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95 Cards in this Set

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How can a merchant accept?
By 1) a promise to ship, 2) Prompt Shipment
What happens if a merchant ship non-conforming goods?
It is viewed as acceptance and breach
What happens if a merchant ships non conforming goods after notifiying they are being offered as accomodation?
It is viewed as a counter offer
What happens if the offer can be viewed as being accepted by beginning performance?
Then the offeree can accept by beginning performance by notifying the offeror of acceptance within a reasonable time
What type of offer ypically invites acceptance by beginnning performance?
An offer for the shipment of manufactures unique goods
How does the mirror image rule apply in the context of an offer for sale/purchase of between merchants?
It does not typically apply if the offeree communicates acceptance by propossing additional terms
When will acceptance propossing different terms not ammount to acceptance?
If the acceptance terms 1) MATERIALLY laters the contract; 2) The offer EXPRESSLY limits acceptance to the terms propossed; 3) if the offeror OBJECTS to the propossed terms
What happens if the acceptance proposses different terms?
1) the acceptance terms control; 2) the knock-out rule applies and UCC gap fillers apply
What is the UCC gap filler for price?
Resonable price at the time of delivery
When are some time when the UCC gap filler as to price will apply?
1) No MENTION of price; 2) Price to be AGREED and no agreement; 3) a price is to be fixed by EXTERNAL factors and not set
What happens if quanity is not supplied?
No contract
What is an outputs/requirements contract?
A contract that requires production of a quanity equal to a sellers output or a buyers needs
What are limits to quanity in a requirement/output contracts?
The quanity can not be unreasonably disproportinate to 1) stated estimate or 2) prior output/requirement
What is under the State of Frauds for a sales contract to be enforcable?
1) $500 or more, 2) signature of part to be bound, 3) quanity
What is the confirming memo exeptions to the SoF?
A merchant will be bound to an oral agreement if they 1) receive and are aware of receipt of a confirming memo; 2) do not object to terms in memo within ten days
What is the special rule for modificaitons under the UCC?
Under the UCC modifications made in good faith do not have to be supported by consideration
What is the possible effect of a modification as it relates to the SoF?
A modificaiton that changes the ammount of sale to more or less than $500.00 can put the contract into or take it out of the SoF
What happens if the written contract for sale of goods overstates the quanity?
The actual agreement for a less ammount may be shown through parol evidence
What happens if the written contract for sale of goods understates the quanity?
The contract is enforcable only for the ammount stated
When is a written contract for sale of goods not required?
1) SPECIALLY manufactured goods; 2) ADMISSION of contract in pleadings; 3) PERFORMANCE
What must be shown to make a specially manufactured goods oral contract enforcable?
1) Goods are SPECIALLY manufactured for the buyer; 2) the goods are not suitable for sale to OTHERS; 3) the seller has made a substantial BEGINNING
When does performance under an oral contract created only a partially enforaceble contract?
When only a part of performance is made and accepted
What happens if you make partial payment for a single indivisible good under an otherwise uneforcable oral contract?
The court will probably view that performance as sufficient to make the whole contract enforcable
At what time is a ruling of a contract's unconscionable character made?
At the time that the contract was made
What will the court do if it finds a contract unconscionable?
1) Refuse to enforce; 2) Enforce without unconsciousble provisions; 3) limit application to avoid unconscionable result
When looking at oral modifications what are some factors that should be considered?
1) Does the modification violate the SoF; 2) if oral modification prohibits (NOTE: if a non merchant is to be bound, term must be seperately signed); 3) has a party relied to their detriment upon the oral modification
What happens if the goods are completely destroyed before risk passes to the buyer?
The contract is avoided
What happens if the good are damaged before risk passes to the buyer?
The contract is avoided unless the buyer agrees to accept with reduction and without a claim for damages
What is impracticability?
When an event occurs that makes a sellers performance of the contract more difficult than expected
What is required for commercial impracticability?
The occurance or nonoccurance of an event that was a "basic assumption" of the parites
That is a basic assumption?
Something 1) the parties did not discuss but which both parties could not have expected to have occured that 2) has a material effect upon the ability of the parties to perform
What are some examples of basic assumptions?
1) Unavailability of raw materials; 2) an unexpected inability to produce caused by external forces; 3) failure of a particular supply source; 4) catostrophic regional crop failure; 5) a rise in price of more than 50%
What happens when when there is an unexpected shortage of resources?
