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103 Cards in this Set
- Front
- Back
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To what does Art 2 apply?
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sale of goods (moveable, personal property)
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Are crops, timber, gravel, and water goods?
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yes
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Are oil, gas, and a structure attached to land goods?
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only if severed by seller
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How does NC handle mixed goods and services in the same contract?
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apportion the price
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Option
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an option is a promise to keep an offer open, that is PAID for
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Firm Offer
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a firm offer requires a signed, written promise to keep an offer open by a merchant
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What if the firm offer fails to state a time period?
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"reasonable time" not to exceed 3 months
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B orders goods for immediate shipment. How can S accept? (2)
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- promise to ship
- promptly shipping conforming goods |
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How does the shipment of non-conforming goods affect the contract?
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serves as both an acceptance and a breach
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What is the effect of shipping goods to "accommodate" buyer?
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- no acceptance
- treated as a counter offer which the buyer may accept or reject |
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Effect of Conditional Acceptance
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serves as a rejection
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Acceptance Varying Offer (CL)
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- mirror image rule
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Acceptance Varying Offer (UCC)
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adding a term does not prevent acceptance, but the OE's term does not automatically become part of the contract
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Elements needed for OE's new terms to become part of contract (3)
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- both parties are merchants
- term is not a material change - Oo does not object within a reasonable time |
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What term must be supplied for a valid Art 2 contract?
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quantity
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Exception for requirements and output contracts
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do not need to specify quantity
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Modification of Contract in CL
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- new consideration (pre-existing duty rule)
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Modification of Contract under UCC
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consideration is not needed, only good faith
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Is a writing required for sale of goods of $500 or more?
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yes
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If the contract falls within the SoF, does modification require a writing?
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yes
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Are no oral modification clauses allowed in CL?
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No
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What two terms are needed in a writing to satisfy SoF?
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- quantity
- signed by defendant (broadly construed) |
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Exceptions to SoF (4)
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- goods accepted and paid for by buyer (applies only to goods accepted and paid for - note entire contract)
- judicial admission - specially manufactured goods - merchants confirmatory memo (limited to quantity specified in memo) |
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If a merchant uses its own confirmatory memo after an oral agreement has been made does it satisfy the SoF as to the OTHER merchant?
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yes
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Three elements where a writing YOU signed can satisfy the SoF against the other party
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- both parties are merchants
- the writing confirms a prior oral agreement and has a quantity term - the recipient does not object in writing within 10 days |
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Parol Evidence Rule
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PER bars you from using a PRIOR or CONTEMPORANEOUS agreement (either oral or written) to contradict a LATER written contract
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When can Parol Evidence Rule allow you to supplement a written contract? (2)
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- consistent terms
- no merger clause |
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Does NC have a presumption you can add to a writing with no merger clause?
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yes
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You can always use Parol Evidence to show the following (3)
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- course of performance (this contract)
- course of dealing (previous dealings between parties) - usage of trade |
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Does Parol Evidence problems require a written contract; and SoF problems require an oral contract?
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yes
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Two ways to create an express warranty
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- statement of fact, promise, or description of goods
- use of sample or model |
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Implied Warranty of Merchantability
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goods are fit for their ordinary purpose when seller is a merchant who deals with goods of the kind
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NC Sealed Container Law
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No breach of the implied warranty of merchantability if the goods are sold in a sealed container
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Implied Warranty of Fitness for a Special Purpose (2)
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- seller must have known, or have reason to have known, the buyer has a special purpose in mind
- and is relying on the seller to select suitable goods |
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Can seller disclaim implied warranties?
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yes
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Can seller disclaim express warranties?
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no
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What are the "magic" words to exclude all implied warranties (2)
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- as is
- with all faults (if not, may use conspicuous writing) |
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May the seller limit buyer's remedy for breach of ANY warranty if the limitation is not unconscionable?
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yes
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May a seller limit buyer's remedy for personal injury in the case of consume goods?
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no - but can be rebutted
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Privity of Contract for Warranties in NC
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warranties extend to buyer's family or household or to a guest who suffers personal injury
(seller may NOT limit privity) |
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Shipment Contract
(FOB, FAS, CIF, C&F) |
seller must get goods to a common carrier and make delivery arrangements and notify buyer what the arrangements are
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Destination Contract
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seller must get the goods to a SPECIFIC destination (usually where buyer is located)
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If the seller does not use a common carrier then the goods are tendered...
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at its place of business or residence
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If seller bears risk of loss, must seller provide new goods at no additional cost to buyer?
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yes
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If buyer bears risk of loss, must he pay the contract price?
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yes
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Effect of Breach on risk of loss
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ANY breach passes the risk of loss to the breaching party
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If seller is a Merchant when does risk of loss pass to the buyer?
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on buyer's possession
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If seller is NOT a merchant, when does risk of loss pass to the buyer?
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then the seller "tenders" - makes the goods available to the buyer
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Effect of "Sale or Return" on risk of loss
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risk is on buyer until he returns the goods
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Effect of "Sale on Approval" on risk of loss
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risk is on seller until buyer accepts the goods
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In auctions, bids are...
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offers
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Is reserve presumed in an auction?
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yes
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Perfect Tender Rule
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S must deliver perfect goods in the right place at the right time; B has right to reject the goods
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Seller's Option to Cure
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S who fails to make perfect tender may have an option to cure (usually when the time for performance has not expired)
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If past dealings had a history of buyer accepting non-conforming goods, what reliance may the seller have?
