Sales & Contracts MEE Rule Statements Flashcards
Under the UCC, when does the buyer have the right to revoke acceptance?
The buyer has the right to revoke acceptance if (1) the defect substantially impairs the value; and (2) acceptance was under the reasonable belief that the defect would be cured OR the items were accepted because of the difficulty of discovering the defects OR items were accepted because of the sellers assurances that the goods conformed.
What is the time period under which a buyer may revoke an acceptance?
The buyer must give the seller notice of the revocation of acceptance within a reasonable time after the defects are discovered and before any substantial change in the goods occur
What are the duties owed by a buyer who revokes an acceptance of goods?
The buyer holds the goods as a bailee for the seller. The buyer may not continue to use them as their own and still have the benefit of recission.
What is guaranteed by the implied warranty of merchantability?
If it is a sale by a merchant who deals in goods of the kind, these warranty guarantees the goods are fit for the ordinary purpose for which the goods are used.
Remedy / Damages when a buyer accepts goods that breach a seller’s warranty?
The buyer recovers (1) the difference between the value of the goods delivered and the value they would have had according to the contract and (2) incidental and consequential damages incurred.
What are incidental damages?
Expenses incurred while caring for rejected goods and any reasonable expense related to the breach
What are consequential damages?
Consequential damages are specific to the plaintiff’s circumstances. They may be recovered only if at the time of the contract formation, a reasonable person would have foreseen the damages as a probable result of the breach.
When is a manufacturer also liable for a breach of merchantability?
A manufacturer is also held liable when the plaintiff is a person whom the manufacturer or seller might reasonably have expected to use, consume, or be affected by the goods. Privity is not required for a breach of warranty action.
What damages / remedy is available after an effective revocation of acceptance?
An effective revocation is treated the same as an initial rejection of non-confirming goods. Here, the parties are entitled to expectation damages to put the parties to how they were before the contract.
What are the two methods of calculating expectation damages?
(1) Cost of Buying replacement goods - Contract Price (+ Incidental / Consequential Damages)
(2) Market Price - Contract Price (+ Incidental / Consequential Damages)
What is a manufacturer’s liability on a breach of contract action other than breach of warranty?
Privity of contract with the manufacturer is necessary to hold a manufacturer liable for a non-warranty action
Punitive Damages under the UCC
Punitive damages are generally not recoverable UNLESS the conduct of the seller was fraudulent, malicious or willful.
What is the effect of a conditional offer in contract formation?
A party to a contract may assert that the contract will not become effective until a condition occurs. There is NO contract until this condition occurs.
Statute of Frauds: Rule for specially manufactured goods
An oral contract is enforceable if the goods are specially manufactured for the buyer, cannot be resold in the ordinary course of business, and the seller has already made a substantial beginning on performance
Statute of Frauds: Rule for accepted goods
An oral contract is enforceable when the buyer receives and accepts goods to the extent of the goods accepted.
