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55 Cards in this Set
- Front
- Back
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Common Law vs. Articles 2 Sale of Goods
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UCC Article 2 has adopted much of the common law of contracts, but where the common law and Article 2 differ, Article 2 prevails in a contract for the sale of goods.
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Goods
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All things movable at the time they are identified as the goods to be sold under the contract. Thus, article 2 applies to sales of most tangible things.
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Merchant
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Articles 2 defines a merchant as one who regularly deals in the goods of the kind sold or who otherwise by his profession holds himself out as having special knowledge or skills as to the practices or goods involved.
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Express Contract
Implied Contract Quasi-contract or Implied in Law contract |
Express contracts are formed by language, oral or written.
Implied contracts are formed by manifestation of assent other than oral or written language, i.e., by conduct. Not contracts at all. They are constructed by courts to avoid unjust enrichment by permitting the plaintiff to bring an action in restitution to recover the amount of the benefit conferred on the defendant. |
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Bilateral contracts
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A bilateral contract is one consisting of the exchange of mutual promises
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Section 17(1) Formation of a Contract Requires
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Except as stated in Subsection (2), the formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and consideration.
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Mutual Assent
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Mutual assent is usually shown by an offer and an acceptance received before the power of acceptance ends.
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Section 24 Offer
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§24. OFFER DEFINED
An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it. |
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Acceptance
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An acceptance is a manifestation of assent to the terms of the offer in a manner invited or required by the offer.
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Notification of Acceptance
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Where the act of acceptance does not automatically provide notice of the acceptance, the offeree ordinarily is under a duty to provide notice. A failure to provide timely notice acts To discharge the obligations of the offer or.
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Revocation
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Until the offer is accepted, the offeror retains the power to revoke the offer and terminate the power of the offeree to accept. A revocation is effective when it is received.
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Consideration
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Consideration may be defined as a bargained for exchange of legal detriment.
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Illusory promise
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An illusory promise is a promise that gives the promisor be unrestricted right to choose to incur no legal detriment.
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Covenant of Good Faith
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A doctrine that restricts a party’s right to claim dissatisfaction, by requiring the dissatisfaction to be reasonable (measurable objectively) or at least in good faith.
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Unjust enrichment
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A theory of recovery that requires that a benefit have been conferred under circumstances where it would be unjust not to provide some compensation for it.
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Undue Influence
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A contract procured by undue influence is voidable. Undue influence is unfair persuasion of a party who is under the domination of the person exercising the persuasion or who by virtue of the relation between them is justified in assuming that that person will not act in a manner inconsistent with his welfare.
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Nondisclosure
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Generally, a contract cannot be avoided for the other party’s nondisclosure. Nondisclosure coupled with other facts rendering the nondisclosure misleading will allow avoidance.
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Misrepresentation or concealment
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A party can avoid a contract due to another’s misrepresentation or concealment.
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Mutual Mistake
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A party that enters into a contract under a mistaken belief as to a basic assumption on which the contract is made will be able to avoid the contract if the mistake was material and the party did not bear the risk of the mistake.
Elements of Mistake a. Mistake (at the time of contract) b. As to a basic assumption for which the agreement is made (identity, ownership, c. Material d. Party asserting the mistake must not bear the risk of the mistake (entering into a contract knowing you don't know is bearing the risk) the only person we care about is the person trying to void the contract-- is he bearing the risk? |
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Duress
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A party who has entered into a contract under duress is entitled to avoid it. 3 elements:
An improper threat; That induces assent; The assent is justified |
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2-201 Basic Statute of Frauds
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A contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some record sufficient to indicate that a contract for sale has been made between the parties and signed by the party against which enforcement is sought or by the party's authorized agent or broker.
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Merchant Statute of Frauds
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Between merchants if within a reasonable time a record in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against the recipient unless notice of objection to its contents is given in a record within 10 days after it is received.
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Relief where writing requirements not met
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A contract that does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable:(a) if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller's business and the seller, before notice of repudiation is received and under circumstances that reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement;
(b) if the party against which enforcement is sought admits in the party's pleading, or in the party's testimony or otherwise under oath that a contract for sale was made, but the contract is not enforceable under this paragraph beyond the quantity of goods admitted; or (c) with respect to goods for which payment has been made and accepted or which have been received and accepted (Sec. 2-606). |
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Formation in general
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(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including offer and acceptance, conduct by both parties which recognizes the existence of a contract, the interaction of electronic agents, and the interaction of an electronic agent and an individual.
(2) An agreement sufficient to constitute a contract for sale may be found even if the moment of its making is undetermined. (3) Even if one or more terms are left open, a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy. |
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2-205 firm offers
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An offer by a merchant to buy or sell goods in a signed record that by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but in no event may the period of irrevocability exceed three months. Any such term of assurance in a form supplied by the offeree must be separately signed by the offeror.
