Default Provisions

Question 1

1. What are gap fillers

Answer 1

Default provisions used to fill in the gaps when a contract doesn’t address the matter

Question 2

What are the UCC implied warranties?

Answer 2

1. warranty of title
2. warranty of merchantability
3. warranty of fitness for a particular purpose

Question 3

What is warranty of title?

Answer 3

That the merchant has:
1. good title to the goods
2. the right to transfer the goods
3. no liens are attached to the goods

Question 4

How can the warranty of title be excluded or modified?

Answer 4

Warranty of title can be excluded or modified by:
1. specific language
2. circumstances that give buyer reason to suspect seller doesn’t claim unencumbered title

Question 5

What is warranty of merchantability?

Answer 5

Goods are fit for their ordinary purposes for which those goods would be used

Question 6

When is warranty of merchantability applicable?

Answer 6

Applies only when seller is a merchant

Question 7

How can warranty of merchantability be disclaimed?

Answer 7

Warranty of merchantability can be displaced by:
1. specific use of the word “merchantability” and conspicuousness if in writing
2. Any other langue or circumstances that would be reasonably understood by a buyer to exclude the warranty, including if the goods are labeled “as is” or have patent defects

Question 8

What is warranty of fitness for a particular purpose?

Answer 8

Goods are fit for the particular purpose buyer intends to use them for

Question 9

When is warranty of fitness for particular purpose applicable?

Answer 9

Warranty is only applicable when, at the time of contracting, the seller has reason to know
1. the particular purpose for which the goods are required AND
2. buyer is relying on the seller’s expertise to select reasonable goods

Question 10

When is warranty of fitness for particular purpose disclaimed?

Answer 10

Warranty is negated when:
1. disclaimer is written, clear and conspicuous
2. goods have a patent defect which was easily detectable

Question 11

What are express warranties?

Answer 11

Assurance that goods will conform to some standard that arises when seller expressly makes them as part of the basis of the bargain

Question 12

How may a seller make an express warranty?

Answer 12

1. any description of the goods
2. any sample or model
3. any affirmation of promise or fact

Question 13

Use use of the words “warrant” or “guarantee” required to create an express warranty?

Answer 13

No

Question 14

When is an express warranty not created?

Answer 14

A mere affirmation of the value of the goods doesn’t create a warranty

Question 15

What is the default for a missing price term under UCC?

Answer 15

The reasonable price of the goods at the time established by the contract for delivery

Question 16

What is the default for a missing time term under UCC?

Answer 16

Reasonable time

Question 17

What is the default for missing delivery place under UCC?

Answer 17

The seller’s place of business (“FOB seller”)

Question 18

What is common law rule regarding default term when a service contract is missing the price term?

Answer 18

The reasonable value for services rendered

Question 19

What does “good faith” mean?

Answer 19

Honesty in fact

Question 20

What is “good faith” in the context of merchants?

Answer 20

1. honesty in fact
2. observance of reasonable commercial standards of fair dealing in the trade

Question 21

How must open price terms be addressed?

Answer 21

Open price terms are to be fixed in good faith

Question 22

What is requirement for satisfaction terms?

Answer 22

Must be exercised in good faith

Question 23

What is requirement regarding open quantity terms?

Answer 23

Party demanding the amount of goods sold must do so in good faith

Question 24

What is an output contract?

Answer 24

Where buyer agrees to purchase all or percentage of seller’s output of a good, the quantity of which is determined by the seller in good faith

Question 25

What is a requirement contract?

Answer 25

Seller agrees to supply all the buyer’s requirements for a good, the quantity of which is determined by the buyer in good faith

Question 26

How must ambiguous language in contracts be interpreted?

Answer 26

Objective meaning generally trumps subjective meaning

Question 27

When will subjective meaning of ambiguous language be given priority over objective meaning?

Answer 27

1. party has reason to know of other party’s subjective understanding
2. at the time of contracting, both parties share a subjective understanding

Question 28

How are ambiguous terms included in contract to be construed?

Answer 28

If ambiguous terms are included in contract, they’re to be construed against the drafter

Question 29

What is the doctrine of reasonable expectations?

Answer 29

Even unambiguous terms may be interpreted against the drafting party if they conflict with reasonable expectations of that party

Question 30

What is the scope of the doctrine of reasonable expectations?

Answer 30

Only applies to defeat the enforceability of the boilerplate terms inconsistent with the reasonable expectations of the purchaser

Question 31

When is the doctrine of reasonable expectations typically applied?

Answer 31

In insurance contracts or adhesion contracts

Question 32

When may extrinsic evidence regarding trade usage, course of dealing and course of performance be admitted?

Answer 32

Extrinsic evidence can be introduced to fill in gaps and resolve ambiguities in contracts

Question 33

What are admissible uses of extrinsic evidence of trade usage, course of dealing or course of performance?

Answer 33

1. to fill in gaps (supplement terms)
2. to resolve ambiguities (explain terms)

Question 34

When is extrinsic evidence regarding trade usage, course of dealing, or course of performance inadmissible?

Answer 34

To contradict express terms of contract

Question 35

What is order or priority regarding extrinsic evidence of trade usage, course of dealing or course of performance

Answer 35

1. course of performance (specific contract)
2. course of dealing (relationship with the parties)
3. trade usage (general practice in trade