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Contracts 2 UCC Del Law > Final > Flashcards

Final Flashcards

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1
Q

2A Finance Leases “Hell or High Water” clause

A

Problems w/ goods –> see supplier
Still Pay
§ 2A-407. IRREVOCABLE PROMISES: FINANCE LEASES.
(1) finance lease that is not a consumer lease - the lessee’s promises in lease K become irrevocable ~ upon the lessee’s acceptance of the goods.
- Implied if commercial lease
- Consumer lease - unconscionable.. usually

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2
Q

Can you have a contract w/o Price ?

A

Yes -Gap Filler = § 2-305. Open Price Term = reasonable price at time of delivery

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3
Q

Breach - § 2-311. Options and Cooperation Respecting Performance

A

3)… Where one party’s cooperation not seasonably forthcoming,
the other party =
(a) is excused for any resulting delay in his own performance; and
(b) may also either proceed to perform
or
… treat the failure to cooperate as a breach

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4
Q

§ 2-609. Right to Adequate Assurance of Performance.

A

Reasonable grounds for insecurity arise with respect to the performance
- the other may in writing demand adequate assurance of due performance
and until he receives such assurance may suspend any performance

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5
Q

§ 2-610. Anticipatory Repudiation.

A

When either party repudiates (refuses to accept) the contract with respect to a performance not yet due
+ the loss of which will substantially impair the value of the contract to the other,
the aggrieved party may:
(a) await performance ; or
(b) resort to any remedy for breach even though he has notified the repudiating party that he would wait and
(c) in either case - suspend his own performance or proceed on the seller’s right to identify goods

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6
Q

§ 2-611. Retraction of Anticipatory Repudiation.

A

(1) Until the repudiating party’s next performance is due - he can retract his repudiation unless
* the aggrieved party has since the repudiation cancelled or materially changed his position ~or
* indicated that he considers the repudiation final.

(2) Retraction may be by any method which clearly indicates
(3) Retraction reinstates the repudiating party’s rights under the contract with allowance to the aggrieved party for any delay

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7
Q

Safe Harbor Provision - 2-305(2) Open Price

A

Comment #3 Subsection (2) price so fixed must be fixed in good faith.

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8
Q

Unconscionability - § 2-302. Unconscionable - test

A

requires both

a) Procedural -  Formation - contracting uneven
b) Substantive - Outcome harsh  * Can be on a sliding scale - more of one and less of the other makes it even
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9
Q

§ 2-501. Identification of Goods - explicit manner agreed

A

[The buyer obtains a special property and an insurable interest in goods by identification of existing goods]

  • even ..if… non-conforming and he has an option to return or reject them.
    • ID = can be made at any time and in any manner explicitly agreed **
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10
Q

§ 2-501. Identification of Goods if not explicit manner agreed

A

(a) when the contract is made if - already existing and identified;
(b) sale of future goods, when goods, shipped, marked or otherwise designated by the seller as goods to contract
(c) when the crops are planted or the young are conceived (within twelve months after contracting)

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11
Q

ID of goods 501- Seller vs Buyer

A

(2) SELLER retains an insurable interest in goods: so
*If title to or any security interest in the goods remains in him
and
* where the identification is by the seller (until notification to the buyer that the identification is final) - he may substitute other goods for those identified

BUYER = obtains a special property and an insurable interest in goods by identification of existing goods

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12
Q

Risk of Loss - NO Breach

§ 2-509. Risk of Loss in the Absence of Breach.

A

(1) Where the contract requires the seller to ship the goods by carrier
(a) NOT deliver them at a particular destination, RISK OF LOSS passes to the buyer when delivered to carrier
(Shipment Contract = Presumption, notify and documents, cost to get to carrier)

(b) if TO A particular DESTINATION and the goods are there duly tendered while in the possession of the carrier, RISK OF LOSS passes to the buyer when .the buyer to take delivery.
(Destination Contract = seller responsible for transport TO A DESTINATION)

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13
Q

RISK of loss - goods w/ bailee 509

A

(2) goods are held by a bailee to be delivered without being moved,
* the risk of loss passes to the buyer
(a) on his receipt of a negotiable document of title –or
(b) on acknowledgment by the bailee of the buyer’s right to possession – or
(c) after his receipt of a non-negotiable document of title

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14
Q

Risk of Loss -otherwise

A

(3) In any case not within (1) or (2), passes to the buyer on his receipt of the goods
* * if the seller is a merchant;
* * Otherwise – the risk passes to the buyer on tender of delivery.

