Mid Term Flashcards
§ 2-105 (1) - Goods
a) Must exist at the time of the contract means all things which are MOVABLE at the time of IDENTIFICATION to the contract for sale
i) Custom - including specially manufactured goods
ii) Unborn young of animals
iii) Growing crops
iv) Other identified things attached to realty
b) § 2-107. Goods to Be Severed From Realty
(1) Minerals (a) Must to be severed by the seller
(2) Growing crops
Goods are NOT
a) Money
b) Securities
c) Things in Action - (UCC § 2-105(1), Comment 1)Things in action are items of property to which a person is legally entitled either because the items are owed in a debt
Hybrid Contracts - 1) Predominant Factor Test
a) Language of the contract
b) Nature of the business of the supplier of the goods and services
c) Reason entered into the contract
d) Amounts paid for the goods and services
Hybrid Contracts - 2) Gravaman Test
a) If it retains the character as goods
b) Is it is a problem with those goods
c) THEN apply Art 2 when the good fail
d) If Problem with Services THEN no UCC
1-203. Lease Distinguished from Security Interest (Sale)
1) A transaction in the form of a lease CREATES a security interest (sale) if
- the consideration that the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease and
- is NOT subject to termination by the lessee, and
:
(1) (NO VALUE LEFT)
(2) the lessee is bound to renew the lease or is bound to become the owner
(3) the lessee has an option to renew the lease for the remaining economic life
(4) the lessee has an option to become the owner of the goods for no additional consideration
§ 2-201. Statute of Frauds.
(1) … price of $500 or more + writing + signed + quantity (lease = 1000)
(2) Between merchants writing in confirmation of the contract + the party receiving it has reason to know its contents,
~ unless written notice of objection to its contents is given within 10 days after it is received.
(3) A contract enforceable w/o =
(a) Custom goods
(b) admission
(c) payment and accepted or which have been received and accepted
§ 2-306. Output, Requirements and Exclusive Dealings.
This eliminates the quantity requirement of the SOF
Promissory estoppel
A party may recover on the basis of a promise made when
- reliance on that promise was reasonable, and
- the party detrimentally relied on the promise.
E-sign + UETA
- parties must agree
- received = it enters an information processing system that the recipient has designated or uses or If in subject line and deleted then it IS Received
Parole Evidence Rule § 2-202.Extrinsic Evidence. (A)
Terms which are set forth in a writing intended by the parties as a final expression of their agreement
- may NOT BE CONTRADICTED by evidence of any prior agreement but
- may be explained or supplemented
(a) by course of dealing ~or~ usage of trade
~and~
(b) by consistent additional terms unless the court finds the writing to have been intended complete and exclusive
Parole Evidence Rule § 2-202.Extrinsic Evidence. (B)
CONSISTENT Additional Terms are EXCLUDED when complete and exclusive agreement
BUT CAN introduce evidence of usage of trade or course of dealing to supplement ANY Writing bc assumed that they are taken for granted
- AFTER the agreement then - NO Parole Evidence Rule
Questions to be asked for Parole Evidence Rule
1) What kind of document memorializes the agreement?
a) Is it a final expression of agreement?
2) What is the source of the evidence offered?
a) Prior / contemporaneous / after
3) For what purpose is the evidence offered?
a) Additional term?
b) Contradict?
Merger Clause -
Evidence of a complete agreement but NOT conclusive
a) “Evidence” of total integration
§ 2-204. Formation
(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties
§ 2-206. Offer / Acceptance
(1) Unless otherwise unambiguously indicated by the language or circumstances
(a) an offer to make a contract shall be construed as inviting acceptance in any manner
(b) an order or other offer to buy goods shall be construed as inviting acceptance either by
- a promise to ship (or)
- by prompt shipment
~ but shipment of non-conforming goods does not constitute an acceptance if offered only as an accommodation
§ 2-207 Battle of the Forms- additional terms
- Two questions need to be asked
1) Whether there was a contract formed?
a) 1st sentence of (3)
2) What are the terms?
a) (2) + (3)
§ 2-207 Battle of the Forms - additional terms
(1) A definite acceptance or a written confirmation which is sent within a reasonable time = acceptance even though it has additional / different terms
- UNLESS acceptance is expressly made conditional on assent to those terms.