The seller is required to allocate available resources amoung customer, including regular customer not under contract at the seller's option
What are some sources from which can be used to explain or supplement contract terms?
1) consistent ADDITIONAL terms; 2) course of DEALING; 3) usage of TRADE; 4) course of PERFORMANCE
If the contract does not describe where delivery shall be made where must delivery be made?
At the sellers place of business or the place where the goods are held (if both parties are aware of this fact at the time they contract)
What must a seller do to tender delivery where there are no carrier provisions within the contract?
The seller must hold conforming goods at its place of business for a time sufficient to allow the buyer to take delivery
What are the sellers duties if its agreed they will ship the goods to the buyer?
1) Contract for delivery; 2) Provide documentation sufficient to allow the buyer to accept delivery; 3) notify the buyer of shipment
What happens if the seller does not make a contract for delivery?
The seller may reject if the failure causes material loss or delay
What happens if the seller does not promptly notify the buyer of shipment?
The seller may reject if the failure causes material loss or delay
What does the term FOB mean?
Free on board, meaning delivery is effective at the place designated
Who bears the risk of loss if the goods are shipped FOB buyer's place of business?
The seller
Who bears the risk of loss if the goods are shipped FOB seller's place of business?
The buyer
What does the term FAS mean?
Free Along Side, meaning you have to delivery to a certain shipping vessel
When is payment due when goods are shipped FOB seller's place of business?
When the goods are received by the seller
When is payment due when goods are not to be shipped?
When the seller makes the goods availble for pick-up
What are the carrier's typical duties relative to surrender of the goods?
Typically the carrier must not surrender the goods until payment is received
What is the buyer's right of inspection?
Unless the contract provide otherwise, payment is made on a bill of lading, or COD the seller has a reasonable time to inspect at their own cost
What are the buyers rights if he has not right of inspection and the goods are defective or non conforming?
The buyer must accept and then sue for breach, unless the defect is obvious witout inspection
When does risk of loss shift from a seller in a non carrier case?
If the seller is a merchant risk of loss shifts when the buyer takes possession, if the seller is not a merchant than the risk of loss shifts at tender of delivery
When does the risk of loss pass when a third party is holding the goods for a buyer?
1) When the buyer receives document of title; 2) When the bailee acknowleges the buyer's right to possessed the goods; 3) After a reasonable time after the bailee revieves written instruction to deliver to the buyer
When does risk of loss pass when non confirming goods are tendered?
When the defect is cured or the buyer accepts
When a buyer rightly revokes acceptance who bears the risk of loss?
The seller to the extent that the buyer's insurance will not cover the loss; however a buyer can revoke after the goods are damaged by causalty
Who bears the risk of loss before delivery if the buyer improperly repudiates?
The buyer bears the risk of loss to the extent that the sellers insurance does not cover
Who bears the risk of loss when the buyer properly returns unsold goods?
The buyer bears risk of loss until the goods are returned to the seller
Who bears the risk of loss when the buyer is able to retain the goods subject to acceptance, ie. a trial run?
The seller bears the risk of loss until acceptance or a reasonable period of time after the period permited for return of unaccepted goods
When does a buyer accept goods?
1) When indicates an intention to RETAIN after time for INSPETCION; 2) When she fails to reject after a reasonable period time after TENDER; 3) When she acts contrary to buyer's OWNERSHIP
What are buyers rights upon delivery of non conforming goods?
1) reject all; 2) accept all; 3) accept any commercial units AND sue for damages
In a single delivery contract how substantial must the defect be?
Any defect is enough to support rejection, perfect tender rule
What are the buyers right of rejection in an installments contract?
The buyer may only reject if the defect 1) substantially impairs the value of the installment and the 2)defect cannot be cured
What are the buyer's duties upon rejection
1) seasonably notify of rejection; and if the defect is not obvious upon reasonably inspection notify seller of the defect
What happens if the buyer does not notify the seller of the defect at the time of rejection?
If the buyer could have cured upon notice or the merchant seller has requested notice of the defect in writing then the buyer can not rely upon the defect as basis for the rejection
What are the rejection buyers duties as to the rejected goods?
1) hold with care; 2) if a merchant dispose of as reasonably requested
What are the buyers rights upon resale of rejected goods?
Can offset value of sale by value of ammounts paid and reasonable cost of resale
What are the sellers rights to cure?
