptance
Warehouse receipt
Legal document providing title to goods in storage and assurace delivery to the holder of the receipt
Bill of lading
Document acknowledging receipt of goods from shipper, given by carrier which includes terms of the contract of carraige for goods
Bailment
Temporary transfer of property’s custody
Bailor
Owner of personal property in bailment
Bailee
Party temporarily possessing personal property in bailment
Necessary elements to be considered a title
Created by bailee as receipt for goods received
Contract to ship or store goods
If negotiable, contains statement that holder has right to receive, hold, and dispoes of both goods and title, and purchaser of title does so free of claims and defenses to prior parties
UCC Article 7
Addresses shipment, storage, and delivery procedures and requirements involved in the sale of goods
UCC Article 9
Unified, comprehensive process for regulating security interests in personal property and fixtures
Three forms of secured transactions
Pledge
Chattel mortgage
Conditional sale
Pledge
Debtor delivers goods for creditor to hold as security until payment has been made
Chattel mortgage
Debtor is allowed to retain possession of property while creditor retains right to take ownership of the property
Five forms of collateral
Consumer goods
Equipment
Farm products
Inventory
Property on paper
Three requirements for attachment
Consenual security aggreement
Creditor must give value
Debtor must have rights to the attachment
Perfection
Process of validating an attachment
Occurs when (1) security interest has attached and executed and (2) the financing statement has been filed
Federal Trade Commission Act
Prohibits unfair methods of competition and unfair or deceptive acts or practices that affect interstate commerce
Does not apply to insurance
Magnuson-Moss Warranty Act
If a producer provides a written warranty, it must conform to certain standards
Lemon provision
Promise to remedy a product defect within a reasonable time
EFT Act
Buyers do not have right to stop payment on electronic fund transfers
Chapter 7 Bankruptcy
Last resort chapter
Nonexempt assets are distributed to creditors and balance of obligations are forgiven or discharged
Chapter 13 Bankruptcy
Permits consumer to set up a plan for paying a portion (or possibly all) debt without threat of lawsuit
Holder in due course
Person to whom a negotiable instrument has been issued and who possesses it for value
