Final Flashcards
UCC 2-102
The UCC article 2 only applies to “sale in goods”
UCC 2-105
Goods are things that are movable at the time of identification to the contract for sale.
Predominant purpose test
The predominant purpose test looks at a transaction as a whole to determine if the predominant purpose is a rendition of services or sale of goods. If it is a rendition of services than common law governs. If it is a sale of goods then the UCC governs.
Offer
an outward manifestation of present intent to be bound to a contract.
Acceptance
any seasonable expression of present intent to be bound to a contract
Consideration
Bargained for legal detriment.
UCC 2-201 Statute of Frauds
A contract for the sale of goods for $500 or more is not enforceable unless
- ) there is writing to indicate a contract for sale has been made between the parties.
- ) The party against whom enforcement is sought, or his agent has signed the writing.
- ) the quantity dealt with is stated.
UCC 2-104(1) Merchant
A “merchant” under the UCC means a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction.
UCC 2-207 (1) Battle of the Forms
A definite and seasonable expression of acceptance or a written confirmation which is sent at a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon.
UCC 2-207(2) Battle of the Forms
If either party is not a merchant, the additional terms are to be construed as proposals for addition to the contract.
Between merchants, such [additional terms] become part of the contract unless:
a. ) the offer expressly limits acceptance to the terms of the offer.
b. ) they materially alter it [surprise or hardship] or;
c. ) notification of objection to them has already been given or is given within a reasonable time after notice of them received.
UCC 2-207(3) Battle of the Forms
Conduct by both parties which recognize the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any provisions of this act.
Knockout rule
The majority view is that the discrepant terms in both the nonidentical offer and the acceptance drop out, and default terms found elsewhere in the Code fill the resulting gap.
Parole Evidence Rule
Terms in a writing may not be contradicted by evidence of any prior agreement but may be explained or supplemented by course of dealing, or usage of trade, or by course of performance; and by evidence of consistent additional terms unless the writing is intended to be a complete and exclusive statement of the terms of the agreement.
PER writing= complete and exclusive
If the writing is a complete and exclusive statement of the terms, the terms may not be contradicted but may be explained or supplemented by course of dealing or usage of trade or by course of performance.
PER writing= not complete and exclusive
If the writing is not a complete and exclusive statement of the terms, the terms may not be contradicted but may be explained or supplemented by course of dealing or usage of trade or by course of performance and by evidence of consistent additional terms.
2-509 Risk of Loss in the absence of breach
where the shipment is by carrier and contract is FOB POINT OF SHIPMENT, the risk of loss passes to the buyer when the goods are delivered to the carrier. But FOB POINT OF DESTINATION, the risk of loss passes to the buyer when the goods are tendered at the point of destination.
2-313 Express Warranties
a promise made by the seller which becomes part of the basis of the bargain creates an express warranty.
2-314 Implied warranty of merchantability
a warranty that the goods shall be merchantable is implied if the seller is a merchant with respect to goods of that kind and be fit for the ordinary purposes for which such goods are used.
2-315 Implied warranty of fitness for a particular purpose
Where the seller 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 judgement to select suitable goods, there is an implied warranty of fitness for a particular purpose.
2-316(2) Exclusion or modification of warranty of merchantability
The exclusion or modification of the warranty of merchantability must mention merchantability, be in writing, and be conspicuous.
2-316(2) Exclusion or modification of warranty of fitness for a particular purpose
the exclusion or modification of the implied warranty of fitness must be in writing and be conspicuous.
2-316(3)
Unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like “as is” and “with all faults” when the buyer has examined the goods or a sample or has refused to examine the goods there is no implied warranty with regard to defects which an examination would have revealed to him. An implied warranty may be excluded or modified by course of dealing, course of performance, or usage of trade.
Warranties: Vertical privity (Express warranty)
Privity of contract is not essential to maintenance of an action against a manufacturer for breach of express warranty; consumer must give reasonably prompt notice of breach.
