Sales Law

Question 1

What sales are covered under the Uniform Commercial Code (UCC)?

Answer 1

Only sales of goods are covered under the UCC.

Question 2

What elements are needed for a sale covered under the Uniform Commercial Code (UCC)?

Answer 2

Offer - You offer to sell something at a price

Acceptance - the other party accepts

Consideration - Something of value has been exchanged for the goods

Note: The UCC only covers sales of goods.

Question 3

What are the elements of a Firm Offer?

Answer 3

You offer to sell something at a price and keep that offer open for a set period of time

3 months max - kept open for a certain amount of time.

Only merchants can make firm offers

Must be in writing and signed

Question 4

Under what situations are sales of goods covered by the Statute of Frauds? What are the exceptions?

Answer 4

If value of goods sold is > $500; sales contract must be in writing

Exceptions: Merchants can enter into oral contracts for > $500 items.

Oral contracts are binding for special or uniquely-made items (i.e. custom cabinets or custom furniture that could not be sold if buyer reneged)

Question 5

When does title and risk of loss transfer on a sale of goods?

Answer 5

If terms are:

FOB shipping point: Title transfers at point of shipment (i.e. when loaded on truck)

FOB destination: Title and risk transfers once item is delivered

Question 6

What is a Warranty of Title?

Answer 6

The seller has the right to sell the good and no one else can stake claim to that good, no leins on the good, and no infringement on patent or trademark.

Can be disclaimed by specific language ( I do not own it) or by circumstances ( judicial sale)

Question 7

What is Warranty of Merchantability?

Answer 7

This good will do its intended purpose, ordinary purpose

Can be disclaimed, oral or written

Made only by merchants

Question 8

What is Warranty of Fitness?

Answer 8

This good is the right choice for you based on the seller’s expert opinion, for a specific purpose

Can be disclaimed

Any seller, does not have to be a merchant

Question 9

What is strict liability with respect to buyer protection?

Answer 9

Manufacturers of goods cannot disclaim that their products will be safe

Can be liable if negligent

Question 10

What are non-conforming goods with respect to buyer protection?

Answer 10

Buyer can reject some or all of the shipment if the seller didn’t perform as agreed and ship what was expected

Must give notice

Must give seller a chance to remedy the situation

Question 11

What is the statute of limitations with respect to buyer protection?

Answer 11

Buyer must sue to recover damages within 4 years.

Question 12

Acceptance

Answer 12

Effective even if it states new or different terms. If between merchants minor changes are the only thing acceptable, new or different terms not accepted.

Promise to ship or Prompt shipment is a valid acceptance of offer.

Shipment of nonconforming goods is both an acceptance and breach of contract.

If the seller let’s the buyer know of nonconforming goods, the shipment is not an acceptance but a counteroffer.

Question 13

With reserve ; Without reserve

Answer 13

With reserve - seller doesn’t have to sell unless adequate bid; without reserve - goods must be sold to the highest bidder.

Question 14

Defenses

Answer 14

Fraud- sue for damages and seek recission.

Question 15

Statue of limitation

Answer 15

4 yrs- action must be brought within four yrs of the time the contract was breached.

Question 16

Statue of fraud

Answer 16

Exceptions- specially manufactured goods, written merchants confirmatory memo, admission in court, already started performance.

Question 17

UCC Contract

Answer 17

Must have the quantity term (unless output or requirement contract), all other terms are not required. If silent, the sale will be at a reasonable price and delivery at the seller’s place of business.

Question 18

Impossibility and impractibility

Answer 18

Contract is discharged for mere impractibility and need not be impossible to perform. Impractibility - more burdensome than anticipated because of the occurrence of an unforeseen event.

Question 19

Risk of loss

Answer 19

Title and risk of loss cannot pass until the goods are first identified. Goods are identified when they are marked, segregated or identified as the buyer’s.

Nonmerchant seller - risk passes to buyer when the seller tender the goods, offer the goods to the buyer.

Merchant seller - risk passes on actual delivery to the buyer, when the buyer takes physical possession.

Question 20

Carrier Rules

Answer 20

If there is no delivery agreement - in a non carrier case the buyer will usually pick up the goods at the sellers store or home; in carrier case the parties will use a common carrier

Question 21

Common carrier

Answer 21

Shipment contract - risk of loss passes to buyer when goods are delivered to the carrier.

Destination contract - risk of loss passes to buy when it gets to the destination and the seller tender delivery.

Question 22

Perfect tender

Answer 22

The goods and delivery must conform exactly to the contract without any defects.

Question 23

Warranties

Answer 23

1) express warranty; 2) implied warranty of title; 3) implied warranty of merchantability ; 4) implied warranty of fitness for a particular purpose.

Question 24

Express Warranty

Answer 24

Express warranty is that the goods will conform to the statement of fact or promise made by seller, description of goods, or sample, model shown by seller.

Oral or written,made by any seller, does not have to be a merchant.

Must be a part of the basis of the bargain - played some part in the buyers decision .

Question 25

Protection

Answer 25

Anyone injured can sue. Does not have to be in privity, anyone that use, consume or affected by the product.

Question 26

Negligence

Answer 26

Injured must prove that : seller owed them duty of care, seller breached by failing to use due care, planting suffered damages, the damages were caused by seller’s negligence.

Question 27

Strict Product Liability

Answer 27

Focus on product and not seller’so conduct.

Must prove: product was defective, the defect caused the injury, defect made product dangerous, seller in the business of selling goods, product reach buyer with no changes in condition.

No need to prove negligence

Question 28

Damages

Answer 28

Punitive damages not available in sales contracts.