CONTRACT SALES

Question 1

UCC Contract

Answer 1

Under the UCC, a contract is a total legal obligation that results form the parties’ agreement. In most instances, contract formation requires a bargain in which there is a manifestation of mutual assent to the exchange and also consideration, A valid contract is formed when there is an offer, an acceptance, and consideration.

Question 2

Sale

Answer 2

Under the UCC, a sale is a contract in which title to goods passes from the seller to the buyer for a price.

Question 3

Goods

Answer 3

Under the UCC, goods are all things that are movable at the time of identification to a contract for sale. Goods do not include regular cash or currency, but goods do include money being treated as a commodity. Goods also include the unborn young of animals and growing crops to be severed from land.

Question 4

Merchant

Answer 4

Under the UCC, a merchant, is a person who regularly deals in the type of goods involved in the transaction, or who through his occupation has specialized knowledge of the business practice involved.

Question 5

Good Faith

Answer 5

Under the UCC, good faith is honesty in fact and the observance of reasonable commercial standards of fair dealing

Question 6

Acceptance

Answer 6

Under the UCC, a definite and seasonable expression of acceptance in a record operates as acceptance, even if the acceptance contains new or different terms. If at least one party is not a merchant, additional or different terms are viewed os proposals to modify the contract; they will not be incorporated into the contract unless the offeror expressly agrees to the terms. If both parties are merchants, additional terms are incorporated into the contract unless: 1) the other party objects to the new terms within a reasonable time, 2) the terms materially alter the contract, or 3) the offer expressly limits acceptance to the exact terms of the offer.

Question 7

Statute of Frauds

Answer 7

Under the UCC, a contract for the sale of goods with a value of at least 500.00 is not enforceable unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker.

Question 8

Express Warranties

Answer 8

Under the UCC, express warranties by the seller to the immediate buyer are created by; 1) any affirmation of fact or promise that the goods will conform to the affirmation or promise, 2) any description of the goods which is made part of the basis of the bargain, or 3) any sample or model, if the buyer considers that fact to be part of the basis of the bargain.

Question 9

Warranties of Title and Against Infringement

Answer 9

Under the UCC, unless disclaimed or modified, every seller warrants that the title is good, the transfer of the goods is rightful, and that the goods will be delivered free from any liens or encumbrances of which the buyer is unaware at the time the parties entered into the contract. Similarly, every merchant warrant that goods will be delivered free of any infringement claims.

Question 10

Implied Warranty of Merchantability

Answer 10

Under the UCC, a merchant warrants in every contract that the goods are of a quality equal to that generally acceptance among those who deal in similar goods and are generally fit for the ordinary purposes for which such goods are used.

Question 11

Implied Warranty of Fitness For a Particular Purpose

Answer 11

Under the UCC, where 1) a seller has reason to know, at the time the parties entered into the contract, 2) that the buyer is buying the goods for a particular purpose, and 3) that the buyer is relying on the seller’s skill or judgment to furnish suitable goods, there is an implied warranty that the goods will be fit for such purpose. There is not requirement for this warranty that the seller is a merchant.

Question 12

Immediate Buyer

Answer 12

Under the UCC, an immediate buyer is a buyer that enteres into a contract with the seller.

Question 13

Remote Purchaser

Answer 13

Under the UCC, remote purchaser is a person that buys or leases goods from an immediate buyer or other person in the normal chain of distribution.

Question 14

Risk of Loss

Answer 14

Under the UCC, “risk of loss” is a concept that determines which party to a contract will pay for goods that are lost, stolen, damaged, or destroyed.

Question 15

Casualty

Answer 15

Under the UCC, “casualty” usually refers to any damage to goods without fault of either party.

Question 16

Installment Contracts

Answer 16

Under the UCC, an installment contract is a contract that requires or authorizes the delivery of goods in separate lots to be separately accepted, even if the contract contains a clause that states “each delivery is a separate contract” or its equivalent.

Question 17

Seller’s Remedies

Answer 17

Under the UCC, in case of the buyer’s breach of contract or insolvency ( i.e., the buyer’s failure to pay for the goods) the seller may withhold goods or stop delivery and reclaim the goods and sue for damages.

Question 18

Letter of Assurance

Answer 18

Under the UCC, when reasonable grounds for insecurity arise with respect to the performance of either party, the other may, in witting, demands adequate assurance of due performance; until he receives such assurance, the party can suspend any performance for a commercially reasonable time. Failure to provide assurance of due performance within 30 days is effective repudiation of contract.

Question 19

Repudiation

Answer 19

Under the UCC, when either party repudiates the contract with respect to a performance not yet due, the loss of which will substantially impair the value of the contract to the other, the non-repudiating party can: 1) wait for performance for a commercially reasonable time, 2) resort to remedy for breach, or 3) suspend performance