SALES Flashcards
CISG Key Differences From UCC
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- The parties must either have known or should have known that their businesses were in different countries.
- To use a different choice of law when the CISG would otherwise apply, you mustexpresslyopt out of the CISG. (not enough saying that NY law will apply, must say we expreslly opt out of the CISG.)
- Not apply to consumer goods
- Does not apply to liability for death or personal injury
- Excludes third party interests in goods sold
- ## No Parole Evidence Rule under CISG meaning you can bring in extrinsic evidence
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Article 2
Scope?
Governs Sales of Goods
Transactions in goods between non-merchants can still be covered under Art 2
Express Terms v. UCC
Express terms in K will trump UCC
Common Law Offer and Acceptance
Battle of the Forms
Mirrior Image Rule - any purported acceptance that doesnt exactly mirror the offers terms is a rejection and a counteroffer
CISG vs. Article 2 of the UCC
- Express Opt-Out:The CISG requires express opt-out to adopt a different choice of law when the CISG would otherwise apply. This is a key difference from the UCC.
- Consumer Goods:The CISG doesnotapply to consumer goods unless the seller neither knew nor should have known they were for consumer use (Article 2).
- Liability for Death or Personal Injury:The CISG does not apply to liability for death or personal injury (Article 5), unlike the UCC (whichmightapply, as seen in UCC §2-719 on limiting damages).
CISG Contract Formation
Article 19 - 1 A reply to an offer containing additions limitations or modifications is a rejectation and a counter offer. (Mirror Image Rule unlike UCC sometimes)
Article 19-2: A reply considered an acceptance despite additional/different terms is valid unless the offeror objects promptly
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Article 19-3: The definition of “materially altering” terms is broad, including:
- Price
- Payment
- Quality
- Quantity
- Delivery (place and time)
- Liability
- Dispute resolution
Last-Shot Doctrine: Article 19 (1, 2, & 3) may revive the last-shot doctrine. If an acceptance includes materially different terms, it’s a counter-offer, potentially accepted by conduct.
Firm Offer
An offer held open for a specific time is typically unenforceable unless the offeree providesconsideration. However,UCC 2-205modifies this.
> A firm offer, under UCC 2-205, is an offer by a merchant to buy or sell goods, in a signed writing, assuring that it will be held open. It’s irrevocable for the stated time, or a reasonable time (maximum three months), even without consideration.
Elements of a Firm Offer:
- Offer by amerchant
- To buy or sellgoods
- In asigned writing
- Assuring the offer will be held open
Exception:If the offeree gives consideration to support the firm offer, UCC 2-205 doesn’t apply; a separate enforceable contract exists.
ADs are generally not Firm Offers under Contract Law
Two Tests for hybrid Transactions
- Predominant Purpose Test ( Maj) - of K at the time partied created K is it a service or good
- Gravamen of Complaint - what is the complaint about the service or the good.
Merchants Under the UCC
2-104 - merchant is a person that deals in goods of the kind or otherwisw by his occupation holds himself out as having knowledge or skill peculiar to the parties or good involved in the transaction
Look to comments—for certain things, everyone would be considered a merchant, like checking mail, for instance (non-specialized business practices)
BUT, even these sections only apply to a merchant in his mercantile capacity! Lawyer buying fishing tackle for his own use is not a merchant.
3 consequences:
1. General business practices—almost every person in business
2. Implied warr of merch–Only merchants who deal in goods of the kind
3. General duties of good faith and fair dealing—almost everyone in busn
Express Warranties
An express warranty is explicitly stated buts it creation isnt always straighforward. Its created by any affirmation of fact or promise that becomes a **basis of the bargain. **
- ## Affirmation of fact or promise:Any statement relating to the goods that influences the buyer’s decision becomes an express warranty. It doesn’t need to be the sole reason for the purchase.
- Description of goods:A description (size, features, certifications) which is part of the basis of the bargain creates an express warranty.
- Sample or model:Showing a sample creates an express warranty that the final product will match the sample. (Humane Society v. Morgan Drilling and Suppliesexample)
- Contractual avoidance:Parties can contract around express warranties, even those created by samples.
