Sales 2 Flashcards
2-601 (Buyer’s Rights on Improper Delivery; “perfect tender” rule)
Subject to the provisions on breach in installment contracts (Section 2-612)
and unless otherwise agreed,
if the goods or the tender of delivery
fail in any respect to conform to the contract,
the buyer may
a. reject the whole; or
b. accept the whole; or
c. accept any commercial unit or units and reject the rest.
2-316(2) (Exclusion or Modification of Warranty of Fitness for a Particular Purpose)
Subject to subsection (3),
the exclusion or modification of the implied warranty of fitness must
be in writing
and be conspicuous.
Warranties: Vertical Privity (Implied Warranties; Tex Enterprises)
A manufacturer may NOT be held liable
for a breach of the implied warranties of 2-314 and 2-315
without privity of contract
between the manufacturer and the ultimate consumer.
UCC 2-207. (Battle of the Forms; Additional Terms) 3
- Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract.
In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act.
Warranties: Vertical Privity (Implied Warranties; New Moon Homes)
A manufacturer may be held liable
for direct economic loss
attributable to a breach of the implied warranties of 2-314 and 2-315
without regard to privity of contract
between the manufacturer and the ultimate consumer.
Consumer must give reasonably prompt notice of the breach.
2-509 (Risk of Loss in the Absence of Breach)
Where the shipment is by carrier and contract is
a. *FOB Point of Shipment, the risk of loss passes to the buyer when the goods are delivered to the carrier; but
b. *FOB Point of Destination, the risk of loss passes to the buyer when the goods are tendered at the point of destination.
2-508 (Cure by Seller of Improper Tender or Delivery; Replacement)
The seller may cure if s/he seasonably notifies the buyer of the intent to do so, and either
- The time for performance has not yet passed, or
- The seller had reasonable grounds to believe the goods would be acceptable.
2-612 (“Installment Contract”; Breach; “substantial performance”)
An “installment contract” is one which authorizes the delivery of goods in separate lots.
2. The buyer may reject an installment only if:
The installment has a nonconformity,
The nonconformity substantially impairs the value of the installment, and
The nonconformity cannot be cured.
3. If the nonconformity substantially impairs the value of the whole contract – as opposed to just the value of the installment – the buyer may cancel the contract and recover damages for total breach.
2-608 (Revocation of Acceptance in Whole or in Part)
The buyer may revoke his acceptance
where the non-conformity substantially impairs the good’s value to him if he has accepted it
a. on the reasonable assumption that its non-conformity would be cured and it has not been seasonably cured; or
b. without discovery of such non-conformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller’s assurances.
2. Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. It is not effective until the buyer notifies the seller of it.
3. A buyer who so revokes has the same rights and duties with regard to the goods involved as if he had rejected them.
2-606 (What Constitutes Acceptance of Goods)
Acceptance of goods occurs when the buyer
a. after a reasonable opportunity to inspect the goods signifies
that the goods are conforming
or that he will take or retain them in spite of their non-conformity; or
b. fails to make an effective rejection,
but such acceptance does not occur
until the buyer has had a reasonable opportunity to inspect them; or
c. does any act inconsistent with the seller’s ownership;
but if such act is wrongful as against the seller
it is an acceptance only if ratified by him.
2. Acceptance of a part of any commercial unit is acceptance of that entire unit.
Warranties: Vertical Privity (Express Warranty)
Privity of contract is not essential to maintenance of an action against a manufacturer for breach of express warranty. Consumer must give reasonably prompt notice of the breach
2-316(2) (Exclusion or Modification of Warranty of Merchantability)
the exclusion or modification of the warranty of merchantability must
mention merchantability,
be in a writing,
and be conspicuous
2-715 (Buyer’s Incidental and Consequential Damages)
- Incidental damages resulting from the seller’s breach include
expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected,
any commercially reasonable expenses in connection with effecting cover
and any other reasonable expense incident to the delay or other breach. (Money going out as a result of a breach) - Consequential damages resulting from the seller’s breach include
a. any loss resulting from 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; and
b. injury to person or property proximately resulting from any breach of warranty. (Lost profit)
2-716 (Buyer’s Right to Specific Performance or Replevin)
A court may decree specific performance
where the goods are unique
or in other proper circumstances.
Buyer’s Rights on Delay in Delivery of Specially Manufactured Goods (D.P. Technology Corp.)
Where the nonconformity involves a delay in the delivery of specially manufactured goods,
the law requires substantial nonconformity for a buyer’s rejection under 2-601.
