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174 Cards in this Set
- Front
- Back
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Three classes of contracts
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1) Those classified by formation
2) Those classified by acceptance 3) Void, voidable, and unenforceable Ks |
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Ks classified by formation
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- Express by language, oral, or written
- Implied by manifestations of assent, conduct - Quasi-K or implied K in law (not a K but a way to avoid unjust enrichment) |
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Ks classified by acceptance
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- Bilateral requires an exchange of promises
- Unilateral requires the exchange of an act for a promise |
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Void, voidable, and unenforceable Kd
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Void = w/o any legal effect from the beginning
Voidable = a party may elect to void or ratify Unenforceable = Otherwise valid K but a defense extraneous to formation exists |
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Creation of a K
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1. Mutual assent (offer and acceptance)
2. Consideration or a substitute 3. No defenses to formation |
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The Offer
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- Creates power of acceptance in the offeree
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What is required for a valid K?
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- Expression of promise, undertaking, or commitment to enter the K
- Definite and certain in its terms - Communicated to the offeree |
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What is definite and certain in it's terms?
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- ID the offeree
- Definiteness of subject matter (quantity, duration, identification of land or price) - Formation fails if offer provides material term will be agreed to on a future date. |
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What happens if there are missing terms?
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Ct supplies r/able terms if consistent w/parties' intent.
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Vagueness
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Defeats formation unless acceptance by part performance makes the vague term clear
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Termination by offeror - revocation
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- Directly communicates revocation to offeree OR
- Acts inconsistently and offeree receives correct info of this - Effective when received - Can be revoked even if offeror promised not to revoke for a set period of time. |
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Limitations on ability to revoke
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- Firm offer under UCC
- Option contract w/considerations - Justifiable/foreseeable reliance by offeree - Offeree has started performance on a unilateral K |
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Termination by offeree- rejection
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- Rejection expressly by counteroffer.
- Rejection of option doesn't terminate offer, offeree may still accept w/in option period unless offeror detrimentally relies on rejection. - Lapse of time also is a rejection |
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Termination by operation of law
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- Death or insanity of either party unless option w/consideration
- Destruction of the proposed K's subject matter - Supervening illegality |
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The Acceptance under Common Law
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- Mirror image rule, otherwise counteroffer
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The acceptance under the UCC
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- Acceptance that deviates from offer necessarily a rejection or a counteroffer unless made conditional on accepting new/different terms
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Acceptances Generally
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- Person to whom offer addressed may accept.
- Acceptance must be communicated by a r/able means unless offer states |
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Mailbox Rule
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- If acceptance by mail properly addressed/stamped, effective at the moment of dispatch. If improperly addressed, effective on date of receipt.
- Does not apply if offer says acceptance effective upon receipt - Options Ks effective on receipt - If offeree sends a rejection and then an acceptance, whichever arrives first prevails. - If offeree sends acceptance then rejection, acceptance is effective upon dispatch UNLESS the rejection arrives first and offeror detrimentally relies |
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Acceptance by unauthorized means
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Effective if actually received by offeror while offer still exists.
