MBE Advanced Sales Flashcards
Types of Warranties
Warranty of Title
Warranty Against Infringement of Copyright
Express Warranties
Implied Warranty of Merchantability
Implied Warranty of Fitness for Particular Purpose
When can a seller get the full contract price?
- Buyer has accepted the goods;
- Conforming goods are lost or damaged after the risk of loss passed to the buyer; or
- Identified goods are unable to be sold
When does risk of loss pass to the buyer in a Shipment Contract?
- Seller gives possession of goods to the carrier;
- Seller makes an appropriate contract for shipment; and
- Seller notifies buyer that goods have been shipped
When can terms be explained or supplemented under the Parol Evidence Rule?
- Course of dealings
- Trade or Business use
- Course of current performance
- Consistent additional terms if the writing is not completely integrated
Elements for Recapture
- Buyer was insolvent at time of purchase
- Seller demands return within 10 days (or within a reasonable period if buyer misrepresented solvency to seller in writing)
- Buyer still has the goods
Buyer’s Damages as to Accepted Goods
Nonconforming Goods: Amount of Loss
Breach of Warranty: Repair or Replacement Cost
Elements of a Firm Offer
- Made with words of firmness
- In writing
- Signed by the merchant
Requirements for Proper Rejection of Goods
- Notification of seller of rejection within a reasonable time;
- Notification of seller as to defect (if ascertainable by reasonable inspection that seller could cure if notified); and
- Hold goods for a reasonable time for seller to retrieve
CIF Contract
Price: cost of goods, insurance, and freight
Always a shipment contract
Elements of Assurance of Performance
Must be in writing with reasonable grounds for insecurity
Acceptance of prior improper delivery/payment doesn’t waive demands for future performance
Repudiation results if assurance isn’t provided within a reasonable time (30 day max)
Warranty Against Infringement of Copyright
Given by a merchant seller who regularly deals in goods of the kind warranted
Does not apply if the buyer furnishes specifications for the goods
When does the UCC govern the removal/sale of goods associated with real property?
Structures to be removed from land & minerals: if severance by seller
Growing crops/timber are separate from the land regardless of who severs
Fixtures that can be severed without materially harming the land regardless of who severs
C&F Contract
Price: cost of goods and freight
Always a shipment contract
Breach of Sales Contract or Warranty Statute of Limitations
4 years after cause of action accrues
Can be reduced to no less than 1 year
Cannot be expanded beyond 4 years
Elements of Revoking Acceptance
- There is a defect that substantially impairs the value to the buyer and buyer reasonably didn’t discover the defect or believed the seller would cure and didn’t
- Timely notification within a reasonable time after nonconformity was or reasonably should have been discovered
- Can’t be a substantial change in the condition of the goods
- Buyer has the same rights/duties as if he had rejected the goods initially
Auction Types (2)
Reserve (Default): goods may be withdrawn until the auctioneer announces the completion of the sale
Non-Reserve: goods cannot be withdrawn unless no bid is received
When does risk of loss pass to buyer in a Non-Carrier Contract?
Non-Merchant Seller: after seller tenders goods
Merchant Seller: when buyer takes physical possession
When does risk of loss pass to buyer in a Destination Contract?
When seller tenders the goods to the buyer at the destination point
Implied Warranty of Fitness for Particular Purpose
Given by any seller who has reason to know at the time of contracting that the buyer intends to use a good in a specific way and the buyer relies on the seller’s skill or judgment to buy/furnish the goods
Express Warranties
Any affirmation of fact or promise made by the seller to the buyer that relates to the goods and becomes a part of the basis of the bargain (e.g., sample, model)
Implied Warranty of Merchantability
Warrants that a good is fit for ordinary, commercial purposes and is of average quality
Can only be given by a merchant who regularly deals in goods of the kind contracted for
Breach occurs at time of sale
Strict Liability: seller need not be aware of breach
Warranty of Title
Includes freedom from security interests, liens, and other encumbrances
Can be disclaimed or limited (e.g., seller sells the rights he has)
An additional term in the acceptance is not part of the final contract UNLESS:
- Both parties are merchants
- The term does not materially alter the contract;
- The offer does not expressly limit acceptance to the terms of the offer; and
- The offeror does not object to the term within a reasonable time
Buyer’s Duties After Rejection
- Sell goods in good faith/commercially reasonable (account to seller for excess over amount they hold as a security interest)
- If no security interest, hold goods with reasonable care for enough time for seller to retrieve, reship to seller, or resell them for seller’s account
- Entitled to usual sales commission not to exceed 10% of gross proceeds
