Sales

Question 1

UCC covers contracts for the sale of…

Answer 1

Goods (so if a K might be goods or services make sure to point this out if relevant)

Question 2

What is a good versus a fixture?

Answer 2

Goods are all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than cash, investment securities, and things in action. This includes things that can be severed from realty like minerals. Fixtures are permanently affixed to realty

Question 3

Are floor tiles fixtures?

Answer 3

Probably not since they differ in the degree and permanence of affixation from fully integrated structural systems

Question 4

What is the predominant purpose rule?

Answer 4

A contract involving the mix of goods and services will be governed by the set of laws that govern the predominant component of the contract

Question 5

What is the statute of frauds?

Answer 5

An affirmative defense

Question 6

What does the statute of frauds require under the UCC?

Answer 6

Contracts for the sale of goods for $500 or more must be in writing that captures the material terms (quantity and subject) and be signed by the person to be charged with the K.

Question 7

What is the specially manufactured goods exception to the SoF?

Answer 7

goods that are “not suitable for sale to others in the ordinary course of the seller’s business” and that “the seller has made … a commitment for their procurement.”

A maker can satisfy the SOF as soon as it makes a substantial beginning toward manufacturing the goods.

Question 8

What is the merchant’s confirming memo?

Answer 8

a “merchant’s confirmatory memorandum” makes the contract enforceable unless objected to within 10 days. The sale must be between two merchants and the receiver must have reason to know of its contents.

its an exception to SOF

Question 9

What is part-performance exception to SOF?

Answer 9

To the extent a contract has already been performed in good faith, it may become enforceable despite the lack of a traditional writing compliant with the Statute of Frauds. (only for quantity delivered and accepted)

Question 10

What is an express warranty?

Answer 10

“affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain”

Question 11

Can maintenance records for a car constitute an express warranty?

Answer 11

Yes

Question 12

What is the implied warranty of merchantability?

Answer 12

goods sold by a merchant must be fit for their ordinary purpose so as to pass without objection in the trade

Question 13

What is the implied warranty for a particular purpose?

Answer 13

Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods there is unless excluded or modified under the next section [8.2-316] an implied warranty that the goods shall be fit for such purpose

Question 14

How are implied warranties effectively disclaimed?

Answer 14

Disclaimed in writing and conspicuous OR

“unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like “as is,” “with all faults” or other language which in common understanding calls the buyer’s attention to the exclusion of warranties and makes plain that there is no implied warranty; and

when the buyer before entering into the contract has examined the goods or the sample or model as fully as he desired or has refused to examine the goods there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him; and

an implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade.

Question 15

Are common law remedies available under the UCC?

Answer 15

Yes, including fraud

Question 16

What is fraud in the inducement?

Answer 16

The elements of fraud in the inducement are an intentional misrepresentation of a material fact not discoverable by reasonable inspection, scienter, reliance, detriment, and damages.

Question 17

When may a buyer revoke acceptance?

Answer 17

Revocation of acceptance [Va. Code 8.2-608] requires that the nonconformity substantially impairs the value of the goods; acceptance was reasonably induced by the difficulty of discovering the nonconformity before acceptance, or by the seller’s assurance to cure; the buyer gave notice of revocation within a reasonable time after discovering the nonconformity and before any substantial change in condition of the goods not caused by their own defects.

UCC requires perfect tender

Question 18

Damages for breach of express warranty?

Answer 18

Revoke acceptance and obtain the purchase price plus incidental damages OR obtain the cost of repair/cover plus incidental damages. Could also get consequential damages if available

Question 19

Distinguish incidental and consequential damages?

Answer 19

Incidental damages include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commission in connection with effecting cover and any other reasonable expense incident to the delay or other breach.

Consequential damages are (a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and (b) injury to person or property proximately resulting from any breach of warranty

Question 20

Does the UCC apply to used goods?

Answer 20

Yes, just apply the definition of a good, “all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities (Title 8.8A) and things in action.”

Question 21

Do implied warranties apply to contracts for the lease of goods?

Answer 21

Yes, Article 2A of the VA Code governs leases

Question 22

In VA, does the implied warranty for a particular purpose require that the good be used for a purpose that it is not ordinarily used for?