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Crossing Offers
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No K even if same terms
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Acceptance w/o communication for bilateral K
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- Express waiver of communication in offer
- Offer requires act as acceptance, OR - Offeree silently takes offered benefits |
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Elements of Consideration
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1. Bargained for exchange
2. Legal Value |
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Bargained for exchange
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- Promise for promise or promise for act
- Act/forbearance by promisee consideration if benefits promisor - Promise given in exchange for somthing already done is NOT consideration, except where past obligation is unenforceable bc of technical defense, like SOL. That obligation will be enforceable if a new promise is made in writing or is partially performed. |
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Legal Value
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Benefit - minority rule. Conferring a benefit on OPY enough
Detriment = Majority rule. Requires party incur detriment by doing something not legally obligated to, or refraining from something you have legal right to do. |
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Pre-existing duty - Insufficient Consideration Except
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- New or different consideration promised
- Promise to ratify a voidable obligation - PED owed to 3P rather than promisor - Honest dispute as to duty - Unforeseen circomstances sufficient to dischare a party. |
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Acceptance w/o communication for bilateral K
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- Express waiver of communication in offer
- Offer requires act as acceptance, OR - Offeree silently takes offered benefits |
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Elements of Consideration
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1. Bargained for exchange
2. Legal Value |
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Bargained for exchange
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- Promise for promise or promise for act
- Act/forbearance by promisee consideration if benefits promisor - Promise given in exchange for somthing already done is NOT consideration, except where past obligation is unenforceable bc of technical defense, like SOL. That obligation will be enforceable if a new promise is made in writing or is partially performed. |
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Legal Value
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Benefit - minority rule. Conferring a benefit on OPY enough
Detriment = Majority rule. Requires party incur detriment by doing something not legally obligated to, or refraining from something you have legal right to do. |
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Pre-existing duty - Insufficient Consideration Except
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- New or different consideration promised
- Promise to ratify a voidable obligation - PED owed to 3P rather than promisor - Honest dispute as to duty - Unforeseen circomstances sufficient to dischare a party. |
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Forebearance to sue
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May be consideration if claim is valid or claimant has GF belief it is valid.
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Mutual and Illusory Promises
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- If only one party is bound to perform, the promise is illusory and not enforced.
- Not illusory if: 1) at least one alternative involves detriment and the poewr to choose rests w/promisee or 3P OR 2) Valuable alternative actually selected |
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Right to choose alternative courses
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- A promise to choose one of several alternatives means of performance is illusory unless every alternative involves legal detriment to promisor.
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Subs for consideration
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- Promissory estoppel
- Written promises to pay legal obligations barred by law (SOL) |
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Defenses to formation
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- Absence of mutual assent
- Absence of Consideration - Public policy defenses |
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Absence of Agreement
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- Mutal Mistake
- Unilateral mistake - Mistake by intermediary - Latent ambiguity mistakes - Misrepresentation |
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Mutual Mistake
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- Mistake re: basic assumption upon which contract made
- Has material adverse effect on agreed-upon exchange - Adversely affected party did not assume risk (party knows assumption is doubtful) - Mistakes in value not generally a good defense bc presumes parties assume risk. |
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Unilateral mistake
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K voidable if non-mistaken party knew or should have known.
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Mistake by intermediary
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Message operative as transmitted unless the receiver should be aware of the mistake.
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Latent Ambiguity (ambiguous terms)
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- If niether or both parties aware, no K unless parties intended same meaning
- One party aware - binding K based on what ignorant party r/ably believed |
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Misrepresentation
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If party induces other party to enter K w/fraudulently misrep or non-fraud material misrep, K voidable if OPY justifiably relied.
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Public policy defenses
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- If consideratoin or subject matter is illegal, K is void.
---Excetpions: P unaware of illegality and D aware, one party not as culpable. If only the purpose behind K is illegal, K voidable by party who is: - Unaware of purpose OR - Aware but did not facilitate in the purpose AND purpose does not involve crime of MT |
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Defenses based on lack of capacity
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- Persons under 18 (voidable by infant, binding on adult; infant may assert K upon age of majority)
- Insane (can K during lucid state) - Intoxicated if other praty knows of the intoxication - Duress and coercion = voidable |
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Defenses to formation
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Statute of Frauds
Unconscionability |
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3PB
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- Intended = contract rights
- Incidental = no K rights. |
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3PB acquires K rights when rights have vested.
