De Bar - Article 2

Front 1

2 -- When does UCC apply?

Back 1

2-102: To transactions in goods

Front 2

2 -- What are underlying purposes and policies of UCC?

Back 2

"1-103(a) -- (1) to simplify, clarify, and modernize the law governing commercial transactions;

Front 3

2 -- "What are ""goods""?"

Back 3

2-105(1) -- all things movable at the time for identification to the K.

Front 4

2 -- When are goods identified to a K?

Back 4

"2-501(1) --
1. When K is made for sale of existing and identified goods;
2. If K is for future goods, when S ships, marks or otherwise designates particular goods.
3. when crops are planted or unborn young of animals are conceived."

Front 5

2 -- Goods to be severed from realty: what must be removed by S?

Back 5

2-107(1) -- Minerals, ice, water, oil, gas, and any structure on the realty

Front 6

2 -- Goods to be severed from realty - What can be removed by either party?

Back 6

2-107(2) - crops, timber, and fixtures severable without material harm to the realty.

Front 7

2 -- "What are not ""goods""?"

Back 7

"1. Money in which the price is to be paid (money not as a commodity)
2. investment securities
3. things in action
4. real property
5. intangible personal property"

Front 8

2 -- "What may or may not be ""goods""?"

Back 8

Software, mp2s, and CDs.

Front 9

2 -- Determining Article 2's application to mixed-hybrid transactions?

Back 9

predominant purpose test (Majority approach) - Does the sale of goods predominate?

Front 10

2 -- Factors in making a Predominant Purpose Test determination?

Back 10

"1. K langugae
2. Nature of supplier's business
3. Value of materials and services provided under the K."

Front 11

2 -- What is required for K formation under Article 2?

Back 11

"2-204(1) -- K for sale of goods can be made in any manner sufficient to show agreement.
Basic requirements, 2-204(3) --
1. intent
2. reasonably certain basis for giving an appropriate remedy."

Front 12

2 -- Form of acceptance?

Back 12

2-206(1)(a) -- acceptance in any manner and by any medium reasonable under the circumstances is valid, unless otherwise unambiguously indicated by language or circumstances.

Front 13

2 -- Acceptance by shipment?

Back 13

"2-206(1)(b) -- Requires:
1. an offer to buy goods for prompt or current shipment
2. either (a) a prompt promise to ship or (b) propmpt or current shipment of conforming or nonconforming goods."

Front 14

2 -- Shipment of nonconforming goods as acceptance?

Back 14

2-206(1)(b) -- an acceptance if S ships without notice to B. If S notifies B that nonconforming goods are shipped as an accomodation, then it is a counter-offer.

Front 15

2 -- Beginning to perform as acceptance?

Back 15

"2-206(2) -- Will be acceptance where:
1. beginning to perform is a reasonable way to accept
2. accepting party provides notice to other party within reasonable time of beginning performance"

Front 16

2 -- """Firm offers"" under article 2?"

Back 16

"2-205 -- Requirements:
1. offeror is a merchant.
2. assurance in writing that the offer will be held open.
3. signed by the party making the offer to hold open"

Front 17

2 -- Who is a merchant?

Back 17

"2-104(1) -- ""A professional in business."" pretty much anyone in business. Goods merchant or a practices merchant."

Front 18

2 -- practices merchant

Back 18

2-104: One who holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction.

Front 19

2 -- good merchant?

Back 19

one who deals in goods of this kind

Front 20

2 -- Article 2 provisions applicable only to goods merchants

Back 20

2-314 - IWOM
2-402(2) retention of possession
2-403(2) entrustment"

Front 21

2 -- proper assurance that offer will be held open?

Back 21

2-205 -- must be explicit; cannot merely idicate time when offer will lapse

Front 22

2 -- Period of irrevocability of a firm offer?

Back 22

3 months at most; if consideration is exchanged, no limit.

Front 23

2 -- When is acceptance effective despite different or additional terms

Back 23

"2-207(1):
1. acceptance must be definite and seasonable, OR confirmation must be sent within a reasonable time.
2. acceptance must state different or additional terms
3. acceptance cannot be made expressly conditional upon on offeror's assent to the different or additional terms.

OR -- 2-207(3):
where conduct of the parties establishes the existence of a K. Terms will be those on which the parties' writings agree + trade terms + gap fillers."

Front 24

2 -- "When is acceptance ""expressly made conditional"" under 2-207?"

Back 24

3 approaches:
1. Roto-Lith -- An offeree’s response stating a term materially altering the contractual obligations solely to the disadvantage of the offeror constitutes a conditional acceptance
2. 2. Construction Aggregates Approach -- A response merely predicating acceptance on clarification, addition or modification is a conditional acceptance
3. 3. Dorton Approach -- The conditional nature of the acceptance should be so clearly expressed in a manner sufficient to notify the offeror that the offeree is unwilling to proceed with the transaction unless the additional or different terms are included in the contract."

