Mod 27 Sales Flashcards
UCC Sales does not involve…3
1 personal services
2 real estate or
3 intangible personal property
UCC sales may include…
Growing crops
Whether UCC Sales is involved does not depend on…
Price of the goods
Firm offers in sale of goods are…
Irrevocable without consideration
3 elements of firm offers
1 must be a merchant
2 must be in writing and
3 guarantee it will be held open
Firm offers are irrevocable for the time stated, but maximum period is…
3 months
Firm offer:
If no time is stated, it is irrevocable for…
A reasonable time
In sales you can make minor…
Minor changes between merchants and still have acceptance
In sales you can make minor changes between merchants and still have a valid acceptance. What is the exception?
If one party says “no changes” then no changes are allowed
Mailbox rule
Acceptance is valid when sent with any reasonable means of communication
Seller may accept ordered goods by…
Prompt shipment
Seller may accept ordered goods by prompt shipment. This is true even if…
Goods are non-conforming
Goods are non-conforming
Seller has both accepted and breached
In UCC Sales you may modify a contract without…
Without added consideration
In UCC Sales you may modify a contract without added consideration. A writing will be required if…
The modification is for $500 or more
In UCC Sales, modification must…
Be made in goods faith
Duties of seller: unless otherwise agreed, the basic obligations of. Seller are to…2
1 hold conforming goods for buyer and
2 give reasonable notification
Duties of seller:
Seller must make…
Perfect tender (no defects allowed)
Duties of seller:
If no place of delivery is stated, the place is…
The seller’s place of business
Duties of seller:
If specified delivery means is impractical, seller may…
Seller may substitute a different means
Duties of buyer: unless otherwise agreed, the basic duties of a buyer are to…2
1 accept conforming goods and
2 pay for them at time of delivery
Duties of buyer:
Buyer can pay by…
Any reasonable means to include check
Duties of buyer:
Buyer has right to…
Inspect prior to payment
Duties of buyer:
Buyer has right to inspect prior to payment, except in…
A C.O.D. sale
Duties of buyer:
Buyer may revoke…
An acceptance for substantial defects
Buyer may reject…
Nonconforming goods for any nonconformity
Buyer may reject Nonconforming goods for any nonconformity 4
1 buyer may reject all, some or none of the goods
2 rejection returns title to seller
3 buyer must notify seller within reasonable time and follow
reasonable instructions
4 seller has right to cure by notifying buyer problem will be corrected
On time
All parties are required to act in…
Good faith
Anticipatory breach
Party states they won’t perform prior to time of performance
When anticipatory breach occurs, the injured party may…2
1 sue immediately or
2 wait until time of performance and then sue
Adequate assurance of performance
A demand for written assurance of performance
Adequate assurance of performance:
Either buyer or seller may demand…
Written assurance when reasonable grounds exist
Adequate assurance of performance:
If it is not received in a reasonable time…
Other Party is released from contract
Sale of goods over $500 or more requires writing which must include…
A quantity
Statute of Frauds exceptions
No writing required, even if $500 or more
UCC Sales must involve…
Goods (movable personal property)
Statute of frauds exceptions, 4
1 specially manufactured goods
2 payment of goods or receipt of goods
3 admissions in court
4 merchants confirming letter
Statute of Frauds exceptions:
Specially manufactured goods…
For the buyer
Statute of Frauds exceptions:
Payment of goods or receipt of foods. With a part payment or part receipt, the contract is…
Contract only enforced for part paid or part received
Statute of Frauds exceptions:
Merchants confirming letter
If no objection in 10 days, both merchants are bound
To determine when title and risk of loss pass…2
1 goods must first be identified
2 once identified, the most important factor is agreement between
The parties
Transportation by common carrier is either…2
1 a shipment or
2 a destination contract
Shipment contract
Risk of loss and title pass when seller delivers goods to carrier
Destination contracts
Risk of loss and title pass when seller gets goods to destination
And tenders delivery
Tenders delivery
Seller notifies buyer goods have arrived
If it is unclear whether shipment contract or destination contract is present, the UCC says…
UCC says it’s a shipment contract
If there is no common carrier, either…2
1 no transportation or
2 seller uses his truck
If there is no common carrier, title passes as soon as…
Contract is made with identified goods
If there is no common carrier, risk of loss with merchant sellers only passes when…
Buyer takes possession
If there is no common carrier, risk of loss with non-merchants passes on…
Tender delivery
With non conforming goods risk of loss is…
Always on seller
With Nonconforming goods title passes when…
The seller completes delivery requirements
Insurable interest:
Buyer gets insurable interest when…
Goods are identified
Insurable interest:
Seller has an insurable interest if…
The seller has any risk of economic loss or title
FOB means 2
1 free on board and
2 fixes the place where risk of loss and title pass
FOB seller’s loading dock is…
A shipment contract
FOB buyer’s loading dock is…
A destination contract
CIF means the price includes…3
1 cost of goods
2 insurance and
3 freight (a shipment contract)
Sale on approval
Neither risk of loss nor title pass until buyer approves
Sale or return 2
1 Buyer gets risk of loss and title on delivery
2 but may return the goods
Implied warranties require…
No oral or written words
Any implied warranty can be…
Disclaimed
Any implied warranty can be disclaimed, but the disclaimer must…
Be conspicuous
Implied warranty:
A seller cannot…
Cannot disclaim liability for personal injury
Merchantability
Merchant’s promise goods are fit and safe for normal uses
Merchantability can be…2
1 Disclaimed in a sale or
2 by telling buyer no warranty of merchantability
3 Warranties of Title
1 title
2 encumbrances
3 infringements
All sellers impliedly promise…
Good title
Encumbrances
All sellers promise no unstated liens or attachments
Infringements
Merchant sellers promise no patent or trademark violations
Disclaiming title requires…
Very specific language
Disclaiming title requires very specific language, seller must specifically tell buyer that he…
2) what is ineffective?