(4) Can agree otherwise by K

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15
Q

Gap Filler - § 2-308. Absence of Specified Place for Delivery.

A

the seller’s place of business

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16
Q

Risk of Loss - § 2-503. Manner of Seller’s Tender of Delivery.

A

(1) requires that the seller put and hold conforming goods at the buyer’s disposition and give the buyer any notification
(a) a reasonable hour, and …must be kept available for the period … buyer to take possession; (Piano problem p270 –stays w/ seller until possession! !)
but
(b) unless otherwise agreed the buyer must furnish facilities reasonably suited to the receipt of the goods.

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17
Q

Negotiable document of title

A

a) Absolute ownership of goods
b) Indicate goods are to be delivered to the bearer or “to the order of” XX (a person)
~ Examples ~
a) Received from: ABC Manufacturing.. Consigned to: 123 Company .. = Non-negotiable
b) Received from: ABC Manufacturing.. Consigned to the ORDER OF: 123 Company .. = Negotiable
c) Received from: Reynolds Inc…. property below… Consigned to: Bearer….Destination: 123 Company ..Goods to be delivered ONLY by written order of Reynolds Inc. = Negotiable

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18
Q

Non - Negotiable document

A

a) Delivery instructions
b) To be delivered to ..XX (a person)
~ Examples ~
a) Received from: ABC Manufacturing.. Consigned to: 123 Company .. = Non-negotiable
b) Received from: ABC Manufacturing.. Consigned to the ORDER OF: 123 Company .. = Negotiable
c) Received from: Reynolds Inc…. property below… Consigned to: Bearer….Destination: 123 Company ..Goods to be delivered ONLY by written order of Reynolds Inc. = Negotiable

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19
Q

CIF + C&F =

A

ALWAYS is a SHIPPING CONTRACT

1) CIF - Cost of item + shipping cost + insurance cost
2) C&F - Cost of goods + Freight

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20
Q

FAS = “Free Alongside” -

A
  • connection with ships / boats - Shipping
    1) § 2-319. F.O.B. and F.A.S. Terms
    2) FAS Vessel - Seller bears risk and cost of delivering goods alongside ship
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21
Q

Delivery “Ex-Ship” § 2-322

A

1) Risk of loss passes when properly unloaded

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22
Q

FOB = “Free on Board” -

A

~ Can be EITHER shipping / destination ~

1) Always followed by place - FOB Pittsburg, Pa - risk passes at that named place
2) FOB Place of Shipment Seller bears Risk and cost of putting goods into carrier / Follows - 2-504 …can have shipping instructions
3) FOB Place of Destination Seller bears risk and cost of transport and tenders delivery / Follows 2-503 4) FOB Vessel - Seller bears risk and cost of loading on board vessel

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23
Q

§ 2-401. Passing of Title;

(1) any manner and on any conditions explicitly agreed on by the parties ..or

A

(2) Unless agreed – title passes = time and place the seller completes his performance with physical delivery

(a) Shipment Contract = buyer at the time and place of shipment; but
(b) Destination Contract = title passes on tender there.

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24
Q

Notification

§ 2-504. Shipment by Seller. – Shipping Contract

A

(c) promptly notify the buyer of the shipment.
*important – risk of loss w/o notification **
Failure to notify the buyer under paragraph (c) or to make a proper contract under paragraph (a) is a ground for rejection only if material delay or loss ensues.

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25
Q

§ 2-511. Tender of Payment by Buyer; Payment by Check.

§ 2-507. Effect of Seller’s Tender; Delivery on Condition.

A

Seller must deliver and buyer must pay - Usually

26
Q

§ 2-612. “Installment contract”; Breach.

A

(2) — but if the non-conformity does not fall within subsection (3) and the seller gives adequate assurance of its cure the buyer must accept

(3) with respect to one or more installments substantially impairs the value of the whole contract there is a breach of the whole.
But ….reinstates the contract if he
- accepts a non-conforming installment without seasonably notifying of cancellation ~or ~
- if he brings an action with respect only to past installments ~or ~
- demands performance as to future installments.
** Substantial Performance is the Rule here !**

27
Q

Perfect Tender Rule

§ 2-601. Buyer’s Rights on Improper Delivery.