Front 25

2 -- What if acceptance or confirmation states additional terms (and is not conditional upon assent)?

Back 25

2-207(2): If parties one party is not a merchant, then the additional terms are proposals for additions to the K (counteroffers).

If both parties are merchants, the additional terms become part of K unless:
1. offer CLEARLY and expressly limits acceptance to terms of the offer
2. the additional terms materially alter the offer.
3. the offeror objects to the additional terms before or after receiving notice of them."

Front 26

2 -- When do additional terms materially alter a k?

Back 26

2-207, cmt. 4: term must constitute changing the bargain, surprise or hardship.

E.g., negation of implied warranties, ability of party to cancel k upon one failed payment, probably an arbitration provision, terms outside norms of the industry."

Front 27

2 -- "What if acceptance or confirmation states ""different"" terms (and is not conditional upon assent)?"

Back 27

3 approaches:
1. treat same as additional terms. Thus, different terms are either proposals for addition or, if both parties, are merchants terms that will materially alter. In both cases, different terms are not part of K. cmt. 3.
2. interpret 2-207 as not addressing different terms. thus, they get ignored.
3. Knock Out Rule. cmt. 6."

Front 28

2 -- What is the Knock Out Rule?

Back 28

2-207, cmt. 6:

if different terms conflict, both terms are stricken, and the K consists of terms that agree + trade terms + gap fillers

NOTE -- some court limit KOR's application to confirmatory memos"

Front 29

2 -- SOF requirements

Back 29

2-201(1):
1. sale of goods for $500 or more
2. some writing sufficient to indicate that a K for sale has been made and stating a QUANTITY term
3. signed by the party against whom enforcement is sought.
"

Front 30

2 -- Merchant exception to SOF

Back 30

"2-201(2):
1. both parties are merchants
2. ii. Confirmation in writing
iii. Sent within a reasonable time
iv. Sufficient against the sender (signed by sender & quantity term)
v. Party receiving it has reason to know its contents
vi. No written notice of receiving party’s objection is given within 10 days of receiving
"

Front 31

2 -- Specially manufactured goods exception to SOF

Back 31

2-201(3):
1. sale is valid but for SOF compliance
2. goods are specially manufactured for B and S cannot otherwise sell in his OCB
3. S has started manufacture or procurement before receiving B's notice of repudiation."

Front 32

2 -- SOF exceptions

Back 32

2-201(2) and (3):
1. merchant exception
2. specially manufacture goods exception
3. partial payment or acceptance exception
4. promissory estoppel"

Front 33

2 -- Promissory Estoppel & SOF

Back 33

3 approaches:
1. Rst. Approach -- PE will defeat SOF only when the promise relied upon is a promise to reduce the K to writing.
2. Restrictive Approach -- PE cannot remove an oral contract from the SOF.
3. Least Restrictive Approach -- An oral promise can satisfy the SOF only where the detrimental reliance is of such a character and magnitude that refusal to enforce the contract would permit one party to perpetrate a fraud."

Front 34

2 -- Electronic K Formation

Back 34

2 methods:
1. Click wrap agreements
2. Browse wrap agreements"

Front 35

2 -- Unconscionability, defined

Back 35

2-302, cmt. 1:whether, in the light of the general commercial background and the commercial needs of the particular trade or case, the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract…The principle is one of the prevention of oppression and unfair surprise

"

Front 36

2 -- substantive unconscionability

Back 36

grossly unfair K terms

Front 37

2 -- Procedural unconscionability

Back 37

unfairness in bargaining process. Factors:
1. Who prepared K?
2. Reasonable alternatives to the K?
3. Negotiation/Take it or leave it basis?
4. Notice -- size of font, etc.?
5. Characteristics of parties? Age, education, sophistication, etc.
"

Front 38

2 -- Actions of a court finding unconscionability?

Back 38

2-302(1):court
a. (1)may refuse to enforce the contract, or
b. (2) it may enforce the remainder of the contract without the unconscionable clause, or
c. (3) it may so limit the application of any unconscionable clause as to avoid any unconscionable result
"

Front 39

2 -- Hierarchy of K term analysis

Back 39

1-303(e):
a. Express Terms of the written or oral contract.
b. Course of Performance
c. Course of Dealing
d. Usage of Trade
e. UCC Gap Fillers
"

Front 40

2 -- How are trade terms used in Article 2?

Back 40

1-303(d):
(1)ascertaining the meaning of the parties' agreement, (2) may give particular meaning to specific terms of the agreement, and (3) may supplement or qualify the terms of the agreement"

Front 41

2 -- Good faith & Article 2

Back 41

1-203; 1-102(3): An unwaivable standard of conduct underlying EVERY obligation imposed by Article 2.