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- 3PB manifests assent to promise OR
- 3PB brings suit to enforce the promise OR - 3PB materially changes position in justifiable reliance on the promise. |
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3PB v. Promisor
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- Promisor can raise any D that has against promisee
- If it is not an absolute promise, promisor can assert hte promisee's defenses against 3PB |
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3PB v. Promisee
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- Creditor B can sue on existing duty, can sue promisor but only obtain one satisfaction)
- Donee B has no right to sue unless detrimental reliance. |
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Promisee v. Promisor
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For specific performance if promisor is not performing for 3PB
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Assignment of Rights
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X (obliger) Ks w/Y (assignor), Y assigns his right to X's performance to Z (Assignee)
- All rights may be assigned unless it substantiall changes obligor's duty/risk, the assignment of future rights to arise from future Ks, or prohibited by law) |
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Non-Assignment Provision
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- Clause barring A of "the k" bars only delegation
- Clause barring A of "contractual rights" does not bar A but gives obligor right to sue for damages - Clause states "attempts to A will be void" bar A - If assignee knows non-assignment clause, A ineffective. |
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Is assignment revocable or irrevocable
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- For consideration is irrevocable
- Not consideration is revocable |
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Can be irrevocable if
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- obligor already performed
- token chose delivered - Assignment of simple chose is put in writing - Assignee can show detrimental reliance |
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Terminated by
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- Death or bankruptcy of assignor
- Notice of revocation by assignor - Assignor takes performance from obligor - Subsequent A of same right to another |
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Who can sue whom?
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- Assignee v. Obligor - obligor has any defense inherent in the K
- Assignee v. Assignor - for wrongful revocation, assignor not liable if obligor incapable of performing |
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What problems if same rights successively assigned?
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- If first A is revocable, subsequent A revokes it.
- If first A is irrevocable, first A trumps second. |
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Exceptions if 2d Assignee paid value and and took w/o notice
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- Subsequent gets first juegment against obligor
- Subsequent gets first payment from obligor - Subsequent gets delivery of a token chose - Subsequent is party to a novation releasing assignor - Subsequent can proceed agaisnt first on estoppel. |
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Delegation of Duties
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- Y (obligor/delegator) promises to perform for X (obligee)/ Y delegates her duty to Z (delegate)
- Generally, all duties may be delegated |
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Duties that may NOT be delegated
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- Duties that involve personal judgment and skill
- Delegation would change obligee's expetcancy - Special trust was reposed in the delegator by the obligee - K restriction on delegation |
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Rights and Liabilities in Delegations
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- Obligee must accept performance from the delegate
- Delegator is liable on the K - Obligee may sue delegate for non performance, but may require delegate to perform only if there has been an assumption. |
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Rules of K Construction
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- K is construed as a "whole" according to the ordinary meaning or words
- Ambiguities construed against preparer unless evidence of the parties' intent - Look to custom and usage to determine intent when unclear |
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Parol Evidence Rule
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- If agreement reduced to writing intended as complete and final expression of the parties, evidence of prior and contemporaneous negotiations and agreements that contradict, modify, or vary the writing's terms is inadmissible.
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Exceptions to Parol Evidence Rule
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- Formation defects
- Existence of condition precedent - Intent re: ambiguous terms - Consideration problems - Prio valid agreement that is incorrectly reflected in the writing - Collateral agreememnt if it does not contradict or vary writing, and is not so closely cnnected as to be a part of the main. |
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Distinction between promise and condition
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Promise = Commitment to do ore refrain from doing
Condition = event the occurrence or non-occurrence of which will create, limit, or extinguish the absolute duty to fulfill the promise. |
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Types of Conditions
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Condition precedent
Condition concurrent Condition subsequent |
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Express, implied, and constructive conditions
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Express - in K
Implied - inferred from intent Constructive - read into K by court w/o regard to parties' intent, to ensure they receive what they bargained for |
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Have conditions been excused?
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- If condition excused, duty of performance becomes absolute
- Party wrongfully prevents condition = excused - Actual material breach by one party excuses the other's duty - Anticipatory repudiation - Prospective inability or unwillingness to perform - Waiver or estoppel - Impossibility, impracitcability, or frustration |
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4 choices for non-repudiating party
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1. Sue immediately
2. Suspend performance and sue when performance due 3. Treat as offer to rescind and treat K as discharged 4. Ignore and urge performance |
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Can repudiation be retracted?
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Yes, until the other party has accepted it or detrimentally relied on it.