A
  • 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.
28
Q

Cure - Replacement

§ 2-508. Cure by Seller of Improper Tender or Delivery;

A

(1) Where any tender is rejected because non-conforming
and the time for performance has not yet expired,
** seller may notify the buyer of his intention to cure and
– then within the contract time make a conforming delivery.

(2) Where buyer rejects a non-conforming
which seller had reasonable grounds to believe would be acceptable
** the seller may, if he notifies the buyer, have a further reasonable time to substitute a conforming tender.

Shaken Faith Doctrine - buyer might not have to accept cure if their faith is shaken in the way the seller attempts to cure

29
Q

§ 2-606. Acceptance

A

(1) occurs when the buyer (after inspection)
(a) signifies that goods are conforming
~or ~
that he will take them in spite of non-conformity;
~or~
(b) fails to make effective rejection (2-602(1)),
~or~
(c) any act inconsistent with the seller’s ownership;

30
Q

§ 2-607. Effect of Acceptance;

A

(1) The buyer must pay
(2) Precludes rejection and, if knowledge of a non-conformity, cannot be revoked because of it unless on - assumption that it

(3) Where accepted
(a) the buyer must notify the seller of breach or be barred from any remedy;
* * To preserve his rights**

(4) The burden is on the buyer to establish any breach with respect to the goods accepted.

31
Q

Acceptance does NOT

A

preclude a warranty suit - just rejection of goods

32
Q

§ 2-602. Rejection.

A

(1) Within a reasonable time after their delivery
- — buyer MUST NOTIFY the seller.
(2) Subject to the provisions of the two following sections on rejected goods (2-603 / 2-604)

(a) after rejection any exercise of ownership by the buyer is wrongful   and
(b) if the buyer taken physical possession of goods has a duty after rejection to hold them with  care   but
(c) the buyer has no further obligations

(3) If goods wrongfully rejected - seller uses seller’s remedies 2-703

33
Q

§ 2-608. Revocation - After Acceptance
More difficult standard then rejection
- must substantially impair value to buyer

A

(1) The buyer may revoke if substantially impairs its value to him if he has accepted it -
(a) on assumption non-conformity would be cured and it has not been cured
(b) induced either by the difficulty of discovery before acceptance or by the seller’s assurances.

(2) within a reasonable time after the buyer discovers or should have discovered it
~ and ~
NO substantial change in condition (ex: painted horse)
– NOT effective until the buyer NOTIFIES

34
Q

Issue - can he revoke after numerous attempts to cure + is the value aspect subjective to buyer ?

A

Test:

a) Subjective - Buyer’s particular needs
b) Objective - IN light of those needs, is the value substantially impaired?
(i) If it Shakes the buyer’s faith or confidence in the reliability of the goods

c) Time aspect - attempts to cure cannot go on forever and buys has a right to say That’s’ Enough !

35
Q

Risk of Loss - Breach

. § 2-510. Effect of Breach - Risk of Loss.

A

(1) Where goods so fails to conform + give a right of rejection
* the risk of their loss remains on the seller until cure or acceptance. (seller breached)

(2) Where buyer rightfully revokes acceptance
* he may treat the risk of loss as having rested on the seller from the beginning.
(revoke - insurance matters - buyer’s ins +
what is not covered = seller)

(3) Where the buyer / conforming goods already ID’ed REPUDIATES in breach before risk of their loss has passed to him
Seller - may to any deficiency in his insurance coverage treat the risk of loss as resting on the buyer (Buyer breaches - ins of seller + buyer any extra)

36
Q

Risk of Loss - Breach = 3 questions need to be answered

A

i. Did the Buyer have the right to reject?
ii. Did they accept anyway based on an expectation of cure?
iii. Was the defect cured prior to loss?

37
Q

Impossibility of Performance
§ 2-613. Casualty to Identified Goods.
- without fault of either party -

A
  • goods identified when the contract is made, and
  • the goods suffer casualty without fault of either party
  • before the risk of loss passes to the buyer
    Then :
    a) if the loss is total the contract is avoided; and
    (b) if the loss is partial or the goods no longer conform to the contract ~ the buyer may demand inspection and at his option either avoid or accept
38
Q

Impossibility

2-614. Substituted Performance = delivery

A

(1) Where without fault of either party the agreed agreed type of carrier becomes unavailable or the agreed manner of delivery becomes impracticable but a substitute is available, such substitute must be tendered and accepted.