Front 42

2 -- Defining the Good Faith Standard

Back 42

"Old Article 1: Honesty in fact + observance of reasonable commercial standards of fair dealing in the trade (for merchants).

Revised Article 1: HIF + reasonable commercial standards of fair dealing (for everyone)"

Front 43

2 -- What obligations cannot be altered by party agreement?

Back 43

"1-302(b):
good faith, diligence, reasonableness, and care. Though parties may determine standards for measuring.
2-302: prohibition against unconscionability
SOF
K formation provisions
Article 2's scope provisions"

Front 44

2 -- Parol Evidence Rule Analysis

Back 44

2-202:
1. What type of evidence is being proferred?
2. What kind of document memorializes the agreement? That is, is this a writing that comes within the scope of PER/2-202?
3. For what purposes is the evidence offered?"

Front 45

2 -- What ype of evidence implicates PER?

Back 45

"2-202:
prior oral agreements
prior written agreements
contemporaneous oral agreements"

Front 46

2 -- What type of writing implicates the PER?

Back 46

"2-202:
a writing intended by the parties as a final expression of their agreement with respect to such terms"

Front 47

2 -- Determining whether writing is a final expression under PER?

Back 47

"2 approaches:
1. 4 corners test
2. Contextual test"

Front 48

2 -- If PER is rightfully invoked, what evidence may still come in?

Back 48

"If writing partially integrated -- supplementary evidence is permitted in the form of (1) trade terms, and (2) consistent additional terms.

If the writing is completely integrated, supplementary evidence is permitted in the form of trade terms."

Front 49

2 -- Was a K modification obtained in good faith?

Back 49

"3 inquiries (Roth Steel):
i. Whether the party's conduct is consistent with reasonable commercial standards of fair dealing in the trade
ii. Whether the parties were in fact motivated to seek modification by an honest desire to compensate for commercial exigencies
iii. Means used to obtain the modification may not be an impermissible attempt to obtain a modification by extortion or overreaching"

Front 50

2 -- When must a modification be in writing?

Back 50

2-209(3): if, as modified, K comes within UCC SOF provision.

Front 51

2-- When is a provision stipulating that modification be in writing proper?

Back 51

2-209(2): Where it is part of a signed writing, except in the case of consumers, who must separately sign the modification provision.

Front 52

2 -- No modification, BUT a waiver?

Back 52

2-209(4): A modification that fails b/c of non-compliance with a writing requirement can still be considered a waiver if the other party changes position on the oral modification.

Front 53

2 -- When can Article 2 privde price term?

Back 53

2-305(1): Where parties intend to contract

Front 54

2 -- Article 2 gap filling provision: price term

Back 54

2-305(1): price will be a reasonable price at time and place of delivery if:
1. no price term
2. parties agreed to determine price at a later point in time but never did.
3. price was to be set by a 3rd party of some agreed upon method that fails to set price through no fault of either party."

Front 55

2 -- price term where one party reserves the right to set the price?

Back 55

2-305(2): part setting price must do so in good faith (must satisfy both HIF and commercial reasonableness, Mathis)

Front 56

2 -- other party's options when party setting price does so in bad faith or price setting mechanism fails through fault of other party?

Back 56

"2-503(3): May
1. cancel K, or
2. set a reasonable price."

Front 57

2 -- Limits on quantity term of output and requirements Ks?

Back 57

"2-306(1): output/requirements must:
1. occur in good faith, and
2. not be unreasonably disproportionate to (a) any stated estimated or (b) any normal or otherwise comparable prior output or requirement in the absence of a stated estimate."

Front 58

2 -- good faith requirement of quantity term in output/requirement Ks?

Back 58

"2-306, cmt. 2:
shut down for lack of orders v. shut down to curtail losses
natural expansion v. sudden expansion
rise in market price of goods where K price if fixed?"

Front 59

2 -- "When is an output/requirement quantity term ""unreasonably disproportionate""?"

Back 59

"Factors to consider:
1. The amount by which the requirements exceed the contract estimate;
2. Whether the seller had any reasonable basis on which to forecast or anticipate the requested increase;
3. The amount, if any, by which the market price of the goods in question exceeded the contract price;
4. Whether such an increase in market price was itself fortuitous; and
5. The reason for the increase in requirements.
6. any stated min/max range"

Front 60

2 -- Gap filler re: number of deliveries?

Back 60

"2-307:
1. delivery in one lot unless otherwise agreed or circumstances necessitate."

Front 61

2 -- gap filler re: place of delivery?

Back 61

"2-308:
S's place of business or S's residence unless, at the time of contracting, goods were identified and in another place known to both parties (that place will be place of delivery)."

Front 62

2 -- gap filler re: time permitted to make delivery?

Back 62

2-309: delivery must be within a reasonable time.

Front 63

2 -- gap filler re: time and place of payment?

Back 63

2-310: time and place where B receives (takes physical possession) of the goods.

