Sales Law Flashcards
What sales are covered under the Uniform Commercial Code (UCC)?
Only sales of goods are covered under the UCC.
What elements are needed for a sale covered under the Uniform Commercial Code (UCC)?
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.
What are the elements of a Firm Offer?
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
Under what situations are sales of goods covered by the Statute of Frauds? What are the exceptions?
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)
When does title and risk of loss transfer on a sale of goods?
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
What is a Warranty of Title?
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)
What is Warranty of Merchantability?
This good will do its intended purpose, ordinary purpose
Can be disclaimed, oral or written
Made only by merchants
What is Warranty of Fitness?
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
What is strict liability with respect to buyer protection?
Manufacturers of goods cannot disclaim that their products will be safe
Can be liable if negligent
What are non-conforming goods with respect to buyer protection?
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
What is the statute of limitations with respect to buyer protection?
Buyer must sue to recover damages within 4 years.
Acceptance
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.
With reserve ; Without reserve
With reserve - seller doesn’t have to sell unless adequate bid; without reserve - goods must be sold to the highest bidder.
Defenses
Fraud- sue for damages and seek recission.
Statue of limitation
4 yrs- action must be brought within four yrs of the time the contract was breached.
Statue of fraud
Exceptions- specially manufactured goods, written merchants confirmatory memo, admission in court, already started performance.
UCC Contract
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.
Impossibility and impractibility
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.
Risk of loss
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.
Carrier Rules
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
Common carrier
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.
Perfect tender
The goods and delivery must conform exactly to the contract without any defects.
Warranties
1) express warranty; 2) implied warranty of title; 3) implied warranty of merchantability ; 4) implied warranty of fitness for a particular purpose.
Express Warranty
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 .
Protection
Anyone injured can sue. Does not have to be in privity, anyone that use, consume or affected by the product.
Negligence
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.
Strict Product Liability
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
Damages
Punitive damages not available in sales contracts.
