Sales

Question 1

Destination Contract

Answer 1

agreement that generally transfers title and risk of loss of goods to the buyer when the goods reach their destination (buyer’s place of business)

Question 2

Firm offer

Answer 2

offer that is irrevocable despite lack of consideration (must be in writing and made by a merchant)

Question 3

Good faith

Answer 3

parties will operate honestly in the course of the transaction

Question 4

Goods

Answer 4

Moveable personal property

Question 5

Implied warranty

Answer 5

guarantee that automatically exists

Question 6

Merchant

Answer 6

person who regularly buys or sells the goods that are involved in the contract

Question 7

Perfect tender rule

Answer 7

goods that the seller delivers must conform exactly to the terms of the contract.

If not buyer can: (a) reject entire lot (b) accept entire lot (c) accept some unites and reject remaining

• contract may stipulate seller need not provide perfect tender

Question 8

Risk of loss

Answer 8

which party will bear the loss if the goods are damaged or destroyed

independent of title under UCC, but rules regarding the transfer of both are similar

if breach of contract occurs, risk of loss falls on the breaching party

Question 9

Shipment contract

Answer 9

agreement that generally provides that title and risk of loss pass to the buyer when the seller delivers the goods to the common carrier

Question 10

Strict product liability

Answer 10

sellers are held responsible for injuries that their goods cause (even if they practiced due care) if

1. product was defective when sold
2. defect is unreasonably dangerous to user
3. product reaches user without significant changes
4. defect caused injury

Question 11

Tender

Answer 11

when a party to the contract is ready, willing, and able to perform the promise of the contract

Question 12

Transfer of title

Answer 12

ownership of goods transferred from seller to buyer

Question 13

Warranty

Answer 13

guarantee concerning the quality, performance or other characteristics of the good

warranty of title: seller warrants good title, rightful transfer and freedom from any lien

express warranties: (written or oral) promise made by seller that becomes part of the basis of the bargain (sales talk, puffing or seller’s opinion does not create express warranty)

implied warranties: (a) warranty of merchantability (if seller is a merchant) - goods are fit for ordinary purpose, properly packages and labeled (b) warranty of fitness for a particular purpose

Question 14

Uniform Commercial Code

Answer 14

Controls contracts for the sale of goods for any dollar amount (includes sales & leases of hardware, sales & licensing of software unless highly customized - then common law applies)

transaction need not involve a merchant

fills in missing terms of contract where parties intent was to create a contract (common law requires terms be stated, or no contract exists)

Question 15

Acceptance under UCC

Answer 15

Intent to be bound:

creates battle of forms: between merchants, additional terms included in accptance become part of the contract unless (a) original offer precludes such, (b) new terms materially alter the original offier, or (c) orginal offeror gives notice of his/her objection within a reasonable time

Question 16

Accomodation

Answer 16

When a seller ships substitute goods because the seller does not have the goods ordered by the buyer

• if buyer accepts, contract exists
• if buyer regects, there is no contract
• considered breach of contract until accepted

Question 17

Excused Performance

Answer 17

Parties releived from their promise to perform if:

• destruction of goods prior to performance
• commercial impracticality (performance has become excessively expensive or difficult)
• Assurance of performance (reasonable basis to believe other party will not perform as promised)

Question 18

Anticipatory repudiation

Answer 18

one party clearly indicates that it is unwilling or unable to perform as promised

Question 19

Document of Title

Answer 19

any document that serves as adequate evidence that the holder of said document is entitled to receive, hold and dispose of the goods the document covers

• Bill of lading: issued by a private or common carrier in exchange for goods delivered to it for shipment (negotiable or nonnegotiable)
• Wharehouse receipt: issued by person engaged in storing goods, acknowledges receipt of goods, describes goods to be stored and contains terms of storage contract (negotiable or nonnegotiable)

Question 20

sale on approval

Answer 20

allows buyer to return the goods even if they conform to the contract. title and risk of loss remains with seller until the buyer accepts goods

Question 21