Answer 22

No, the seller just needs to have reason to know of the particular purpose for which the goods are requires and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods.

Question 23

What is the implied warranty of merchantability?

Answer 23

Va. Code § 8.2-314 provides that, “Unless excluded or modified, a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind” and that “goods to be merchantable must be at least such as to pass without objection in the trade under the contract description.”

Question 24

Is there any difference with how the implied warranty of fitness for a particular purpose and the implied warranty of merchantability are disclaimed?

Answer 24

No

Question 25

When will the refusal to examine goods exclude application of an implied warranty?

Answer 25

Code says that when the buyer examines the product or refuses to then there is no warranty as to defects which an examination ought in the circumstances have been revealed.

William & Mary say a refusal needs to be more prominent. A seller asking someone if they would like to try out a product and the buyer declining is apparently not a refusal; just pick a side if this comes up; VBBE gave 10 points for a different conclusion. In fact, they even put down the wrong rule.

Question 26

What is a merchant?

Answer 26

Someone who regularly deals in the kind of goods at issue or by occupation holds themselves out as having knowledge or skill peculiar to the goods involved in the transaction.

Question 27

Under §8-207 when will inconsistent terms in an acceptance become a part of the contract?

Answer 27

1. Both parties are merchants
2. The new term does not materially alter the deal
3. The initial offer does not expressly limit acceptance to its terms
4. The offeror does not object within a reasonable time to the new term(s)

Question 28

When do terms materially alter a contract?

Answer 28

Terms materially alter the agreement if there is hardship through significant shifting of the burden or surprise

Question 29

What rule does VA apply when the parties do not reach a contract b/c the offer and acceptance have inconsistent terms that materially alter the contract, but they act as though the have one through performance?

Answer 29

The knockout rule. The inconsistent terms are knocked out and replaced with the UCC gap fillers.

Question 30

The UCC requires perfect…

Answer 30

Tender, which means perfect goods and perfect delivery.

exceptions: K explicitly changes the default rule; installment contracts

Which means buyer can reject immediately. Revocation is different from rejection and occurs after acceptance.

Question 31

To properly reject the goods, the buyer must:

Answer 31

1. Notify the seller of the rejection within a reasonable time;
2. Notify the seller of the particular defect which is ascertainable by reasonable inspection
3. Hold the goods for a reasonable time with reasonable care so the seller can get them back

Question 32

If the goods are rightfully rejected and the buyer has paid some or all of the purchase price, then she will have a ____________ in the rejected goods

Answer 32

security interest

Question 33

If the seller fails to give reasonable instructions once the bad goods have been delivered, the buyer has three options:

Answer 33

1. Store the goods on the seller’s account;
2. reship them to the seller; OR
3. resell them for the seller’s account

Question 34

What can the buyer do when the Goods seem good at first but then an underlying defect is discovered within a reasonable time? Seller’s rights?

Answer 34

Revoke acceptance of the goods if their non-conformity substantially impairs the value of the goods to the buyer

BUT, If the seller fails to tender perfect goods and time is left on the K or the seller had reasonable grounds to believe that the buyer would accept a replacement, then the buyer must give the seller a chance to cure the deficiency.

Question 35

With an installment contract, the buyer can only reject a specific delivery that is not perfect when there is …

Answer 35

substantial impairment in the installment that cannot be cured

Question 36

When a buyer of goods accepts non-conforming goods, what measure of damages is he entitled to receive?

Answer 36

a buyer that has accepted non-conforming goods may keep the goods and recover damages “for any loss” resulting from the breach, including lost profits.

Question 37

General rule on recovery of attorney’s fees?

Answer 37

The general rule (the American Rule) is that each side pays its own fees, unless otherwise provided by contract or statute, or in the Court’s discretion for fraud.

Question 38

When a buyer of goods lawfully rejects a shipment for lateness, what is the correct measure of the buyer’s damages recoverable if buyer sues seller?

Answer 38

The measure of damages would be the difference between the market value of the goods and the contract price, with any consequential or incidental damages (UCC § 2-713(1)), plus any lost profits (UCC § 2-715(2)).

