Sales

Question 1

In a sale or return, the buyer has title and risk of loss

Answer 1

unless and until the goods are returned to the seller.

Question 2

Express Warranty

Answer 2

Any affirmation of fact or promise that becomes part of the basis of the bargain

Question 3

In Sales - the Perfect Tender Doctrine

Answer 3

A buyer may reject goods if they do not conform to the contract IN ANY WAY.

Question 4

The UCC imposes an obligation of good faith on both parties to a contract.

Answer 4

For MERCHANTS, this includes the duty to observe reasonable commercial standards

Question 5

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.

Answer 5

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.

Question 6

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:

Answer 6

S pecially manufactured (custom) goods

W ritten confirmation between merchants

A dmission in court

P erformance to the extent that it has been accepted

Question 7

A FIRM OFFER (an offer that must remain open despite the absence of consideration) can be made only by .

Answer 7

MERCHANTS and must be in a SIGNED WRITING

Called a MERCHANT’S FIRM OFFER

1. Seller must be a merchant.
2. In writing & signed by the merchant
3. 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.)

Question 8

The warranty of title is

Answer 8

a guarantee from the seller that the goods are delivered free of all liens of which the buyer is unaware.

Question 9

An action for Strict Product Liability will succeed only if -

Answer 9

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.

Question 10

An action for Negligence-Failure to Use Reasonable Care

Answer 10

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

Question 11

Under a Shipment Contract, risk of loss under the UCC is controlled by

Answer 11

the Shipping Terms, NOT by Title.

Question 12

In an F.O.B. place of shipment contract, risk of loss passes

Answer 12

when the goods are placed in the hands of a carrier at the seller’s loading dock.

Question 13

On an anticipatory breach of contract (or repudiation) the nonbreaching party has a right to

Answer 13

1. Sue immediately
2. Cancel the contract
3. Demand assurances, or
4. 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.

Question 14

Absent an agreement otherwise,

Answer 14

the seller is not obligated to deliver the conforming goods to the buyer, but merely needs to hold them for the buyer’s disposition.

Question 15

An injured party cannot necessarily collect “ANY amount” of liquidated damages specified in a contract. II:

Answer 15

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.

Question 16

When a buyer materially breaches a contract, the seller may

Answer 16

cancel and seek damages. Punitive Damages are NOT available.

Question 17

Under the Sales Article of the UCC it

Answer 17

imposes a duty of good faith on all parties.

Question 18

The Warranty of Merchantability is =

Answer 18

IMPLIED whenever a merchant (one who ordinarily sells goods of the kind sold) sells goods. UCC 2-314

Question 19

Under an action for Strict Product Liability -

Answer 19

It DOES NOT REQUIRE A SHOWING OF NEGLIGENCE. The product must have been unreasonably dangerous when it left the seller’s hands.

Question 20

In a noncarrier case, risk of loss passes from a merchant seller

Answer 20

on actual DELIVERY of the goods into the buyer’s possession

Question 21

Failure to give adequate assurances when reasonably demanded is

Answer 21

a form of anticipatory repudiation. It constitutes a breach and discharges the buyer.

Question 22

The UCC Sales Article applies to all contracts for the sale of goods,

Answer 22

REGARDLESS of price.

Question 23

Tender of delivery =

Answer 23

Seller notifies and makes available to the buyer the goods required by the contract

Question 24

Tender of Payment =

Answer 24

An offer of payment of an amount due.

Question 25

Shipment of nonconforming goods is

Answer 25

a COUNTEROFFER IF accompanied by a NOTICE OF ACCOMODATION. (Without the notice, it is an acceptance and a breach).

Question 26

Every sale of goods by a merchant includes

Answer 26

an implied warranty of merchantability.

Question 27

With a NON MERCHANT SELLER (Garage Sale) - Risk of loss passes to the buyer when

Answer 27

upon tender of the delivery of the goods. i.e. - the goods are made available to the buyer.

Question 28

A purchaser has a right to

Answer 28

inspect goods before paying for them unless the contract provides otherwise.

Question 29

When something is specially manufactured, a seller can bring an action for

Answer 29

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.

Question 30

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),

Answer 30

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.

Question 31

To be an express warranty, the language must be

Answer 31

part of the basis of the bargain.

Question 32

the implied warranty of merchantability may be disclaimed in a number of ways.

Answer 32

One such way is by the use of an oral statement that mentions merchantability.

Question 33

if the parties agreed that delivery would be made in a certain way and the agreed method becomes impossible(Trucker’s strike),

Answer 33

the seller must arrange for other commercially reasonable transportation and the buyer must accept.

Question 34

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).

Answer 34

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.

Question 35

The implied warranty of fitness is created when the seller of goods

Answer 35

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.

Question 36

Anticipatory repudiation occurs when

Answer 36

either the buyer or the seller indicates in advance of performance that he or she will not perform.

Question 37

Before a buyer can have any interest in any goods

Answer 37

the goods must be Identified to the Contract .

Question 38

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

Answer 38

the QUANTITY of the goods bought and sold, either specifically or in terms of output of the seller or requirements of the buyer.

Question 39

The implied warranty of fitness for particular purpose arises when

Answer 39

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.

Question 40

A clause in a contract that provides for liquidated damages will be enforceable if the amount of the damages clause

Answer 40

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.

Question 41

“scienter”

Answer 41

A misrepresentation made with the reckless disregard for the truth will prove fraud

Question 42

With a SHIPMENT contract

Answer 42

Buyer has Risk of Loss when the goods are in the carrier truck.