39
Q

Impossibility

§ 2-615. Excuse by Failure of Presupposed Conditions. (Foreseeability)

A

(a) Delay or non-delivery by a seller who complies with paragraphs (b) and (c) is not a breach - if performance has been made impracticable by the occurrence / the non-occurrence of which was a basic assumption on which the contract was made

(b) Where the causes in (a) affect only a part of the seller’s performance, he must allocate .
Manner = fair and reasonable.

(c) The seller must notify the buyer that there will be delay and, when allocation is required

40
Q

Impossibility
§ 2-615. Excuse by Failure of Presupposed Conditions. (Foreseeability)
- - Comment #9 - - Farmers

A

Failure of farmer with output / requirements contract = either 615 or 613 as an excuse when the crop fails

41
Q

Impossibility - Notification received by Buyer

Triggers - § 2-616. Procedure on Notice Claiming Excuse.

A

(1) Buyer may
(a) terminate the contract; or
(b) modify + agree to take available quota in substitution.

(2) If after notification - the buyer fails to modify the contract not exceeding thirty days …the contract lapses with respect to any deliveries affected.

42
Q

Impossibility - just bc performance is difficult or expensive…

A
  • does NOT mean it’s impossible

§ 2-615.Comment #4 - Increased cost alone does not excuse performance

43
Q

Seller Remedy #1
Insolvent Buyer - Broke
Delivery in Transit - § 2-705. Seller’s Stoppage of Delivery in Transit

A

(1) The seller may stop delivery of goods in the possession of a carrier when he discovers Buyer insolvent (NO Size limitation) (+ Demand Cash 2-702)
and
(Size limitation here - ) may stop delivery of carload, truckload, planeload or larger shipments when
- buyer repudiates or fails to make a payment due
- before delivery

44
Q

Seller Remedy #2
Insolvent Buyer - Broke
Demand Cash Payment
§ 2-702. Seller’s Remedies - Buyer’s Insolvency

A

(1) Where the seller discovers the buyer to be insolvent he may refuse delivery except for cash

45
Q

Seller or Buyer Remedy #3

Demand Assurance - § 2-609 Adequate Assurance

A

. When grounds for insecurity arise

  • performance of either party the other may
  • in writing
  • demand adequate assurance and until he receives
  • may suspend any performance
46
Q

Liquidated Damages

§ 2-718. Liquidation or Limitation of Damages

A

(1) Damages for breach by either party may be liquidated - only at an amount which is reasonable in the light actual harm caused
- A term fixing unreasonably large liquidated damages is void -

(2) Where the seller justifiably withholds delivery because of breach,
- buyer is entitled to restitution of any amount by which the sum of his payments exceeds

(a) the amount to which the seller is entitled by virtue of terms liquidating, or
(b) Absence  terms =  twenty per cent of the value of the total performance for which the buyer is obligated  or $500 (smallest)
47
Q

4 Ways for Buyer to breach

A

i. Repudiate
ii. Wrongfully reject
iii. Fail to pay
iv. Wrongfully revoke

48
Q

Buyer in Breach – Buyer has Goods

A

2-709. Action for the Price

49
Q

Buyer in Breach – Seller has Goods

A

§ 2-706. Seller’s Resale (Including Contract for Resale) – (Preferred Method !)
Damages = K- the resale price + incidental damages - expenses saved
~or~
§ 2-708. Seller’s Damages Market Price
- market price (at the time and place for tender) - unpaid contract price + incidental damages -expenses
(2) Lost Volume Seller = Profit + incidental damages provided (costs reasonably incurred)

50
Q

3 Ways a Seller can Breach

A

i. Repudiation
ii. Failure to deliver
iii. Tender of delivery that does not conform

51
Q

Seller in Breach - Buyer has Goods

Breach of Warranty

A

§ 2-714. Buyer’s Damages for Breach in Regard to Accepted Goods.
(1) Where the buyer has
accepted (2-606) + given notification (2-607(3)) he may recover for any non-conformity

(2) The  damages for breach of warranty = (at the time and place of acceptance) value of the goods accepted -  the value they would have had if they had been as warranted, 
(3) Incidental and consequential damages may also be recovered.
52
Q