Front 64

2 -- payment when delivery is made through documents of title?

Back 64

2-310(c): payment is due at time and place where B receives docs.

Front 65

2 -- Basic Warranty Analysis:

Back 65

"i. Has an express warranty been made?
ii. Are any warranties implied by law?
iii. Have any warranties been effectively disclaimed?
1. What warranty is being disclaimed?
2. Have article 2 disclaimer requirements been complied with?
3. Are there any defenses or other reasons (e.g., unconscionability) not to enforce despite Article 2 compliance?
iv. Has any warranty been breached?
"

Front 66

2 -- Requirements to establish an express warranty

Back 66

"2-313:
a. An affirmation of fact or promise which relates to the goods/A description of the goods/A sample or model
b. Part of the basis of the bargain"

Front 67

2 -- What is not an affirmation of fact/promise?

Back 67

"2-313(2):
1. an affirmation of value of the goods
2. a statement of opinion or commendation"

Front 68

2 -- Express Warranties: Basis of the Bargain prong

Back 68

"1. UCC establishes a presumption that affirmations of fact/promises/models/descriptions form a basis of the bargain.
2. B's knowledge and where B acquired such knowledge may affect basis of the bargain analysis. Rogath."

Front 69

2 -- Disclaiming express warranties?

Back 69

"Virtually impossible. 2-313

Front 70

2 -- IWOM -- When does it apply?

Back 70

2-314(1): When S is a goods merchant

Front 71

2 -- When are goods merchantable?

Back 71

"2-314(2): Merchantable goods must at least:
(a) pass without objection in the trade under the contract description; and
(b) in the case of fungible goods, are of fair average quality within the description; and
(c) are fit for the ordinary purposes for which such goods are used; and
(d) run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; and
(e) are adequately contained, packaged, and labeled as the agreement may require; and
(f) conform to the promises or affirmations of fact made on the container or label if any. "

Front 72

2 -- When are goods fit for ordinary purposes for which such goods are used?

Back 72

goods must do what is normally expected of them; the goods must work.

Front 73

2 -- IWOM & Used Goods?

Back 73

A lessened standard of merchantability. 2-314, cmt. 3

Front 74

2 -- IWOM & Timing?

Back 74

B's subsequent use can affect scope of IWOM; but B's reasonable expectations as to quality and continued use are also pertinent.

Front 75

2 -- Objects in Food/Drink and IWOM

Back 75

"2 approaches:
1. Indigenous/Non-indigenous Test: If object is ""naturally occurring"" then there is no IWOM breach.
2. Reasonable expectations test."

Front 76

2 -- How can IWOM be disclaimed?

Back 76

"2-316(2), (3):
1. An oral disclaimer that specifically mentions the term “merchantability.” 2-316(2).
2. A written disclaimer that is (1) conspicuous and (2) mentions the term “merchantability.” 2-316(2).
3. “as is”, “with all faults” or other language which in common understanding calls the buyer's attention to the exclusion of warranties and makes plain that there is no implied warranty, so long as such language is conspicuous. 2-316(3)(a).
4. B examines goods or refuses to examine goods after S demands that he do so No IWOM to the extent an examination would have or B’s inspection should have revealed defects. 2-316(3)(b).
5. COP/COD/UOT can give rise to an exclusion or modification of IWOM."

Front 77

2 -- IWOFFPP requirements?

Back 77

"2-315
1. S, at the time of contracting, has reason to know of the particular use of the goods contemplated by B, and
2. S, at the time of contracting, has reason to know the B is relying on S’s skill or judgment to select or furnish goods suitable for B’s contemplated purpose."

Front 78

2 -- "What is a ""particular purpose"" covered by IWOFFPP?"

Back 78

"2-315, cmt.2:
A “particular purpose” differs from the ordinary purpose for which the goods are used in that it envisages a specific use by the buyer which is peculiar to the nature of his business "

Front 79

2 -- How can IWOFFPP be disclaimed?

Back 79

"2-316:
1. A written disclaimer that is conspicuous. 2-316(2).
2. “as is”, “with all faults” or other language which in common understanding calls the buyer's attention to the exclusion of warranties and makes plain that there is no implied warranty, so long as such language is conspicuous. 2-316(3)(a).
3. B examines goods or refuses to examine goods after S demands that he do so No IWOFFPP to the extent an examination would have or B’s inspection should have revealed defects. 2-316(3)(b).
4. COP/COD/UOT can give rise to an exclusion or modification of IWOFFPP."

Front 80

2 -- When can a purchaser with voidable title still transfer good title to a 3rd party?

Back 80

"2-403(1):
(a) the transferor was deceived as to the identity of the purchaser, or
(b) the delivery was in exchange for a check which is later dishonored, or
(c) it was agreed that the transaction was to be a “cash sale”, or
(d) the delivery was procured through fraud punishable as larcenous under the criminal law. "

Front 81

2 -- What does warranty of title provide?

