CONTRACTS FINAL Flashcards
IMPLIED TERMS
What does UCC § 2-306(2) say is required for contracts for sale that deal with “exclusive dealings?”
imposes “best efforts”, meaning reasonable or dilligent effort
IMPLIED TERMS
UCC’s “Gap-Filling Provisions,” what are they and when are they implemented?
Matter of Law implied in contracts for the sale of goods UNLESS otherwise agreed by the parties. i.e., place of delivery, time of payment, risk of loss, buyer’s right of inspection.
WARRANTIES
Three types of warranties?
- express warranty
- implied warranty of merchantability
- implied warranty of fitness for a particular purpose
WARRANTIES
What is an express warranty and how are they created? (does not need to be merchant)
- a guarantee or affirmation that the goods conform to a stated fact or condition
- can be created by a description, which warrants that the goods will conform to the description, as well as a sample or model, which warrants that the goods will conform to the sample or model
WARRANTIES
Does an express warranty require specific language or need specific intent to create?
NO
WARRANTIES
“mere puffery,” and is it enough to create an express warranty?
NO, a form of an opinion or recommendation does not create an express warranty.
WARRANTIES
What is an implied warranty of merchantability and how are they created? (must be a merchant)
a) guarantees that the goods are merchantable
b) automatically created when the seller is a merchant of those goods
WARRANTIES
When are goods considered merchantable?
when they are fit for the ordinary purposes for which such goods are used
WARRANTIES
What is the implied warranty of fitness for a particular purpose and how are they created?
a) guarantees that the goods are fit for the buyer’s particular purpose
b) automatically created when the buyer relies on the seller’s skill or judgment to select suitable goods
c) seller must know of the buyer’s purpose and reliance
WARRANTIES
What is a disclaimer?
a limitation or negation for the warranty of the sale of goods
WARRANTIES
Two types of disclaimers?
- explicit disclaimers
- implicit disclaimers
WARRANTIES
What types of warranties can be explicitly disclaimed and how?
- express warranties: clear and reasonable words or conduct
- implied warranties of merchantability: explicit language, which may be spoken or written but must include the word “merchantability”
- implied warranties of fitness for a particular purpose: seller’s written language, must be conspicuous (cannot be in fine print)
WARRANTIES
What types of warranties can be implicitly disclaimed and how?
both types of implied warranties, by the…
a) language of the sale (“as is” or “with all faults”) OR
b) the buyer’s examination (or refusal to examine) of the goods
DEFENSES
Lack of capacity as a minor and the exception? (majority and minority views)
- contracts entered into by minors are voidable at the minor’s option
- EXCEPTION: contracts for necessaries (food, shelter, medical care) are often enforceable
1. MAJORITY: can disaffirm before reaching reaching the age of majority and for a reasonable time afterward. Must return product.
2. MINORITY: can disaffirm, but if they used, damaged, or depreciated the property, courts may require to compensate the other party for the loss in value. If adult party acted in good faith, court may limit ability to fully escape liability. When it’s a business transaction (buying a car, taking out a loan), courts expect more accountability, especially if they misrepresented their age.
DEFENSES
Lack of capacity because of mental illness or defect?
a) unable to reasonably underestand the nature and consequences of the transaction OR
b) if she is unable to reasonably act in relation to the transaction and the other party has reason to know of his condition
DEFENSES
Lack of capacity because of intoxication?
a) other party has reason to know that, by reason of intoxication, the party is unable to reasonably understand the nature and consequences of the transaction OR
b) is unable to reasonably act in relation to the transaction
DEFENSES
Duress?
may be asserted by a party whose assent was induced by an improper threat that was left no reasonable alternative
DEFENSES
What qualify as threats under duress?
- crimes and torts (expressed or implied through words or conduct)
- usually physical or economic
DEFENSES
Illegality?
may be asserted when their contract violates public policy
DEFENSES
Unconscionability and it’s two types?
- asserted by a party who has entered into an unconscionable, or unfair, contract.
1. procedurally unconscionable: results from a significant inequality of bargaining power between the two parties (signing party has no power to negotiate or modify, contract terms that are actively hidden)
2. substantively unconscionable: terms are overly harsh or one-sided
DEFENSES
Majority/Minority view on what types of unconscionability is required?
- MAJORITY: both procedural and substantative
- MINORITY: either procedural or substantative
DEFENSES
Misrepresentation?
a) assent induced by misrepresentation or untrue assertion (concealment or non-disclosure)
b) that was fraudulent or material (intended to induce the party’s assent and made by someone who knows or believes that the assertion is untrue or who isn’t confident that assertion is true)
c) as long as the party’s reliance on the assertion was justified (may not be an opinion or “mere puffery”, usually happens between relationships of trust i.e., real estate agent, or special skills i.e., termite inspector, or special reason i.e., illiteracy/unusual gullibility)
