Sales

Question 1

To have binding contract must have…

Answer 1

Offer, Acceptance, Consideration

Question 2

Under the UCC, what needs to be explicit in the contract?

Answer 2

Type and Quantity of goods

Question 3

2 typical examples of types of sales contracts

Answer 3

Output contract- buyer agrees to purchase as much as seller can make, seller agrees to sell all to buyer
Requirements contract- seller agrees to supply all the needs of buyer for certain product/time, buyer agrees to purchase whatever they need all from seller

Question 4

Under UCC, a firm offer exists when all 3..

Answer 4

[SUM]
Signed- promise to keep offer open must be in writing and signed
Up to 3 months max from date of writing or reasonable period of time
Merchant- good faith that they deal with goods
* Under UCC don’t need consideration to keep offer open (you do in common law)

Question 5

What is the major difference regarding acceptance under UCC opposed to common law

Answer 5

Under UCC can have minor variations from original offer unless prohibited (must be merchants)
Don’t respond by 10 days
“Bound by silence”

Question 6

With and without reserve in an auction…

Answer 6

Auction is invitation to offer
with reserve- right to withdraw prior to acceptance
without reserve- sold highest bidder, can’t withdraw unless no bid

Question 7

Statute of Frauds

Answer 7

[GROSS]
Goods worth 500+
Real estate sales
Over 1 year required to perform contract (bilateral- impossible to perform under 1 year)
Suretyship
Statements in consideration of marriage

Question 8

Exceptions to written requirement (Statute of Frauds)

Answer 8

[SPAM]
Specifically manufactured goods at request of buyer
Performance of contract already has occurred (Part payment or receipt of goods- enforceable only to part paid or delivered)
Admitted in court by defendant
Merchant not objecting to written confirm within 10 days treated as if signed (bound by silence)
* All parties need not sign contract, just the weasel

Question 9

When is the earliest passage of title and risk of loss may pass?

Answer 9

Not until goods exist and are identified to the contract

Question 10

What are title and risk of loss based on?

Answer 10

Contract terms- if none, use..
Shipping terms (shipment contract, T/RoL transfer when placed with common carrier; destination contract, T/RoL transfer when tendered to buyer)

Question 11

If no contract or carrier terms then when do title and risk of loss transfer?

Answer 11

Not a common carrier- title passes when contract formed and risk of loss for:
merchant > goods rec’v by buyer
nonmerchant > goods tendered to buyer (garage sale)

Question 12

What is conditional sales and the 2 possible situations?

Answer 12

The buyer is given the option to cancel the deal and return the goods
Sale on approval- T/RoL transfer to buyer as soon as accepted or time period elapsed (30 days)
Sale or return- based on shipping terms (buyer has T/RoL until returned)

Question 13

2 situations when buyer attempts to cancel the contract

Answer 13

Buyer rejects delivery- title immediately reverts to seller, If rejection proper, RoL to seller too; if wrongfully rejects, party in breach liable buyer bears RoL
Buyer revokes acceptance- if proper, T/RoL to seller; if not proper, T/RoL stays with buyer

Question 14

What are defects to marketable title in real property mean?

Answer 14

A claim against that property that the buyer is not aware of (recorded are presumed known)

Question 15

Difference between transferability of negotiable and nonnegotiable instruments

Answer 15

Negotiable- covered by the UCC (transferred by negotiation or assignment
Nonnegotiable- governed by contract law of assignment (transfers by assignment only)

Question 16

What are the 4 warranties

Answer 16

Implied- automatic, seller warrants good title no liens, doesn’t violate law
Express- stated, “basis of the bargain” sample, description, model (cannot be disclaimed)
Implied warranty of merchantability- seller warrants goods in fair condition, only merchant can disclaim “as is”
Implied warranty of fitness for particular purpose- merchant or nonmerchant, buyer relies on sellers judgement in selling product (goods will fulfill buyers needs)

Question 17

Product liability law

Answer 17

eliminates the privity defense; form of strict liability; everyone could be liable

Question 18

Breach of warranty requires plaintiff to demonstrate all..

Answer 18

Express or implied warranty wasn’t effectively disclaimed

Injury or illness that resulted from the breach

Question 19

In a product liability case involving negligence the plaintiff must prove all:

Answer 19

Absence of due care in connection w/ product
Defect caused by carelessness
Damages to plaintiff resulting from the defect

Question 20

In strict liability law, the plaintiff must prove:

Answer 20

Defect or unreasonable danger in product
Damages caused by this danger
Danger existed when product left defendant’s control
Defendant in business of selling product

Question 21

Sellers remedies for breach

Answer 21

Right to resell; Right to stop carrier (rescind); Cancel contract; Recover damages (no punitive); Cure (correct non-conforming goods)

Question 22

Buyers remedies for breach

Answer 22

Accept all some or none; Cover (purchase goods elsewhere and sue seller); Specific performance (unique goods); Recover damages; Rescind

Question 23

If there is no breach, no carrier, and the seller is a merchant, risk of loss passes..

Answer 23

When the buyer receives the goods. This could happen when the merchant seller delivers the goods to the buyer or when the buyer picks up the goods at the merchant seller’s place of business.

Question 24

If there is no breach, no carrier, and the seller is a nonmerchant, risk of loss passes…

Answer 24

When the seller tenders (offers) delivery to the buyer.

Question 25

Since the seller is a merchant, risk of loss passes when…

Answer 25

The buyer takes actual physical possession of the goods

Question 26

What is required for proof under strict liability?

Answer 26

Strict liability does not require proof that the defendant was negligent or otherwise at fault. Strict liability requires proof that the defendant’s product was defective and that damages occurred because of the defect in the product.

Question 27

Liquidating damages

Answer 27

Shall be limited to an amount that is reasonable considering the anticipated or actual harm caused by the breach
A seller of goods may retain up to $500 as liquidated damages even without any explicit provision in the contract