Warranties: Vertical privity (implied warranties; Tex enterprises)
A manufacturer may NOT be held liable
for a breach of the implied warranties of 2-314 and 2-315
without privity of contract
between the manufacturer and the ultimate consumer.
Warranties: Vertical Privity (Implied Warranties; New Moon Homes)
A manufacturer may be held liable
for direct economic loss
attributable to a breach of the implied warranties of 2-314 and 2-315
without regard to privity of contract
between the manufacturer and the ultimate consumer.
Consumer must give reasonably prompt notice of the breach.
2-318 (Horizontal Privity: Third-Party Beneficiaries of Warranties)
Alternative A:
A seller’s express or implied warranty
extends to any natural person in the family or household of the buyer or guest
if it is reasonable that such person may use the goods
and is injured.
A seller may not exclude or limit this section.
Consumer must give reasonably prompt notice of the breach. (Natural person in household and reasonable)
Alternative B
A seller’s express or implied warranty
extends to any natural person
who may reasonably be expected to use the goods
and is injured.
A seller may not exclude or limit this section.
Consumer must give reasonably prompt notice of the breach. (natural person and reasonable)
Alternative C
A seller’s express or implied warranty
extends to any person
who may reasonably be expected to use the goods
and is injured.
A seller may not exclude or limit this section.
Consumer must give reasonably prompt notice of the breach. (any person and reasonable)
2-601 (Buyer’s Rights on Improper Delivery; “perfect tender” rule)
Subject to the provisions on breach in installment contracts (Section 2-612)
and unless otherwise agreed,
if the goods or the tender of delivery
fail in any respect to conform to the contract,
the buyer may
a. reject the whole; or
b. accept the whole; or
c. accept any commercial unit or units and reject the rest.
Buyer’s Rights on Delay in Delivery of Specially Manufactured Goods (D.P. Technology Corp.)
Where the nonconformity involves a delay in the delivery of specially manufactured goods,
the law requires substantial nonconformity for a buyer’s rejection under 2-601.
2-508 (Cure by Seller of Improper Tender or Delivery; Replacement)
The seller may cure if s/he seasonably notifies the buyer of the intent to do so, and either
- The time for performance has not yet passed, or
- The seller had reasonable grounds to believe the goods would be acceptable
2-612 (“Installment Contract”; Breach; “substantial performance”)
- An “installment contract” is one which authorizes the delivery of goods in separate lots.
- The buyer may reject an installment only if:
The installment has a nonconformity,
The nonconformity substantially impairs the value of the installment, and
The nonconformity cannot be cured. - If the nonconformity substantially impairs the value of the whole contract – as opposed to just the value of the installment – the buyer may cancel the contract and recover damages for total breach.
2-606 (What Constitutes Acceptance of Goods)
- Acceptance of goods occurs when the buyer
a. after a reasonable opportunity to inspect the goods signifies
that the goods are conforming
or that he will take or retain them in spite of their non-conformity; or
b. fails to make an effective rejection,
but such acceptance does not occur
until the buyer has had a reasonable opportunity to inspect them; or
c. does any act inconsistent with the seller’s ownership;
but if such act is wrongful as against the seller
it is an acceptance only if ratified by him. - Acceptance of a part of any commercial unit is acceptance of that entire unit.
2-608 (Revocation of Acceptance in Whole or in Part)
- The buyer may revoke his acceptance
where the non-conformity substantially impairs the good’s value to him if he has accepted it
a. on the reasonable assumption that its non-conformity would be cured and it has not been seasonably cured; or
b. without discovery of such non-conformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller’s assurances. - Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. It is not effective until the buyer notifies the seller of it.
- A buyer who so revokes has the same rights and duties with regard to the goods involved as if he had rejected them.
2-716 (Buyer’s Right to Specific Performance or Replevin)
A court may decree specific performance
where the goods are unique
or in other proper circumstances.