Doesn’t guarantee title
2) general language is ineffective
Fitness for a particular purpose:
Buyer must rely on seller to…
Select suitable goods (seller must know of reliance)
Fitness for a particular purpose:
If buyer does rely…
Goods must fit for buyer’s specific purpose
Fitness for a particular purpose:
How can fitness for a particular purpose be disclaimed?
Writing is required
Express warranties:
A buyer may sue the seller for…
Any material misrepresentation of fact
A buyer may sue the seller for any misrepresentations of fact 2
1 opinions and statements of value don’t count unless they are
made by experts
2 conformity to description, sample or model is an express warranty
Express warranties:
The words must have been…
Part of the basis of the bargain
Power to transfer title:
Usually buyer gets…
Gets no better title than seller has to give
Power to transfer title:
2 exceptions when buyer gets better title than the seller has to give 2
1 entrusting
2 voidable title
Entrusting 2
1 A rightful owner leaves goods with a merchant who sells them by
Error
2 an innocent buyer gets good title
Example of a voidable title
Fraud
Power to transfer title:
One with voidable title (fraud) can…
Pass good title to an innocent purchaser
Remedies of buyer:
In sales a buyer can…2
1 rescind (cancel) and
2 sue for money damages
Remedies of buyer:
In sales a buyer can rescind (cancel) and sue for money damages. 2
1 buyer may recover for any loss, but can’t collect punitive damages
2 buyer must give reasonable notice of cancellation
Remedies of buyer:
Buyer may cover
Purchase suitable goods elsewhere and charge seller for any loss
With rapidly rising prices, buyer’s failure to cover may…
Reduce his damages
Remedies of buyer:
Buyer may recover goods from seller if…2
1 buyer has prepaid and
2 goods are identified
Remedies of buyer:
Specific performance may be used if…2
1 Goods are unique or
2 if buyer cannot cover
Remedies of seller:
If buyer breaches seller may…
Resell and sue for damages
Remedies of seller:
If buyer breaches seller may resell and sue for damages 2
1 seller may charge buyer for any loss to include expenses, lost
Profits and storage fees
2 seller may not collect punitive damages
Remedies of seller:
Seller may rescind (cancel) and…
Sue for money damages
Remedies of seller:
It in a credit sale buyer becomes insolvent, seller may…
Stop delivery and demand cash
Remedies of seller:
If in a credit sale buyer becomes insolvent, seller may stop delivery and demand cash. 2
1 if goods were already delivered, the seller may reclaim them within
Ten days
2 there is no 10 day limit if buyer misrepresented solvency
Statute of limitations in sales states…
Suit must be brought within 4 years of breach
Statute of limitations in sales:
By agreement 2
1 By agreement can be limited to minimum of 1 year
2 can’t be extended beyond 4 years
Privity determines…
Who can sue whom
Strict privity 2
1 Only original buyer could sue and
2 could only sue original seller
Privity:
UCC rule
1 Users and those reasonably affected by product may sue
2 can’t be excluded
Privity:
Negligence 2
1 those injured may sue negligent sellers
2 must show 4 elements
4 elements of negligence
1 duty of care
2 breach
3 damages
4 causality
Duty of care
Seller owed buyer duty of due care
Breach
Seller failed to use reasonable care
Damages
Buyer suffered damages
Causality
Buyer’s damages were caused by seller’s breach
Strict liability in tort 2
1 Liability without fault by sellers of defective products
2 must show 5 elements
Privity and negligence are…
Irrelevant as defenses for strict liability tort
5 elements of strict liability tort
1 defective products 2 cause 3 unreasonably dangerous 4 business 5 changes
Defective products cause unreasonably dangerous business changes:
Defective products
Must show a defective product
Defective products cause unreasonably dangerous business changes:
Cause
Must show the defect caused injury
Defective products cause unreasonably dangerous business changes:
Unreasonably dangerous
Must show defect was unreasonably dangerous to users and consumers
Defective products cause unreasonably dangerous business changes:
Business
Must show seller was engaged in that business
Defective products cause unreasonably dangerous business changes:
Changes
Must show it reached user without substantial changes