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Prospective inability or unwillingness to perform
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- R/able grounds to believe OPY will be unable/unwilling
- Innocent party may suspend own performance until receives adequate assurance. If no adequate assurance, treat as repudiation |
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Substantial performance
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Party almost completely performed but commits minor breach
- Only with constructive conditions - Don't apply rule if breach was willful |
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Divisibility of K
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- Party performs one of the units of DK, entitled to agreed equivalent for that unit despite failing to perform other units.
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DK reqs
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- Performance of each party divided into 2 or more parts
- # of parts due from each party is the same - Parties agree the parts are equivalent |
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UCC Installment Ks
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Total breach if defects in an installment substantially impair value of whole K
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Estoppel waiver
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- Waive condition by indicating will not insist on it
- Upon detrimental reliance, waiving party estopped from asserting condition. - |
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Election Waiver
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If continue under K despite broken condition = waiver
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Impossibility, impracticability, or frustration
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- If meet discharge tests
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Has the duty to perform been discharged?
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- Performance or tender of performance
- Occurrence of condition subsequent - Illegality of subject matter - Impossiblility, impracticability, or frustration - Rescission - Modification = partial discharge - Novation - Cancellation of original K - Release and covenant not to sue - Accord and satisfaction - Acount stated - Lapse - Operation of law - running of SOL |
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Accord
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- 1 party agrees to accept different performance
- Consideration required - Does not discharge K duty, only suspends OPYs rt to enforce it - Payment of a smaller amount than due is valid consideration if made in GF and there has been a bona fide dispute to claim |
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Satisfaction
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Performance of the accord
Discharges both accord and original debt. |
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Account stated
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Parties agree to amount as final balance due from other as settlement
More than one prior transaction required Writing required only if original transaction subject to SOF |
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Remedies for minor breach
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Non-breacher must perform, but may recover damages
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Remedies for material breach
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- Nonbr/party may treat K as over and duty to perform discharged; and has immediate Rt to all remedies for breach of entire K.
- Non-breaching party must show she was willing/able to perform |
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Timeliness of performance
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Not a material breach if perform w/in r/able time of date stated in k unless nature of K makes timely performance essential
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Compensatory damages
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- standard and consequential. Can recover both.
- Standard is the expectation damages, or the reliance damages if expectation speculative |
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Damages of Ks for Sale of Goods
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Difference btw K price and FMV when seller tenders goods or when buyer learns of breach.
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What if the buyer breaches?
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Seller may
- w/hold delivery - Stop delivery - Resell and recover the difference - Recover damages for non-acceptance - If buyer has already accepted or if seller unable to resell, may recover K price |
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What if seller breaches?
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Buyer may:
- Reject nonconforming goods - Cancel - Cover - Recover goods identified in K - Obtain specific performance - Recover damages for non-delivery - If buyer accepts non-conforming goods, may recover the difference btw value of non-conforming and conforming goods |
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Remedy for Land sales K
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Difference btw K and FMV
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Remedy for Employment K
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- If ER breaches, damages are the full K price less wages earned after breach
- If EE breaches, measure is whatever it costs to replace EE |
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Remedy in Construction K
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- If owner breaches, builder entitled to profits that would have resulted from K plus any costs expended.
- If K breached after construction complete, recover full K price plus interest - If builder breaches, owner entitled to cost of completion plus r/able compensation for the delay |
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Remedies for K Calling for Installment Payments
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- If payment not made, only partial breach and recovery limited to recovering the missed payment
- K may include acceleration clause |
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Consequential damages
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If r/able person would've foreseen when making K these damages would result from breach.
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Liquidated damages
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Valid if damages difficult to ascertain when K formed and are r/able
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Specific Performance
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- If legal remedy is inadequate because subject matter is rare or unique.
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Equitable defenses
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- Laches
- Unclean hands - Sale of subject matter to bona fide purchaser |
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Restitution
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An alternative to K damages to prevent unjust enrichment.
Measure of damages = value of the benefit conferrd. |
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Restitution where K breached
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Non breaching party has not fully performed. May choose to rescind and sue for restitution, which is not limited to K price.
