UCC Flashcards
UCC general rules
Contracts for the sale of goods are governed by UCC Article 2. Goods are all things moveable at the time that they are identified as goods to be sold under the contract.
Merchant
A merchant is one who regularly deals in goods of the kind sold or who otherwise by his occupation holds himself out as having knowledge or skill peculiar to the goods involved.
Merchant’s confirmatory memos
In contracts between merchants, if one party, within a reasonable time after an oral agreement is made, send to the other party a written confirmation of the agreement that is sufficient under the Statute of Frauds to bind the sender, it will also bind the recipient if he has reason to know of the confirmation’s contents and he does not object to it in writing within 10 days of the receipt.
Perfect tender rule
Perfect tender is required under the UCC, which means that if the goods or their delivery fail to conform to the contract in any way, there is a breach.
Merchant’s firm offer
Under the UCC, an offer by a merchant to buy or sell goods in a signed writing, that, by its terms, gives assurances that it will be held open is not revocable for lack of consideration during the time stated (not to exceed 3 months). If the term assuring that the offer will be held open is on a form supplied by the offeree, it must be separately signed by the offeror.
Acceptance of a shipment of goods - goods don’t arrive
When a nonbreaching buyer does not receive the contracted goods, it has several options: it can cancel the contract and recover any incidental damages, or it can purchase replacement goods and sue for the cost of replacement (cover). Damages under the cover option are measured by the difference between the contract price and the amount the buyer actually has to pay for the replacement goods.
UCC - shipment contract presumption
The UCC presumes a contract is a shipment contract in the absence of a contrary agreement. In a shipment contract, the seller must ship the goods by carrier but is not required to tender them at a particular destination. A “ship to” address does not make a contract a destination contract. In a shipment contract, the risk of loss generally passes to the buyer when the goods are delivered to the carrier. There is an exception, however, if the buyer has a right to reject the goods (e.g., no perfect tender). In that case, the risk of loss does not pass to the buyer until the defects are cured or the buyer accepts the goods.
Buyer rejects goods because of defects
Under the UCC, if a buyer has rejected goods because of defects, the seller may, within the time originally provided for performance, “cure” the defective tender by giving reasonable notice of its intention to do so and making a new tender of conforming goods, which the buyer must then accept. When a buyer rejects a tender that the seller reasonably believed would be acceptable, the seller, on reasonable notification to the buyer, has a further reasonable time beyond the original contract. time within which to make a conforming tender.
Specific performance for buyer of goods
The buyer of goods may obtain specific performance where the seller refuses to deliver goods if the goods are unique or circumstances are otherwise proper. Specific performance is available for contracts for the sale of goods where money damages would be inadequate to secure substitute goods.
Buyer’s rights when receiving nonconforming goods
A buyer who receives nonconforming goods generally has the right to accept all, reject all, or accept any commercial units and reject the rest. To properly reject, the rejecting party must, within a reasonable time after delivery and before acceptance, reject the goods or notify the seller of the rejection.
UCC - Risk of loss when seller is a merchant
Where the seller is a merchant, the risk of loss does not pass to the buyer until the buyer takes physical possession of the goods.
UCC - buyer’s right to reject for nonconformity after acceptance
Once a buyer has accepted goods, his right to reject for nonconformity generally lapses and his only remedy is a suit for damages. Acceptance usually occurs when the buyer takes possession of the goods. In some cases, the buyer can revoke acceptance, but the breach must be substantial and the buyer must have a good reason for accepting the goods (i.e., something more than not taking the time to inspect).