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2-206. Offer and Acceptance in Formation of Contract.
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Unless otherwise unambiguously indicated by the language or circumstances
(a) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances(b) an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or nonconforming goods, but the shipment of nonconforming goods is not an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer. |
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Accommodation 2-206
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Nonconforming goods, but the shipment of nonconforming goods is not an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.
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UCC 2-207 (1)
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A definite and seasonable expression of acceptance or a written confirmation and which is sent within a reasonable time operates as an acceptance even though it states terms additional two or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
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UCC 2-207 (2)
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The additional terms are two be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:
a) The offer expressly limits acceptance to the terms of the offer; b) B) they materially alter it; or c) C) notification of objection two of them has already been given or is given within a reasonable time after notice of them is received. |
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UCC 2-207 (3)
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It is a provision that allows formation of a contract when the writings between parties do not establish a contract. It allows the terms of the contract to be the terms that their writing do agree on.
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UCC 2-306
Output, Requirement and Exclusive Dealings |
A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded.
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UCC 2-312
Warranty of Title and Against Infringement |
Subject to subsection (3), there is in a contract for sale a warranty by the seller that:(a) the title conveyed shall be good and its transfer rightful and shall not unreasonably expose the buyer to litigation because of any colorable claim to or interest in the goods; and(b) the goods shall be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge.(2) Unless otherwise agreed, a seller that is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of any third person by way of infringement or the like but a buyer that furnishes specifications to the seller must hold the seller harmless against any such claim that arises out of compliance with the specifications. (3) A warranty under this section may be disclaimed or modified only by specific language or by circumstances that give the buyer reason to know that the seller does not claim title, that the seller is purpor
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2-314 Implied Warranty: Merchantability; Usage of Trade
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Unless excluded or modified (Section 2-316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale.
(2) Goods to be merchantable must be at least such as: (a) pass without objection in the trade under the contract description; (b) in the case of fungible goods, are of fair average quality within the description; (c) are fit for the ordinary purposes for which goods of that description are used; (d) run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; (e) are adequately contained, packaged, and labeled as the agreement may require; and(f) conform to the promise or affirmations of fact made on the container or label if any.(3) Unless excluded or modified (Section 2-316) other implied warranties may arise from c |
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2-316 Exclusion of Modification of Warranties
Limits the power to exclude or modify warranties |
(1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but subject to Section 2-202, negation or limitation is inoperative to the extent that such construction is unreasonable.(2) Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it in a consumer contract the language must be in a record, be conspicuous, and state "The seller undertakes no responsibility for the quality of the goods except as otherwise provided in this contract," and in any other contract the language must mention merchantability and in case of a record must be conspicuous. Subject to subsection (3), to exclude or modify the implied warranty of fitness, the exclusion must be in a record and be conspicuous. Language to exclude all implied warranties of fitness in a consumer contract must state "The seller assumes no responsibility that the goods will
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2-328 Sale by Auction
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(1) In a sale by auction, if goods are put up in lots each lot is the subject of a separate sale.(2) A sale by auction is complete when the auctioneer so announces by the fall of the hammer or in other customary manner. If a bid is made during the process of completing the sale but before a prior bid is accepted, the auctioneer has discretion to reopen the bidding or to declare the goods sold under the prior bid.(3) A sale by auction is subject to the seller's right to withdraw the goods unless at the time the goods are put up or during the course of the auction it is announced in express terms that the right to withdraw the goods is not reserved. In an auction in which the right to withdraw the goods is reserved, the auctioneer may withdraw the goods at any time until completion of the sale is announced by the auctioneer. In an auction in which the right to withdraw the goods is not reserved, after the auctioneer calls for bids on an article or lot, the article or lot may not be withdrawn unless no bid is
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3-311 Accord and Satisfaction By Use of Instrument
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If a person against whom a claim is asserted proves that (i) that person in good faith tendered an instrument to the claimant as full satisfaction of the claim, (ii) the amount of the claim was unliquidated or subject to a bona fide dispute, and (iii) the claimant obtained payment of the instrument, the following subsections apply.
(b) Unless subsection (c) applies, the claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim. |
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Section 26 Preliminary Negotiations
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§26. PRELIMINARY NEGOTIATIONS
A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent. |
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§30. FORM OF ACCEPTANCE INVITED
Comments: a. Required form. The offeror is the master of his offer.... The form of acceptance is less likely to affect the substance of the bargain than the identity of the offeree, and is often quite immaterial. But the offeror is entitled to insist on a particular mode of manifestation of assent.... b. Invited form. Insistence on a particular form of acceptance is unusual. Offers often make no express reference to the form of acceptance; sometimes ambiguous language is used. Language referring to a particular mode of acceptance is often intended and understood as suggestion rather than limitation; the suggested mode is then authorized, but other modes are not precluded. |
(1) An offer may invite or require acceptance to be made by an affirmative answer in words, or by performing or refraining from performing a specified act, or may empower the offeree to make a selection of terms in his acceptance.