- If breach by P, restitution decreased by damages caused. |
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Restitution where K unenforceable
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Quasi-K action allows restitution to avoid unjust enrichment
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Restitution where no K involved
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Quasi-k action allows restitution if:
- P conferred benefit on D - w/ r/able expectation of payment. - D knew or had reason to know of expectation, and - D would be unjustly enriched if allowed to retain the benefits w/o compensating P. |
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Differences btw CL and UCC re: Consideration
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CL: Option K requires consideration or promissory estoppel
UCC: Merchant's firm offer is irrevocable w/o consideratoin |
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Differences btw CL and UCC re: Acceptance
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CL: Acceptance must be absolute and unequivocal, otherwise a rejection and counter-offer (Mirror Image Rule)
UCC: Proposal of additional terms does not constitute rejection; terms may become part of K - battle of forms rule. |
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Differences btw CL and UCC: modification
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CL: requires consideration
UCC: if sought w/GF binding w/o consideration |
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Differences btw CL and UCC re: performance
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CL: Rule of substantial performance
UCC: perfect tender rule (w/exceptions) |
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Subject matter of Article 2
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- Transactions in movable goods.
- Timber, minerals, and structures to be removed if severed by seller - Growing crops - Fixtures that can be removed w/o farm |
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Who is a merchant?
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Person who regularly deals in goods of the kind or holds self out as having special knowledge and skills as to practices/goods involved.
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Merchant's firm offer
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1. Written and signed by merchant
2. Assurance that offer will be held open 3. Irrevocable for period stated or for r/able time not over 3 mos 4. No consideration required |
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Methods of Acceptance
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- Any r/able manner
- Offer to buy good for current shipment invites acceptance eithre by promise to ship or by prompt shipment. |
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Battle of the Forms Rule
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- No mirror image; only intent needed
- If involving nonmerchant K, includes only terms in offer |
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Additional terms automatically part of K unless:
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They materially alter the original
- The offer is expressly limited to its terms OR - The offeror rejects add'l terms in r/able time. |
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Different Terms under Battle of Forms
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Some court treat as additional, others apply knock out rule
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Effect of performance on battle of forms
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Offeror may object to new or inconsistent terms by offeree. If the offeree's response has add;t terms and states not an acceptance unless offeror consents, NO K.
But, if parties proceed to act as though they have a K, there is a K consisting of the terms on which the writings agree and suplemented by UCC |
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Open Terms
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Do not prevent formation if parties intend open terms and there is a r/able basis for giving a remedy
- Court can supply r/able terms for those missing - QUANTITY IS THE ONE ESSENTIAL TERM |
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Auctions
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Actions are w/reserve unless explicitly stated w/o reserve.
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Defenses to Formation of a K
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Statute of Frauds
Unconscionability |
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Modification by Parties' Agreement
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- Binding w/o consideration if in GF
- Writing prohibiting oral modifcation is valid/binding (unless detrimental reliance) - Waiver of condition by words, conduct. No consideration req'd except in installment Ks. Beneficiary of waived condition may insist on strict compliance in future w/notice - |
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Modification by operation of law
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- Destruction or injury to Id'd goods w/o fault of either party
- Impracticability |
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Destruction/injury to goods
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If before risk passes to buyer, K is avoided
For damaged goods, B can elect to take them w/reduction in price |
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Impracticability
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Seller discharged from performing if:
- At time of K, basic assumption was of a certain thing that would make it extremely more burdensome would NOT occur, AND - Circumstance does not occur. S is discharged only to the extend of the impracticability. |
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Some examples of impracticability, please?
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War
Embargo Natural Disaster |
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What if seller is only partially unable to perform bc of impracticability?
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Must allocate available supply among customers.
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Parol Evidence Under the UCC
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May be introduced by:
- Consistent additional terms - Couse of dealing - Usage of the trade or business - Course of performance |
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Seller's Obligation of Tender and Delivery UCC: Non-carrier Ks
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- Seller must put and hold conforming goods at B's disposition
- If no agreement, place of delivery is S's place of business |
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Seller's Obligation of Tender and Delivery UCC: Carrier Shipment Ks
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- Seller only req'd to put the goods into carrier's hands, make r/able K for their shipment, and promptly tender rqd docs and notify B of shipment.