Back 81

"2-312(1):
a. S conveys good title
b. Transfer is rightful
c. Goods are delivered free of any claim by S’s creditors of which B had no knowledge at time of sale.
"

Front 82

2 -- Special ability to transfer entrusted goods?

Back 82

2-413(2): goods merchant can transfer any goods entrusted to him by a BIOCOB

Front 83

2 -- BIOCOB

Back 83

"A person
a. who buys goods,
b. in good faith,
c. without knowledge that the sale violates the rights of another person,
d. In the ordinary course of business
e. Who takes possession, or who has the right to possession from the seller."

Front 84

2 -- How to disclaim WOT?

Back 84

"2-312(2):
1. with SPECIFIC language, or
2. circumstances indicate S does not have title or does not have complete and good title"

Front 85

2 -- Limitation of remedy as a warranty disclaimer?

Back 85

"2-719(1)
1. permitted, but not exclusive unless agreement expressly states."

Front 86

2 -- When will a limited remedy fail as awarranty disclaimer?

Back 86

"2-719(2): where circumstances cause it to fail of its essential purpose or deprives either party of the substantial value of the bargain
2-719(3): Where a limitation of consequential damages is unconscionable."

Front 87

2 -- When are liquidated damages as a warranty disclaimer okay?

Back 87

"2-718(1): Where amount is reasonable in light of
1. the anticipated or actual harm
2. difficulties of proof of loss
inconvenience or nonfeasability of otherwise obtaining an adequate remedy"

Front 88

2 -- Parties' basic performance obligations

Back 88

"2-301:
S must transfer and deliver; B must accept and pay."

Front 89

2 -- "What is ""tender""?"

Back 89

An offer of goods to B

Front 90

2 -- Requirements for S's direct tender to B?

Back 90

"2-503(1): S must
a. Put and hold conforming goods at B’s disposition at a reasonable hour and for a reasonable length of time
b. Provide reasonable notice to B so that B may take delivery
c. Provide any documents necessary for B to take possession
"

Front 91

2 -- ROL when S tenders to B directly?

Back 91

"2-509(3):
If S is a merchant, upon tender of delivery.
If S is NOT a merchant, when B takes possession."

Front 92

2 -- ROL & goods in possession of bailee

Back 92

"2-509(2):
1. negotiable doc of title --> ROL passes upon tender of doc to B.
2. bailee acknowledgement of B's right to possess --> ROL passes upon that acknowledgement
3. non-negotiable doc of title OR delivery order --> ROL passes once B has had reasonable time to present doc/order."

Front 93

2 -- Shipment K

Back 93

Requires S to deliver goods to a carrier at the place of shipment. 2-503, cmt. 2: all Ks are presumed to be shipment Ks.

Front 94

2 -- Destination K

Back 94

"Requires S to deliver goods to a particular destination.
NOTE --> there must be clear indication that S agreed to be responsible for goods during shipment."

Front 95

2 -- S's obligations under a shipment K?

Back 95

"2-504: S must:
1. Deliver goods to the carrier
2. Make a reasonable contract with the carrier on behalf of B
3. Promptly notify B of the shipment
4. Provide B with any documents necessary to obtain possession of the goods."

Front 96

2 -- B's ability to reject for failure to make a reasonable K with carrier or promptly notify B of shipment under a shipment K?

Back 96

2-504: B can only reject is MATERIAL delay or loss ensues.

Front 97

2 -- ROL & shipment Ks?

Back 97

2-509(1): ROL passes to B when S duly delivers goods to carrier.

Front 98

2 -- S's tender obligations under a destination K?

Back 98

"Same as those for direct tender, 2-503(3):
S must
a. Put and hold conforming goods at B’s disposition at a reasonable hour and for a reasonable length of time
b. Provide reasonable notice to B so that B may take delivery
c. Provide any documents necessary for B to take possession
"

Front 99

2 -- ROL & destination Ks

Back 99

2-509(1)(b): ROL passes to buyer upon tender of goods at destination.

Front 100

2 -- Commercial Shipment Terms

Back 100

"Shipment Ks:
1. FOB Shipment/FOB Seller
2. FOB vehicle of transportation
3. CIF
4. C&F

Destination Ks:
1. FOB Point of Destination/FOB Buyer"

Front 101

2 -- How does S ship goods under reservation?

Back 101

"2-505(1):
1. negotiable bill of lading to his own order
2. non-negotiable bill or lading to himself (cannot name B as a cosignee).
3. S's nominee reserves possession to himself"

Front 102

2 -- ROL & Shipments under reservation?

Back 102

2-509(1): ROL passes to B upon delivery to carrier.