(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:
(a) the offer expressly limits acceptance to the terms of the offer;
(b) they materially alter it; or
(c) notification of objection is given within a reasonable time after notice of them is received.
(3) Conduct by both parties which recognizes the existence of a contract is SUFFICIENT to establish Contract
- in this case, the terms consist of those terms on which parties agree, together with any supplementary terms (LIKE KNOCK OUT Rule)
207(1) Written Confirmations
1) Act as acceptance EVEN if the terms are additional or conflicting
207 - “Subject to” =
NOT a conditional acceptance expressly made conditional to the assent
207 Cmmt #4 Materially Alter =
Surprise or Hardship - usually prolonged
207 - . Three views of different terms
1) Majority = Knock Out Rule
a) The terms that differ are excluded , make contract on terms that agree, use Gap Fillers
2) Offeror’s Terms = master of the offer
3) Treat the same way as additional terms = they are proposals for additions and must be expressly assented
Rolling Contract
§ 2-606. Constitutes Acceptance of Goods.
1) Acceptance occurs when buyer
(a) inspect the goods signifies that goods are conforming or that he will take in spite of non-conformity; or
(b) fails to make an effective rejection but such acceptance does not occur until
- - - opportunity to inspect
Warranty - Two Categories:
i. Quality
ii. Title
Warranty of Title / Void Title =
Stolen goods / involuntary transfer by owner -
Buyer gets NO title b/c the seller had No Title to transfer
Warranty of Title / Voidable Title =
Voluntary transfer by owner - The buyer can get good title
Entrusting
Warranty of Title - § 2-403. Power to Transfer
“Entrusting”
Can only pass on the tile that you have:
(1) A purchaser of goods acquires all title which his transferor had or had power to transfer
- a purchaser of a limited interest acquires rights only to the extent of the interest purchased.
- A person with voidable title has power to transfer a good title to a good faith purchaser for value.
(2) Any entrusting of possession of goods to A MERCHANT WHO DEALS IN GOOD OF THAT KIND gives him power to transfer all rights
Entrusting: 4 essential elements:
1) Actual entrustment of goods by delivery of possession to a merchant
2) Party receiving the goods must be a merchant who deals in goods of that kind
3) Merchant must sell the entrusted goods
4) Sale must be to a buyer in the ordinary course of business ( buys in good faith, without knowledge that the sale violates the rights of another except pawnbroker)
2-607. Effect of Acceptance;
(2) Acceptance precludes rejection and
if made with knowledge of a non-conformity,
cannot be revoked because of it
—> unless acceptance was on the assumption that the non-conformity would be cured
Vouching In / 3rd Party Defendant :
Buyer Sued for breach - buyer brings in seller 2-607 (5)
Warranty of Title § 2-312
(1) In a contract for sale a warranty by the seller that;
(a) the title conveyed shall be good, and its transfer rightful; and
(b) the goods shall be delivered free from any security interest or other lien of which the buyer at the time of contracting has no knowledge.
(2) A warranty - will be excluded only by
- specific language ~or~
- circumstances which give the buyer reason to know that the person selling does not claim title
(3) a MERCHANT REGULARLY DEALING IN GOOD OF KIND warrants that the goods shall be delivered free of the rightful claim
- but a buyer who furnishes Specifics - can’t claim breach
Implied Warranty of Merchantability § 2-314
(1) Unless excluded , implied in a contract if the seller is a merchant with respect to goods of that kind.
(2) Goods to be merchantable must be;
(a) pass without objection in the trade and
(b) fungible goods, are of fair average quality and
* ** (c) are fit for the ordinary purposes for which such goods are used; *** and
(d) run, within quality and quantity within each unit and among all units involved; and
* ** (e) adequately packaged, and labeled
> Merchant as to Goods
2 Tests for Objects in Food
i. Foreign or natural. Test
ii. Reasonable Expectation test
1) Reasonable consumer
2) Consumer of the buyer’s age and experience
- DEFENSE –
1) Common knowledge = about a product is a factor to be considered in deciding if warranty exists ~ cannot exist if it is contrary to common knowledge.
