Commercial Law: Art 2 Sales

Question 1

§2-102 Scope

Answer 1

this article applies to “transactions in goods”

Question 2

§2-304(1)

Answer 2

“transactions” price need not be money; transfer of value; bargain

***Gifts are not transactions

Question 3

Does the UCC adopt the Mirror Image Rule

Answer 3

No, Prompt shipment of nonconforming goods= acceptance + breach

Question 4

Is a shipment of non-conforming goods always a breach?

Answer 4

No, considered counteroffer if seller seasonably notifies buyer that shipment is offered only as an accommodation to the buyer - Corinthian Pharma

Question 5

To prove an express-warranty breach, a buyer must:

Answer 5

(1) show he relied on the seller’s express affirmation of fact or promise,
(2) the goods did not comply with the affirmation or promise,
(3) and the product’s noncompliance proximately caused the buyer’s injury.

Question 6

An implied-warranty-of-merchantability breach requires

Answer 6

(1) proof that the seller sold the buyer goods that were unfit for ordinary purposes (Defective goods)
(2) and the buyer suffered injury.
(3) must include the word “merchantability.”

Question 7

A breach of the implied warranty of fitness for a particular purpose occurs if:

Answer 7

(1) the seller knew of the particular purpose for which a buyer required goods,
(2) the buyer relied on the seller’s skill or judgment to furnish suitable goods,
(3) the buyer notified the seller of the breach,
(4) and the breach caused the buyer’s injury.

Question 8

Defect must be proven for breach of

Answer 8

Implied warranty of merchantability
but NOT fitness for particular purpose**

Question 9

For implied warranty disclaimer to be effective they must be

Answer 9

“Conspicuously” made
(1) written so reasonable person should have noticed
(2) Headings, CAPITAL LETTERS, contrasting font, or color that call attention to disclaimer are sufficient

Question 10

section 2-725 Statute of Limitations

Answer 10

an action for breach of K must be commenced w/in 4 yrs after the cause of action has accrued

but may be reduced to as short as one year by agmt

Question 11

Defenses in Warranty Action

Answer 11

Article 2 N/A to trxn; therefore alleged warranties do not exist

Deny facts based on which pl alleges existence of warranty (ex- Puffing vs. affirmation of fact, or representation not part of basis of bargain)

Goods were sold with effective warranty disclaimer; therefore alleged warranties do not exist

Goods sold were as warranted (scope of warranty)

Break in chain of causation

Untimely /inadequate notice to seller

Lack of privity

Question 12

Pl. Prima Facie Case for Breach of Warranty

Answer 12

1. Existence of Warranty
   a. Contract of Sale (Warranty of Title, §2-312)
   b. Seller’s affirmation (express warranty, §2-313)
   c. Merchant with respect to goods of the kind sold goods ( §2-314)
   d. Seller sold goods; buyer has particular purpose ( §2-315)
2. Goods sold were not as warranted
3. Injury and damages to pl and his property
4. Proximately caused by failure of goods to be as warranted
5. Notice to Seller
6. Privity

Question 13

Remedy Limitations

Answer 13

2-719(1) Limiting buyer’s remedies to
a. return of the goods for repayment
b. repair or replace non-conforming goods

Question 14

When do circumstances cause exclusive/limited remedy fail?

Answer 14

When remedy has “failed essential purpose” determination> seller’s remedy refused or failed several times

Question 15

When does Cause of action arise on regular warranty?

Answer 15

when the breach occurred; regardless of buyer’s knowledge

Question 16

When the K “requires for its performance goods identified when the K was made”

Answer 16

Goods must (1) exist (2) be identifiable; specific goods required for performance i.e. The Mona Lisa

Question 17

K that requires particular goods for its performance

Answer 17

Goods must (1) exist (2) be identifiable as part of a tangible bulk ; no particular good identified or required for performance e.i. 3 watches from a 30 watch lot

Question 18

If title is void

Answer 18

person holding cannot transfer title to another

Question 19

can someone with voidable title transfer good title?

Answer 19

yes, if (1) transacting in good faith (2) with value

Question 20

how is a warranty of title excluded?

Answer 20

by :
(1) specific language or
(2) circumstances giving the buyer reason to know that seller does not claim title himself or
(2.1) is purporting to sell only such right or title as he or third person may have

Question 21

How much title is a purchaser able to have transferred to them?

Answer 21

as much as seller has or has the power to transfer

Question 22

what title does a person recieving goods incif=dent to txn involving a dishonered check?

Answer 22

only voidable title

Question 23

What is the Entrustment Exception?

Answer 23

2-403(2)- any
(1) entrusting of possession of goods
(2) to a merchant who deals in goods of that kind
(3) gives the bailee/merchant/entruster power to transfer all rights of the bailee to a buyer in an ordinary course of business

Question 24

what does “a buyer in the ordinary course of business” mean?

Answer 24

A person that buys goods
(1) in good faith
(2) w/o knowledge that sale violates the rights of another person
(3) in ordinary couse of business of selling the goods
except pawnbrokers**

Question 25

What remedy for bailor that has goods sold out fom under them?

