Ucc Distinctions

Front 1

UCC Distinction # 1: What is the difference between a UCC offer and a common law offer?

Back 1

The common law requires that ALL ESSENTIAL TERMS of the agreement must be stated in the offer, to wit, parties, subject, price, and quantity. The UCC merely requires that the offer state parties, subject, and quantity--IT NEED NOT LIST THE PRICE TERM! (NB: If the contract is a requirements or output contract, it need only provide a method for calculating the quantity, not the quantity itself)

Front 2

UCC Distinction # 2: How does the UCC permit the creation of an irrevocable offer that the common law does not?

Back 2

A MERCHANT may make a "firm offer" (a binding, free option) if (1) the offeror is a MERCHANT; (2) the promise not to revoke is explicit; (3) the promise is in writing; and (4) the writing is signed by the offeror MERCHANT. If the writing does not specify the period of the firm offer, a reasonable period is implied. (NB: Irrevocability lasts no longer than 90 days without consideration)

Front 3

UCC Distinction # 3(a): Under the UCC, what happens if seller responds to buyer's unilateral offer by shipping the wrong goods?

Back 3

Acceptance plus breach. A valid contract has been formed (shipment was statement of acceptance) but it was immediately breached.

Front 4

UCC Distinction # 3(b): Is shipping the wrong goods always an acceptance and breach?

Back 4

No. If the seller seasonably notifies the buyer that the wrong goods are being shipped as an ACCOMMODATION, then that shipment is a COUNTEROFFER and no contract has been formed.

Front 5

UCC Distinction # 4(a): Under the UCC, what happens if an offeree violates the mirror image rule?

Back 5

Under UCC sec. 2-207(1), an acceptance that does not perfectly conform to the terms of the offer is still a valid acceptance even it is states "terms additional to or different than those" in the offer, so long as "acceptance is [NOT] made conditional upon assent to the additional or different terms." (PARTIES DO NOT HAVE TO BE MERCHANTS)

Front 6

UCC Distinction # 4(b): What becomes of the differing terms in an acceptance that does not perfectly mirror the terms of the offer?

Back 6

Under UCC sec. 2-207(2), the offeree's new term binds IF AND ONLY IF: (1) both parties are merchants; (2) the new term does not materially alter the deal; (3) the initial offer did not expressly limit acceptance to its terms; and (4) the offeror does not object within a reasonable time to the new term.

Front 7

UCC Distinction # 4(c): What if there is no contract formed under 2-207, but the parties act as though there is (e.g., exchanging money for goods)?

Back 7

Sec. 2-207(3) provides a "RESET": Only the terms that both writings agree on become part of the contract and the other terms are supplied by the UCC's default rules.

Front 8

UCC Distinction # 4(d): What if the parties agree to terms, but a party then sends over a confirming memo with additional terms?

Back 8

Sec. 2-207(2) controls identically as though the memo is the actual acceptance.

Front 9

UCC Distinction # 5: Under the UCC, do parties need consideration to modify a contract?

Back 9

No, so long as the modification is made in "good faith."

Front 10

UCC Distinction # 6(a): Under the UCC, what is necessary to satisfy IMPLIED conditions (like the constructive condition of exchange)?

Back 10

Perfect tender (common law requires only substantial performance). This entails both perfect goods (quality, quantity, identity of the goods) and perfect delivery (a single delivery on time in the correct quantity).

Front 11

UCC Distinction # 6(b): Under the UCC, what happens if a buyer accepts goods but discovers a defect within reasonable time of acceptance (imperfect goods)?

Back 11

The buyer may revoke his acceptance and return the goods.

Front 12

UCC Distinction # 6(c): Under the UCC, what happens if a seller fails to deliver perfect goods but time remains for perfect delivery (i.e. delivery was made early) or the seller reasonably believe the buyer would accept the goods?

Back 12

The buyer must give the seller an opportunity to cure the defect.

Front 13

UCC Distinction # 6(d): Under the UCC, may a buyer reject a single imperfect delivery in an installment contract?

Back 13

ONLY IF the defect substantially impairs the value of that delivery to the buyer and the defect cannot be cured.

Front 14

UCC Distinction # 7: What is "assurance of performance"?

