Contracts/Sales

Question 1

The UCC applies to:

Answer 1

The sale of goods, which are all things movable at the time of identification to the contract for sale

July 2017

Question 2

What may be used to interpret arguably ambiguous contract terms in a UCC contract?

Answer 2

In descending order:
1. Course of performance
2. Course of dealing
3. Trade usage

Question 3

When may trade usage be used as a method of interpretation in a UCC contract?

Answer 3

Where those terms are generally accepted in trade usage and such terms should be reasonably understood by the parties

Question 4

What is an installment contract?

Answer 4

A contract that authorizes the delivery of goods in separate shipments

Question 5

When may a party reject non-conforming (e.g., late-delivered) goods in a shipment?

Answer 5

Only if the late delivery (or non-conformity) substantially impairs the value of the goods

Question 6

When may a party cancel an entire installment contract based on a non-conforming shipment?

Answer 6

When the value of the entire contract is substantially impaired

Question 7

What is required for a buyer to reject a shipment in an installment contract?

Answer 7

They must: (1) reject within a reasonable time after delivery; and (2) give seasonable notice to the breaching party

Question 8

What damages is a buyer entitled to for rejection of non-conforming goods?

Answer 8

The difference between market value of the goods and K price PLUS lost profits

Question 9

What is required to recover lost profits?

Answer 9

The seller must have reason to know of the lost profits that will be occurred by the buyer

Question 10

What is a buyer’s duty when recognizing goods will be late or are non-conforming?

Answer 10

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

Question 11

What is the warranty of title?

Answer 11

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

Question 12

What are a seller’s rights if they deliver goods to an insolvent buyer on credit?

Answer 12

Seller may reclaim the goods upon demand made within 10 days after the receipt

Question 13

Virginia (does/does not) require written authorization of an agent, even when the underlying contracts falls within the statute of frauds

Answer 13

Does NOT (different from UCC)

Feb 2015

Question 14

How are contracts to be construed when there is an ambiguity?

Answer 14

Against the party who drafted the contract

July 2016

Question 15

What is the SOL for property damage for sales Covered by UCC?

Answer 15

4 years from accrual

July 2016

Question 16

When does an action “accrue” for SOL purposes?

Answer 16

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

Question 17

What must a buyer do to notify seller of objections in sales contract?

Answer 17

Notify them that the transaction was “troublesome”

Feb 2017

Question 18

When does a buyer accept goods?

Answer 18

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

Question 19

May a buyer seek relief of revocation of acceptance and money damages in the same suit under the UCC?

Answer 19

Yes–no longer required to elect between remedies of money damages and revocation of acceptance

July 2018

Question 20

When may a buyer revoke acceptance under the UCC for non-conforming goods that he has taken possession of?

Answer 20

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

Question 21

When is the right to revoke cut off by acceptance?

Answer 21

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

Question 22

What MUST the buyer do when he discovers a breach?

Answer 22

Notify seller within reasonable time after he discovers/should have discovered breach, or else barred from any remedy

July 2018

Question 23

To whom does a warranty extend to in VA?

Answer 23

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

Question 24

What damages is one entitled to for breach of implied warranty of merchantibility?

Answer 24

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

Question 25

When are punitive damages permitted?

Answer 25

Where conduct is willful or wanton, or such recklessness as evinces a conscious disregard for the safety of others

July 2018

Question 26

What is the doctrine of mutual mistake?

Answer 26

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

Question 27

What is the doctrine of unilateral mistake and when is K voidable?

Answer 27

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

Question 28

What must a party show to establish a breach of the implied warranty of merchantability?

Answer 28

(1) Existence of warranty; (2) breach of warranty; (3) breach was proximate cause of loss

Question 29

How may implied warranty of merchantability be disclaimed?

Answer 29

In a conspicuous writing that MENTIONS MERCHANTABILITY or by “as is” or “with all faults” language

FREQUENT

Question 30

How may an implied warranty of fitness for a particular purpose be disclaimed?

Answer 30

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

Question 31

Hypo: A sells car to B and falsifies records, then B sells to C–how may C recover from A under the UCC?

Answer 31

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

Question 32

Where is an action in quantum meruit applicable?

Answer 32

When a contract is not enforceable, but D received valuable services from P for which he was not compensated

Question 33

What writing will satisfy the statute of frauds?

Answer 33

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)

Question 34

What is the Merchant’s Confirmatory Memo rule?

Answer 34

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

Question 35

What is the doctrine of part performance?

Answer 35

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