Front 103

2 -- Perfect Tender Rule

Back 103

"2-601:
S's tender must conform to K in ALL respects, otherwise B may
(a) reject the whole; or
(b) accept the whole; or
(c) accept any commercial unit or units and reject the rest.
"

Front 104

2 -- Mitigation of Perfect Tender Rule?

Back 104

"1. Allowance for S to Cure, 2-508
2. Substantial Performance in Installment Contracts
3. Failure to make a reasonable shipping K w/ carrier is ground for rejection only if it results in material delay or loss. See 2-504.
4. B’s acceptance in spite of non-conformity, 2-608
5. Good faith, 1-203
6. UOT"

Front 105

2 -- When may B reject an installment?

Back 105

"2-612(2):
1. When the nonconformity substantially impairs the value of that installment and cannot be cured, OR
2. the nonconformity is a defect in the required docs."

Front 106

2 -- When may B cancel an installment K in its entirety?

Back 106

2-612(3): Where the nonconformity or default of one or more installments substantially impairs the value of the whole K

Front 107

2 -- When is B estopped from cancelling an installment K in its entirety?

Back 107

"(1. where value of entire K is not substantially impaired)
2. where B accepts a nonconforming installment without seasonably notifying of cancellation
3. where B brings an action with respect only to past installments
where B demands future performance"

Front 108

2 -- When does S have right to cure?

Back 108

"2-508
1. Where the time for performance has not yet expired, 2-508(1), or
2. Where S knew of the non-conformity but nevertheless had reasonable grounds to believe that B would accept (with or without a money allowance for the non-conformity). 2-508(2).
"

Front 109

2 -- How does S cure?

Back 109

1. S must “seasonably notify” B of intent to cure. 2-508(1), (2).
2. Time to cure?
a. Under 2-508(1), S may cure within contract time.
b. Under 2-508(2), S has “reasonable time” to cure.
3. What is a satisfactory cure?
a. Depends on the nature of the breach
"

Front 110

2 -- When must B pay before he has right to inspect?

Back 110

2-513(3): 1. COD delvery term 2. where B is to pay against docs of title (CIF and C&F presume B is to do so before inspections)

Front 111

2 -- How does B accept?

Back 111

"2-606:
1. Words or conduct signifying to S that B is accepting
2. Failing to effectively reject the goods after the time for inspection expires
3. Dealing with goods in a manner inconsistent with S's ownership"

Front 112

2 -- Effect of B's acceptance?

Back 112

"2-607:
1. B is precluded from rejecting the goods. 2-607(2).
2. B is obligated to pay K price. 2-607(1).
a. But if S's tender is non-conforming B still entitled to various remedies. See 2-714; 2-715.
3. B must notify S of any breach within a reasonable time or will be barred from any remedy. 2-607(3)(a).
4. B assumes burden of proof on any claim of breach with respect to accepted goods. 2-607(4).
5. In a non-installment K, B loses the right to cancel the K."

Front 113

2 -- Requirements for B's notice of breach after B has accepted?

Back 113

"2-607(3)(a):
1. no writing
2. no magic words necessary
3. within a reasonable time of discovery or when B should have discovered"

Front 114

2 -- What form must B's payment be in?

Back 114

2-511(2): any means or in any manner current in the OCB unless S demands cash and S allows time for B to get it.

Front 115

2 -- When can B reject? What can B reject?

Back 115

"1. B may reject if goods or tender are nonconforming in ANY respect
2. B may reject the whole or accept any commercial unit and reject the rest."

Front 116

2 -- Limits on B's right to reject?

Back 116

"a. Parties may expressly limited circumstances for rightful rejection or limit B’s remedy in the event of non-conformity
b. Installment Ks under 2-612
c. COP/COD/UOT
d. Partial rejection limited to commercial units under 2-606(2)."

Front 117

2 -- Requirements for an effective rejection?

Back 117

"2-602(1):
a. Reject within a reasonable time after tender or delivery of the goods, and
b. Seasonably notify S."

Front 118

2 -- When must B's notice of rejection to S contain the reason for rejecting?

Back 118

"2-605: Where --
1. S could have cured OR S and B are merchants and S requests a statement of defects, AND
2. defect is ascertainable upon reasonable inspection, AND
3. B seeks to rely on defect to justify rejection or to establish breach

Front 119

2 -- Effect of B's rejection?

Back 119

"1. B is not obligated to pay K price, 2-709.
2. S retains ownership. 2-401(4)
3. ROL remains with S
4. S may have the right to cure under 2-508 (see above)
5. B has a security interest in any goods in his possession or control to the extent of any price paid or expenses incurred
6. B is entitled to damages
7. B must comply with duties under 2-602, 603, & 604 if in possession or control of goods"

Front 120

2 -- B's basic duties after rejecting goods?

Back 120

"2-602:
1. cannot exercise ownership over goods, AND
2. must hold with reasonable care at S's disposition for sufficient time unless B has a SI in goods under 2-711(3)."

