UCC Article 2 Flashcards
What is the Uniform Commercial Code (UCC) supplied term (i.e., assumed term) if a contract term has an open time for contracted performance?
In absence of agreement, it is a reasonable time.
What happens to additional terms in acceptance-merchants?
Additional terms become part of the contract unless they are material, the offer is limited, or the party objects.
What is the result of a shipment of a nonconforming goods delivery?
- Acceptance and automatic breach; 2. Not an acceptance if shipper notifies that shipment is only an accommodation.
The ___ ___ ___ is the passage of title of goods from a seller to a buyer for a price.
sale of goods
A ____ is a person who deals in goods of the kind being sold, or a person who by occupation holds himself or herself out as having knowledge or skill.
merchant
In what special circumstances will an offeree’s additional terms not be valid when both parties in the transaction are merchants?
- The offeror limits acceptance to his or her terms; 2. The additional terms materially alter the contract; 3. The offeror specifically with notice objects to the additional terms.
What is the Uniform Commercial Code (UCC) supplied term (i.e., assumed term) if a contract term has an open price term?
A reasonable or market price at the time of delivery will apply or if price is to be fixed by either party good faith is required in doing so.
List the requirements for a sale of goods contract.
Intent; Object; Quantity.
What happens to additional terms in acceptance-non-merchants?
Additional terms do not become part of the contract - original offer terms control.
Is consideration required for the modification of a contract?
No consideration required; good faith is required.
What law governs the sale of goods?
Uniform Commercial Code - Article 2.
Describe the concept of a merchant’s battle of the forms.
Formation situation in which boiler plate language in merchant’s individual forms adds terms to the original offer.
What is the Uniform Commercial Code (UCC) supplied term (i.e., assumed term) if a contract term has an open payment term?
Payment is due at time and place buyer is to receive the goods.
Describe the elements of a merchant’s firm offer.
- Offer by a merchant; 2. States that it will be kept open (max of 3 months); 3. Signed or authenticated by merchant. Irrevocable for time stated or max of 3 months.
What is the Uniform Commercial Code (UCC) supplied term (i.e., assumed term) if a contract term has an open place of payment term?
Seller’s place of business or if none residence.
List the three methods by which a seller can accept a buyer’s shipment order.
- Delivery of conforming goods to carrier; 2. A prompt promise to ship; or 3. Shipment of nonconforming goods delivery without notice of accommodation.
All movable and tangible personal property other than money, investments, securities and things in action are defined as ____.
goods
When studying Article 2, use the ____ formula.
AFTPDT
Explain/Discuss the meaning of the AFTPDT formula, for studying UCC Article 2.
Application - when do I apply the UCC Article 2 to a contract? This question often controls the answer to questions you will have on the exam. Understanding when to apply the UCC determines whether you will get your answer correct! Formation - when is a contract formed under the UCC Article 2? Terms - what are the terms of a UCC Article 2 contract? Performance - what is required for performance under a UCC Article 2 contract? Damages - what damages are available to buyers and sellers under the UCC Article 2? Title and Risk of Loss - what are the issues of title and risk of loss under the UCC Article 2?
When the contract involves both service and the sale of goods - use the ___ ____ ____; was the primary purpose of the transaction the sale of goods or the provision of a service?
predominant purpose test
When a contract involves both realty and the sale of goods, use which law(s)?
the UCC (UCC 2-107) and common law on fixtures (real property).
“Things” attached but not deemed fixtures, which can be severed without material harm to realty, are ___.
goods.
The sales of minerals, oil, gas, or structures on earth to be moved are considered ___ if they are to be severed by the seller; if severed by the buyer, ___ ___ law governs.
goods; real estate (common law)
Sales of growing crops or timber are sale of ___ regardless who severs.
goods
The transfer of personal property but not title is termed a ____.
bailment
Does Article 2 apply to bailments?
no
___ ___ is the obligation of both parties to an Article 2 contract to act with forthrightness and fairness in the formation, performance, and modification of their contracts.
Good faith
The UCC’s goal is to produce ____ ____ and minimize ___ ____ in performing contracts and handling ___ to ___. Both parties have an obligation to act in good faith.
smooth transactions ; unnecessary expenses; failures to perform
A reasonable or market price at the time of delivery will apply, or if price is to be fixed by either party, good faith is required in doing so -UCC 2-305- is called the ___ ___ ___.
Open price term
A contract for sale of goods under UCC is formed as long as the ___ ___ and ___ ___ ___ are agreed upon
subject matter ; quantity of goods (if there is more than one)
What is an “escalation clause”?
the UCC specifically allows prices to be determined at time of shipment (sometimes referred to as an “escalation clause”)
Under UCC, allows for prices to be determined at the time of ____. The price can be what is a reasonable or a market price at time of either ____, ___, ____, or ___.
shipment; contract, shipment, delivery, or payment.
___ ___ ___ permits a record of a contract to be pieced together from various memos, documents, and correspondence if the writings/records show that a contract was formed and the necessary terms are included.
UCC Article 2
For goods in existence at the time the contract is entered into, identification occurs at the time the parties ?
enter into the contract.
Before any interest in goods (title or risk of loss) can pass from a seller to a buyer, the goods must be in ____ and ____ to the contract - (UCC 2-105(2)).
existence; identified
___ is – A Prerequisite to Passage of Title and Risk of Loss
identification
___ ___ are those goods that either cannot be distinguished because of homogenous qualities or that are so mixed together that they cannot be distinguished by individual units, e.g., grains, fruit, cases of canned goods
Fungible goods
For fungible and manufactured goods, Identification occurs when the goods are ?
shipped, marked, or otherwise designated for the buyer, i.e., set aside in the warehouse.
How and when risk of loss and title pass depend upon the ___/___ ___ in a contract.
shipping/delivery terms
____ - (___ ___ ___) delivery terms – Title and risk of loss pass upon delivery (possession) of conforming goods to the carrier
F.O.B. – (free on board)
____ - (___ ___ ___) delivery terms – Title and risk of loss pass upon seller’s delivery of conforming goods alongside the vessel in the manner usual in that port, or on a dock designated and provided by the buyer
F.A.S – (free alongside vessel)
This term requires the buyer to pay cash upon tender of the goods.
COD – (cash on delivery)
This shipping term follows the same rule as in C.I.F., except procurement of an insurance policy is not required on seller’s part.
C&F – (cost and freight)
____ - (___ ___ ___) delivery terms – Title and risk of loss pass from seller to buyer when the seller delivers (possession) identified conforming goods to the carrier, obtains a negotiable bill(s) of lading covering transportation to a named destination, procures an insurance policy, and forwards to buyer all documents
C.I.F. – (cost, insurance, freight)
When title passes is important for purposes of determining the ???
When title passes is important for purposes of determining the rights of third parties with respect to the buyer and seller.
If goods are shipped COD, then the timing of the buyer’s ___ ___ ___ is affected
right to inspection
Passage of title occurs at different times depending on whether the contract is ___ ___ or ____.
non-delivery or delivery.
You must be sure that ____ has occurred regardless of whether the contract is delivery or non-delivery.
identification