- If S fails to make K for shipment or notify B, B has grounds for rejection ONLY if material loss/delay |
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Seller's Obligation of Tender and Delivery UCC: Destination Ks
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- S reqd to see the goods reach the buyer
- Rqd to put and hold conforming good at B's disposition at the destination specified |
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FOB Ks
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FOB point = delivery point
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FAS Ks
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S delivers goods alongside vessel in manner usual or on dock designated by B and obtain and tender receipt for the goods
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Delivery and Payment Concurrent Conditions Default Rules
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- Non carrier case = sale is for cash and price due concurrently w/tender of delivery
- Carrier case = Price is due only at time and place at which buyer receives good |
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Shipment Under Reservation
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B must pay carrier in order to receive goods
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Installment Ks
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Payment for each installment unless contrary intent.
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Buyer's Right to Inspect
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Right to inspect before paying unless goods are sent COD or B promises to pay w/o inspecting
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Identification of Goods
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- B has i nterest in goods under K once they are ID'd.
- Specific, ascertained, and existing goods, ID'd at time of K - Crops to be harvested w/in 12 months and unborn animals, ID'd when planted or conceived - Other goods - ID'd when shipped, marked, or otherwise designated by S |
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Insurable Interest
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B has insurable interest in ID'd goods
S has insurable interest as long as she has title or security interest |
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Risk in the Absence of Breach, Non carrier
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Non-Carrier: If S = merchant, risk on B only upon B taking physical possession. If S is not merchant, risk on B upon tender of delivery
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Risk in the absence of breach, Carrier
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Shipment K = Risk passes to B when goods are delivered to K
Destination K = Risk on B when goods tendered to B at destination |
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Effect of Breach on Risk - Defective Goods
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If goods so defective that B has right to reject, risk does not shift until defect cured or B accepts despite defects.
If B rightfully revokes acceptance, risk always on S |
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Effect of Breach on Risk - Breach by buyer
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If B breaches before risk shifts to B, any loss occurring w/in commercially r/able time after S learns of breach falls on B.
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Risk in Sale or Return (If B doesn't sell goods, send back to S)
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If goods returned to S, risk stays w/B until they reach S.
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Risk in Sale on Approval (B takes goods but may return even if conform
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Risk does not pass to B until he accepts
If B decides to return goods, return is at S's risk. |
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Rules for Passage of Title
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In absence of agreemnt, title passes when S completes delivery performance.
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How to show acceptance
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- B, after r/able chance to inspect, indicates to S that goods conform or that will keep despite non-conform.
- B fails to reject w/in r/able time or fails to notify S of rejection - B does anything inconsistent with S's ownership |
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Right to reject
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If non-conforming goods are tendered, B may either keep them and sue for damages or reject and either cancel K or sue
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Right to reject, single delivery Ks
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B may reject all, accept all, or accept any commercial units and reject the rest
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Right to reject in installment Ks
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- Reject installment only if non-conformity substantially impairs value of that installment and cannot be cured. This is a whole breach.
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Formal reqs for rejection
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1. W/in r/able time after delivery or tender and before acceptance,
2. Notify S. |
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Buyer's Responsibilities for Goods After Rejection
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1. Hold goods w/r/able care at S's disposition for a time sufficient
2. If no instruction w/in r/able time, B can reship, store, or resell goods. |
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Seller's right to cure
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- W/in time originally provided for, but need to give notice of inent to cure and make new tender.
