Ucc 2

Front 1

Distinguish between UCC and Common law of K's

Back 1

UCC 2 applies to all sales of goods, whereas the common law applies to all Ks for services.

Front 2

What is a Merchant

Back 2

A merchant is a person who deals in goods of the kind sold, or who holds himself out as having skill/judgment peculiar to the goods/practices involved.

Front 3

Merchant vs. Non-Merchant ROL

Back 3

If seller is not a merchant, ROL passes to the buyer on tender of delivery.

Front 4

Tender of Delivery

Back 4

Requires that the seller put and hold conforming goods a the buyer's disposition for a time sufficient to enable buyer to pick them up.

Front 5

Article 2 of the UCC Applies:

Back 5

When transaction is SALE, not gift
Subject matter of transaction is GOODS, (tangible, personal property)
IF subject matter is MIXED (goods and services) then the common law applies because the general rule is all-or-nothing. Therefore, unless the GOOD is FAR more important than the service (e.g. a watch with a warranty) the CL applies.)

Front 6

Article 2A of the UCC:

Back 6

Applies to lease of goods. In most controversies between lessee-lessor, Article 2A is similar to Article 2. In controversies involving default by the lessee or priortiy contests between lessor and 3rd parties, Article 2 is similar to Article 9.

Front 7

K Formation: What is a K

Back 7

An agreement that is legally enforceable.

Front 8

What is required of a valid K

Back 8

1) Offer
2) Acceptance of Offer
3) Consideration from each party
4) No defenses to formation.

Front 9

Valid K: Offer

Back 9

Valid offer: Requires
"Present intent to be bound, communicated to the offeree, with sufficient and definite material terms"

Front 10

Valid K: OFFER: General Test for whether offer constitutes a valid offer

Back 10

Whether a reasonable person in the position of the offeree would believe that her acceptance creates a K.

Front 11

Specific Offer Issues:

Back 11

1) Content: generally, offer is not required to contain all material terms, however, SOME terms are necessary:
1) Sale of Real Estate: CL requires price and description.
2) Sale of Goods: UCC 2 has NO price requirement
3) Vague or ambiguous material terms prevent offer under both UCC and CL (e.g. A offers to sell her car to B for "a fair price" TOO VAGUE)
4) Requirements/Output K's: Acceptable to state quantity in seller's output/buyer's requirements.

Front 12

Offer: Requirement/Output K's:

Back 12

Valid:
X agrees to buy widgets from Y for 5 years. There is no specific quantity, but it provides that X shall purchase all his widgets from Y. (e.g. exclusive sale to buyer)

Limitations: Buyer can increase requirements, so long as the increase is in line with the prior demands (e.g. 10%/year)
X cannot buy 1000lb/yr for three years, and in year 4 decide it needs 7000 lb.

Front 13

Offer: Context

Back 13

Generally, advertisements or price quotations are not offers (they are invitations for others to make offers)

Front 14

Offer: Context--Exception

Back 14

1)Price quotation can be an offer IF it is in response to a specific inquiry.
2) Advertisement can be an offer if it is specific as to quantity and indicates who can accept it:
"One black alligator wrist-watch worth $700...$100 to the first woman in the door!"

Front 15

Offer: Termination--4 Methods

Back 15

1) Lapse of time: Stated expiration date or "Reasonable time" (30 days is typically the reasonable time)
2) Revocation (words or conduct of offeror
3) Rejection
4) Death of Party prior to Acceptance.

Front 16

Termination of Offer: Revocation
HOW

Back 16

Words or conduct of offeror.
HOW: Unambiguous statement by offeror to offerree of unwillingness or inability to K, or that offeree is aware of (e.g. S offers to B, then S offers to A. B hears the offer to A. S did not say anything to B, but B knows of S's unwillingness to sell, and therefore revocation is effective.)

Front 17

Termination of Offer: Revocation
WHEN

Back 17

Revocation of offer sent through mail is not valid until it's received.
An offer CANNOT be revoked after it's accepted.

Front 18

Termination of Offer: Revocation
Irrevocable Offers:

Back 18

Generally offers can be revoked freely at any time prior to acceptance, EXCEPT;
1) Option K (promise to keep offer open in exchange for consideration)
2) Offer cannot be revoked for up to 3 months where:
--> K is for sale of goods
--> Signed, written promise specifically to keep the offer open (3 mo. cap, even if written for longer)
-->Party is a merchant.
3) Offer cannot be revoked if there has been detrimental reliance by offeree that's reasonably foreseeable.
4) Start of performance pursuant to an offer to enter into a unilateral K makes that offer irrevocable for a reasonable time to allow completion of performance.
--> Unilateral K: O offers P $1000 if P will paint his house. P starts painting, O can't revoke the offer.

Front 19

Termination of Offer: Rejection
Counteroffer:

Back 19

1) Counteroffer terminates the offer and becomes a new offer. Bargaining does not terminate the offer, (e.g. "will you take $1000? but counteroffer does "I'll only do it for $1200" does)
2) Conditional Acceptance: Terminates the offer and becomes new offer.
3) Indirect rejection: Additional terms
4) Common law: Mirror image rule. If offer and acceptance differ in terms, new "offer" is treated as a counteroffer rather than an acceptance.