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seller may reasonably believe the buyer would accept or be flexible
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Rejection of Goods (GR) (3)
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S's performance is not perfect in every respect, B has 3 options:
- reject all - accept all - accept some and can get damages |
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Installment Contract
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requires or authorizes delivery in separate installments
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Significance of Perfect Tender Rule on Installment Contracts (2)
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- right to reject an installment if there is a substantial impairment
- right to reject ENTIRE contract if the defect in installment substantially impairs the ENTIRE contract |
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Implied Acceptance
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B keeps goods without objection, after having a reasonable opportunity to inspect
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Effect of Acceptance (2)
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- to late to reject
- B who accepts non-conforming goods may still get damages |
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Revocation of Acceptance
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if the non-conformity substantially impairs the value of the goods and was difficult to discover (latent defect) then B may revoke acceptance
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Consequence of Rejection (3)
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- return
- refund - damages |
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Consequence of Revocation of Acceptance (3)
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- return
- refund - damages |
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Rules for Rejection of Checks
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S may require cash, but must give B extra time
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Commercial Impracticability
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where a later unforeseen event substantially affects the seller's ability to perform - released
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Destruction of Goods
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S excused if goods were identified to the contract
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Is a seller who bore risk of loss when goods were damaged or destroyed excused by impracticability, but the buyer is not?
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yes
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Supervening Government Regulation
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excuses performance
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NC Rule on increase in cost of performance
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if the absolute increase is small or the relative amount small - no excuse
if the relative amount is > 50% then the seller is excused |
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Are punitive damages awarded on contracts?
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no
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Liquidated Damages
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upheld if damages were difficult to estimate in advance and are reasonable in light of the anticipated or actual harm - a term fixing unreasonably large liquidated damages is void as a penalty
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May actual damages be awarded if liquidated damages are void?
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yes
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Expectation Damages
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puts an injured party in as good a position as full performance (usual)
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Cover Damages
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[cover price] - [contract price]
good faith |
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Market Damages
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[market price] - [contract price]
if B does not cover, or does not cover in good faith |
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Loss in Value Damages
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[value as promise] - [value as received]
B gets benefit of his bargain |
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Resale Damages (S)
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[contract price] - [resale price]
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Market Damages (S)
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[contract price] - [market price]
does not resell in good faith or does not resell at all |
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Lost Profit (S) - Lost Volume Dealer
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damages = lost profit
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Damages if Seller Cannot Resell Specially Manufactured Goods
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Contract price
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Incidental Damages (B)(S)
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cost of transporting or caring for goods after breach and costs associated with arranging a substitute transaction
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Consequential Damages (B)
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injury to person or property, lost profits and damages to reputation if it was foreseeable at time of the contract
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Avoidable Damages (CL)
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an injured party cannot get damages he could have avoided (mitigated) with reasonable effort
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Avoidable Damages (UCC)
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the injured party does not have to arrange a substitute transaction and can still get market damages
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Does anticipatory repudiation require an executory contract?
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yes
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Anticipatory Repudiation
You contract to buy a custom made object. After construction has started, you tell tradesman you will not pay. What are his rights? (3) |
- wait
- sue for breach - treat as offer to rescind or cancel |
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Can you retract a repudiation?
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yes, so long as there been no reliance
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Rights to Request Adequate Assurance
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if S does not provide B with adequate assurance in a reasonable time, B may invoke and anticipatory repudiation
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Entrustment
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an owner who entrusts goods to a merchant who deals in goods of the kind has no rights against a BFP
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Remedy for Entrustment
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sue party who was entrusted for conversion
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Unpaid Seller's right to reclaim goods (GR)
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no right under UCC
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Unpaid Seller's right to reclaim goods (exception) (2)
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- S may reclaim if B was insolvent when it received the goods and S demands return within 10 days
- S can reclaim at any time if buyer misrepresented its solvency to S in writing within 3 months before delivery |
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NC Products Liability
Does it abolish strict liability? |
yes
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NC Products Liability
How does it expand liability? |
ca sue seller or manufacturer
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NC Products Liability
Plaintiffs? |
All UCC P's + B's employees
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NC Products Liability
SoL? |
- within 3 yrs after the injury or damage becomes, or should have become apparent
- no more than 6 yrs after initial purchase |
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NC Products Liability
Scope? (3) |
- personal injury
- death - property damage (not for purely economic loss) |
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NC Products Liability
Defenses (3) |
- Article 2 defenses
- use contrary to express and adequate instructions - alteration or modification |
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Purchaser bought a drill from Sears. Purchaser and bystander suffered personal injury when the drill malfunctioned. Recovery?
Purchaser v. Retailer |
Yes, privity of K
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Purchaser bought a drill from Sears. Purchaser and bystander suffered personal injury when the drill malfunctioned. Recovery?
Retailer v. Manufacturer |
Yes, privity of K
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Purchaser bought a drill from Sears. Purchaser and bystander suffered personal injury when the drill malfunctioned. Recovery?
Bystander v. Retailer |
No, lack of privity of K BUT cans suer under Article 2 (family, household, or guest) or 99B (employee)
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Purchaser bought a drill from Sears. Purchaser and bystander suffered personal injury when the drill malfunctioned. Recovery?
Purchaser v. Manufacturer *** |
No, no privity of K
YES under 99B |
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Purchaser bought a drill from Sears. Purchaser and bystander suffered personal injury when the drill malfunctioned. Recovery?
Bystander v. Manufacturer *** |
Yes, so long as 99B (broader class of Plaintiffs)
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