Contracts & Sales (Incl. UCC Art. 2) Flashcards
When a buyer of goods lawfully rejects a shipment for lateness, what is the correct measure of the buyer’s damages recoverable if buyer sues seller?
The difference between the market value of the goods and the contract price plus the lost profits as a result of rejecting the shipment.
If the parties to a sales contract do not set a specific time of performance for any obligation under the contract, the contract must be performed within thirty (30) days from the date the contract was formed?
False. If the parties to a sales contract do not set a specific time of performance for any obligation under the contract, the contract must be performed within a reasonable period of time.
Article 2 of the Uniform Commercial Code applies to the Sale of Goods and Services?
False. The UCC § 2-102 only applies to the sale of “Goods” as that term is defined by UCC § 2-105. It does not apply to the sale of “Services.”
Clothes are goods
Goods are
moveable, personal property.
When a buyer of goods accepts non-conforming goods, what measure of damages is he entitled to receive?
He may keep the non-conforming goods and recover damages for any loss resulting from the breach, including lost profits.
UCC § 2-714(1) and (3) together permit a buyer that has accepted non-conforming goods to keep the goods and to recover damages “for any loss” resulting from the breach, including lost profits.
In an installment contract, a late-delivered installment of goods can be rejected only when:
Because of the lateness, the value of the shipment was substantially impaired.
In an installment contract, late-delivered goods may be rejected only if the late delivery “substantially impairs” the value of the installment (UCC § 2-612(2))
Usage of Certain Terms in Sales Contracts
There are “terms of art” used in contracts for the sale of goods, and they are enforceable where the meaning of the term can be found in a usage of trade
Lateness - An installment contract
authorizes the delivery of items in separate lots over time. Late-delivered lots can be rejected only if the late delivery “substantially impairs” the value of the installment.
To rescind a contract based on fraud, there must be a
false statement of facts, positively made, not mere matters of erroneous opinions.
concealment to afford ground of rescission for fraud must be a
willful suppression of such facts in regard
to the subject–matter of the contract as the party making it is bound to disclose.
What is an express warranty?
an “affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain”
E.g. Describe the goods, promise facts about the goods,
showing a sample or model, but NOT an “opinion” or puffery/sales talk
Does “good quality ladder” create an express warranty?
No. The 4th Circuit has held: “good quality ladder” does NOT
create an express warranty.
Implied Warranty of Fitness for a Particular
Purpose - Definition and Key Facts
When the seller knows buyer has a special purpose and is relying
on seller to select suitable goods, there is unless disclaimed, an implied warranty that the goods shall be fit for such purpose
[Note: Seller does not have to be any kind of a merchant
at all!]
Implied Warranty of Merchantability - Definition and Key Facts
When a seller is a merchant who deals in goods of the kind being sold, there is unless disclaimed an implied warranty that the goods are fit for their ordinary purpose.
The implied Warranty of Merchantability arises even in
sale of a USED product.
For suing for breach of the implied warranty of merchantability and for breach of the implied warranty of fitness for a particular purpose, what must P do?
P bears the burden of proving breach and that the breach was the proximate
cause of the loss;
P must comply with §2-607(3)(a) by notifying D of the breach; AND
P must prove damages (under §2-714(2), i.e., the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted).
In VA, do warranties apply to leases of goods [UCC 2A], as
well as sales of goods?
Yes. In VA, warranties apply to LEASES of goods [UCC 2A], as
well as sales of goods.
What warranties can be disclaimed in Virginia? The use of phrases like “as is” “with all faults?”
A seller can disclaim implied warranties, but not express
warranties.
Unless the circumstances indicate otherwise, all implied warranties are excluded
by expressions like “as is,” “with all faults” or other language which in common understanding calls the buyer’s attention to the exclusion of warranties and makes plain that there is no implied warranty.
Revocation of acceptance [Va. Code 8.2-608] requires that
the nonconformity substantially impairs the value of the goods;
acceptance was reasonably induced by the difficulty of discovering the nonconformity before acceptance, or by the seller’s assurance to cure; AND
the buyer gave notice of revocation within a reasonable time after discovering the
nonconformity and before any substantial change of condition of the goods not caused by their own defects.
A minor who ostensibly enters into a contract can either
honor the deal or void the contract. Upon reaching age 18, he must act promptly to void the contract.
E.g. Feb 2021 bar exam - On turning 18 years old Joey told Derek he would
never get a penny from Joey. Thus, the contract is unenforceable because Joey lacked capacity when the agreement was made and, on attaining majority, promptly voided the contract.
Minors and the SOF
Virginia Code § 11-2 prohibits any agreement, without a written contract “[t]o charge any person upon a promise made after attaining the age of majority,
to pay a debt contracted during infancy, or upon a ratification after attaining the age of majority, of a promise or simple
contract made during infancy.”
Does the court have authority to award attorney’s fees?
The general rule (the American Rule) is that each side pays its own fees, unless otherwise provided by contract or statute, or in the Court’s discretion for fraud
What is a merchant?
One who deals in goods of the kind or by their occupation hold themselves out as having knowledge or skill peculiar to the goods involved in the transaction.
Under §8.2-207(2)(b) when terms materially alter the agreement BETWEEN MERCHANTS, they
do not become a part of the contract. Then, the Court should
apply the knockout rule to find that there is a contract, eliminating the inconsistent material terms. These terms are replaced with UCC gap-fillers.
https://law.lis.virginia.gov/vacode/title8.2/part2/section8.2-207/#:~:text=(1)%20A%20definite%20and%20seasonable,assent%20to%20the%20additional%20or
Terms materially alter the agreement if
there is hardship through significant shifting of the burden or surprise.