Front 20

Termination of Offer: UCC: Still Acceptance with Seasonable Expression of Acceptance

Back 20

A fact pattern where there is an offer to sell goods,and a response with additional terms is generally treated as an acceptance: "seasonal expression of acceptance" Two exceptions:
1) Additional term is not a part of the K if it materially changes the terms of the offer; or
2) If offeror objects to the change.
If one or both parties is NOT a merchant, then the additional terms are treated merely as proposals to be accepted or rejected.

Front 21

Termination of Offer: Rejection
Death of Party Prior to Acceptance:

Back 21

Generally death or incapacity of either party terminates the offer, except:
1) When the offer is about an option (express promise to keep an offer open with consideration)
2) There was part-performance of offer to enter into unilateral K (results from an offer that expressly requires perfornance as the only possible method of acceptance.)

Front 22

Acceptance of an Offer:
Who can accept?

Back 22

Generally, offer can be accepted only by:
1) person who knows about offer (e.g. X sees Y's reward poster advertising a reward for whoever finds Y's lost dog. But, if X finds and returns the dog without knowing about the reward, no K.)
2) The person to whom the offer is made: Offers can't be assigned, although options can.

Front 23

Methods of Accepting an Offer:
Starting Performance.

Back 23

1) Offeree starts to perform: Start of performance is acceptance of an offer to enter into a bilateral K, but is not acceptance of an offer to enter into a unilateral K.
a) Bilateral: Offer is open as method of acceptance so startof performance is acceptable.
b) Unilateral: Offers require performance for acceptance, so that start of performance is not acceptance: Completion of performance is required. (Start of performance to an offer to enter into a unilateral K makes the offer irrevocable for a reasonable time to allw completion of performance.

Front 24

Methods of Accepting an Offer:
Promise to Perform

Back 24

Most offeres can be accepted by a promise to perform (remember offers that expressly require performance for acceptance and reward offers require complete performance for acceptance.)

Front 25

Methods of Accepting an Offer:
Acceptance in the mail

Back 25

Under the UCC, if offer is invited through the mail, acceptance is effective when posted. (mailbox rule)

Front 26

Acceptance;
Exceptions to the Mailbox Rule:

Back 26

1) When offeree expressly provides other methods of acceptance in offer (even so, mailed acceptance effective on receipt.
2) Rejection, then acceptance: NO mailbox rule. The first letter to the offeror controls.
3)Option deadlines. When deadline is specified in an option, acceptance must be received by that date: No mailbox rule.

Front 27

Acceptance; Special Situation
Seller of Goods sends Wrong Goods

Back 27

1) Generally, this will amount to acceptance and breach
2) Except: When goods come with Accomodation letter (Counteroffer and NO breach)

Front 28

Acceptance: Offeree is Silent

Back 28

Silence is not acceptance except in very limited situations:
1) Specifies that silence is agreement:
-"If you don't hear from me by Friday, I accept"

Front 29

Consideration / Consideration Substitutes

Back 29

Consideration is a bargained for legal detriment (can't be a gift--look at each promise separately)

Front 30

Consideration: Forms & Adequacy

Back 30

1) Performance
2) Forbearance (not doing something you have a right to do)
3) Promise to perform
4) Promise to forbear
Adequacy of consideration: Not relevant in K law:
1) Past consideration: usually NOT a consideration.
2) Except; Expressly requested and expectation of payment, (e.g A saves B's life. C is so grateful that he promises to pay $3000. (A sees B in danger, C knowing that A would be rewarded, asks a to save B after A saves B. C promises to ppay A $200. K. An expressly requested perfornance knowing that the other person is expecting payment.

Front 31

Consideration:
Pre-Existing K or Statutory Duty (common law differs from UCC 2)
Common Law

Back 31

CL: performance of pre-existing K or legal duty is NOT consideration.(except when there is unforeseen difficulty so severe as to excuse performance, or when 3rd party makes promise becuase 3rd party would NOT have pre-existing K/legal duty.

UCC:

Front 32

Consideration:
Pre-Existing K or Statutory Duty (common law differs from UCC 2)
UCC

Back 32

Does NOT have pre-existing legal duty rule. Good faith is the test for changes in an existing sale of goods K.

Front 33

Consideration: Partial Payment for promise to give balance of debt:

Back 33

1) where due and undisputed: If payment is due and undisputed, then the partial payment does not constitute consideration.
2) Not yet due, or disputed: Agree to take payment when it's not yet due or it's disputed MAY constitute consideration for release.

Front 34

Consideration: Illusory Promise

Back 34

Generally: Illusive promise (a promise in which the promisor has not committed herself in any manner) NO consideration, NO detriment.
Except: What appears to be illusion creates a new obligation (e.g. A agrees to sell B a car, unless he gives a notice that he changed his mind by 12/1, where changin ghis mind by itself could be an illusory promise, by adding notice by 12/1 it adds new illusion.