Question 39

If the parties to a sales contract do not set a specific time of performance for any obligation under the contract, the contract must be performed within…

Answer 39

A reasonable period of time

Question 40

How are terms of art interpreted in contracts under the UCC?

Answer 40

They are enforceable where the meaning of the term can be found in a usage of trade and can be reasonably understood by the parties.

Question 41

When late delivery on an installment contract substantially impairs the value of the installment, what can the buyer do with respect to future installments?

Answer 41

The buyer may cancel the contract and stop receiving future installments

Question 42

Rule for mitigation on late delivery?

Answer 42

When buyers recognize goods will be late in delivery, they may be required to attempt to mitigate by obtaining the goods elsewhere and selling them. However, where the seller continues to make assurances that the delivery is coming and the contract will be fulfilled, buyers are not required to cover elsewhere.

Question 43

if the parties to a sales contract do not set a specific time of performance for any obligation under the contract, the contract must be performed within thirty (30) days from the date the contract was formed. (T/F?)

Answer 43

False, the K must be performed within a reasonable time

Question 44

What is an express warranty/how is it created/what does it not require/what is it not?

Answer 44

an express warranty is any affirmation by the seller of a fact or promise that relates to the goods and becomes a basis of the bargain. The goods shall conform to those affirmations. It can be created by sample.

an express warranty is not an opinion. However, the words of “warranty” need not be used, nor does the seller need to intend to create an express warranty.

Question 45

What is an implied warranty of fitness for a particular purpose/how is it created?

Answer 45

where the seller has reason to know of a particular purpose that the buyer is buying a good for and it relying o nthe seller’s skill or judgment in finding a suitable good for that service, the seller warrants that such good will be suitable for that purpose.

Question 46

How can a buyer’s actions disclaim an implied warranty of fitness for a particular purpose or merchantability?

Answer 46

when the buyer inspects goods or a sample or refuses to perform such inspection, and such inspection ought to have revealed the defects, the warranties are disclaimed.

as fully as he desired

Question 47

What is the implied warranty of merchantability?

Answer 47

Goods sold by a merchant are warranted as being good for their ordinary purpose so as to pass without objection in the trade.

Question 48

what is a merchant?

Answer 48

a person that deals in the kind of goods at issue or by occupation presents himself as someone with skill or knowledge peculiar to the goods.

Question 49

What is measure of damages for a breach of warranty?

Answer 49

expectation basically. Purchase price + difference between cost of cover and the K price + any incidental or consequential damages.

Question 50

When is revocation of goods permitted?

Answer 50

After acceptance of goods, which occurs after reasonable opportunity for inspection or failure to make rightful rejection and after reasonable opportunity for inspection, buyer uncovers a defect that was not reasonably uncoverable, or where the seller assures cure, before acceptance that substantially impairs the value of the good, he must notify the seller within a reasonable time of the discovery of the defect, and before any substantial change has occured in the condition of the goods not caused by their own defect.

Question 51

What is the effect on the buyer when they revoke acceptance, so….?

Answer 51

They have the same rights and duties with respect to the goods as if they had rejected them, so to continue using them would be wrongful. Revocation would be invalid at that point.

Question 52

May a buyer that is permitted to revoke, entitled to seek damages in addition to revocation?

Answer 52

Yes

Question 53

Measure of damages for breach in regard to accepted goods?

Answer 53

Expectation damages, incidental damages, and consequential damages, but no cover because the goods were accepted.

Question 54

Buyer’s damages for nondelivery or repudiation?

Answer 54

Difference between the market price and the K price plus incidental damages and consequential (lost profits), less expenses saved as a consequnece of the seller’s breach.

Question 55

When are punitive damages permitted?

Answer 55

When there is willful or wanton conduct, or such recklessness as evinces a conscious disregard for the safety of others.

Question 56

Where circumstances cause an exclusive or limited remedy to fail of its _________, remedy may be had as provided in this act.

Answer 56

essential purpose

Question 57

What should you do if you have a limited warranty and the seller makes a bunch of attempts to repair a defect but fails?

Answer 57

revoke acceptance and seek expectation damages which is the difference between the K price and the cost of cover plus incidental and consequential damages. **