Front 121

2 -- Doctrine of unavoidable use?

Back 121

"B may engage in unavoidable use of goods after rejection. Factors as to what use is ""unavoidable""?:
a. Seller's instructions to B after rejection/revocation of acceptance
b. Degree of economic and other hardship to B if he discontinued use
c. Reasonableness of B's use after rejection/revocation as a method of mitigating damages
d. Degree of prejudice to S
e. Whether S acted in bad faith."

Front 122

2 -- B's options after rejecting and holding goods for S for a reasonable time?

Back 122

"2-604: B may
1. store
2. ship
3. resell"

Front 123

2 -- Duties of a rejecting merchant B?

Back 123

"2-603: If S has no agent or place of biz in market, B must:
1. follow S's instructions
2. sell goods if perishable or rapidly declining in value."

Front 124

2 -- Requirements for proper revocation of acceptance by B?

Back 124

"2-608:
1. The non-conformity substantially impairs value of the goods to B
2. There has been no substantial change in the condition of the goods other than a change caused by the non-conformity, 2-608(2); AND
3. At least one of the following:
a. B knew of the non-conformity at time of acceptance but reasonably assumed that the non-conformity would be cured but it has not been cured;
b. The non-conformity was difficult to discover and that difficulty induced B to accept the goods (no knowledge of non-conformity); or
c. S assured B that the goods were conforming and those assurances induced B to accept the goods without discovery or knowledge of the non-conformity."

Front 125

2 -- How does B revoke acceptance?

Back 125

"2-608:
1. within a reasonable time
2. provides notice to S"

Front 126

2 -- Effect of a revocation of acceptance?

Back 126

2-608(3) Essentially the same as if B had rejected, but majority of cts say S has no right to cure.

Front 127

2 -- Requirements of a demand for adequate assurance?

Back 127

"2-609:
1. Reasonable grounds for insecurity as to other party’s performance
2. Demand for assurance must be made in writing
3. Demand must be for adequate assurance
""2-609:
1. Reasonable grounds for insecurity as to other party’s performance
2. Demand for assurance must be made in writing
3. Demand must be for adequate assurance
"

Front 128

2 -- Per se reasonable grounds for insecurity?

Back 128

"i. Delegation of duties (i.e., a party obtains another party to fulfill its performance obligations). 2-210(6).
ii. Seller discovers buyer to be insolvent. 2-702(1).
"

Front 129

2 -- when must adequate assurance be supplied by?

Back 129

2-609(4): a reasonable time; 30 days at most.

Front 130

2 -- failure to provide adequate assurance/an unjustified demand or unreasonable request of assurance =?

Back 130

a repudiation under 2-610.

Front 131

2 -- After repudiation, what can non-repudiating party do?

Back 131

"2-610: If the repudiation substantially impairs the value of the K to him, non-repudiator may:
1. await performance
2. resort to any remedy for breach
3. suspend his own performance or continue performance or salvage the unfinished goods"

Front 132

2 -- When, How, and Effect of a retraction of repudiation?

Back 132

"2-611:
1. so long as non-repudiating party has not materially changed position
2. retratction may be in any manner reasonable.
3. effect is as if nothing had happened."

Front 133

2 -- Requirements for B to avoid K in event of casualty to goods

Back 133

"2-613:
a. Casualty to the goods
b. Neither party is at fault
c. Goods must be identified to the K. See 2-501(1).
d. Risk of loss has NOT passed to the buyer"

Front 134

2 -- ROL general provision

Back 134

"2-509(3):
i. S is a merchant -->ROL passes when B takes possession
ii. S is NOT a merchant -->ROL passes upon tender of delivery.
"

Front 135

2 -- ROL & Shipment/Destination Ks

Back 135

"Shipment K --> ROL passes to B when goods are duly delivered to carrier.

Destination K --> ROL passes when goods are delivered to specified destination"

Front 136

2 -- ROL & Breach

Back 136

"2-510:

i. Where B has right to reject, ROL remains with S until cure or acceptance. 2-510(1).
1. If B revokes acceptance, B may treat ROL as having been with S to the extent B’s insurance does NOT cover loss. 2-510(2).
ii. Where B repudiates or breaches before ROL passes to B, S may treat ROL as resting with B for a commercially reasonable time to the extent S’s insurance does NOT cover loss. 2-510(3).
"

Front 137

2 -- When is S excused from performance?

Back 137

"2-615(a): 2 situations:
1. performance made inpracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made
2. compliance with a govt reg."

Front 138

2 -- impracticability

Back 138

"2-615, cmt. 1: Unforeseen supervening circumstances not within the contemplation of the parties at the time of contracting.
cmt. 4 -- a market event v. capacity event."

Front 139

2 -- When can Specific performance be ordered?

Back 139

"2-716(1):
1. where goods are unique, or
2. in other proper circumstances"

Front 140

2 -- When does B have right of replevin?