Puffery 🗣️
> Puffery:Exaggerated or subjective statements of opinion (“super duper fantastic”) that don’t create warranties. The line between puffery and a warranty is often blurry and jurisdiction-specific. Measurable claims (e.g., “60 miles per gallon”) are not considered puffery.
What is a sale of goods
Any transaction or contract by which seller trasfers title to goods to buyer for a price. UCC 2-106(1)
Course of performance
is a sequence of conduct between the parties to a
particular transaction that exists if:
(1) the agreement of the parties with respect
to the transaction involves repeated occasions for performance by a party; and
(2) the other party, with knowledge of the nature of the performance and
opportunity for objection to it, accepts the performance or acquiesces in it
without objection
Course of Dealing
i a sequence of conduct concerning previous transactions
between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions
and other conduct
Usage of Trade
A “usage of trade” is any practice or method of dealing having such regularity of
observance in a place, vocation, or trade as to justify an expectation that it will be
observed with respect to the transaction in question. The existence and scope of
such a usage must be proved as facts.
1-203- (a) whether sale or lease is determined by facts of each case
(b) creates a security interest if: lessee has to pay for possession and is an obligation for termination of lease & is not subject to termination by lessee (without some kind of financial penalty) AND:
- term longer than economic life
- lessee bound to renew lease for remaining life or to become owner
- lessee has option to renew lease for nominal consideration
- lessee has option to become owner for no addtl or for nominal consideration upon compliance with lease
Statue of Frauds
Defense to claims of K formation
Requirements
- Writing sufficient to indicate a contract for sale has been made
- writing must be signed by the party who enforcement is sught
- must state quantity of goods
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Contract Formation
General Provision 2-204
(1) A contract for sale of goods may be made in any manner
sufficient to show agreement, including conduct by both
parties which recognizes the existence of such a contract.
(2) An agreement sufficient to constitute a contract for sale
may be found even though the moment of its making is
undetermined.
(3) Even though one or more terms are left open a contract
for sale does not fail for indefiniteness if the parties have
intended to make a contract and there is a reasonably
certain basis for giving an appropriate remedy.
Offer and Acceptance
2-206
(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 and by any medium reasonable in the circumstances;
(b) an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-
conforming goods, but such a shipment of non-conforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.
(2) Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.
Parole Evidence Rule
1) writing has to be intended by both parties to be a final expression of
their agreement, or the terms of that agreement.
2) even if a writing is intended by both parties to be a final expression, evidence of subsequent side agreements is admissible (see modifications under 2-209).
3) even if a writing is intended by both parties to be a final expression, evidence of trade usage, course of performance and course of dealing may be introduced to explain or supplement the writing BUT not contradict the writing.**
Fully integrated- need merger clause for this—it is a complete and exclusive agreement
Partially integrated- final statement, but not necessarily complete and exclusive statement, so can introduce evidence under a & b when it is partially integrated
The existence of a merger and integration clause is evidence that a contract is a fully integrated (i.e. a “complete and exclusive statement”) but it not conclusive. The court must still determine whether, on the facts, the contract is fully integrated.
There is a presumption under the UCC that contracts are only partially integrated because it is common for parties to not include every necessary provision for a contract in one document.
Express Warranty
Merchant?
- making of affirmations that goods would conform to certain affimations
- description of goods that the goods will conform to the description
- sample or model of the goods creates an express warranty that the goods will conform to the sample or model
Basis of the Bargain -
No Merchant Requirment
OBSTACLES TO EXPRESS WARRANTIES
1. Are words facts/promises or mere puffery?
2. Privity?
3. Notice under 2-607(3)(a)
4. Statute of limitations 2-725; 4 years from date of
delivery
Warranty of Title
2-312
WARRANTY OF TITLE & AGAINST
INFRINGEMENT; BUYER’S OBLIGATION
AGAINST INFRINGEMENT
* Implied warranty of good and transferable title
* Implied warranty that goods are free of security
interest/lien of which buyer has no knowledge
* Part B permits exclusion of warranties by
specific language or circumstances
* Merchant who deals in goods of that kind
warrants the goods are free from 3rd party
infringement claims (think Patent Trolls!)
must be disclaimed in specific language or under certain circumstanes.
Implied Warrant of Merchantibility
Merchant?
