Sales ( Focused Deck) Flashcards
Article 2 - Intro for every sales essay & analysis must include whether item is a good & therefore Article 2 applies
Article 2 of UCC applies to transactions in goods. A transaction is a sale, and goods are tangible objects that are moveable at the time of identification to the contract for sale
Firm Offer under Article 2 (MASSS)
An offer may not be revoked if the offer is
1) made by a merchant,
2) it gives assurance that the offer will be held open
3) it is a contract for the sale of goods,
4) it is signed and in writing, and
5) it is held open for a stated time, or a reasonable time will be implied ( not more than 3 months)
Acceptance w/ additional terms **
Definite and seasonable acceptance that contains different or additional terms will still constitute an acceptance unless THE ACCEPTANCE says that acceptance is expressly made conditional on assent to the additional or different terms.
If parties still act like K occurs, terms that govern are the terms both writings agree on and then UCC gap fillers for the rest.
If there is no expressly conditional language, the additional terms are proposals for addition which must be separately accepted by both parties.
If both parties are merchants, the terms become part of K unless THE OFFER expressly limits acceptance to terms of K, the additional terms materially alter the K, or the offeror has already objected or objects within a reasonable time
Performance Obligations**
Revocation of Acceptance of Goods
The UCC follows the perfect tender rule. The seller has to deliver perfect goods. If goods fail to conform to the K, buyer can
1) reject all of them by giving timely notice to seller of rejection. Must be before acceptance. Buyer should hold rejected goods w/ reasonable care
2) Accept all
- by failing to make effective rejection
- acts inconsistent w/ seller’s ownership or
- after reasonable opportunity to inspect, buyer tells seller that goods conform or that he will keep them despite their nonconformity
3) Accept some and reject some
Right to cure: Where a buyer rejects a delivery for non-conformance with the contract and the time for performance of the contract has not yet expired, 1) the seller may seasonably notify the buyer of its intent to cure the error within the contract’s time limit and make a conforming delivery. or 2) seller had reasonable grounds to believe that the improper tender would be acceptable with or without a money allowance
Revocation:
Buyer can revoke acceptance of the goods where there is a nonconformity with respect to the goods that “substantially impairs its value to [the buyer] AND he had a reasonable belief that the nonconformity would be cured ( and it wasn’t ) OR he did not discover the nonconformity because the nonconformity was difficult to discover or because of the seller’s assurances.
Revocation of acceptance must occur within a reasonable time after the buyer discovers or
should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. It is not effective until the buyer notifies the seller of it.
Prospective Inability to perform
When a party has reasonable grounds for insecurity, that the other party is unable or unwilling to perform. Under UCC the party may then in writing demand adequate assurance of performance and until she receives such assurance, may suspend her performance. If assurance is not given within a reasonable time not exceeding 30 days, the other party may treat it as a repudiation
Defenses to the enforcement of a K
Statute of Frauds - exceptions to sale of goods over 1000 in signed writing requirement ***
Contracts that fall under the SOF must be in signed writing by the party to be charged. This includes sale of goods contracts over 1000$. A writing is not insufficient because it omits or incorrectly states a term agreed upon, but the contract is not enforceable beyond the quantity of goods shown in the writing. Modifications that fit this requirement also must be in writing.
Exception:* Confirmatory memorandum rule between merchants
A “merchant” is one who deals in the particular type of goods involved in the transaction.
If both parties are merchants and one sends a signed writing claiming that there is a K within a reasonable time, and states a quantity and the other merchant has reason to know of its contents but fails to object in writing to the contents of the writing within 10 days of receiving the writing, then the confirmatory memo will bind both merchants.
Lost volume seller
Seller that has an unlimited amount of the item he or she is selling. Will recover lost profits + incidental damages if there is a breach
Delegation of Duties
Duties can be delegated unless a party has a substantial interest in having the other party perform ( K involves special skill/judgment or there is a special trust relationship) or if the k prohibits delegation (K says “ no delegation/no assignments”).
Delegation of performance does not relieve the delegator of any liability for breach. Obligee can sue the delegator unless there is novation.
Obligee can sue the delegatee if they receive consideration from the delegator
Delegation does not require consideration, a writing, or consent of the obligee
Express Warranty
Express warranties can be created by the seller of goods by any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain.
Modifications
Under Article 2, contract modifications made in good faith are binding without consideration. However, if a modification is effectuated from the other party in bad faith, it is unenforceable
Damages
Seller breaches & buyer has goods
- value of goods as contracted for (whatit’sworth) - value of goods as delivered + IC + CD
Seller breaches and seller has goods
(replacement - K price)
(market price @time of breach - K price) + IC + CD - expenses saved
Buyer breaches and buyer has goods
- seller will receive K price
Buyer breaches and seller has goods
- K price - market price at time and place for tender/resale price + IC - expenses saved
Buyer breaches and seller is a lost volume seller ( seller that has an unlimited amount of the item he is selling)
- lost profits + incidental damages
Shipment and Destination K
A shipment contract occurs when the seller is required to send the goods to the buyer and the
contract does not require him to deliver them at a particular destination. The seller fulfills his
delivery obligations when he gets the goods to the common carrier, makes reasonable
arrangements for the delivery and notifies the buyer of the shipment.
A destination contract occurs if the contract requires the seller to deliver the goods at a particular location. The risk of loss passes to the buyer when the goods are tendered to the buyer at the destination.
Rejecting an installment K
An installment k is any k that requires delivery in separate lots to be separately accepted. The buyer can only reject an installment when the nonconformity substantially impairs the value of that installment and cannot be cured. The buyer can only reject the whole K if the nonconformity substantially impairs the value of the whole K
