Sales: The UCC PDF

Sales: The UCC Sales Analysis Approach Step1: Is there a Valid Contract? * Contract Formation under the UCC Step 2: Are there any issues related to the performance of a valid contract? Contract Performance & Breach unde...

Sales: The UCC Sales Analysis Approach Step1: Is there a Valid Contract? * Contract Formation under the UCC Step 2: Are there any issues related to the performance of a valid contract? Contract Performance & Breach under the UCC Step 3: What Remedies are Available if a Contract is Breached? Contract Remedies under the UCC  Sales: The UCC Sale of goods governed by the Uniform Commercial Code (UCC) What is a good? Loading… All tangible chattles (personal property) which are moveable at the time of the K. If goods coupled with services Can separate and apply UCC to goods portion UCC liberally construed if close call, apply UCC Who is a merchant? 8 Someone who deals in goods of the kind Duty of good faith (higher obligation) K Formation - Offer * A K for the sale of goods may be made in any manner sufficient to indicate that a K has been made between the parties 6 Quantity is the only thing you need all other open terms the UCC will imply Missing/Implied terms (next slide)or gap fillers: Price: Reasonable price at time for delivery - Payment: Due at time and place buyer receives goods Delivery: Seller’s place of business Acceptance & Unless otherwise specified, offer to make a K shall be construed as inviting acceptance in any manner and by any medium reasonable under the circumstances Nonconforming goods Additional or different terms Nonconforming Goods If accompanied by a note, counteroffer If just shipped, acceptance and breach Additional or Different Terms Not necessarily a rejection and counteroffer If both parties are merchants new terms become part of the K unless: Offer expressly limits to original terms New terms are a material alteration Original offeror objects to new terms If one or both parties are non-merchants, new terms do not automatically become part of K Consideration Still required for initial K If modification of original K, new consideration not required as long as parties act in good faith Statute of Frauds * More liberal than common law A sufficient memo is all that is required identifying parties and quantity term signed by party to be charged Loading… K Performance – UCC Who bears the risk of loss? Seller’s Obligations Buyer’s Obligations  Risk of Loss & when? Generally placed on party best able to have insured against goods loss If seller is a merchant, risk of loss passes to buyer on receipt of goods If seller is a non-merchant, risk of loss passes to buyer upon tender of delivery If delivery to a specific location not required, risk of loss passes when seller delivers to carrier (shipment K) If delivery required, risk of loss passes when carrier places goods at buyer’s disposal at specified destination (destination K) Seller’s Obligations Perfect Tender Rule Right to Cure Commercial Impracticability Assurance and Cooperation award Perfect Tender Rule At common law, tender conforming goods Modernly, if goods or delivery fails to conform to K, buyer has the right to: Accept goods Reject the entire shipment Accept part and reject part Right to Cure Right of seller to repair, adjust, or replace defective or non- conforming goods Before time for performance expires After time for performance expires if seller has reasonable grounds to believe nonconforming goods would be sufficient Limits right of buyer to reject  Impracticability Look for unforeseeable supervening event Still must be extreme or severely burdensome Partial incapacity requires seller to allocate diminished production among all customers (including regular customers not currently under K) Permits discharge of seller for delay or non-delivery upon notice where where parties did not contemplate contingent event that make performance impracticable Non-occurrence is basic assumption of K K lapses when buyer fails to respond in writing to seller’s notice after reasonable time (not exceeding 30 days) Assurance & Cooperation If one party has reasonable grounds to believe that the other party will not perform as contracted, he/she/they may demand adequate assurances in writing Until adequate assurances received, may suspend performance  Buyer’s Obligations Payment Right of Inspection Any reasonable time and manner Acceptance presumed when buyer fails to reject May accept in part and reject in part Anticipatory Repudiation Non breaching party may: Treat repudiation as final breach Wait and see if party will decide to honor K despite intention not to UCC allows breaching party to retract repudiation O Remedies Under UCC Buyer’s remedies prior to acceptance Buyer’s remedies after acceptance Seller’s remedies prior to acceptance Seller’s remedies after acceptance Buyer’s Remedies Prior to Acceptance Cancel K Recover anything paid and: Cover (purchase substitute goods) and receive damages for difference plus incidental & consequential damages Receive damages for difference between K price and market price Hold nonconforming goods as security for damages Bring action for specific performance or replevin Unique or specifically identified good Buyer unable to cover Buyer’s Remedies After Acceptance Buyer liable to K price less damages for defective goods Buyer must notify seller of any deduction in K price Revoke acceptance if nonconformity substantially impairs value Seller’s Remedies Prior to Acceptance Cancel K Withhold delivery Stop goods in transit & Resell goods and recover damages based on difference between resale and K price plus incidental damage Receive damages for nonperformance, based on difference btwn K price and market price plus incidental damages Where unfinished goods involved, seller may resell or stop production and sell materials as scrap Seller’s Remedies After Acceptance F Action for price plus incidental damages Reclamation of goods if buyer can’t afford to pay Seller may refuse or stop delivery to buyer Available in all cases where buyer can’t afford to pay at time of delivery Right to reclaim goods is cut off if buyer sells to a third party bona fide purchaser If buyer goes into bankruptcy, right to reclaim is lost unless seller demands it w/in 10 days of delivery 10 day limit does not apply where buyer misrepresents financial stability in writing w/in 3 months of delivery  Warranties - Products Liability * Express Warranty: When a seller represents to a buyer something about a product involved—condition, description, performance potential—advertising or otherwise—may becomes part of the K If warranty breached, causing loss to buyer by relying on warranty, buyer has a direct action against seller Distinguish from mere puffery that does not create a warranty (opinion of seller, not a fact; for example) Implied Warranty: Implied in law from seller to buyer Merchantability: Fit for average purpose intended at time sold Fitness for Particular Purpose: Implicitly warranted for (cold weather sleeping bag) Can arise from course of dealing or usage of trade