**Implied warranty that attaches unless **excluded or modified **in each sale of goods
- If seller is **merchant **w/r/t goods of that kind
- Goods must be fit for ordinary purpose
- That go without objection in the trade
- Or of “fair average” quality
See 2-314 (2) for more definitions of merchantability
Other implied warranties may arise from COD or Trade usage
Impied Warranty: Fitness for a Particular Purpose
Merchant?
- Seller has reason to know of buyer particular purpose in buying goods
- And that buyer is relying on sellers skill or judgment to select goods
- Buyers in fact relies on seller skilll or judgment
no merchant requirment
Disclaimer for Implied Warranty of fitness for a particular pupose
Writing and Conspicuous
Open Price Term
gap filler provision
2-305
The parties if they so intend can conclude a contract for sale even thoufh the price is not settled. In such a case the prisce is a reaonable price at the time of delivery if
- nothing is said as to price
- price is left to be agreed by the parties and they fail to agree or
- the price is to be ficed in terms of some agreed market or other standard as set or recorded by a thrid person or agency and it is not so set or recorded
- A price to be fixed by the seller must do so in good faith
2-316 Exclusion of Express Warranties
Rules & Wrinkles
- (1) when words create warranty and other words negate the negation is inoperative
- seller must use clear and conspicuous language in the contract, specifically stating that no express warranties are made, and ensuring the disclaimer is presented in a way that a reasonable person would notice it, often by using bold text, larger font size, or a separate section within the agreement;
2-316 Exclusion of Implied Warranties
Rules and Wrinkles \
- to exclude implied warranties the writing must mention merchantibility and be conspicuous
- to exlcude or modify implied warranty of fitness must be in writing and conspicuous
- as is or with out faults exludes both implied warranties unless circumstances indicate otherwise
- When buyer has a chance to sample or refuse to examine the goods there is no implied warranty with regard to defects which examination would reveal to him(buyer experience and totality of circumstances play here)
- SELLER MUST DEMAND INSPECTION.
See also Modification of Warranties 2-316
Excused Performance due to Impracticability
as defense
2-615
- may not apply if seller assumed greater obligation and subject to substituted performance
- not a breach by seller if an ocurrence of a contigency that was not comtemplated on which the conteact was made by good faith compliance excused performance is valid even if gov regulation deemed invaled as long as done in good faith =
Key points about UCC 2-615(a):
“Commercial Impracticability”:
The key concept here is that the event causing the difficulty must make performance significantly harder or more costly, not just slightly inconvenient.
Unforeseen Contingency:
The event that makes performance impracticable must not have been reasonably foreseeable by the parties when the contract was formed.
Good Faith Compliance:
If a seller is relying on a government regulation to excuse performance, they must comply with it in good faith.
Notice provision § 2-615(c) –seller must notify buyer seasonably that there will be delay or non-deliv and if allocation necessary, then estimated quota avail to buyer
Apportionment §2-615 (b)—seller must allocate production and delivers among buyers (pro rata perferred), but does have some discretion to do it in a FAIR and REASONABLE manner
Substantive vs. Procedural Unconscionability
- Substantive Unconscionability: Focuses on the actual terms of the agreement.
- Procedural Unconscionability: Examines the circumstances surrounding the agreement.
2-614 Substituted Performance
- without faults of eaither party
- loading, facilities carriers and or manner of delivery becomes impracticable
- ## o Failure in delivery or in payment should allow **commercially reasonable substitute. **
2-613 Casualty to Identified Goods
UCC § 2-613
o Items are specifically identified when the K is made
Cannot be replaceable or must be special good
o Loss is w/o fault to either party
o Ask is total or partial loss
- if total then contract is avoided
- if partial the buyer may nevertheless demand inspection and at
his option either treat the contract as avoided or accept the goods with due
allowance from the contract price for the deterioration or the deficiency in
quantity but without further right against the seller.
What type of transactions does Article 2A cover?
a transfer of the right to possession and use of goods for a term in return for consideration ….”
Covers both Consumer and Commercial transcation.
ex of no coverage. Real Estate Transaction
Consumer Lease v. Finance lease
consumer lease- lessor is regularly engaged in selling or leasing & lessee is individual who takes lease for personal, fam or household purpose
o
finance lease- generally involves a supplier, a financer, and a lessee