- You can cure after the K time if S r/ably believed goods sent were acceptable. - In installment Ks, B cannot reject an installment if the defect can be cured. |
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Revocation of Acceptance
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B may revoke acceptance if defect substantially impairs good's value AND
- Accepted on r/able belief would be cured and hasn't - Accepted them bc of the difficulty of discovery defects OR - Accepted them bc S assured goods conformed |
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Buyer's Right to Replevy Undelivered ID'd Goods from Seller
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- B may replevy if B has tendered full payment and made at least part payment and either:
1) S becomes insolvent w/in 10 days after receiving B's first payoment or 2) Goods were purchased for personal, family, or household purposes. |
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Buyer's right to specific performance
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Unique goods or in proper circs
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B's Damages for Non-Delivery or Proper rejection or revocation of acceptance
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- Difference btw K price and the FMV or actual cost of replacement.
- Also incidental and consequential |
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B's Damages for Accepted Goods
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- Difference btw value of goods delivered and the value they would have had if they conformed.
- Incidental and consequential damages - To recover for defective accepted goods, B must notify seller of defect w/in r/able time. |
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Seller's right to w/hold goods
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If B fails to pay
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Seller's right to Recover Goods
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- Upon insolvency and demand w/in 10 days of B's receipt of goods.
- If from baily, stop when you find out B is insolvent, B breaches, or S has right to w/hold pending assurances. |
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Seller's right to force goods on B and recover full price
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Only if seller is unable to resell goods at a r/able time after risk has passed to B.
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Seller's Damages
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- Difference btw K price and FMV.
- Resell goods and reover the difference btw K and resale price - If lost volume seller, recover under a "lost profits" measure - Incidental damages |
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Remedies available to Both B and S
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- Right to demand assurances
- Anticipatory Repudiation - Retraction of Repudiation (before performance due unless OPY cancelled K, relied, or said final) - Liquidated Damages - W/in 4 yrs of breach |
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Warranties
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- Warranty of Title and Against Infringement
- Implied Warranty of Merchantibility - Implied warranty of fitness for a particular purpose - Express Warranties |
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Warranty of Title
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Implied from S that:
- Title transferred is good - Transfer is rightful - No liens or encumbrances against title of which B is unaware |
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Warranty Against Infringement
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Merchant warrants that goods are delivered free of any patent, trademark, copyright, or similar claims.
Does not apply where B furnishes specifications for Goods to S. |
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Implied Warranty of Merchantibility
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Merchant S.
Goods are fit for ordinary purposes for which such goods are used. Serving food/drink on premises is subject to warranty |
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Implied Warranty of Fitness for Particular Purpose
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S has reason to know the particular purpose for which goods are to be used and that B is relying on S's skill/juegment to select suitable goods
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Express Warranties
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S's affirmations of fact, promise, description, samle, or model becomes the basis of the bargain.
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Disclaimer of Express Warranties
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Warranty and disclaimer must be read consistently
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Implied disclaimer of merchantability
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may be sepcifically disclaimed using word "merchantability"
If it's written it must be conspicuous |
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Implied disclaimer of fitness for particular purpose
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Disclaimed by a conspicuous writing
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Disclaimers for Both Fitness and Merch
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"as is" or "with all faults"
Inspection as to defects that a r/able inspection would reveal Course of dealing, course of performance, or trade usage. |
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Limits on Disclaimer
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Unconscionability makes disclaimer ineffective
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Limitation of Damages for Breach of Warranty
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Unconscionability test
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Entrustment
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Entrusting goods to merchant who deals in goods of that kind gives her power to transfer rights of the entruster to a buyer in the ordinary course of biz.
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Voidable Title
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If sale induced by fraud, S can rescind sale and recover goods.
Exception if defrauding buyer then sells to GFP for value. |
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Can thieves pass good title?
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NO. Except:
1. Goods are money 2. Goods are negotiable instruments transferred to a holder in due course. 3. Buyer has made accessions to the goods. 4. True owner estopped from asserting title. |
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Fraudulent Retention of Possession
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Retention of possession by seller of sold goods is conclusively fraudlent, as against S's creditors, unless the sale is evidenced by a written bill of sale. therefore, seller's creditors can reach goods while seller has them.
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Sale or Return
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If B takes goods for resale and has right to return them if not sold, goods are subject to B's creditors while in B's possession.
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