Contracts/Sales Flashcards
The UCC applies to:
The sale of goods, which are all things movable at the time of identification to the contract for sale
July 2017
What may be used to interpret arguably ambiguous contract terms in a UCC contract?
In descending order:
1. Course of performance
2. Course of dealing
3. Trade usage
When may trade usage be used as a method of interpretation in a UCC contract?
Where those terms are generally accepted in trade usage and such terms should be reasonably understood by the parties
What is an installment contract?
A contract that authorizes the delivery of goods in separate shipments
When may a party reject non-conforming (e.g., late-delivered) goods in a shipment?
Only if the late delivery (or non-conformity) substantially impairs the value of the goods
When may a party cancel an entire installment contract based on a non-conforming shipment?
When the value of the entire contract is substantially impaired
What is required for a buyer to reject a shipment in an installment contract?
They must: (1) reject within a reasonable time after delivery; and (2) give seasonable notice to the breaching party
What damages is a buyer entitled to for rejection of non-conforming goods?
The difference between market value of the goods and K price PLUS lost profits
What is required to recover lost profits?
The seller must have reason to know of the lost profits that will be occurred by the buyer
What is a buyer’s duty when recognizing goods will be late or are non-conforming?
The buyer has a duty to mitigate by obtaining goods elsewhere and selling them (i.e., “cover”)
* Where seller continues to make assurance of delivery/fulfillment of K, cover not required
What is the warranty of title?
Any seller of goods warrants that the title transferred is good (arises automatically)
* If breached, put nonbreaching party in position they would have been in had breaching party not committed breach (i.e., value of sales K)
July 2015
What are a seller’s rights if they deliver goods to an insolvent buyer on credit?
Seller may reclaim the goods upon demand made within 10 days after the receipt
Virginia (does/does not) require written authorization of an agent, even when the underlying contracts falls within the statute of frauds
Does NOT (different from UCC)
Feb 2015
How are contracts to be construed when there is an ambiguity?
Against the party who drafted the contract
July 2016
What is the SOL for property damage for sales Covered by UCC?
4 years from accrual
July 2016
When does an action “accrue” for SOL purposes?
The date of injury or breach (not from time P discovered harm or reasonable person would have discovered)
* In breach of warranty, breach normally occurs upon tender of delivery; however, when it extends to future performance discovery of breach must await at time of performance
July 2016
What must a buyer do to notify seller of objections in sales contract?
Notify them that the transaction was “troublesome”
Feb 2017
When does a buyer accept goods?
When:
(1) After reasonable opportunity to inspect signifies that the goods are conforming or buyer will accept despite nonconformity
(2) Fails to make effective rejection, but acceptance does not occur until buyer has had reasonable opportunity to inspect
(3) Does any act inconsistent with seller’s ownership (but seller may ratify)
Feb 2017
May a buyer seek relief of revocation of acceptance and money damages in the same suit under the UCC?
Yes–no longer required to elect between remedies of money damages and revocation of acceptance
July 2018
When may a buyer revoke acceptance under the UCC for non-conforming goods that he has taken possession of?
If nonconfrmoity substantially impairs the value of the goods, acceptance was reasonably induced by difficulty of discovering nonconformity before acceptance (or by seller’s assurances to cure), and buyer gives notice within reasonable time after discovering nonconformity and before any substantial change not caused by existing defects
July 2018, Feb 2021
When is the right to revoke cut off by acceptance?
When:
1. After reasonable opportunity to inspect goods, buyer indicates to seller that goods conform or that they will keep goods even though they fail to conform
2. Fail to reject within reasonable time after tender/delivery or fail to seasonably notify seller of rejection OR
3. Do any act inconsistent with the seller’s ownership
July 2018
What MUST the buyer do when he discovers a breach?
Notify seller within reasonable time after he discovers/should have discovered breach, or else barred from any remedy
July 2018
To whom does a warranty extend to in VA?
No need for privity; instead, warranty extends to one whom manufacturer/seller might reasonably have expected to use, consume, or be affected by the goods
July 2018
What damages is one entitled to for breach of implied warranty of merchantibility?
Expectation damages (difference b/w goods as warranted and accepted) plus incidental and consequential damages
* Can get cover if they haven’t accepted the goods
July 2018
When are punitive damages permitted?
Where conduct is willful or wanton, or such recklessness as evinces a conscious disregard for the safety of others
July 2018
What is the doctrine of mutual mistake?
If both parties entering into a contract are mistaken about existing facts relating to the agreement, K may be voidable by adversely affected party if:
(1) Mistake concerns a basic assumption on which K is made
(2) Mistake has material effect on agreed-upon exchange; AND
(3) Party seeking avoidance did not assume risk of the mistake
Sept 2020, July 2021
What is the doctrine of unilateral mistake and when is K voidable?
Generally, if only one of the parties is mistaken about facts relating to the agreement, mistake will not prevent formation of K
* If nonmistaken party knew or had reason to know of the mistake made by the other party, K voidable by mistaken party (need impact on basic assumption of the contract)
July 2021
What must a party show to establish a breach of the implied warranty of merchantability?
(1) Existence of warranty; (2) breach of warranty; (3) breach was proximate cause of loss
How may implied warranty of merchantability be disclaimed?
In a conspicuous writing that MENTIONS MERCHANTABILITY or by “as is” or “with all faults” language
FREQUENT
How may an implied warranty of fitness for a particular purpose be disclaimed?
In a conspicuous writing (e.g., “there are no warranties which extend beyond the description on the face thereof,” BUT NOTE not sufficient for merchantability) OR by “as is” language
FREQUENT
Hypo: A sells car to B and falsifies records, then B sells to C–how may C recover from A under the UCC?
Through fraud in the inducement, which is available under UCC and requires showing: (1) intentional misrepresentation of material fact not discoverable by reasonable inspection; (2) intent to defraud; (3) reliance; (4) detriment; and (5) damages
Feb 2021
Where is an action in quantum meruit applicable?
When a contract is not enforceable, but D received valuable services from P for which he was not compensated
What writing will satisfy the statute of frauds?
A writing that: (1) reasonably identifies the subject matter of the contract; (2) is sufficient to indicate that a contract exists; and (3) states with reasonable certainty the material terms of the contract (for UCC, this is quantity term)
What is the Merchant’s Confirmatory Memo rule?
In a contract between merchants, if one party, within a reasonable time after oral agreement has been made, sends to the other party a written confirmation of the understanding that is sufficient under SOF to bind sender, it will also bind recipient if: (1) they have reason to know of the confirmation’s contents; and (2) they do not object to it in writing within 10 days of receipt
July 2022
What is the doctrine of part performance?
It takes sale of goods K out of SOF when: (1) goods have been specially manufactured or (2) goods have been either paid for or accepted
July 2022