1) Can cure by, after notice, providing conforming compliant goods within time for performance; 2) if seller reasonably thought would be acceptable is allowed reasonable time to provide compliant goods
When would a seller have reasonable grounds to believe the non-conforming but tender goods would have been acceptable
1) trade practice or prior dealings; or 2) no reason to know of defect, ie. goods provided and packaged by another
What are the special rules for cure in an installments contract?
Typically the seller is given an opportunity to cure
When can a buyer revoke acceptance?
1) Defect substantially impairs the goods value to the buyer; and 2) accepted them reasonably anticipating cure; 3) accepted them due to difficulty discovering the defect; 4) or upon assurance of conformance by the seller
When must a buyer revoke?
1) A resaonble time after should have discovered defect; 2) Before substantial change in value not caused by the defect
When can a buyer force a seller to deliver goods?
1) part payment; 2) buyer insolvent ten days after payment; 3) personal goods; 4) can find substitute
What is a buyer's ability to force the seller to deliver goods called?
What are a buyer's damages for non delivery or rejection?
1) Difference between contract price and market price at time learns of breach (or anticipatory breach)or 2) Cost or cover and 3)incidental and consequential damages
What are a buyer's damages for non conforming accepted goods?
Difference between value of goods as delivered and value of goods as promised and incidental or consequential damages
What are a buyer's duties upon learing that accepted goods are defective?
Must notify seller of breach within a reasonable time
When a seller withhold goods?
1) when the buyer does not pay on delivery or 2) learns that a buyer on credit is insolvent
What can an insolvent buyer do in order to require a seller to deliver goods?
Tender cash
When can a seller recover goods from a credit buyer?
1) The buyer was insolvent at time of delivery; 2) makes written demand within ten days of delivery
When does the ten day within delivery rule not apply to a credit seller's right to recovery delivered goods from an insolvent buyer?
When the buyer has made written assurances of solvency before delivery
From whom can a credit seller not recover goods?
A buyer in due course or a good faith purchaser
When may a seller instruct a bailee or carrier to stop delivery?
When the buyer breaches or the seller has a right to withhold pending adaquate assurances
What are a carrier or bailee's duties relative to a stop delivery demand from a seller?
They are only obliged to stop if the order in given a reasonable ammount of time in advance of delivery and need not stop if a negotiable instrument covering the transaction is not surrendered
When a seller able to force the goods on the buyer and recover the full price?
When the seller is 1) unable to resell at a reasonable price or 2) the goods are damages shortly after risk of loss passed to buyer
What are a seller's damages upon breach?
1) Difference between contract price and market price at time and place of delivery or 2) Difference between contract price and resell good faith, commercially reasonable resell price
What are the seller's duties in conneciton with resell?
1) if private sale give buyer reasonable notice of intention to resell; 2) if public sale must be at usual market for goods of this kind and 3) notice to seller unless perishable or delay impairs value of goods
When are lost profits availble to a seller?
If the seller has an infinite supply of the goods and demand is limited
What other damages are sellers always able to recover?
Incidential damages, ie. cost of sale
May a seller of goods declare the other in breach if it appears reasonably certain they will not be able to perform the contract?
Probably not
What is a demand for adequate assurances?
When a party 1) has reasonable GROUNDS for insecurity as to another parties ability to perform they may make a 2) WRITTEN request for ADEQUATE assurance; 3) SUSPEND performance until assurances or given; and if assurances are 4) not given within THIRTY days treat the contract as redudiated
What are a party's options in the event of anticipatory repudiation?
1) AWAIT performance; 2) Seek remedy for BREACH; 3) SUSPEND performance
Wait, Wait, or Litigate
Can a thief obtain or pass title?
What are the victim of thefts rights against a buyer in good faith of stolen goods?
He can recover from the buyer
What rights does one who repudicates have to reverse their course?
A repudiating party can revoke repudiation up until the next period for performance
When can a repudiating party whose time for performance has not come, not revoke?
If the other party has 1) CANCELLED; 2) CHANGED position in reliance upon the repudiation; 3) acted to indicate he CONSIDERS the repudiation final
CCC Repudiation Factory
What are a seller's rights when he give goods to a fraudulant buyer?
He may recover the goods from the defrauding party
What are a seller's rights as to goods sold by a defrauding buyer?
He may not recover from a secured creditor or good faith purchaser
What is the SoL for goods sold under the UCC?
Four years from breach