Sales
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Questions and Answers

What happens when nonconforming goods are shipped without a note?

  • It constitutes acceptance and a breach of contract. (correct)
  • The buyer automatically rejects the goods.
  • It is considered a rejection of the original offer.
  • The seller is entitled to request a new offer.

Who generally bears the risk of loss under the UCC?

  • The seller retains the risk until the buyer pays in full.
  • The buyer bears the risk as soon as the goods are dispatched.
  • The risk is equally shared between both parties.
  • The seller bears the risk until the buyer has possession of the goods. (correct)

In what scenario does the right to cure arise under the UCC?

  • When both parties agree on the contract terms.
  • When the seller fulfills the contract by delivering goods late.
  • When the buyer complains about the price of the goods.
  • When the buyer rejects nonconforming goods. (correct)

Which situation exemplifies commercial impracticability under the UCC?

<p>A natural disaster makes it impossible to fulfill a contract for perishable goods. (C)</p> Signup and view all the answers

What occurs if additional or different terms are present in an acceptance between two merchants?

<p>The new terms become part of the contract unless specific conditions apply. (B)</p> Signup and view all the answers

Which is NOT a required element for the formation of a valid contract under the UCC?

<p>Agreement on price. (D)</p> Signup and view all the answers

How can a seller exercise the right to cure a breach?

<p>By delivering conforming goods within the original time frame. (A)</p> Signup and view all the answers

Consideration is required for which of the following under the UCC?

<p>Initial contract formation. (C)</p> Signup and view all the answers

What does the Perfect Tender Rule allow the buyer to do if the delivered goods do not conform to the contract?

<p>Accept part of the goods and reject the rest (C)</p> Signup and view all the answers

When does the risk of loss pass to the buyer if the seller is a merchant?

<p>Upon receipt of the goods (A)</p> Signup and view all the answers

Under what condition may a seller exercise the Right to Cure after the performance period has expired?

<p>If the seller has reasonable grounds to believe that the nonconforming goods would be accepted (D)</p> Signup and view all the answers

What must the seller prove for discharge under the doctrine of Commercial Impracticability?

<p>That an unforeseeable event made performance extremely burdensome (D)</p> Signup and view all the answers

What right do buyers have concerning nonconforming goods prior to acceptance?

<p>Reject any goods that do not fully conform (C)</p> Signup and view all the answers

In a shipment contract, when does the risk of loss pass to the buyer?

<p>When the seller delivers the goods to the carrier (C)</p> Signup and view all the answers

What can a buyer do if nonconformity substantially impairs the value of the goods after acceptance?

<p>Revoke acceptance (C)</p> Signup and view all the answers

What is an implied warranty of merchantability?

<p>The product is fit for its average intended purpose at the time of sale (A)</p> Signup and view all the answers

What does UCC state about the seller's right to reclaim goods if the buyer cannot pay?

<p>The seller can reclaim the goods if the buyer can’t pay at the time of delivery (B)</p> Signup and view all the answers

In which situation does the buyer lose the right to reclaim goods after bankruptcy?

<p>If the seller does not demand reclamation within 10 days of delivery (C)</p> Signup and view all the answers

What condition must exist for a buyer to hold nonconforming goods as security for damages before acceptance?

<p>The buyer must prove they are unable to cover (A)</p> Signup and view all the answers

What must a seller do before exercising their right to cure after a buyer's rejection of goods?

<p>Act before the time for performance expires (D)</p> Signup and view all the answers

When may a buyer cancel the contract prior to acceptance?

<p>If the goods received are defective (B)</p> Signup and view all the answers

Flashcards

Valid Sales Contract (UCC)

A contract for the sale of goods, formed according to the Uniform Commercial Code (UCC).

UCC 'Good'

Tangible, movable personal property.

Merchant (UCC)

Someone who regularly deals in the type of goods involved in the sales contract.

Implied Terms (UCC)

Missing terms in a sales contract that the UCC assumes or fills in.

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Acceptance in Sales Contract

A clear sign, or reasonable response/action, of agreement to a sales offer.

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Nonconforming Goods

Goods that don't match the contract's terms.

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Additional/different Terms

Terms added to or different from an initial sales contract.

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UCC Statute of Frauds

UCC's slightly less stringent standard for written proof of a sales contract compared to common law.

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Perfect Tender Rule

A buyer can reject goods if they don't perfectly match the contract terms.

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Right to Cure

The seller can fix or replace nonconforming goods before the performance deadline, or even after, if they have a reasonable belief the replacement would be satisfactory.

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Commercial Impracticability

A seller can be discharged from a contract if an unforeseeable event makes performance extremely difficult or burdensome.

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Assurance & Cooperation

Parties can demand written assurances from each other that they will fulfill their contractual obligations.

