Sales

Question 1

Does an implied warranty of merchantability apply to goods that are borrowed?

Answer 1

No. Must be purchased.

Question 2

How can an implied warranty of merchantability be disclaimed?

Answer 2

Generally with conspicuous language that mentions merchantability
Depending on circumstances statements that goods are sold “as is”, “without faults”, “no warranty”

Question 3

When goods are sold by a merchant, what implied warranty arises?

Answer 3

implied warranty of merchantability.

Question 4

What are the elements of an implied warrant of fitness for a particular purpose?

Answer 4

Warranty will be implied in sale of good when:

1) any seller has reason to know of particular purpose for which goods are used
2) seller knows that buyer is relying on seller’s knowledge
3) buyer actually relies

Question 5

Is an implied warranty of particular purpose limited to merchants?

Answer 5

No applies to all sellers.

Question 6

Would statement such as “This product is the best” create a warranty?

Answer 6

No. Statement of opinion is not a warranty.

Question 7

Is serving of food or drink for consumption on premises a sale of good subject to the warranty of merchantability?

Answer 7

Yes.

Question 8

Is the seller’s knowledge of a defect in an implied warranty cause of action relevant?

Answer 8

No. Breach of implied warranty of merchantability based on absolute liability that is imposed on certain sellers.

Question 9

Do the implied warranties extend to third parties?

Answer 9

Yes, if it is a natural person who is a family member or guest who would reasonable use the product.

Question 10

In VA, an individual entrusting possession of goods to a merchant who deals in good of that kind gives the merchant what?

Answer 10

power to transfer all rights of the entruster to a buyer in the ordinary course of business.

Question 11

When must revocation of goods occur?

Answer 11

within reasonable time and condition of the goods must not substantially change

Question 12

Can a buyer reject a good when the buyer accepted it and someone else used it?

Answer 12

No rejection if accepted and used for a period of time.

Question 13

Statute of Frauds for Contracts involving goods in VA

Answer 13

sale of goods of $500 or more must have writing to indicate a contract that has been made by parties and signed by party against whom enforcement is made.

Question 14

Exceptions to statute of frauds for specially manufactured goods in VA

Answer 14

1) goods are specially manufacturer for buyer
2) goods are not suitable for sale to others in ordinary course of business
3) seller has made a substantial beginning of manufacturer or commitments for procurements.

Question 15

Confirmatory Memo Rule for sales of goods

Answer 15

exception to statute of frauds - involving merchants
when one merchant sends a written confirmation to the other merchant with understanding that writing is sufficient and other merchant does not object

Question 16

K and L orally agree that L will purchase 150 widgets from K at a price of $10. L gives K check for $70. Is there is an enforceable agreement?

Answer 16

Yes, but only to 7 widgets.

Question 17

Is a writing required to satisfy the statute of frauds when one party accepts the goods and pays for the goods?

Answer 17

No - exception to statute of frauds.

Question 18

J orally contracts to buy a car from S for $15,000. J gives S a down payment of $1,000. Is the contract enforceable?

Answer 18

Yes, generally enforceable because partial payment of goods and accepted

Question 19

When a party make a demand for reasonable assurance and the other party does not provide satisfactory assurance within ___, the other party will have repudiated the contract.

Answer 19

30 days.

Question 20

What may a party who has reasonable doubts regarding the performance of the other party, what may they do?

Answer 20

May demand in writing adequate assurance of performance.

Question 21

When buyer breaches by wrongfully rejecting, revoking acceptance of goods, or failing to make a payment, what can the seller do?

Answer 21

1) if in transit - stop shipment
2) sue for the contract price (if unable to sell goods)
3) sell goods and recover damages for difference between the contract price and resale price (plus incidental damages) or
4) sell unfinished product or stop manufacture

Question 22

If a seller decides to resale the goods when a buyer wrongfully breaches a good, what must the seller do?

Answer 22

Give notice to the buyer of the manner of sale.

Sale must be commercially reasonable.

Question 23

When is revocation effective?

Answer 23

When received.

Question 24

When an offer does not specify how acceptance may be done, how can acceptance be accomplished?

Answer 24

acceptance by any reasonable means

Question 25

Can a thief pass good title?

Answer 25

No.

Question 26

Detrimental Reliance

Answer 26

When offeror can reasonably expect that offeree will reply to his detriment on an offer, then offer is irrevocable for a reasonably period of time

• foreseeability
• damages measured by extend of any detrimental reliance

Question 27

What is the measure of damages when buyer breaches on a contract for the sale of specially manufactured goods?

Answer 27

Contract price, if unable to resale goods.

- foreseeable consequential damages are also recoverable

Question 28

On an unilateral contract, when it is irrevocable?

Answer 28

Once performance has begun.

Question 29

When are reliance damages available?

Answer 29

when expectation damages are too speculative (unique goods)

- designed to put plaintiff in position had contract never been formed

Question 30

When is a buyer’s right to reject good cut off?