Seller in Breach - Buyer has Goods

Breach of Warranty - incidental / consequential damages

A

§ 2-715. Buyer’s Incidental and Consequential Damages

(1) Incidental damages = expenses reasonably incurred …with effecting cover and any other reasonable expense in connection with effectuating COVER incident to the delay or other breach.
(2) Consequential damages =

(a) any loss resulting from requirements and needs of which the seller  had reason to know and which could not reasonably be prevented by cover or otherwise; and
(b) injury to person or property resulting from any breach of warranty.
53
Q

Seller in Breach - Seller has Goods

A

§ 2-711. Buyer’s Remedies in General; Buyer’s Security Interest in Rejected Goods.(1) Where the seller fails to make delivery or buyer rightfully rejects

  • § 2-712. “Cover”; Buyer’s Procurement of Substitute
    (1) Damages = the cost of cover - contract price + any incidental or consequential damages = expenses saved
  • § 2-713. Buyer’s Market Price Damages for Non-delivery or Repudiation.
    (1) Damages = the market price (at the time when the buyer learned of the breach) - contract price + incidental and consequential damages -expenses saved
  • § 2-715. Buyer’s Incidental and Consequential Damages…applies here too!
    1) NOTE – YOU can NOT recover Consequential Damages that could have been prevented by Cover - Must Mitigate !! 2-715(2)(a)
54
Q

Seller in Breach - Seller has Goods - what remedy does he have to choose?

A

A Buyer Does NOT HAVE TO COVER - may choose between 712 cover and 713 market
BUT failure to cover may impact the consequential damages 715(2)

55
Q

Broke Seller - Insolvent after partial payment or full payment
§ 2-502. Buyer’s Right to Goods on Seller’s Insolvency

A

(1) even though the goods have not been shipped a buyer who has paid a part or all recover them from the seller if the seller becomes insolvent within ten days after receipt of the first installment

56
Q

Seller in Breach - Seller has Goods

Specific Performance

A

§ 2-716. Buyer’s Right to Specific Performance (1) where unique or in other proper circumstances (no avail substitute)
TEST :
1) whether the goods are unique (impossible to replace)
2) If not unique can they obtain cover goods??

57
Q

Anticipatory Repudiation - § 2-610. Anticipatory Repudiation

  • When either party repudiates the contract with respect to a performance
  • not yet due -
  • the loss of which will substantially impair the value of the contract - the aggrieved party may…
A

(a) await performance ; ( AND Mitigate Damages !!) or
(b) resort to any remedy for breach (2-703 or 2-711), even though notified party that he would wait and has urged retraction; and

(c) in either case suspend his own performance or proceed - on the seller’s right to identify goods or salvage unfinished goods (2-704)
ii. May give rise to 2-609 = adequate assurance required And suspend any performance
iii. This will be used (2-609) when it does NOT Substantially Impair

** MUST be a definite refusal to perform **

58
Q

§ 2-611. Retraction of Anticipatory Repudiation

- How ? When?

A

(1) Until the repudiating party’s ( BEFORE ) next performance is due he can retract his repudiation
- – unless the aggrieved party has since the repudiation cancelled or materially changed his position or otherwise indicated that he considers the repudiation final.

59
Q

When is market price determined ?

1) Seller’s Damages -
2) Buyer’s Damages -

A

1) 2-708 - Market price at time of tender and K Price

2) 2-713 - Market price at time learned of breach and K Price

60
Q

§ 2-725. Statute of Limitations in Contracts for Sale.

A 
An action  (breach of any contract)must be within four years after the cause of action has accrued. 
- parties may reduce to not less than one year but may not extend it.
61
Q

Statute of Limitation

1) A cause of action accrues WHEN =
2) A breach of warranty occurs WHEN =

A

1) the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach.
2) delivery is made, except that where a warranty EXPLICITLY extends to future performance of the goods and when the breach is or should have been discovered.

62
Q

SOL - Extension as to Future Performance must be …

A

MUST be explicit , clear and unambiguous under 725(2)

i. Express Warranties - time of discovery + 4 years
ii. A “Repair or Replace” warranty is NOT - a warranty extending future performance
iii. Implied Warranties = Die at the end of 4 Years !

Contracts 2 UCC Del Law (2 decks)

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