Answer 25

original owner gets restitution for value of good from bailee/merchant/entruster

Question 26

how does one obtain void title?

Answer 26

theft

Question 27

T/F fraud and trickery are included in theft when considering whether title is void or not

Answer 27

false

Question 28

How are express warranties created?

Answer 28

(1) by affirmation of fact
(2) any description of the goods which is made in as part of the basis of the bargain
(3) any sample or model made part of the basis of the bargain

Question 29

Loose, general praise of the goods sold; expression of an exaggerated opinion

Answer 29

puffing; sales talk

Question 30

what does “basis of the bargain” mean?

Answer 30

reliance is presumed; all seller’s affirmations about the goods are considered part of the deal unless good reason can be shown to the contrary

Question 31

T/F You can give a warranty after formation.

Answer 31

True and false- you can, it just turns into a modification which doesn’t need consideration

Question 32

When is an implied warranty of merchantibility is included automatically?

Answer 32

when
(1) seller is a merchant w/ respect to the goods of that kind
(2) not excluded or modified

most commonly- “are fit for ordinary purposes for which goods are used”

Question 33

When does an Implied Warranty of fitness for a particular purpose arise?

Answer 33

2-315:
When seller, at time of contracting,

(1) has reason to know any particular purpose for which the goods are required AND

(2) the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods

Question 34

What is the difference between particular purpose and ordinary purpose?

Answer 34

Particular purpose envisages a specific use by the buyer; peculiar to buyer’s nature of business

ordinary purpose is envisioned in concept of merchantability

Question 35

What is the only way to negate an express warranty?

Answer 35

through the parole evidence rule i.e.- prior/contemporaneous express warranty not included in the written K when written sales agmt is a complete integration/conflicting with “lack of auth: clause

Question 36

an effective disclaimer to an implied warranty of merchantability includes

Answer 36

(1) must mention “merchantability” and
(2) if written, is conspicuous; requires special precaution

Question 37

How is a disclaimer considered “conspicuous”?

Answer 37

So written that a reasonable person would have noticed
i.e.- bold, bigger font, underlined, etc

Question 38

Is an implied warranty included in an “as is” transaction?

Answer 38

No, but a warranty of title is included

Question 39

When is there no implied warranty with regaurd to defects?

Answer 39

2-316 (3)(a)-
when buyer, before entering into K,
(1) examined the goods fully or
(2) refused to inspect goods

Question 40

what are the two ways a seller can limit buyer’s remedy?

Answer 40

(1) by limiting to a return of goods and repayment of purchase price
(2) by repair or replacement of non-conforming goods or parts

Question 41

For a remedy to be exclusive

Answer 41

parties must expressly agree it is; and it must be conspicuous

Question 42

when does an exclusive/ limited remedy fail?

Answer 42

Upon “failure of essential purpose”
exclusive/ limited remedy no longer applies; repeated unsuccessful attempts to repair
remedy up to buyer

Question 43

T/F consequential damages cannot be limited or excluded

Answer 43

F; they may be excluded unless such action would be unconscionable 2-615

Question 44

What are circumstances parties assume the risk of when contracting?

Answer 44

(1) increase/decease in market price of goods
(2) increase/decease in value of money
(3) increase/decease cost to manufacture and deliver goods or buyer’s difficulty in paying (bc reasonable person would be able to pay)

Question 45

What is a Force Majeure clause?

Answer 45

K provision excusing a party’s non-performance for certain events beyond parties’ control

In practice- should be custom to client needs bc they are strictly construed

Question 46

What happens when circumstances of a K change that were not included in the force majeure clause?

Answer 46

Parties can negotiate a modification only if in good faith
Bad news> parties are not required to agree to modification
Good news> no consideration required for agmt

Question 47

What would be the instances modifications need to be in writing?

Answer 47

(1) if there is a “no oral modification” clause; not good or bad until you know who wants to modify
(2) Statute of Frauds; if price is $500 or more
if mod price is less than $500> SOF no longer applies

Question 48

Elements of 2-613 Impossibility of performance due to damage/destroyed goods

Answer 48

(1) K requires for it’s performance goods identified when K is made
(2) goods are damaged/destroyed
(3) w/o fault of either party AND
(4) before risk of loss passes to buyer

Question 49

When are crops identifiable when being transacted?

Answer 49

when they are planted

Question 50

T/F future goods are covered by 2-613

Answer 50

false; goods covered under 2-613 must be (1) identified and (2) required (specifically)

Question 51

When is a nonperformance excusable by substitution?

Answer 51

Under 2-614
when method of delivery becomes unavailable or commercially impracticable; refers to “incidential matters” rather than matters essential to the agmt

Question 52

T/F there is a duty to provide substitute performance under 2-615 Impracticability of performance

Answer 52

T; duty to substitute only applicable under 2-614

Question 53

Elements of 2-615 Impracticability of performance

Answer 53

(1) performance is impractical
(2) because of the occurence of a contingency not assumed when K formed
(3) not due to seller’s fault
(4) and seller did not assume the risk of the occurance

performance is excused and not a breach as long as