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Inspect Goods

Buyers have the right to inspect purchased goods before accepting them.

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Anticipatory Repudiation

A party declares they won't fulfill their contract obligations before the performance deadline.

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Cover (Buyer's Remedy)

A buyer can purchase substitute goods and recover damages for the difference between their cost and the original contract price.

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Specific Performance (Buyer's Remedy)

A court order requiring the seller to fulfill their obligation under the contract.

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Revoke Acceptance (Buyer's Remedy)

A buyer can cancel acceptance of goods if a nonconformity substantially affects their value.

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Resell Goods (Seller's Remedy)

A seller can resell nonconforming goods and recover damages based on the difference between the resale price and the original contract price.

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Reclamation of Goods (Seller's Remedy)

A seller can reclaim goods from a buyer who cannot afford to pay, but may be time-limited.

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Express Warranty

The seller makes a specific promise about the product's quality, condition, or performance.

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Implied Warranty of Merchantability

A seller implicitly guarantees goods are fit for their ordinary purpose.

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Implied Warranty of Fitness for a Particular Purpose

A seller implicitly guarantees goods are suitable for a specific use the buyer has communicated.

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Puffery vs. Warranty

A seller's exaggerated claims or opinions are not considered warranties, while specific promises about the product's capabilities are.

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Study Notes

UCC Sales Analysis Approach

  • Step 1: Valid Contract? Analyzing contract formation under the UCC.
  • Step 2: Performance Issues? Evaluating contract performance and potential breaches under the UCC.
  • Step 3: Remedies? Assessing available remedies if a contract is breached under the UCC.

UCC Definitions

  • Sale of Goods: Governed by the Uniform Commercial Code (UCC).
  • Good: Tangible, movable personal property.
  • Merchant: Someone who regularly deals in goods of the type involved in the contract and is held to a higher standard of good faith.

Contract Formation (Offer)

  • Formation: A contract can be formed in any manner sufficient to indicate a deal between parties.

  • Quantity: Quantity is the essential term; all other terms can be filled in by UCC implication.

  • Missing Terms/Gap Fillers: The UCC automatically supplies reasonable implied terms for price, payment, and delivery.

  • Price: Reasonable price at the time of delivery.

  • Payment: Due at the time and place the buyer receives the goods.

  • Delivery: Seller's place of business.

Acceptance

  • Manner: Acceptance can be in any reasonable manner and medium.
  • Nonconforming Goods: If goods are nonconforming, accompanying notice makes it a counteroffer. Without notice, it's acceptance & breach.
  • Additional/Different Terms: If both parties are merchants, additional or different terms become part of the contract unless the offer expressly limits modifications, they're material alterations, or the offeror objects. For non-merchants, these terms do not become part of the contract.

Consideration

  • Initial Contract: Consideration is required for a valid initial contract for the sale of goods.
  • Modification: New consideration is not required for contract modifications as long as parties act in good faith.

UCC Statute of Frauds

  • Sufficient Memo: A sufficient written memo, signed by the party to be charged, is all that is required to satisfy the UCC statute of frauds. This must contain the identifying parties and the quantity of goods.

Contract Performance (UCC)

  • Risk of Loss: Determining who bears the risk of loss during transaction.
  • Seller's Obligations: Seller's responsibilities under the contract.
  • Buyer's Obligations: Buyer's responsibilities under the contract.

Seller's Obligations

  • Perfect Tender Rule: Seller must deliver conforming goods.
  • Right to Cure: Seller has a limited right to fix nonconforming goods (prior to expiration of time for performance).
  • Commercial Impracticability: Unforeseeable circumstances can excuse seller's performance.
  • Assurance and Cooperation: Party demanding assurance can suspend performance until the other party provides assurance.

Buyer’s Obligations

  • Payment: Obligation to pay for goods, including method of and timing.
  • Right of Inspection: Buyer has a right to inspect goods.
  • Acceptance: Acceptance is presumed if the buyer fails to reject goods in a reasonable time. Acceptance does not give up all rights against a defective or non-conforming product.
  • Anticipatory Repudiation: If one party indicates they won't perform, the other party can treat it as a breach. The breaching party can retract the repudiation unless the other party has acted detrimentally.

Remedies Under UCC

  • Buyer's remedies before acceptance (various).
  • Buyer's remedies after acceptance (various).
  • Seller's remedies before acceptance (various).
  • Seller's remedies after acceptance (various).

Warranties – Product Liability

  • Express Warranty: Seller's promises or representations that become part of the contract.
  • Implied Warranty of Merchantability: Goods are fit for the ordinary purpose for which they are used.
  • Implied Warranty of Fitness for a Particular Purpose: Goods are fit for a specific purpose.

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