Cross Border Sales Flashcards
Mid Term
Canadian Sales of Goods Act: Goods
Chattels other than (1) things in action and money; (2) things attached/forming part of the land which are agreed to be severed under the contract of sale and services, or (3) services.
a. Lee v. Griffin : The test was whether the result of the contract would be the sale of chattel.
b. Isaacs v. Hardy: Some cases the substances of the contract is the materials and the work is ancillary or vise versa.
c. Robinson v. Graves: if the primary object of the contract is for property that was not originally the property of the buyer, the contract will be for the sale of goods, but if the primary purpose is the performance the provision of tasks, with goods incidental, the contract will for services.
Canadian Sales of Goods Act: 1. Things in Action and Money
I.E. debts and shares. These things are not tangible movables. Although money is tangible it is not a good unless the currency is used as a collectible
Canadian Sales of Goods Act: 2. Things From Land
Considered fructus naturales, (natural products of the land) are not goods because they are not capable of being sold under a contract as a good unless they are severed from the land. Land and buildings attached are not goods. When severed from the land they become goods. Fructus industrials (things that come from the land) are sold as goods.
Canadian Sales of Goods Act: 3. Service Contracts
can include the transfer of goods, where services are involved in producing the good. Is it a service or goods contract? The Act attaches conditions to a contract for goods and not for services. I.E., conditions in the Act as to quality do not apply to a contract for services.
Canadian Sales of Goods Act: Consideration
Consideration for a contract for the sale of goods must be money. If Consideration is for other goods the contract is one of barter or exchange. Specific provisions of the act cannot apply to barters.
UCC Mixed Contract
If goods predominate the contract, the UCC governs, but if the predominant assets are services, common law applies.
UCC Goods
Goods = all things (including specially manufactured goods) which are moveable at the time of identification of the contract for sale other than money in which the price is to be paid, investment securities and things in action.
UCC Bartering 2-304
The price can be made payable in money or otherwise. If it is payable in whole or in part in goods each party is a seller of the goods which he is to transfer.
UCC Formation in General 2-204
(1) A contract for goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract
(3) even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy
Firm Offers 2-205
A limited exception to the common law rule that firm offers require consideration. Firm offers are binding even in the absence of consideration if the offeror is a merchant and the offer is in writing. The firm offer is only open for a reasonable time if not time is stated in the offer. In no event, would such a firm offer remain irrevocable for longer than three months.
Offer and Acceptance in Formation of the Contract
Offers to make sales contract may be accepted in any manner and by any medium reasonable under the circumstances. When a buyer offers to purchase goods for immediate shipment, the seller may accept either by shipping or by promising to ship. A shipment of non-conforming goods will count as an acceptance, unless the seller specifically indicates that the non-conforming shipment is offered merely as an accommodation to the buyer (in which case the shipment would constitute a counteroffer)
UCC Battle of the Forms
Rejects the mirror image rule. Often leads to a contract being formed where offer and acceptance diverge.
i. (1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states te`rms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
ii. (2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:
1. (a) the offer expressly limits acceptance to the terms of the offer;
2. (b) they materially alter it; or
3. (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
a. At least one party is a merchant: if at least one party is not a merchant, the additional term does not prevent the offeree response from giving rise to a contract, but the additional term becomes part of the contract only if the offeror explicitly assents to it.
iii. (3) Conduct by both parties recognizing contract establishes a contract although the writings of the parties do not establish a contract. The terms of the contract consist of those terms on which the writings agree, together with any supplementary terms incorporated under any other provision of this Act
1. Apply this section if there is no K and fail section 1. Only the terms upon which the parties agree will become part of the valid contract.
2. 1-205(1). Course of dealing: a sequence of previous conduct between the parties to a particular transaction which is to be regarded as establishing a common basis of understanding for interpreting their expression conduct.
3. Belden v. American Electronic When a contract is formed under 2-207(3) the terms consist of the standard gap fillers provisions of the UCC as well as sections relating to course of performance, course of dealing and trade usage.
