UCC - Sales Flashcards
What does UCC Article 2 apply to?
Sales of goods
Define ‘Goods’ as per UCC Article 2.
Movable items at the time of identification of the contract
What are fixtures, and how do they relate to UCC Article 2?
Fixtures are not covered by UCC Article 2 due to their degree and permanence of affixation
Who is considered a Merchant under UCC Article 2?
A person who deals in goods of the kind or holds themselves out as having knowledge or skill related to the goods involved
Statute of Frauds
Contracts for the sale of goods for $500 or more must be in writing to be enforceable
“specially manufactured goods” exception
An exception to the Statute of Frauds writing requirement - contract is enforceable if the goods are not suitable for sale to others and the seller has made a commitment for their procurement
“merchant’s confirmatory memorandum” exception
Exception to the Statute of Frauds writing requirement - Both parties are merchants, one sends a written confirmation, the writing binds the sender, the recipient knows the contents, and no objection within 10 days
Doctrine of Part Performance
To the extent a contract has already been performed in good faith, it may become enforceable despite the lack of a traditional writing compliant with the Statute of Frauds, for the same reason as the “specially manufactured goods” exception: to prevent fraud and avoid wrongly penalizing an innocent commercial party.
Predominant Purpose Rule.
If a contract includes both goods and services, courts will look at the predominant purpose of the contract to decide if Article 2 of the Uniform Commercial Code (UCC) applies.
- If the primary purpose of the contract is the sale of goods, then UCC Article 2 applies to the entire contract, even if services are also involved.
- If the primary purpose is to provide services, then common law (not the UCC) governs, even if goods are involved.
List the factors considered under the Predominant Purpose Rule.
- Language of the Contract
- Nature of the Business of the Supplier
- Value of Goods vs. Services
- Nature of the Complaint
Express Warranty
Any affirmation of fact or promise by the seller that relates to the goods and becomes part of the basis of the bargain
Is it necessary for a seller to use specific words to create an express warranty?
No, formal words like ‘warrant’ or ‘guarantee’ are not required
Warranty of Fitness for a Particular Purpose
An implied warranty that goods shall be fit for a particular purpose.
Arises when a seller knows the buyer’s particular purpose and that the buyer is relying on the seller’s skill or judgment to select the goods.
What happens if a buyer examines the goods before entering a contract?
There is no implied warranty for defects that should have been revealed by the examination
Warranty of Merchantability
An implied warranty that goods are fit for the ordinary purposes for which such goods are used.
Applies only if the seller is a merchant of the type of goods sold.
How are damages measured in a breach of contract under UCC?
By the difference between the value of the goods accepted and the value if they had been as warranted + any incidental damages.
Incidental Damages
Expenses resulting from the seller’s breach, including inspection, transportation, and custody of goods
Disclaimer of Implied Warranty of Fitness for a Particular Purpose
Can be disclaimed through clear language in the contract.
Disclaimer of Warranty of Merchantability
Can be disclaimed with:
- explicit/conspicuous disclaimer that uses the word “merchantability”; or
- terms such as “as is” or “with all faults” (Va. Code § 8.2-316(3)(A)).
Does puffery or sales talk create an express warranty?
No.
Fraud in the Inducement (UCC and Common Law)
- Intentional misrepresentation of a material fact.
- Fact not discoverable by reasonable inspection.
- Scienter (knowledge of falsity and intent to deceive).
- Reliance by the buyer.
- Detriment and damages suffered as a result.
Revocation of Acceptance (Va. Code § 8.2-608)
A buyer may revoke acceptance if:
- The nonconformity substantially impairs the value of the goods.
- Acceptance was reasonably induced by either: (1) The difficulty of discovering the defect before acceptance, or (2) The seller’s assurance of a cure; and
- The buyer gives notice within a reasonable time and before making a substantial change to the goods.
Damages for Breach of Warranty (Va. Code §§ 8.2-313, 8.2-608, 8.2-721)
Buyer may recover repair costs or refund of purchase price.
Buyer’s Election of Remedies
The UCC allows the buyer to choose the most favorable measure of damages.
Lease Warranties under UCC Article 2A (Va. Code § 8.2A-213)
Implied warranty of fitness applies unless disclaimed.
