REG - Sales Flashcards
UCC - Who has the risk of loss?
Only apply if the parties have not allocated risk of loss in their contract - look at intent of parties manifested in contract.
UCC - what is the warrant against infringement?
Primary purpose is to protect the buyer of goods from infringement of the rights of third parties. In a sale by a merchant, the merchant warrants that the goods are free from a rightful claim of infringement of patent or trademark by third parties. If the buyer furnishes the specs that infringes, then the seller is protected.
What are the defences if A suffers and injury from a product he bought from B and product was manufactured by C in a strict liability case?
Seller or C’s defences are misuse and assumption of risk, NOT nonnegligence as irrelevant under strict liability.
A buyer misuses a product when he uses it for some purpose other than the purpose for which the product was originally intended.
Assumption of risk exists when an individual uses the product without regard to an inherent danger associated with the product.
Privity of contract does not apply under strict liability as the suit is not based on contract law.
What is strict liability and needs to be proved?
It allows the injured party to recover against either the manufacturer or the merchant seller.
Plaintiff must establish the following
1-seller was engaged in the business of selling the product
2 - the product was defective
3 - the defect was unreasonably dangerous to the plaintiff
4 - the defect caused injury to the plaintiff
If established, then the seller is liable regardless of whether the seller was negligent or at fault.
Strict liability in product liability is applied in the majority of jurisdictions.
When can the buyer reject defective goods? What else could they do?
Buyer is allowed a reasonable time to inspect and reject defective goods after physical acceptance of goods.
Buyer could also have rescission (place parties in the position they held prior to formation of contract) or accept the nonconforming goods and recover damages.
What is anticipatory repudiation?
Discharges the nonrepudiating party from the contract and gives them two options:
sue immediately for breach of contract OR for a commercially reasonable time, ignore the breaching party’s repudiation and wait for the repudiating party to perform at the appointed time. If they do not perform, the nonrepudiating party may then sue for breach.
The market value to be used in computing the buyer’s damages would be the market value at the time the buyer learned of the breach, not any time after.
Consequential damages only apply when the buyer cannot have reasonably purchased elsewhere at the time of the repudiation.
When does risk of loss and title change when the sale includes a 30 day period to return?
Risk of loss and title remain with seller until after 30 day period since the buyer has not indicated acceptance of the product, and the sale is incomplete.
When does the risk of loss transfer when there is a negotiable warehouse receipt?
Risk of loss to goods which are held in a warehouse for delivery without being moved will pass at the time the negotiable document of title is properly negotiated to the buyer. If the doc of title is nonnegotiable, then the risk of loss passes a reasonable time after the buyer receives the document. When there is no doc of title representing the goods, risk of loss will pass once the warehouseman acknowledges the buyer’s right to the goods.
When does risk of loss ordinarily pass?
Passes on tender of delivery. However, if seller is a merchant seller, the risk of loss does not pass until the buyer takes receipt of the goods.
Not at the time contract formed.
UCC applies to..
Statute of Frauds?
Applies to the sale of goods, specially manufactured or otherwise. Does not apply to sale of real estate.
Statute of frauds - requires that any sale of goods for $500 or more must be in writing to be enforceable
When can a seller stop delivery?
A seller is entitled to stop the delivery of goods in the hands of a carrier if an insolvent buyer who is not in possession of the document of title refuses to pay cash.
Note the furnishing of false FS does not void contract, instead it extends the time the seller has to reclaim the goods already delivered to the insolvent buyer.
When do you have a firm offer under UCC?
The offer must be made by a merchant offeror in a signed writing which gives assurance that the offer will be held open. There is no requirement that the offeree also be a merchant. A firm offer does not need to state the period of time for which it is irrevocable. If no time period stated, it will be irrevocable for a reasonable period of time, not to exceed 3 months.
A firm offer does not need to be supported by consideration to be irrevocable.
What is the UCC’s implied warranty of merchantability?
Every merchant seller of goods impliedly warrants that
- the goods sold are fit for the ordinary purposes for which such goods are used
- adequately packaged and labeled
- conform to promises or affirmations of fact made on the package or label
What happens when the buyer breaches the contract as it becomes due?
The seller can recover the full purchase amount of the goods identified to the contract plus incidental damages (ex: storage) if the seller is unable to resell the goods at a reasonable price after making a reasonable effort.
What is the warranty of title?
In any contract for the sale of goods, the seller extends a warranty of title to the buyer. Such a warranty is neither express nor implied but warrants that the seller has good title to the goods, that the transfer of said title is rightful, and that the buyer will have knowledge of all liens against the property at the time of transfer.
If the buyer was not informed of all liens, then the seller must bear the loss since it violated the provisions of the title warranty.
