R5 Sales

Question 1

Under the Sales Article, what are the exceptions to the Statue of Frauds?

Answer 1

S - Specially manufactured goods
W - Written confirmatory memo between merchants
A - Admission to court
P - Performance to the extent accepted

Question 2

What is a merchant’s firm offer?

Answer 2

A written and signed offer by a merchant assuring that the offer will be held open for a period of time. Such offers must be kept open for the time stated or if not time stated, for a reasonable time but, in any event no longer than 3 months.

Question 3

Under the sales article, the terms of the acceptance must match the terms of the offer or no contract is formed (mirror rule) true or false?

Answer 3

False, the sales article does not follow the common law mirror image rule. If the terms of the acceptance do not match the terms of the offer, the terms of the offer control, except in a contract between merchants. In a contract between merchants, the terms of the acceptance usually control unless the offeror objects or the changes are material.

Question 4

Output and requirement contracts do not state an exact quantify of good. When are such contracts enforceable?

Answer 4

Although the exact quantity is unknown, the output and requirement contracts are enforceable if the amounts are reasonable with respect to normally expected amounts.

Question 5

State the accommodation shipment rile

Answer 5

Shipment of nonconforming goods will not operate as an acceptance, but rather will operate as a counteroffer if the seller notifies the buyer that the shipment is intended as an accommodation

Question 6

How long is the statue of limitations in UCC sales and when does the statute begin to run?

Answer 6

The UCC statue of limitations is four years from the time the cause of action occurred (from date of breach).

The limitation period begins to run when the breach occurs

Question 7

If the contract does not specify where goods should be delivered, what is the usual place for delivery?

Answer 7

The seller’s place of business, or if there is no place of business, the seller’s home.

Question 8

If there is no agreement between the parties, when does the risk of loss pass to the buyer:

Answer 8

If the seller is a merchant:

• If noncarrier contract, when the buyer takes actual physical possession of the goods
• In a shipment contract, when the seller turns over the goods to a carrier (inside the truck)
• In a destination contract, hen the goods reach the destination specified

If the seller is not a merchant: upon tender of goods to the buyer

Question 9

Under the UCC, state the rules governing passage of title

Answer 9

• Title generally can pass as parties agree
• If parties do not agree, title passes upon delivery
• If buyer rejects goods, title reverts to the seller

Question 10

Under the sales article, identify your types of warranties

Answer 10

• Express warranty
• Warranty of Title
• Implied Warranty of Merchantability
• Implied Warrant of Fitness for Particular Purpose

Question 11

How does the warranty of title arise? May it be disclaimed by a general disclaimer?

Answer 11

The warranty of title arises automatically in every sale of goods, it may be disclaimed by specifically (I am giving no warranty of title) or by circumstances (judicial sale) but may not be disclaimed through a general disclaimer “as is” or “with all faults”

Question 12

Who makes the implied warranty of merchantability? Essentially, what does the warranty guarantee?

Answer 12

Only merchants who regularly sell goods of the kind sold and other experts in the goods make the warranty, which is that the goods are fit for the ordinary purpose for which such goods are used

Question 13

Who makes the implied warranty of fitness for a particular purpose? what does it guarantee?

Answer 13

Any seller (not just merchants) who knows that the buyer is relying on the seller to choose goods suitable for a purpose specified by the buyer makes the warranty. The seller’s guarantee is that goods are fit for the purpose for which the seller has reason to know the buyer will use them

Question 14

What must be shown in order to prove a cause of action for strict products liability?

Answer 14

• The seller was in the business of selling goods
• The product was defective when it left the seller’s hands
• The product was unreasonably dangerous
• The defect cause the plaintiff’s injuries or damages
• The product was expected to and did reach the consumer without substantial change in condition

Privity not required, negligence not necessary

Question 15

What must be shown in order to prove a cause of action for negligence?

Answer 15

• Seller owed them a duty of care
• Seller breached the duty by failing to use due care
• Damages suffered by plaintiff
• Causation of damages by seller’s negligence

Question 16

If the seller sells goods to a buyer on credit and then learns that the buyer is insolvent, what are the seller’s remedies?

Answer 16

• Withhold goods in the seller’s possession
• Stop goods in transit and demand cash
• Demand return of goods already received - 10 day limitation

Question 17

What are the buyer’s options when goods are tendered that do not conform to the contract?

Answer 17

• Keep the goods and sue for damages
• Reject all of the goods and cancel the contract
• Reject some or all of the goods and sue for damages

Question 18

If the buyer breaches, under what circumstances can a seller recover the full contract price?

Answer 18

When the buyer has the goods, the seller can collect the full contract price plus incidental damages if the goods cannot be resold for any price or the goods are destroyed after risk of loss has passed to the buyer