(2) Unless otherwise indicated by the language or the circumstances, an offer invites acceptance in any manner and by any medium reasonable in the circumstances. |
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§32. INVITATION OF PROMISE OR PERFORMANCE
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In case of doubt an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses.
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§33. CERTAINTY
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1) Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain.
(2) The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy. (3) The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance. |
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§45. OPTION CONTRACT CREATED BY PART PERFORMANCE OR TENDER
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§45. OPTION CONTRACT CREATED BY PART PERFORMANCE OR TENDER
(1) Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it. (2) The offeror's duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer. |
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§39. COUNTER-OFFERS
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(1) A counter-offer is an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer.
(2) An offeree's power of acceptance is terminated by his making of a counter-offer, unless the offeror has manifested a contrary intention or unless the counter-offer manifests a contrary intention of the offeree. |
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§41. LAPSE OF TIME
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(1) An offeree's power of acceptance is terminated at the time specified in the offer, or, if no time is specified, at the end of a reasonable time.
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§42. REVOCATION BY COMMUNICATION
FROM OFFEROR RECEIVED BY OFFEREE |
§42. REVOCATION BY COMMUNICATION FROM OFFEROR RECEIVED BY OFFEREE
An offeree's power of acceptance is terminated when the offeree receives from the offeror a manifestation of an intention not to enter into the proposed contract. |
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§43. INDIRECT COMMUNICATION OF REVOCATION
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§43. INDIRECT COMMUNICATION OF REVOCATION
An offeree's power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect. |
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§56. ACCEPTANCE BY PROMISE;
NECESSITY OF NOTIFICATION TO OFFEROR |
§56. ACCEPTANCE BY PROMISE; NECESSITY OF NOTIFICATION TO OFFEROR
Except as stated in §69 or where the offer manifests a contrary intention, it is essential to an acceptance by promise either that the offeree exercise reasonable diligence to notify the offeror of acceptance or that the offeror receive the acceptance seasonably. |
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§59. PURPORTED ACCEPTANCE
WHICH ADDS QUALIFICATIONS |
A reply to an offer which purports to accept it but is conditional on the offeror's assent to terms additional to or different from those offered is not an acceptance but is a counter-offer.
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§60. ACCEPTANCE OF OFFER
WHICH STATES PLACE, TIME OR MANNER OF ACCEPTANCE |
§60. ACCEPTANCE OF OFFER WHICH STATES PLACE, TIME OR MANNER OF ACCEPTANCE
If an offer prescribes the place, time or manner of acceptance its terms in this respect must be complied with in order to create a contract. If an offer merely suggests a permitted place, time or manner of acceptance, another method of acceptance is not precluded. |
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§63. TIME WHEN ACCEPTANCE
TAKES EFFECT |
§63. TIME WHEN ACCEPTANCE TAKES EFFECT
Unless the offer provides otherwise, (a) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree's possession, without regard to whether it ever reaches the offeror; but (b) an acceptance under an option contract is not operative until received by the offeror. |
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§69. ACCEPTANCE BY SILENCE OR
EXERCISE OF DOMINION |
(1) Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following cases only:(a) Where an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation.
(b) Where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer.(c) Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept. (2) An offeree who does any act inconsistent with the offeror's ownership of offered property is bound in accordance with the offered terms unless they are manifestly unreasonable. But if the act is wrongful as against the offeror it is an acceptance only if ratified by him. |
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§71. REQUIREMENT OF EXCHANGE; TYPES OF EXCHANGE
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(1) To constitute consideration, a performance or a return promise must be bargained for.
(2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.(3) The performance may consist of(a) an act other than a promise, or(b) a forbearance, or(c) the creation, modification, or destruction of a legal relation. |
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§73. PERFORMANCE OF LEGAL DUTY
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Performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest dispute is not consideration; but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more than a pretense of bargain.
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§79. ADEQUACY OF CONSIDERATION; MUTUALITY OF OBLIGATION
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If the requirement of consideration is met, there is no additional requirement of (a) a gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the promisee; or
(b) equivalence in the values exchanged; or (c) "mutuality of obligation." |
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Unilateral Mistake
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A party that enters into a contract under a mistaken belief as to a basic assumption on which the contract is made will be able to avoid the contract if the mistake was material and the party did not bear the risk of the mistake.
Elements of elements of Unilateral Mistake a. Mistake (at the time of contract) b. As to a basic assumption for which the agreement is made (identity, ownership, c. Material d. Party asserting the mistake must not bear the risk of the mistake (entering into a contract knowing you don't know is bearing the risk) the only person we care about is the person trying to void the contract-- is he bearing the risk? e. Enforcement would be “unconscionable” f. Other knows or should know of mistake Look for Equitable remedies |
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Courts of Equity
No jury trials |
Look for Equitable remedies
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