Front 35

Consideration Substitutes: Rule

Back 35

A written promise to satisfy an obligation for which there is a legal defense is enforceable without consideration.
E.g. D owes C $1000. Legal action to collect this debt is barred by the SOL. D wrote to C "I know that I owe you $1000. I will pay you $600." C can collect the $600 because 1) written promise 2) to satisfy an obligation 3) for which there is a legal defense 4) New deal is enforceable without tconsideration

Front 36

Consideration Substitutes
Written Realase of Claim for Breach of Sale

Back 36

Under 1-107, a written release of all or part of a claim for breach of a K for sale of goods is enforceable without consideration.

Front 37

Consideration Substitutes
Seal

Back 37

Not a consideration substitute.

Front 38

Consideration Substitutes
Promissory Estoppel

Back 38

Element;
1) Promise
2) Reliance that is reasonable, detrimental and foreseeable.
3) Enforcement necessary to avoid injustice.
Comparison of Consideration and Promissory Estoppel: When nothing is in exchange, but statement is relied upon and is reasonable and foreseeable (e.g. X promises Y that X will not foreclose Y's mortgage. Y then paints her house. Is Y's painting of her house consideration for X's promise? No, as it's not in exchange for anything, however, it may be promissory estoppel and therefore a substitute for consideration in this case.

Front 39

DEFENSES to Formation of K

Back 39

1) Capacity to K
2) SOF
3) Illegality, Misrepresentation, Duress
4) Unconscionability
5) Ambiguity
6) Mistake of Fact

Front 40

DEFENSES to Formation of K
Capacity

Back 40

1) minor
2) mental incompetents: Lack ability to understand agreement.
3) intoxicated persons, if other party has cause to know.

Front 41

DEFENSES to Formation of K
Consequences of Incapacity

Back 41

1) Right to disaffirm by person without capacity (party over 18 bound by K, but infant not)
2) Implied Affirmation: Person made agreement when under 18, person has gained capacity, person continues to get benefit from prior agreement: Creates implied affirmation and the K is enforceable.
3) Liability for Necessity: Even a person without capacity is required to pay for necessities (rent, utilities) Legal basis is on quantum meruit, not K law. Measure of promise is not based on K, but on value of the promise.

Front 42

DEFENSES to Formation of K
SOF: When K falls into SOF:
Promise in consideration of Marriage

Back 42

When K is within SOF:
1) Promise in consideration of marriage: Pre-nup. Not merely a promise to marry, but a promise to do something or refrain from doing something.

Front 43

DEFENSES to Formation of K
SOF: When K falls into SOF:\When K falls into SOF:
Promise by executor or adminstrator to pay obligations of estate from his own funds

Back 43

2) Promise by executor or administrator to pay obligation of estate from his own funds. Not merely a promise to pay estate's expenses, but promise to pay from personal funds (D's estate paying for D's funeral does NOT fall under SOF)

Front 44

DEFENSES to Formation of K
Other promises to answer for (Guarantee) debts of another:

Back 44

A claims that B said she woudl pay for the pain A delivered to C. Not SOF, because merely a promise to pay. NOt guaranteeing for B. (e.g. A said he woudl pay if B did not pay--THAT'S a guarantee)

Front 45

When K falls into SOF:
Service K not capable of being performed within a year:

Back 45

Specific time period: Ignore what happens, key is what MIGHT happen.
EX: A promises to employ B for three years. Fall under SOF.
E.g. X agrees to serve Y for the rest of X's life. Exempt from SOF b/c capable of performance in under a year (X or Y could die tomorrow) NOT under SOF.

Front 46

When K falls into SOF:
Transfers of Interests in Real Estate of a Term of more than a year

Back 46

in other words, rent out property for less than a year, no SOF

Front 47

When K falls into SOF:
UCC 2 Approach to SOF:

Back 47

CL: Sale of goods for $ 500 or more.

UCC: Sale of goods falls under the SoF regardless of the amount.

Front 48

IF K falls into SOF, is SoF satisfied?

Back 48

SoF requirement that the alleged agreement is generally satisfied by either performance or by a writing. Depends on the type of K involved.

Front 49

IF K falls into SOF, is SoF satisfied?
By performance?

Back 49

1) Service Ks:
Full performance by either party satisfies the SOF.
2) Sale of Goods Ks: Ordinary Goods: Full performance by either party satisfies the SOF, but only to the extent of the partial performance.
3) Real Estate Transfer K:
Full payment by buyer of real estate CAN satisfy the SOF/
Partial performance is generally any two of the following three:
1) Part payment
2) Possession and/or
3) Improvement

Front 50

IF K falls into SOF, is SoF satisfied?
By Writing?

Back 50

SoF Other than UCC: Generally, to satisfy the SoF in writing, writing itself must contain all
1) material terms
2) Signed by the person to be charged (e.g. D)