Terms of a Contract Flashcards
Terms
Under the common law, a contract must include the following terms: quantity, time for performance, identity of parties, price, and subject matter. Missing terms may result in a failure to contract for indefiniteness of terms. Under the UCC, a contract must include the parties and the quantity, but “gap fillers” may be used to supply other missing terms if there is a reasonably certain basis for determining the missing term.
UCC Absence of Specified Place for Delivery
Under the UCC, unless otherwise agreed, delivery is at the seller’s place of business or at his residence if he has no place of business. However, if both parties know, at the time the contract is formed, that the goods are in some other place, that place is the place for their delivery. An exception is made for documents of title, which may be delivered through customary banking channels.
UCC Open Time for Payment
Under the UCC, unless otherwise agreed, payment is due at the time and place at which the buyer is to receive the goods or documents of title. However, unless the contract provides otherwise, the buyer may inspect the goods after their arrival and prior to payment.
Risk of Loss
Generally the risk of loss of goods during shipment is placed upon the party who was in the best position to have insured against risk of loss. If the seller is a merchant, then the seller bears the risk of loss until the buyer receives the goods; if the seller is not a merchant, then the buyer assumes the risk of loss once the goods are tendered for delivery.
F.O.B (Free on Board)
The abbreviation “F.O.B.” stands for “free on board,” and means that the buyer pays shipping costs and once the seller puts the goods into the carrier’s possession for shipping, the buyer bears the risk of loss.
F.O.B (Free on Board) Destination
F.O.B. Destination” means that the seller pays the shipping costs to a specified destination and bears the risk of loss to such destination. Reasonable notice that the goods have arrived at the destination and are available for the buyer to take delivery is required to relieve the seller of his risk of loss.
F.A.S (Free Alongside)
The abbreviation “F.A.S.” stands for “free alongside” and means the buyer pays shipping costs and assumes the risk of loss once the seller places goods alongside a vessel for shipping.
C.I.F (Cost, Insurance, Freight)
The abbreviation “C.I.F.” stands for “cost, insurance, freight,” and means the seller pays the cost of delivering goods to the carrier for shipment, as well as insurance and freight costs to the destination, but the buyer bears the risk of loss during transit.
No Arrival No Sale
“No arrival no sale” means that the seller has a duty to ship goods and bears the risk of loss during shipment. If the goods arrive damaged or late, through no fault of the seller’s, then the buyer has the option either to void the contract or to accept the goods at a discount.
Shipment under reservation
“Shipment under Reservation” means that the seller ships the goods, but consigns them to himself at the destination so that he retains control of the goods in transit and until the buyer pays for them. The buyer will not receive the goods until payment has been made.
Exculpatory Clause
An exculpatory clause is a provision in a contract that is intended to remove liability from one or more of the contracting parties that may result from certain acts or events.
Privity of Contract
Privity of contract is the relationship that exists between the parties to an agreement, allowing them to sue each other to enforce the agreement, but preventing a third party from doing so.
