Contracts Pt. 3 Flashcards
T/F: under common law, consideration is needed to make an offer irrevocable
True; however, there is a limited exception to this rule that only arises under the UCC - merchant’s firm offers
What is a merchant’s firm offer?
an offer that is irrevocable without consideration; it is irrevocable for the time stated, or if no time is stated, no longer than 3 months
to qualify as a merchant’s firm offer: the seller must be a merchant, the offer must be in writing and signed by the merchant, and the offer must give assurances that it will be kept open for a certain time
T/F: under common law contracts, the terms of an acceptance must mirror the terms of the offer or there is no contract (just a counteroffer)
True; however, under the UCC this is not the case; an acceptance will be effective even if it states new or different terms; they are generally ignored unless the contract is between merchants, in which case, the terms of acceptance control unless the offeror objects or the changes are material
T/F: under the UCC, a shipment of nonconforming goods is both an acceptance and a breach of contract
True; if the seller reasonably notifies the buyer that nonconforming goods are shipped only as an accommodation to the buyer, the shipment is not an acceptance (it is a counteroffer)
T/F: the UCC statute of limitations is 4 years
True; an action must be brought within 4 years from the time the contract was breached
T/F: contracts for the sale of goods for $500 or more must be evidenced by a writing signed by the party being sued
True; however, there are 4 exceptions to this rule (SWAP): specially manufactured goods, written merchant’s confirmatory memo, admission in court, and performance
Under the common law, the writing must include all essential terms, but under the UCC…
…terms may be omitted; all that is required is the quantity and signature
T/F: the UCC is more lenient in that a contract will be discharged for mere impracticablility
True; it doesn’t have to be impossible to perform like under contract law; as long as it is now more burdensome than anticipated due to an unforeseen event
What is the difference between a merchant seller and a nonmerchant seller when it comes to risk of loss (this is for noncarrier cases)?
nonmerchant seller - risk of loss passes to the buyer upon the seller’s tender of delivery of the goods to the buyer
merchant seller - risk of loss passes only upon actual delivery to the buyer (when buyer takes physical possession)
When a common carrier is involved, when is the risk of loss transferred?
shipment contracts (f.o.b. shipping point) - risk of loss passes to the buyer when the goods are delivered to the carrier
destination contracts (f.o.b. destination) - risk of loss passes to the buyer when the goods reach the destination and seller tenders delivery
f.o.b. = free on board
T/F: if the seller sends nonconforming goods, the risk of loss remains on the seller regardless of the shipping terms
True; unless the buyer accepts the defective goods
What are the 4 warranties that all goods must conform to?
express warranties
implied warranty of title
implied warranty of merchantability
implied warranty of fitness for a particular purpose
What is an express warranty?
it states that the goods will conform to the statement of fact, to the description, or to the sample/model
it can be made by any seller and can be oral or written; the statement must involve facts; the UCC requires that it be made at a time when it could have played some part in the buyer’s decision to buy
What is implied warranty of title?
implies that the seller has good title and has the right to transfer that title (also implies that there are no encumbrances - unstated liens or attachments on the goods; if the seller is a merchant, it also implies that the goods do not infringe on any patent/trademark)
What is implied warranty of merchantability?
implies that the goods are fit for ordinary purposes (need not be in writing or oral); this only applies to sales made by merchants; merchantability can be disclaimed by a statement that the goods are sold “as is” or “with all faults”
