VA _ Advanced Sales

Question 1

Merchants Firm Offer

Answer 1

merchant’s offer irrevocable if (i) made with words of firmness, (ii) in writing, and (iii) authenticated (signed) by merchant; irrevocable for reasonable time not to exceed three months

Question 2

How is the shipment of non-conforming goods treated under the UCC, Art. 2?

Answer 2

both acceptance and breach of contract

Question 3

Battle of the forms - additional or different terms (non-merchants and merchants)

Answer 3

At least one party nonmerchant
o Additional or different terms are not part of K unless original offeror expressly assents to terms
o If original offeree conditions acceptance of K on offeror’s acceptance of other terms—offeree has made counteroffer

Both parties are merchants
o Additional term in acceptance—part of K unless (i) term materially alters K; (ii) offer expressly limits acceptance to terms of offer; or (iii) offeror objects to term within reasonable time
 If one of these conditions apply, K is formed but original terms control
o Different term in acceptance—most states apply “knock-out” rule (terms nullify each other)

Question 4

Reserve auction

Answer 4

Goods may be withdrawn until auctioneer announces completion of sale

*default type of auction

Question 5

No-reserve auction

Answer 5

Goods cannot be withdrawn unless no bid received

Question 6

SOF - Merchant’s confirmatory memo

Answer 6

Merchant’s confirmatory memo—merchant who fails to object within 10 days of receipt of memo is bound

Question 7

Exceptions to SOF

Answer 7

1. Specifically manufactured goods
2. Court admission
3. Performance (to extent of goods received and accepted or paid for); partial payment for indivisible item sufficient

Question 8

Reasonable time for adequate assurances?

Answer 8

30 days

Question 9

Rules for buyer rejection

Answer 9

1. notification of seller of rejection w/in a reasonable time
2. notividation of seller as to defect
3. hold goods for reasonable time for seller to retrieve/disposition

Question 10

buyer responsibility after rejection

Answer 10

Buyer with security interest in goods (payments made for goods)—may sell goods in good faith and a commercially reasonable manner; must account to seller for excess over amount of security interest

Buyer without security interest in goods
o May hold rejected goods with reasonable care for time sufficient to permit seller to remove them
o If seller fails to give instructions, buyer may (i) store the goods for seller’s account, (ii) reship them to seller, or (iii) resell them for seller’s account

Buyer is entitled to usual sales commission or reasonable sum not to exceed 10% of gross proceeds

Question 11

Seller’s right to cure

Answer 11

1. In general—if, after rejection, time for performance has not expired, seller may notify buyer of intent to cure and within time permitted by K to do so
2. Seller has reasonable grounds to believe that nonconforming tender would be acceptable with or without a money allowance (course of dealing/performance)— seller has additional reasonable time to cure
3. Installment contracts
   * Nonconforming tender may be cured within installment period

Question 12

When may acceptance be revoked?

Answer 12

Defect that substantially impairs value to buyer; and

o Buyer accepted goods on reasonable belief that seller would cure defect but seller has failed to do so; or

o Buyer accepted goods without discovering defect and acceptance was reasonable because induced by difficulty in discovering defect or seller gave assurances that goods were conforming.

• reasonable time
• cannot be revoked if there has been substantial change in the condition of goods

Question 13

Statute of Limitations

Answer 13

Statute of limitations on breach of sales contract or warranty—four years after cause of action accrues; may be reduced to not less than one year: may not be extended

• accrual of cause of action = when breach occurs
• breach of warranty = generally accrues upon delivery of goods
• breach of warranty of future performance = when breach is or should have been discovered

Question 13

Rights of 3rd parties – theft

Answer 13

thief cannot pass good title even to good-faith purchaser unless (1) buyer has made improvements to goods or (2) true owner indicates thief had good title

Question 14

Express Warranty

Answer 14

Any promise, affirmation, description, or sample that is part of the basis of the bargain is an express warranty, unless it is merely the seller’s opinion or commendation of the value of the goods.

Question 15

Implied Warranty of Merchantability

Answer 15

A warranty that the goods are merchantable is implied in a contract for their sale whenever the seller is a merchant with respect to goods of that kind. To be merchantable, goods must be fit for their ordinary purpose and pass without objection in the trade under the contract description. A breach of this warranty must have been present at the time of the sale.

Question 16

Defenses / Disclaiming Implied Warranties

Answer 16

*A Defense - If the buyer, before entering into the contract, has examined the goods or a sample or model as fully as the buyer desired, or has refused to examine the goods, there is no implied warranty with respect to defects that an examination ought to have revealed to the buyer.

*One way for the seller to disclaim the implied warranty of merchantability is to use the term “merchantability.” This may be done orally or in a conspicuous writing. The implied warranty of merchantability can also be disclaimed by use of “as is,” “without faults,” or similar language that makes plain that there is no implied warranty.

Question 17

Implied warranty of fitness for a particular purpose

Answer 17

A warranty that the goods are fit for a particular purpose is implied whenever the seller has reason to know (from any source, not just from the buyer) that the buyer has a particular use for the goods, and the buyer is relying upon the seller’s skill to select the goods.