2-715 (Buyer’s Incidental and Consequential Damages)
- Incidental damages resulting from the seller’s breach include
expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected,
any commercially reasonable expenses in connection with effecting cover
and any other reasonable expense incident to the delay or other breach. - Consequential damages resulting from the seller’s breach include
a. any loss resulting from requirements and needs
of which the seller at the time of contracting had reason to know
and which could not reasonably be prevented by cover; and
b. injury to person or property proximately resulting from any breach of warranty.
2-712 (“Cover”; Buyer’s Procurement of Substitute Goods)
- After a breach by the seller,
the buyer may “cover”
by making in good faith
and without unreasonable delay
any reasonable purchase of goods
in substitution for those due from the seller. - The buyer may recover the cost of cover minus the contract price
together with any incidental
or consequential damages,
but less expenses saved due to the breach.
2-713 (Buyer’s Damages for Non-delivery or Repudiation)
- The measure of damages for non-delivery or repudiation by the seller
is the market price at the time the buyer learned of the breach minus the contract price
together with any incidental
and consequential damages,
but less expenses saved due to the breach.
1-305
The aggrieved party [should] be put in as good a position as if the other party had fully performed.
Seller’s Breach (Buyer’s Remedies when Buyer does not accept and/or have goods)
- Cover (2-712): cost of “cover” minus contract price
- Market Damages (2-713): market price minus contract price
- Specific Relief (2-716): specific performance OR
possession if goods are unique or in other proper circumstances
Plus incidental and consequential damages (1-3).
Seller’s Breach (Buyer’s Damages for Breach in Regard to Accepted Goods; 2-714)
- Where the buyer has accepted goods and given notification within a reasonable time, he may recover the value the goods would have had if they had been as warranted minus the value of the goods accepted.
- Plus incidental and consequential damages.
2-607(3) (Notice of Breach)
Where a tender has been accepted
the buyer must within a reasonable time after he discovers or should have discovered any breach
notify the seller of breach or be barred from any remedy.
Buyer’s Breach (Contract Price; 2-709)
- Contract price due if goods accepted by the buyer. (2-709(1)(a).) Acceptance of goods occurs when, after a reasonable opportunity to inspect the goods, the buyer fails to effectively reject them. (2-606(1)(b).)
- Contract price if goods are identified and the seller mitigates damages or shows that such effort would be unavailing. (2-709(1)(b).)
Plus incidental damages (1-2)
Buyer Breach (Seller’s remedy for buyer’s unjustified rejection of goods)
- Resale (2-706): contract price minus resale price
- Don’t resell (2-708(1)): contract price minus market price at time and place for tender
- Lost profits (2-708(2)): 1. Capacity to supply the breached units in addition to what it actually sold
2. Profitable to make both sales
3. Probably would have made 2nd sale absent breach
Plus incidental damages (1-3)
2-718 (Liquidated Damages: Criteria to measure reasonableness of liquidated damages clauses)
- Anticipated or actual harm caused by breach;
- Difficulty of proving loss; and
- Difficulty of obtaining an adequate remedy.
2-609 Right to adequate assurance of performance
When reasonable grounds for insecurity arise, demand adequate assurance of due performance and may reasonable suspend any performance. After receipt of a justified demand, failure to provide assurance within a reasonable time not exceeding thirty days is a repudiation of the contract.
2-610 (Anticipatory Repudiation)
When a party repudiates the contract, the aggrieved party may
a) await performance for a commercially reasonable time; or
b) resort to any remedy for breach; and
c) suspend performance.
2-615 (Impracticability Defense)
Performance is excused
- by the occurrence of a contingency;
- that has made performance impracticable;
- where the non-occurrence of that contingency was a basic assumption on which the contract was made; and
- the seller has not assumed the obligation.
Frustration of Purpose Defense
Performance may be excused
where the purpose or value of the contract has been destroyed
by an unforeseen event, not caused by either party,
and the risk is not allocated by contract.
