Sales Law UCC contracts

Question 1

Offer in a UCC contract doesn’t need to be as:

Answer 1

definite as is required by the common law.
Open price-reasonable price
Open quantity

Question 2

What is the firm offer rule and is consideration required?

Answer 2

Promises to keep an offer open, even if not supported by consideration, are irrevocable if the promises are in writing and made by a merchant. The max duration of a firm offer is 3 months.

Question 3

Does UCC recognize mirror image rule?

Answer 3

No, UCC rejects mirror image rule and simply focuses on the parties intent to be bound.

Question 4

Accommodation is where a seller ships substitute goods because the seller does not have the goods ordered by the buyer. When does a contract exist?

Answer 4

when buyer accepts substituted goods, contract exists. But buyer may reject substituted goods without consequence.
If seller provides notice to buyer that shipment of non-conforming goods is only an accommodation, seller’s actions are not viewed as an acceptance.

Question 5

Statute of Frauds requires a written evidence if sale of goods are $500 or more. What constitutes a sufficient writing?

Answer 5

Indicates existence of a contract
Signature of party to be charged
Quantity term

Question 6

What kind of contracts do not require a writing to be enforceable?

Answer 6

Specially manufactured goods
To the extent that the goods are:
-admitted to under oath, or
-accepted upon delivery

Question 7

What is generally the place of tender if not specified?

Answer 7

Seller’s place of business.

Question 8

What is Perfect tender rule?

Answer 8

Seller’s tender of goods must conform exactly to the terms of the contract.

Question 9

What happens if seller’s tender is not perfect, then buyer may:

Answer 9

Reject the whole lot,
Accept the whole lot, or
Accept some units and reject the rest.
Exceptions: agreement by the parties, cure by the seller

Question 10

Does the buyer have the right to inspect the goods prior to payment? when does he not have that right?

Answer 10

yes, the buyer has the right to inspect goods prior to payment, except CODs

Question 11

Generally, when is payment due?

Answer 11

Payment is due at the time of delivery.

Question 12

Explain wrongful rejection and rightful rejection of the goods?

Answer 12

Wrongful: Goods conform with contract, buyer has breached.

Rightful, buyer must: Disclose nature of the defeat and return goods or hold with reasonable care.

Question 13

Title may only be transferred if the goods are:

Answer 13

In existence and are identified

Question 14

When does title pass in a shipment contract?

Answer 14

Title passes to buyer at the shipment point

Question 15

when does title pass in a destination contract?

Answer 15

Title passes to buyer at the destination point.

Question 16

What happens to the title if buyer rejects non-conforming goods?

Answer 16

Title reverts back to seller.

Question 17

how is a void title acquired? and who may recover against the buyer?

Answer 17

Buyer acquires void title from a thief, a finder, or any party who has title. True owner may recover against buyer with void title.

Question 18

Buyer acquires voidable title from any other party without good title if the buyer:

Answer 18

Purchased in good faith, and
Gave value (Party acquires goods through fraud and sells them to good faith buyer for value, buyer has voidable title)
True owner may not recover against buyer with voidable title.

Question 19

In a shipment contract, when does risk of loss transfer in a conforming goods contract?
What is the seller’s risk and expense?

Answer 19

Risk of loss transfers to buyer when they are delivered to carrier.
Seller’s risk and expense is simply to get the goods to the carrier.

Question 20

In a destination contract, when does risk of loss transfer in a conforming goods contract?
Who bears the risk of loss and expense of getting the goods to the buyer?

Answer 20

Risk of loss transfers to the buyer at the specified destination and tendered to the buyer.
Seller bears risk of loss and expense of getting the goods to the destination.

Question 21

If seller breaches and sends non conforming goods when does title and risk of loss pass?

Answer 21

Even though title may pass to the buyer, risk of loss does not despite attempts to allocate the risk of loss to the seller.
Seller must cure nonconformity to shift risk of loss to the buyer.

Question 22

Implied warranty of title exists with:

Warranty of title assures that?

Answer 22

Exists with the sale of all goods, unless disclaimed.
Warranty of title assures that seller has good title to the goods and the right to transfer the goods. The goods are free from liens or security interests, unless disclosed.

Question 23

What are express warranties:

Answer 23

created by factual statements and description of the goods.
Warranty needs to be the basis of the bargain, buyer relied on warranty, generally assumed.
“Conformity of goods to the sample”

Question 24

What are the 2 types of implied warranties?

Answer 24

Merchantability and Fitness for a particular purpose

Question 25

Describe merchantability:

Answer 25

Goods are fit for normal use.

Merchant seller

Question 26

Describe fitness for a particular purpose:

Answer 26

(1) the particular purpose for which the goods are to be used and
(2) that the buyer is relying on the seller to select suitable goods.

Question 27

What are the requirements to disclaim a warranty?

Answer 27

Must be clear and conspicuous

Cannot be unconscionable: any attempt to disclaim liability for personal injury from consumer goods.

Question 28

Can express warranty be disclaimed?

Answer 28

Cannot disclaim written express warranty.

May be able to disclaim oral express warranties; application of parol evidence rule.

Question 29

Can implied warranties be disclaimed?

Answer 29

Yes. Needs explicit language and special phrases “as is”, “with all faults”.
Disclaimers for the warranty of fitness for a particular purpose must be in writing, but merchantability can be oral.

Question 30

Elements for strict product liability in tort are:

“MUDS”

Answer 30

Merchant seller
Unreasonably dangerous product
Defective condition caused injury
Sold product in defective condition
Negligence is not required to be proven by the plaintiff.

Question 31

is due care a defense in strict product liability in tort?

Answer 31

No, seller, manufacturer is liable even if it exercised all possible care; due care is not a defense.
Privity of contract is not required.

Question 32

What defenses are available to a strict product liability claim?

Answer 32

Buyer assumed risk, usually shown through adequate warnings.
Buyer engaged in an unforeseeable misuse of the product.

Question 33

What must be included in a warehouse receipt?

Answer 33

Location of the warehouse
Date receipt issued
Statement to whom goods will be delivered
Rates (charges)
Description of the goods
Signature of the warehouseman.

Question 34

In how many days may a party object to the confirmation’s content?

Answer 34

If one such party, within a reasonable time after an oral understanding, sends a written confirmation that binds the sender, it will satisfy the statute of frauds. But the recipient may object to the confirmation’s content within 10 days of receipt.

Question 35

If the seller is not a merchant, when does the risk of loss pass to the buyers?

Answer 35

Upon tender of delivery.

Question 36

Does title passage govern who bears the risk of loss?

Answer 36

No, title passage does not govern who bears the risk of loss.

Question 37

What is the statute of limitations for cases involving sales of goods?

Answer 37

a 4-year statute of limitations applies to cases involving sales of goods.

Question 38

Before title can pass, two conditions must be satisfied:

Answer 38

(1) The goods must be in existence, and

(2) they must be identified to the contract.

Question 39

Under Article 2 of the UCC, the warranty of title may be excluded by

Answer 39

The seller’s statement that it is selling only such right or title that it has.