Answer 30

Acceptance of goods, unless defect is difficult to discover

Question 31

If a contract is made because of fraudulent misrepresentation and inducement, what can the non-fraudulent party do?

Answer 31

Seek rescission of a voidable contract.

Question 32

If the buyer is unable to find cover goods, does the UCC allow for specific performance?

Answer 32

Yes, only when goods are unique and cannot be replaced easily
- also there may be action in detinue since goods are identified in contract and not delivered.

Question 33

What is the duty of a buyer who rejects goods but keeps them until seller can pick up the goods?

Answer 33

Buyer must act with reasonable care and obey any reasonable instructions as to the rejected goods.

Question 34

What can a buyer do with goods that are rejected but who receives no instructions from the seller?

Answer 34

1) Reship goods to seller;
2) store goods for seller’s account; or
3) resale goods - entitled to recover expenses and reasonable commission (10%)

Question 35

A buyer rejects goods and holds them for the seller to pick up. Before the seller picks up the goods, the buyer uses a portion of the goods. What is the buyer liable for?

Answer 35

Conversion - value of goods (not the contract price)

Subsequent exercise of ownership is wrongful.

Question 36

After rejection any exercise of ownership by the buyer with respect to any commercial unit is ____.

Answer 36

Wrongful as against the seller.

Liable for conversion (value of the goods)

Question 37

A seller must be given the opportunity to ____ before the buyer seeks to cover.

Answer 37

cure.

Cure is available if it is before the contract delivery date.

Question 38

Oral modifications to contracts of good require what?

Answer 38

Good faith

Consideration is not required

Question 39

Is good faith or consideration need to make an oral modification to a contract of goods in VA?

Answer 39

good faith

“observation of reasonable commercial standards of fair dealing in the trade”

Question 40

Can a seller reclaim goods in a buyer’s possession when the buyer is insolvent and there is a perfected attached creditor with an after acquired clause interest in the goods?

Answer 40

Yes, if seller discovers that a buyer is insolvent and has received the goods on seller’s credit, then seller may reclaim the goods upon demand made within 10 days after receipt.

Question 41

As between merchants, if a seller sends purchaser order confirmation that contains nonmaterial terms, are those terms included?

Answer 41

Yes, if not objected to in a reasonable time period.

Question 42

As between merchants, if a seller sends purchaser order confirmation that contains a clause providing for interest on overdue notices, is that term a material or nonmaterial variation?

Answer 42

nonmaterial.

Question 43

As between merchants, if a seller sends purchaser order confirmation that contains a clause disclaiming express and implied warranties, is that term a material or nonmaterial variation?

Answer 43

material - does not become part of the contract unless separately acceptance by buyer.

Question 44

If a contract provides an assortment of goods to be delivered and does not specify who will choose, what is the default UCC rule?

Answer 44

assortment is at the buyer’s option.

Question 45

What are terms that the UCC will supply if not provided in the contract?

Answer 45

1) price
2) place of delivery - default is seller’s place of business
3) time for shipment
4) time for payment

Question 46

What damages is a non-breaching entitled to regarding of the breach for a sale of goods?

Answer 46

incidental damages - expenses related to breach

Question 47

Is a buyer obligated to pay for nonconforming goods?

Answer 47

Yes, if goods are properly tendered.

Question 48

When buyer refuses to accept goods, and the breach is wrongful, what can the seller recover?

Answer 48

Difference between contract price and market price at time of delivery, plus incidental damages.

Question 49

When buyer refuses to accept goods, and the breach is wrongful, what can the seller recover if unable to resell goods?

Answer 49

Full contract price.

Watch for goods that can spoil (food).

Question 50

What is a loss volume seller entitled to recover?

Answer 50

profits, because they would have been able to make two sales instead of one.

Question 51

What a party indicates that they will not perform through words, actions, or circumstances, what can the other party do?

Answer 51

This is anticipatory breach.

1) await performance by the other party for a commercially reasonable time
2) resort to any remedy for breach
3) suspend own performance

Question 52

What is the measure of damages when selling party refuses to deliver contracted for goods?

Answer 52

difference between contract price and i) the market price (benefit of bargain) or ii) the cost of buying replacement goods (cover)

• market price determined at time of learning of breach

Question 53

Consequential damages may be available when?

Answer 53

buyer has requirements that sells had reason to know of at item of the contracting and cannot be prevented by buying substitute goods

Question 54

When a party relied on fraudulent misrepresentations the contract is ___.

Answer 54

voidable.

Question 55

Is consideration needed for valid waiver of a term in a contract?

Answer 55

No. waiver may be done by express or implied contract.

Question 56

In an installment contract, if the waiver is not supported by consideration and there is no detrimental reliance, the beneficiary of waiver can insist on ___.

Answer 56

strict compliance with the terms of the contract for future installments by giving notice that he is revoking the waiver.

Question 57

Is a writing required when a party accepts the goods for an oral contract?

Answer 57

no - exception to statute of frauds.