2) Labeling - sufficiency
- DEFENSE –
Express Warranties § 2-313
(1) Express warranties are created by:
- Any affirmation of fact or promise made and becomes part of the BASIS OF THE BARGAIN
- Any sample or model
Express warranty - Basis of the Bargain:
1) Williston view - seller must prove buyer did not rely.
2) Historic view centered on “reliance”
a) Reliance jurisdictions - Buyer must prove he relied on seller’s representations
b) Non-reliance jurisdictions -Seller is bound regardless of buyer’s non-reliance or lack of knowledge of the representation.
Express warranty Defenses ?
1) Lack of Reliance
2) Mere Puffery
Implied Warranty - Fitness for Particular Purpose § 2-315
Seller at the time has reason to know any particular purpose
** This applies to EVERYONE Who is a seller - NOT JUST MERCHANTS
Implied Warranty of Merchantability - test
Do we have a fundamental defect that affects the core functionality ?
- Only has to meet the expected minimal level of quality
Disclaiming Warranties § 2-316
1) Express warranty = impossible - just don’t make one
* * Parol Evidence - comes into play most likely
- - Oral statements made prior to sale is the question - admissible and were they a warranty?
- - The seller is protected by the customary “lack of authority” clauses
2) Implied warranty of merchantability = must mention merchantability and if a writing must be conspicuous,
- AS Is or examined by buyer or course of dealing
3) Warranty of fitness = must be by a writing and conspicuous.
Timing of Disclaimer - AFTER purchase
Modification 2-209 - (1) An agreement modifying a contract needs no consideration to be binding.
Warranty on “Rolling Contract”
- grace period / grey area - inspect before rejecting and if keep , then becomes acceptance and contract
- Ex: Inside of packaging booklet = ok
What is “Zipper Clause”?
Merger
+
No Oral Modifications clause
Warranty ~ Limitation of Remedy - § 2-719(2)
~ FAIL of its essential purpose, remedy may be had as provided in this Act.
- Fails when: unsuccessful in repairing or replacing (item blew up or something) ~or~
- an unreasonable delay in repairing
Then ~ can pursue any remedy available in the UCC
Warranty ~ Limitation of Remedy - § 2-719(3)
~ Consequential damages may be limited or excluded unless it’s unconscionable ( injury v. property / consumer v. commercial)
Consequential damages may be limited unless the limitation is unconscionable.
1) Injury to the person in the case of consumer goods is prima facie unconscionable but
2) limitation of damages where the loss is commercial is not.
Limitation 719 (2) + (3) can be either …?
Independent
~or~
Dependent
§ 2-302. Unconscionable contract or Clause.
- 2 ways can be unconscionable:
Leads to inequality of the bargain
1) Procedural - Lack of meaningful choice on the part of one party
2) Substantive - Unreasonably harsh terms
- Comment 1: need to prevent oppression and unfair surprise,
i) when a consumer involved
ii) Disparity in bargaining power
iii) Boilerplate language
iv) Foreseeablity - is the damage w/in the realm of expected losses
- Comment 1: need to prevent oppression and unfair surprise,
DEFENSES to Limitations on the Warranty
1) No Notice
2) Privity
3) Burden of Proof
Vouching IN -
607(5)(a) Where the buyer is sued for breach - and manufacturer also liable
Defense - Privity - 2 Kinds:
1) Horizontal - Whom retail seller is liable to other than the immediate buyer
2) Vertical - How far back up the chain
Defense - Notice - required language (2 views)
2 Differing Jurisdictions:
1) Some require the word “Breach”
2) Some just that notice of particular problem with this specific good
Defense - Notice - reasons for it
1) To allow the seller to CURE the defect
2) To protect the seller from claims too long after that he can’t investigate
Defense - Burden of Proof - Four Things
1) Creation of a Warranty
2) Breach
3) Causal connection
4) Injury - (fact and extent)
Battle of the Forms - Section / Proviso vs No Proviso
Sect 207
Proviso = Sub Section 3
No Proviso = Sub Section 2
* Strike Conflicting and use gap fillers
* Between Merchants - then become part of contract unless “Materially Alter”
3 Ways Around Parol Evidence Rule in Express Warranty
1) Fraud
2) Unconscionable
3) Both need to intend as final expression and the 1 party did NOT so intend
