Sales (UCC Art 2) Flashcards
Does UCC Article 2 apply where a contract is for a mix of goods and services?
Only if the sale of goods predominates. [J22]
Under the UCC, “goods” does not include fixtures which are…
…by their nature permanently affixed to realty.
Factors include the degree and permanence of affixation as compared with fully integrated structural systems. [J22]
A sale of goods for $___ or more falls under the statute of frauds, unless the ___ exception applies.
$500; specially manufactured goods.
Applies where the goods were not suitable for sale to others in the ordinary course of the seller’s business and the seller has made a commitment for their procurement. [J22]
[F17] Other SOF Exceptions:
-payment and goods have been received and accepted.
-party to be charged admits there was a contract
An exception to the statute of frauds for sale of goods over $500 also exists for agreements between ___ where…
merchants.
…within a reasonable time, a writing in confirmation of the contract is received and the party receiving it has reason to know its contents, the agreement is enforceable unless written notice of objection to its contents is given within 10 days after it is received. [J22]
To the extent a contract has already been ___, it may become enforceable despite the lack of a traditional writing compliant with the Statute of Frauds
performed in good faith. [J22]
Terms of a contract must be…
…definite and certain enough for a court to enforce (quantity, time for performance, price, etc.)
UCC contracts: missing terms, including price, are okay if parties clearly intended to make a contract and there is a reasonably certain basis for filling in the terms. [F15]
Where a condition of the contract is not satisfied…
…performance is excused. [F15]
A party may be estopped from using the statute of frauds to escape liability for a contract where
…the party accepted consideration under the agreement. [F15]
Ordinarily, a written memorandum would take an oral agreement outside the statute of frauds—and allow it to be enforceable—if…
…the written memorandum identifies the subject of the contract, is sufficient to indicate a contract has been made, and includes the essential terms of such contract, as well as be signed by the party to be charged. [J17]
Remedy for breach of land sale contract.
Specific performance or if not damages = market price of house - price of house on the contract. [J17]
UCC Article 2 applies to…
…contracts for sale of goods (moveable). [J17]
How to waive implied warranties under UCC?
The disclaimer mentions “merchantability” in a writing that’s conspicuous because its larger.
The warranty of fitness is effectively excluded by the same conspicuous writing. There’s no need to use the phrase, “warranty of fitness.” Saying that no “other warranties” exist is equivalent to the statutory example, “There are no other warranties . . . .” [J17]
Breach discovered after acceptance.
Buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy [J17]
Exclusive remedy agreement can be avoided where…
…the remedy has failed its essential purpose. Other remedies may then be sought. [J17]
A buyer of non-conforming goods ___ seek revocation and damages at the same time.
Can. [J18]
___ after notice of revocation is an ___, which deprives the buyer of the power to revoke.
Significant and avoidable use; exercise of ownership.
Such a revoker may argue that the use was commercially reasonable and could pay a reasonable rental fee to offset her exceeding her authority as bailee. [J18]
Under UCC, who bears risk of loss? Shipment by carrier contract (e.g., FedEx)
seller only obligated to ship goods to buyer; ROL passes to buyer when seller delivers goods to carrier
* If contract is otherwise silent on shipment terms, a shipment K is presumed if K requires shipment by third-party carrier. [F18]
Under UCC, who bears the loss? Destination Contract
seller obligated to ensure goods reach buyer [F18]
Under UCC, who bears the loss? Non-carrier delivery (goods not shipped by common carrier)
Merchant seller - ROL passes to buyer when he takes physical possession.
Non-merchant seller - ROL passes to buyer upon tender of delivery. [F18]
Under UCC, who bears the loss in a shipment contract? FOB [location] (free on board)
risk of loss passes to Buyer when the goods are duly delivered to the carrier
(seller bears risk and expense of getting goods to the named location, at which point risk passes to buyer)
[F18]
UCC - Breach & Risk of Loss
if buyer rejects defective goods or revokes acceptance, ROL does not pass to buyer until defects are cured or she accepts [F18]
UCC Acceptance with additional terms
Are both parties merchants?
- Yes: K is formed with additional terms unless either:
a) Additional terms materially change the offer,
b) Offer expressly limits acceptance to the offer’s terms, or
c) Offeror objects within a reasonable time - No: K is formed, but without additional terms.
Terms materially alter the agreement if there is hardship through significant shifting of the burden or surprise. [J20]
To prove a breach of warranty, P must also prove…
…proximate causation and damages. [F20]
How can a seller create an express warranty without using that language or even intending to?
Where a seller makes an affirmation of fact or promise that relates to the goods and becomes part of the basis of the bargain, it creates an express warranty that the goods will conform to that affirmation or promise.
Same for descriptions. Not for opinions. [F21]
When does an implied warranty of fitness for a particular purpose exist?
Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is unless excluded or modified an implied warranty that the goods shall be fit for such purpose. [F21]
When does an implied warranty of merchantability exist?
Goods purchased from a merchant are implicitly warranted to be fit for their ordinary purpose so as to pass without objection in the trade.
A merchant is a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill. [F21]
Unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like…
…”as is,” “with all faults” or other language which in common understanding calls the buyer’s attention to the exclusion of warranties and makes plain that there is no implied warranty. [F21]
Revocation of acceptance requires that:
-the nonconformity substantially impairs the value of the goods;
-acceptance was reasonably induced by the difficulty of discovering the nonconformity before acceptance, or by the seller’s assurance to cure;
-the buyer gave notice of revocation within a reasonable time after discovering the nonconformity and before any substantial change in condition of the goods not caused by their own defects. [F21]
What is the measure of damages for breach of express warranty discovered after acceptance?
Buyer has a choice:
-revoke and refund plus incidental; or
-cost of repair plus incidental. [F21]