Back 140

"2-716(3): 3 circumstances:
a. Goods are identified to K and B is unable to affect cover
b. Goods are identified to K, S has shipped the goods under reservation (see 2-505), and B has tendered the amount due.
3. goods are for personal, family or household purposes and have been identified to the K."

Front 141

2 -- B;s monetary recovery for S's failure to tender or repudiation?

Back 141

"2-711:
Damages = Market Price/Cover Price - K Price +Incidentals + Consequentials - Expenses saved"

Front 142

2 -- Requirements for B's cover?

Back 142

"2-712:
1. Cover must be made ""in good faith,""
2. Cover must be made “without reasonable delay”
3. Goods purchased must be a reasonable substitute"

Front 143

2 -- Consequential Damages Requirements?

Back 143

"2-715(2):
a. Damages must actually be caused by breach
b. Must arise from circumstances that breaching party had reason to know about at time of contracting (foreseeable)
c. Must not have been readily avoidable by appropriate mitigating actions, AND
d. Aggrieved party must prove consequential damages with reasonable certainty
"

Front 144

2 -- What is included in incidental damages?

Back 144

"2-715(1)
1. expenses in inspection, receipt, transportation and care and custody of rightfully rejected goods.
2. expenses to effect cover
3. other expenses incident to the delay or breach."

Front 145

2 -- B's monetary remedies where B rightfully rejects or rightfully revokes acceptance?

Back 145

"i. B is entitled to any portion of price already paid. 2-711(1).
ii. B is entitled to recover market or cover damages. 2-711(1).
iii. B is entitled to foreclose on his security interest in the goods to recover the price already paid and some incidental damages. 2-711(3).
iv. B is entitled to recover consequential and incidental damages. 2-715."

Front 146

2 -- B's damages where B accepts in spite of non conformity and nonconformity = breach of warranty?

Back 146

"2-714(2):

Damages = As warranted - as accepted"

Front 147

2 -- What are S;s remedies in general?

Back 147

"2-703:
5. (a) withhold delivery of such goods;
6. (b) stop delivery by any bailee as hereafter provided (Section 2-705);
7. (c) proceed under the next section respecting goods still unidentified to the contract;
8. (d) resell and recover damages as hereafter provided (Section 2-706);
9. (e) recover damages for non-acceptance (Section 2-708) or in a proper case the price (Section 2-709);
10. (f) cancel. "

Front 148

2 -- What actions by B give S ability to claim a remedy?

Back 148

"2-703:
1. wrongfully rejects or
2. wrongfully revokes acceptance of goods or
3. fails to make a payment due on or before delivery or
4. repudiates with respect to a part or the whole,
"

Front 149

2 -- When is S entitled to withhold delivery of goods in his possession?

Back 149

"2-702, 703:
i. Wrongfully rejects
ii. Revokes acceptance
iii. Fails to make a payment when due
iv. Anticipatorily repudiates/breaches See 2-703(a).
v. B is insolvent. 2-702(1)."

Front 150

2 -- Resale procedure?

Back 150

"2-706:
1. S must notify B of intent to resale.
2. If a public resale, S must provide B with date and time.
3. Method, manner, time, place and terms of resale must be commercially reasonable
4. Goods must be identified as the result of a broken K."

Front 151

2 -- When can S stop delivery of goods in transit?

Back 151

"a. If B is insolvent S may stop delivery if S discovers B’s insolvency when goods were in transit. 2-705(1).
b. If (1) S repudiates, (2) S fails to make a payment that is due, (3) S would have had right to withhold, or (4) S would have had right to reclaim goods S may stop delivery of a large shipment (carload, truckload, planeload or larger shipments of express or freight). 2-705(1)."

Front 152

2 -- When does S have an action for the price?

Back 152

"2-709:
a. Where B has accepted the goods. 2-709(1)(a).
b. Where ROL has passed to B, and goods are lost, harmed, or destroyed. 2-709(1)(a).
c. Where goods are identified to K and S is unable to resell or it is clear such efforts would be unavailing. 2-709(1)(b)."

Front 153

2 -- distinguishing statement of fact from opinion?

Back 153

"i. General rather than specific statement
ii. Hedged rather than unqualified statement
iii. Phrased as opinion rather than fact
iv. Medium of communication (oral rather than written, or in informal statement rather than in formal written contract)
v. Experimental rather than standard goods
vi. Claim is not capable of objective measurement or being adjudged true or false
vii. Unreasonableness of buyer’s reliance on the statement
viii. Seller not significantly more sophisticated or knowledgeable than buyer
ix. Bargain price rather than pr

Front 154

2 -- When are market or resale damages inadequate, thus giving rise to lost profit damages?

Back 154

Basically, where S's expectation is not met. The usual case --> goods have standard price, so resale or market would be at that price