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15 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Implied warranties are based on the __________’s understanding of the product they are purchasing.
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Buyer
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Implied warranties (Article 2 of the UCC) include:Warranty of merchantability – the goods for sale are fit for “normal” use Warranty of fitness – applies when the buyer is relying on the seller’s expertise to purchase goods for a particular purpose.
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TrueBlue and Tom enter a pool maintenance contract. TrueBlue hires a third-party to test the pool water during the busy summer season. Unless the contract prohibits this type of delegation, a court of law would most likely find this delegation acceptable.
_________ duties can normally be delegated to a third-party unless specifically prohibited by a contract. |
Routine
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Delegation is not typically allowed if the duties of the contract require a specific person’s talent, performance, or reputation. If you pay Raul Rodriguez, a famous baseball player, to appear at your birthday party, he cannot ask his friend Alex to take his place.
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If a college baseball player makes an oral agreement with the manager of the Texas Rangers to play for them for the next ten years, he is bound by this oral contract.
___ false ___ true |
False
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Since the contract was not in writing and is covered under the Statute of Frauds, he is not bound by this contract (over 1 year).
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Although all 50 states have their own bodies of law and interpretations, ________ laws exist.
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Uniform
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Uniform laws are laws that have been adopted by many states and reduce varying interpretations of the law. The best example of a uniform law is the Uniform Commercial Code (UCC). The UCC, which primarily deals with contracts, has similar interpretations and enforcements in all 50 states.
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Normally, oral contracts are enforceable and valid. However, any contract covered by the Statute of Frauds must be in ___________.
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Writing
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Be familiar with the following types of contracts that are covered under the Statute of Frauds:
(MY LEGG) 1 – Contract in consideration of Marriage (M) 2 – Contract not to be performed within 1 Year (Y) 3 – Contract for the sale of Land (L) 4 -- Promise to pay a debt of an Estate out of personal funds (E) 5 – Contract for the sale of Goods above $500 (G) 6 – A Guarantee to pay another person’s debt (G) |
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The _________ _________ ______ (UCC) has been adopted by all 50 states.
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Uniform Commercial Code
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The UCC provides legal consistency regarding contract interpretation and enforcement across all 50 states. This legal consistency makes it easier for interstate businesses to conduct business.
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_________ of title, which is covered in Article 2 of the UCC, is the seller’s guarantee that they are conveying a clear and valid title.
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Warranty
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If a title had a lien on it that was not properly disclosed, that would be a violation of warranty of title.
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Article 2 of the UCC (Uniform Commercial Code) covers:
___ Warranty of Title ___ All choices ___ Implied Warranties ___ Express Warranties |
All choices
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Warranty of title – seller warrants clear and valid title
Express warranty – representations of the quality or condition Implied warranty – a warranty that is implied by law The words warranty and guarantee are interchangeable |
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Adam purchases a life insurance policy from Live Long & Prosper, Inc., which is viewed by the court as a valid contract between Adam and LLP, Inc. In the event of Adam’s death, LLP, Inc. will pay Adam’s wife Karen $1,000,000. Karen is an example of a third-party beneficiary known as a _________ beneficiary.
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Donee
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A donee beneficiary receives contractual performance as a gift from one of the original parties of the contract.
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The phrase “stands in the shoes of the assignor” means the assignee has all rights and duties ________ to him.
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Transferred
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The assignee (person taking over the contract) is contractually substituted for the assignor (original party). Whatever the assignor was entitled to or owed, the assignee is now entitled to or owes. Basically, the contract is now viewed as if the assignee is one of the original parties. The “standing in the shoes” idea is one of the most important principles in contract law.
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Warranty of ________ is a guarantee that the person selling the goods has conveyed a clear title without liens.
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Title
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Warranty of title is an implied warranty that guarantees:
1 -- Seller has a valid title (rightful ownership) 2 – There are no liens that the seller knows of 3 – The goods do not infringe upon a third party’s trademark, patent, or copyright |
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A(n) ________ warranty, which is covered in Article 2 of the UCC, is an agreed between the seller and buyer that the products or goods will be of a certain quality. This type of warranty is normally a description, statement that good will do a certain thing, or reference to a sample or model.
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Express
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Express warranties are the things a seller says regarding the quality, condition, or performance of goods. However, puffery, which is exaggerated praise or flattery in advertising (i.e. Best Apple Pie In The World), is not considered an express or implied warranty.
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Frank, who had been an avid baseball card collector as a child, was cleaning out his attic and found a Mickey Mantle rookie card! The local collectible shop offered him $3,000, he accepts, and sells it. A week later he discovers the card was actually worth $10,000 and feels that he has been unfairly cheated out of his money. However, this is a(n)__________ mistake and Frank will not be able to get his card back or demand more money.
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Unilateral
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The collectible store did not have a duty to tell Frank the value of his baseball card. Even if the salesman did misstate the value, it would not be considered fraud because it would not be a misstatement of a material fact. Next time, Frank should be more careful about entering into a contract!
Unilateral Mistake Principle – A person should not be allowed to benefit from his own ignorance or carelessness. Bilateral Mistake Principle – If both parties made a material mistake, the contract can be rescinded Two types of mistakes: Incidental mistake – an insignificant detail that does not affect the contract Material mistake – a significant mistake that cuts to the heart of the matter |
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A ______-party beneficiary is a person who benefits from a contract, but is not an actual party to the contract.
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Third
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The two types of third-party beneficiaries that can make a claim are:
Donee-beneficiary – gifted contractual performance Creditor Beneficiary – owed the performance of a contract |
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Contractually Michael owes Bethany $200 cash. Michael is broke and offers to mow Bethany’s grass for one month in lieu of the originally agreed upon payment. Bethany accepts this offer.
If a party agrees to accept something in lieu of the original agreement, it is known as “___________ and satisfaction.” |
Accord
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Acceptance of a new performance to satisfy an existing obligation discharges the old obligation (performance requirement) on the basis of “accord and satisfaction.”
Accord – new performance Satisfaction – performance of the accord agreement |
