Sales Flashcards
In a sale or return, the buyer has title and risk of loss
unless and until the goods are returned to the seller.
Express Warranty
Any affirmation of fact or promise that becomes part of the basis of the bargain
In Sales - the Perfect Tender Doctrine
A buyer may reject goods if they do not conform to the contract IN ANY WAY.
The UCC imposes an obligation of good faith on both parties to a contract.
For MERCHANTS, this includes the duty to observe reasonable commercial standards
Under the UCC, a contract to buy all of one’s requirements or to sell all of one’s output is valid even though an exact quantity is not stated. In addition, price and time for delivery are not essential terms under
the UCC.
As a general rule, the only essential term under the UCC is quantity, and an output or requirements term is considered a sufficiently precise quantity.
THE STATUTE OF FRAUDS requires contracts involving the sales of goods to be in writing if they exceed $500 (MYLEGS). However, if any of these (4) EXCEPTIONS apply, an oral contract will be enforceable:
S pecially manufactured (custom) goods
W ritten confirmation between merchants
A dmission in court
P erformance to the extent that it has been accepted
A FIRM OFFER (an offer that must remain open despite the absence of consideration) can be made only by .
MERCHANTS and must be in a SIGNED WRITING
Called a MERCHANT’S FIRM OFFER
- Seller must be a merchant.
- In writing & signed by the merchant
- Offer gives assurance it will be kept open for a certain time (irrevocable for time stated, if no time is stated then a reasonable time, in no event longer than 3 mos.)
The warranty of title is
a guarantee from the seller that the goods are delivered free of all liens of which the buyer is unaware.
An action for Strict Product Liability will succeed only if -
The Product was in a defective condition when sold,
The defect caused the plaintiff’s injury
The defect made the Product Unreasonably dangerous
Seller was in the business of selling goods (Dealer)
The reached the consumer without substantial change.
An action for Negligence-Failure to Use Reasonable Care
Injured must prove:
Seller owed a duty of CARE
Seller Breached the duty by FAILING TO USE DUE CARE
(selling unsafe goods)
Damages (plaintiff suffered damages)
Causation -caused by the seller’s negligence
Under a Shipment Contract, risk of loss under the UCC is controlled by
the Shipping Terms, NOT by Title.
In an F.O.B. place of shipment contract, risk of loss passes
when the goods are placed in the hands of a carrier at the seller’s loading dock.
On an anticipatory breach of contract (or repudiation) the nonbreaching party has a right to
- Sue immediately
- Cancel the contract
- Demand assurances, or
- Wait until the time for performance and sue then if they
fail to perform.
There is NO RIGHT TO PUNITIVE DAMAGES under contract law in general, even on anticipatory breach.
Absent an agreement otherwise,
the seller is not obligated to deliver the conforming goods to the buyer, but merely needs to hold them for the buyer’s disposition.
An injured party cannot necessarily collect “ANY amount” of liquidated damages specified in a contract. II:
UCC 2-718(1) restricts recovery to reasonable liquidated damages; any amounts above a reasonable amount are considered unenforceable penalties.
Under UCC 2-718(2)(b), on the buyer’s breach a seller can usually retain up to $500 of the buyer’s deposit OR,
the lesser of 20% of the price.
When a buyer materially breaches a contract, the seller may
cancel and seek damages. Punitive Damages are NOT available.
Under the Sales Article of the UCC it
imposes a duty of good faith on all parties.
The Warranty of Merchantability is =
IMPLIED whenever a merchant (one who ordinarily sells goods of the kind sold) sells goods. UCC 2-314
Under an action for Strict Product Liability -
It DOES NOT REQUIRE A SHOWING OF NEGLIGENCE. The product must have been unreasonably dangerous when it left the seller’s hands.
In a noncarrier case, risk of loss passes from a merchant seller
on actual DELIVERY of the goods into the buyer’s possession
Failure to give adequate assurances when reasonably demanded is
a form of anticipatory repudiation. It constitutes a breach and discharges the buyer.
The UCC Sales Article applies to all contracts for the sale of goods,
REGARDLESS of price.
Tender of delivery =
Seller notifies and makes available to the buyer the goods required by the contract
Tender of Payment =
An offer of payment of an amount due.
Shipment of nonconforming goods is
a COUNTEROFFER IF accompanied by a NOTICE OF ACCOMODATION. (Without the notice, it is an acceptance and a breach).
Every sale of goods by a merchant includes
an implied warranty of merchantability.
With a NON MERCHANT SELLER (Garage Sale) - Risk of loss passes to the buyer when
upon tender of the delivery of the goods. i.e. - the goods are made available to the buyer.
A purchaser has a right to
inspect goods before paying for them unless the contract provides otherwise.
When something is specially manufactured, a seller can bring an action for
the FULL CONTRACT PRICE (NOT JUST THEIR COST) when it is unable to sell the goods that a buyer refuses to accept. The seller can also recover incidental damages such as costs of storage.
if the owner of goods entrusts them to a merchant who deals in goods of that kind, and the merchant sells them in the ordinary course of the merchant’s business (by mistake),
then the merchant has the power to transfer title to the goods. You can’t get your merchandise back from the person they sold it to but you can have an action of damages against the merchant.
To be an express warranty, the language must be
part of the basis of the bargain.
the implied warranty of merchantability may be disclaimed in a number of ways.
One such way is by the use of an oral statement that mentions merchantability.
if the parties agreed that delivery would be made in a certain way and the agreed method becomes impossible(Trucker’s strike),
the seller must arrange for other commercially reasonable transportation and the buyer must accept.
Under the UCC, a contract involving “goods” may be modified without the need for additional (new) consideration (both parties agree to change the delivery date of a an appliance purchased for $480).
Here, the subsequent modification is binding if they both agree. Moreover, no writing was required for the modification because the contract price, as modified, was less than $500.
The implied warranty of fitness is created when the seller of goods
knows at the time of the sale that the buyer is relying on the seller to select goods fit for the purpose that the buyer told the seller about.
Anticipatory repudiation occurs when
either the buyer or the seller indicates in advance of performance that he or she will not perform.
Before a buyer can have any interest in any goods
the goods must be Identified to the Contract .
Under the Sales Article, if parties’ contracts are incomplete, the Article has many gap filling provisions through which the contract may be completed. However, the courts will NOT enforce a contract that does not state
the QUANTITY of the goods bought and sold, either specifically or in terms of output of the seller or requirements of the buyer.
The implied warranty of fitness for particular purpose arises when
the SELLER knows the particular purpose for which the buyer will use the goods and KNOWS that the buyer is RELYING on the seller to choose suitable goods.
A clause in a contract that provides for liquidated damages will be enforceable if the amount of the damages clause
bears a reasonable relationship to the probable loss. Liquidated damages clauses will not be enforced where they are so high as to constitute a penalty.
“scienter”
A misrepresentation made with the reckless disregard for the truth will prove fraud
With a SHIPMENT contract
Buyer has Risk of Loss when the goods are in the carrier truck.