- The Court here found that most cases involving the repeated exchange of forms does not establish a course of dealing sufficient to incorporate the terms of those forms into the contract. Course of dealings after the transaction does not establish a course of dealings. If the term at issue had been used in the past, it would establish a course of dealings, but since the limitation of liability clause had not been used in the past, e.o it was included in the contract, it does not create a course of dealings
UCC 2-207 Comment 4 and 5
gives examples of material and non-material additional terms. Much will depend on whether the additional term is common in the buyers and sellers industry.
UCC Knock-Out Rule
Remove conflicting terms and use the UCC gap fillers
UCC Common Law Mirror Image Rule
The terms of the acceptance must mirror the terms of the offer in order to have a valid contract.
UCC Last Shot Doctrine
When parties proceed to perform on a contract that would otherwise be invalid because the terms of the acceptance do not mirror the terms of the offer (they would otherwise be considered a counteroffer). The most recent terms control.
Transactions where people pay before receiving the terms are valid - Hill v. Gateway
A contract does not need to be read to be effective, people who accept take the risk that the unread terms may in retrospect be unfavorable. Practical considerations support allowing vendors to enclose full legal terms within their products. Cashiers cannot be expected to terms to customers before the sale. Shoppers have multiple ways to discover the terms before they buy the product. By keeping the computer for the 30 days, the plaintiffs accepted the contract and are bound by the arbitration provision within.
Carnival Cruise Lines
Forum-selection clauses included among the terms attached to the cruise ship tickets are enforceable
ProCD
ProCD: Terms inside a package bind customers who use the product after they’ve had an opportunity to read and reject them (by returning it). Vendors are masters of the offer and invite acceptance by conduct. A buyer may accept by performing the acts proposed by the vendor
Ways Buyers use purchase orders
(i)The offer to the seller. (ii) Used to confirm an oral agreement that has already been reached: The buyers purchase order and the sellers’ invoice/acknowledgment will usually be standard form documents that include boilerplate terms
Open Account Sale
the seller checks the buyers credit. If the buyer’s credit is satisfactory, the seller will forward the buyers order to the shipping department which will then ship the goods to the buyer with a written invoice.
International Law Contract Formation Application of the CISG
Applies to contracts for the sale of goods between parties from different states who adopted the CISG. Under A6 parties can exclude its application. In order for the contract to exclude the CISG it must include language which affirmatively states that the CISG does not apply.
- Rosier Technologies, CSN attempted to exclude the CISG in its standards conditions, which stated that “… shall exclusively be governed by German Law. Laws on international sales of moveable objects and on international purchase contracts on moveable objects is excluded” This attempted exclusion was ineffective. It does not explicitly reference the CISG. The CISG does not use the term moveable objects
CISG deals with the battle of the forms different than the UCC
- Article 19(1): purported acceptances containing additions/modifications are not acceptances, they are counteroffers.
- 19(2): Purported acceptances containing additional/different terms are valid acceptances as long as the new terms are not material alterations and the offeror does not object to the discrepancy without undue delay. To add a terms the other party needs to be aware and acknowledge
CISG Material Alteration
- additional or different terms relating, to the price, payment, quality, and quantity of the goods, place and time of delivery, extent of one party’s liability or the settlement of disputes
CISG Acceptance containing materially different terms
with conduct by both sides that indicates a contract, the CISG uses the last shot rule.
- 18(1) the original offeror proceeding to perform under the contract would constitute conduct by which the original offeror will be deemed to have accepted the counteroffer.
- 18(2) acceptances are effective only when actually received by the offeror, not when they are sent to the offeror
Master Agreement
signed by a buyer and seller at the beginning of on-going sales relationship, to outline terms and conditions of each subsequent sale. Subsequent sales are conducted without the benefit of individual signed writings and often it will specify that both parties agree to waive their ability to assert the statute of frauds as a bar to enforceability.
Statute of Frauds
Most contracts need to be in writing to be legally enforceable. Requirements: (1) a writing; (2) signature; (3) sufficient evidence of the contract
UCC 2-201 SOF Formal Requirements
(1) a contract for the sale of goods for the price of $500 or more is not enforceable unless there is a writing sufficient to indicate a contract and signed by the party against whom enforcement is sought. A writing is not insufficient because it omits or incorrectly states a term agreed upon.
