Sales Flashcards
T/F
Whether the Uniform Commercial Code (Statutory Law) is involved in a contract depends on the price of the goods
FALSE
Whether UCC is involved in sales does NOT depend on the price of the goods
What are the 3 necessary elements of a firm offer?
1) Must be a merchant
2) must be in writing
3) must guarantee that the offer will be held open
T/F
In sales, like in contracts, you can make minor changes between merchants and still have a valid acceptance
FALSE
In sales you can make minor changes between merchants and still have a valid acceptance, however this is DIFFERENT from contracts, in which even the slightest change causes a counteroffer to be established
What is a COD Sale?
This is a Collect on Delivery sale, in which case the buyer will not have the right to inspect the purchase prior to payment
T/F
A buyer may reject nonconforming goods for any nonconformity, even if it is immaterial (wrong shipping method)
TRUE
T/F
If a buyer rejects nonconforming goods, they must reject all of the goods - they cannot pick and choose.
FALSE
They can reject all of the goods, some of the goods, or none of the goods
T/F
When a buyer rejects nonconforming goods, this substantially ends the sales contract
FALSE
The seller has the right to cure/correct by notifying the buyer that the problem will be correct in time to be within the originally agreed-upon deadline.
This is when a party states that they won’t perform prior to the time of performance.
An Anticipatory Breach
T/F
Sale of goods of $500 or more requires a writing which must include a quantity. This is known as the Statute of Frauds.
TRUE
What are the 4 exceptions to the Statute of Frauds? (no writing required, even if $500 or more)
1) Specially manufactured goods for the buyer (seller can’t sell the goods to anyone else)
2) Payment of goods or Receipt of Goods
3) Admissions in Court make the oral contract enforceable
4) Merchants Confirming Letter (no objection within 10 days binds both merchants)
When it is unclear whether a contract is FOB Shipping or FOB Destination, which is it?
UCC says it is FOB Shipping
If there is no common carrier, when does title and risk of loss pass?
Title passes as soon as the contract is made with identified goods. Risk of loss with MERCHANTS passes when the buyer takes possession. Risk of loss with NON-MERCHANTS passes on tender of delivery.
With nonconforming goods, when does title and risk of loss pass?
Title passes when the seller completes delivery requirements. Risk of loss is always on the seller.
What does CIF mean?
This means the quoted price includes the Cost of goods, Insurance, and Freight
What does Sale on Approval mean?
Neither risk of loss nor title pass until the buyer approves. The buyer is a non-merchant and buying for good use.
What does Sale on Return mean?
Buyer gets risk of loss and title on delivery, but may return the goods. Buyer is buying for resale - the buyer is a merchant
This is a merchant’s promise that goods are fit and safe in normal uses
Merchantability
T/F
Merchantability can be disclaimed but must be done in writing
FALSE
Merchantability can be disclaimed orally by saying the sale is an “as is” sale
What are the 3 warranties of Title?
Title - Seller implies good title
Encumbrances - Sellers promise no unstated liens
Infringments - Sellers promise no patent/trademark violations
T/F
Like merchantability, disclaiming the title can be done orally with general language
FALSE
Disclaiming the title requires very specific language, the seller must specifically tell the buyer that they do not guarantee title
This is when a buyer relies on the seller to select suitable goods, the seller knows of the reliance, and therefore the goods must be fit for the buyer’s purpose.
Fitness for a Particular Purpose
T/F
Fitness for a particular purpose can be disclaimed orally
FALSE
This must be disclaimed in writing
When can a buyer get better title than a seller has to give?
1) When a rightful owner leaves goods with a merchant who sells them by error - an innocent buyer gets good title
2) When a seller has fraudulent title and passes the goods on to an innocent purchaser
T/F
In sales a buyer may recover for any loss, and may collect punitive damages depending on the severity of the loss
FALSE
A buyer cannot collect punitive damages in sales
A remedy of a buyer in sales is that the buyer may purchase suitable goods elsewhere and charge the seller for any loss. What is this called?
Cover
If in a credit sale the buyer becomes insolvent, the seller may stop delivery and demand cash. If the goods were already delivered, how long does the seller have to collect the items? Is there an exception to this limit?
10 days
If the buyer misrepresented their solvency there is no 10 day limit.
The Statute of Limitations in sales states suit must be brought within how many years of the breach?
4 years
T/F
If the parties agree, the Statute of Limitations can be limited to a minimum of 2 years, and also can be extended to a maximum of 6 years
FALSE
The Statute of Limitations can be limited to a minimum of 1 year but cannot be extended beyond 4 years
In sales under Strict Privity Rules, who can sue whom?
Only the original buyer can sue the original seller
In sales under the UCC rules, who can sue whom?
Users and those reasonably affected by the product may sue
In sales under Negligence situations, who can sue whom?
Those injured may sue negligent sellers, but must show the 4 elements of negligence
What are the 4 elements of negligence?
Duty of Care - seller owed the buyer a duty of due care
Breach - seller failed to use reasonable care
Damages - buyer suffered damages
Causality - buyers damages were caused by the seller’s breach
This is a liability without fault by sellers of defective products
Strict Liability in Tort
What are the 5 elements of Strict Liability in Tort?
1) Defective products
2) Cause - must show the defect caused injury
3) Unreasonably Dangerous - must show the defect was unreasonably dangerous to users and consumers
4) Business - must show seller was engaged in that business (seller is a merchant)
5) Changes - must show it reached the user without substantial changes
T/F
Privity and negligence are irrelevant for strict liability in tort
TRUE
How is a firm offer created?
A firm offer is a written, signed offer concerning the sale of goods, by a merchant, giving assurance that it will be held open for a specified time and is irrevocable for that period, not to exceed three months. If the firm offer does not state a period of time, it will remain open for a reasonable period of time, not to exceed three months.
T/F
In a firm offer, both the offeror and the offeree must be merchants
FALSE
Only the offeror need be a merchant
Under the UCC the place of tender is ____ unless the parties alter the place of tender in their contract
The seller’s place of business
