Contracts & Sales (II)

Question 1

Under Sales Article of UCC, what is true about “Title to Goods” and “Risk of Loss” under a Sales or Return contract?

Answer 1

Title and risk rest with buyer, until goods are actually returned to the seller.

Question 2

Express warranty – what does it basically mean?

Answer 2

That goods will conform to a seller’s promise.

Question 3

What = good faith requirement that must be met by a merchant?

Answer 3

Merchant must observe REASONABLE COMMERCIAL STANDARDS of fair dealing in the trade.

Question 4

What is a Merchant Firm offer?

Answer 4

Sale of goods, seller is a Merchant, offer is in writing and signed by merchant, words of firmness (EG language of keeping offer open regardless of ANY consideration)=

Minimum 3 Months

Question 5

When can contracts ignore UCC requirement for Quantity term?

Answer 5

In an output contract, or EG a contract designed to promise that buyer will buy all output of Seller.

Question 6

Statute of fraud requires writing for goods of $500+ in all cases EXCEPT…

(hint: SWAP)

Answer 6

S-specially manufactured or custom goods
W-written confirmation previously having occurred between merchants
A- Admission in court
P- Partial performance

Remember, if a fact pattern falls under “SWAP”, there can be no remedy claimed under the Statute of Frauds.

Question 7

FOB “destination” or similar term

or

“DESTINATION CONTRACT”

Answer 7

SELLER is assuming risk of loss during shipping

transfer upon arrival at destination

Question 8

FOB “shipping” or similar term

or

“SHIPMENT CONTRACT”

Answer 8

BUYER assumed Risk of loss during shipping

transfer once goods hit Common Carrier for shipping

Question 9

Under UCC, what is the Warranty of Title?

Answer 9

The Warranty of Title is a guarantee FROM seller, that goods are delivered free of ALL liens from which the buyer is UNAWARE OF.

Question 10

when will a tort action for STRICT product liability succeed?

Answer 10

1) product was defective when it left seller’s hands
2) defect CAUSED plaintiff’s injury
3) the defect made the product UNREASONABLY dangerous
4) seller was in the BIZ of selling this type of goods
5) product reached user WITHOUT substantial change in condition it had left the warehouse

**no NEGLIGENCE necessary on part of seller, when it comes to recovering under strict prod. liability*

Question 11

Under UCC, the seller’s BASIC obligation to the buyer unless otherwise stated/elaborated…

Answer 11

Hold conforming goods, give buyer whatever notification is REASONABLY necessary to enable buyer to take delivery.

Question 12

Under UCC, what are ONLY liquidation damages available?

Answer 12

The lesser of a $500 deposit or 20% of purchase price.

Question 13

Buyer materially breaches a contract. Seller can do what?

Answer 13

Cancel contract; sue to recover damages

Question 14

When does Implied Warrant of Merchantability take hold?

Answer 14

Implied warrant of merchantability applies to EVERY sale by a merchant who deals in goods of the kind being sold

It is an implied warranty that the goods are fit for ORDINARY purpose.

NO WRITING or ORAL PROMISE required!! (Happens automatically thru course of sale)

Can be DISCLAIMED by seller, if they ORALLY mention merchantability

Question 15

When does Risk of Loss pass in non-carrier cases?

Answer 15

R.o.L. passes from Merchant–>Seller on ACTUAL DELIVERY of goods into the buyer’s possession, for non-carrier cases

Question 16

UCC Sales article – does it matter the price of goods?

Answer 16

NOPE.

It applies regardless. The $500+ purchases are the ones covered, under the Statute of Frauds.

Question 17

Implied Warranty of title – what is it, and what does it do?

Answer 17

Implied in EVERY sales contract… this is the warranty that the seller has GOOD TITLE and RIGHT TO TRANSFER said title.

Implies that there are no Liens or Encumbrances on the goods.

General disclaimers of “As is” made by merchants as blanket statements, are not enforceable under contract law.

Question 18

“Written Confirmation” exception in SWAP – what makes it work?

Answer 18

The seller must FAIL to object to the written confirmation as received by buyer.

No SELLER signatures are necessary to enforce.

Question 19

What does shipment of nonconforming goods constitute?

Answer 19

Both an acceptance of contract AS WELL AS a breach!!

unless notice of accommodation is sent, prior

Question 20

Implied warranty of fitness for a particular purpose MEANS –

Answer 20

You are counting on the seller to choose goods APPROPRIATE for your purpose, and send to you

Question 21

What does “Tender of Delivery” mean?

Answer 21

Tender of delivery refers to an offer of goods by a seller to a buyer, by putting or holding them at the disposition of the buyer and giving the buyer some notification reasonably necessary for taking delivery.

EG: Renato has paid me for my bike. Im saying, “Come get it”. Right now it is his resp. to get it within reasonable time/means because I have Tendered delivery.

Question 22

What can you recover under oral contracts for specially made goods (within the exception that is within Statute of Frauds?)

Answer 22

FULL contracted price for the obj., plus any storage or holding fees.

EG: even if you complete $90K out of the $120K worth of work, you are entitled to sue for $120K.

Question 23

Rejected goods?

Answer 23

Title passes back to Seller upon rejection of non-conforming goods

Question 24

What rights does a seller have when Anticipatory Repudiation occurs?

Answer 24

EG: buyer who contracted says “Actually I can’t pay”

Immediate breach – non-breaching party now has several options of recovery

INCL: suing for diff. in new contracts of goods (EG only receiving $5 per bushel, after broken contract was $6, sue for that recovery)

Question 25

UCC does not follow “Mirror Image Rule”. What does this mean in practical terms?

Answer 25

Anything that looks like acceptance will OPERATE AS acceptance, even if it includes new terms

“eg.. we accept the offer, and you must weigh your goods on this scale”

operates as acceptance, and use of that scale would be considered an Implied Condition.

Question 26

What is “Fair Use” in copyrights law?

Answer 26

The right of NON-copyright holders to do things like teach the book in class, etc.

Question 27

Patent law: which is 14 yrs, which is 20?

Answer 27

14 yrs - designs

20 yrs - Machines, inventions

Question 28

What must you do to obtain a patent (The 3 things you must show)

Answer 28

Novel, Useful, and Not obvious to those already working in the field

Question 29

What is an express warranty?

Answer 29

Basically the goods conform to what they are being described as.

“Express warranties are specific promises made by the seller and include oral representations, written representations, descriptions of the goods or services, representations in samples and models, and proof of prior quality of the goods or services. “

Question 30

Risk of loss passes to buyer (when no other terms are stated).. WHEN?

Answer 30

When the goods are delivered to carrier.

Question 31

Death of an offeror, prior to an acceptance?

Answer 31

Terminates that offer by operation of law.

Question 32

What does Duress focus on?

Answer 32

Whether the improper actions (EG threats, actual violence) actually induced the purchaser into making the contract.

Question 33

To prevail in a case against innocent misrepresentations, what must those innocent misrepresentations apply to?

Answer 33

Material Facts

Question 34

What shows scienter?

Answer 34

Misrepresentation with reckless disregard for truth satisfies the “intent” or “scienter” element of Fraud

Question 35

What happens when contract passes stage of statutes of limitation?

Answer 35

Passing of phase BARS ACCESS to judicial remedies.

Question 36

What is needed in terms of Reasonable Notice of Accomodation provided to buyers?

Answer 36

needed in ADVANCE of the purchase…

not simultaneous (or obvs. after) the purchase.