UCC 2-201(2) SOF Requirements between Merchants
(2) Between merchants, within a reasonable time, a writing to confirm the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection to its contents is given within 10 days after it is received.
- General Trading Int’l v. Wal-Mart Stores: A writing indicating only a tentative agreement or ongoing negotiations does not satisfy the requirements of UCC § 2-201(2).
SOF 2-201 (3) A contract that does not satisfy (1) but is valid in other respects is enforceable if:
(a) specially manufactured goods for the buyer not suitable for sale in the ordinary course of the seller’s business and the seller…has made either a substantial beginning of their manufacture or commitments for their procurement; or
(b) if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or
(c) with respect to goods for which payment has been made and accepted or which have been received and accepted.
- DF Activities Corp v. Brown: Brown submitted a sworn affidavit denying that she formed a contract to sell the chair with Briggs. When a defendant raises a statute of frauds defense and submits a sworn affidavit denying the formation, the plaintiff may not seek additional discovery to attempt to gain an admission.
SOF Canadian Law
recognizes the validity of a contract under seal or by implication by parties conduct. In Ontario future performance needs a writing. 10 day cooling off period where the consumer can repudiate without a penalty.
30/93
SOF Canadian Law
recognizes the validity of a contract under seal or by implication by parties conduct. In Ontario future performance needs a writing. 10 day cooling off period where the consumer can repudiate without a penalty.
Warranties
A key feature of any sales transaction is ensuring that the goods being purchased will work in the way they are supposed to.
UCC Warranty of Merchantability 2-314
(1) Unless excluded or modified (Section 2-316), a warranty that the goods shall be merchantable is f the seller is a merchant with respect to goods of that kind.
(2) Goods to be merchantable must be at least such as
(a) pass without objection in the trade under the contract description; and
(b) in the case of fungible goods, are of fair average quality within the description; and
(c) are fit for the ordinary purposes for which such goods are used; and
(d) run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; and
(e) are adequately contained, packaged, and labeled as the agreement may require; and
(f) conform to the promise or affirmations of fact made on the container or label if any.
(3) Unless excluded or modified (Section 2-316) other implied warranties may arise from course of dealing or usage of trade
- Phillips v. Cricket Lighters: § 2-314 must be applied to determine whether a lighter is fit for its ordinary purpose. Merchantability does not require that the goods be the best quality, but it does require that they have an inherent soundness which makes them suitable for the purpose for which they are designed. A claim for the breach of an implied warranty of merchantability will not stand if the good was used for an improper purpose that does not constitute an ordinary use. Ordinary is most often defined as common. Punitive damages will only be awarded if the plaintiff has presented sufficient evidence to prove that the defendant acted with a purposeful or reckless disregard for others.
Extension of UCC Merchantability Warranty 2-218
the warranty extends to any natural person who is in the family or household of his buyer or who is a guest in his home if it is reasonable to expect that such person may use, consumer, or be affected by the goods and who is injured by a person by breach of the warranty.
Exclusion or Modification of Warranties 2-316
to exclude the warranty the language must mention merchantability and must be clear. The implied warranty will be excluded with the words “as is” “with all fault” or other language with common understanding to make clear there is no implied warranty. There is no implied warranty if the buyer has thoroughly inspected the goods or refused to inspect.
Warranty of Fitness for Practical Purposes 2-315
Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select suitable goods, unless excluded or modified, there is an implied warranty that the goods shall be fit for such purpose.
- Leal v. Holtvogt: The Leals testified that they did in fact rely on these representations. The Leals testified that they purchased the horse for the purpose of breeding it. The implied warranty was, therefore, breached because the horse was lame, the Holtvogts knew that the leas wanted to purchase the horse for breeding, the Holtvogts should have known the Leals would rely on their representation. Horse breeders don’t want a lame horse
Two Major Warranty Issues
(1) sellers place outside time limits on warranties, but buyers who resell do not want time limits to begin until their resale; (2) resellers do not like to give greater warranties than they’re getting.
- Buyers who resell are careful to ensure that the warranties that they give to buyers are no greater than warranties they receive from their sellers