Back 14

A demand by one party to another that the other party provide adequate assurance of performance if the one party has reasonable grounds for insecurity. Failure to provide assurance within a reasonable time may be treated as anticipatory breach.

Front 15

UCC Distinction # 7(a): What is needed in a signed writing to satisfy the SOF, other than the signature of the party to be charged?

Back 15

The quantity term

Front 16

UCC Distinction # 7(b): What if the parties make a mistake in the writing as to the quantity term?

Back 16

The contract may be enforced only up to the quantity contained in the writing.

Front 17

UCC Distinction # 8: What beyond a signed writing satisfies the SOF in a goods contract?

Back 17

1. Partial performance of the contract, but ONLY for the quantity that has been delivered and accepted.
2. A judicial admission
3. A confirming memo IF AND ONLY IF (1) both parties are merchants and (2) the merchant against whom the contract is asserted did not object to the memo within 10 days.

Front 18

UCC Distinction # 9: What goods, even valued $500 or more, are not covered by the SOF?

Back 18

Custom-made goods as soon as the manufacturer has made a substantial beginning toward manufacturing the goods.

Front 19

UCC Distinction # 10: What is the default view, for purposes of the PER, of a written agreement?

Back 19

Partial integration only, absent a merger clause, UNLESS the parties would CERTAINLY have included the disputed term in the writing.

Front 20

UCC Distinction # 11: What are the three implied warranties involved in sales of goods?

Back 20

1. Warranty of title: warrants that title is good and transfer is lawful (merchants and non-merchants)
2. Implied warranty of merchantibility: MERCHANT warrants that product is (1) fit for ordinary commercial use (2) at the time of sale (MERCHANTS ONLY)
3. Implied warranty of fitness for a particular purpose: If (1) buyer relies on (2) seller's expertise (3) to select a particular good that is going to be used FOR A PARTICULAR PURPOSE and (4) the seller knows of this reliance, then (5) seller warrants that product is fit for that purpose (merchants and non-merchants) (only disclaimable IN WRITING).

Front 21

UCC Distinction # 6(e): How may a buyer reject goods?

Back 21

1. Notify seller of rejection within a reasonable time
2. Notify seller of defect
3. Hold the goods for a reasonable time until seller can reclaim them (if buyer has already paid for those goods, she has a security interest in them until repaid)

Front 22

UCC Distinction # 6(f): What may the buyer do if seller fails to give reasonable instructions about what to do with the rejected goods?

Back 22

1. Continue to hold the goods on the seller's account
2. Ship the goods back
3. Resell the goods for the seller

Front 23

UCC Distinction # 12: What are the three methods of tender?

Back 23

1. Seller's place of business: tender complete when seller hands goods to buyer
2. Shipment contract: tender complete when seller (1) gets goods to common carrier; (2) makes arrangements for delivery; and (3) notifies the buyer.
3. Destination contract (FOB buyer's business): seller must (1) get goods to the location specified and (2) notify the buyer

Front 24

UCC Distinction # 13: How is the risk of loss allocated in goods contracts?

Back 24

Order of analysis
1. In accordance with express contract terms
2. The non-breaching party (breach may be unrelated to the loss)
3. In shipment contracts, with buyer; in delivery contract, with seller
4. If seller is a merchant, risk stays with seller until buyer RECEIVES the goods.
5. If seller is NOT a merchant, risk stays with seller until he TENDERS the goods.

Front 25

UCC Distinction # 14: When may parties purchase insurance on goods (when do they have insurable interest) and when may they sue THIRD PARTIES for damage to the contract goods?

Back 25

1. Seller has interest while she has title or a security interest.
2. Buyer has interest as soon as goods are specifically identified (and exist).

Front 26

UCC Distinction # 15(a): When must payment be tendered?

Back 26

At the time and place of delivery.

Front 27

UCC Distinction # 15(b): What payment methods are permitted?

Back 27

Any method is permitted, but the seller may demand cash if she gives the buyer a reasonable period of time to procure that cash.

Front 28

UCC Distinction # 15(c): Does the buyer have the right to inspect the goods?

Back 28

Yes, UNLESS the contract requires payment on delivery (COD). The buyer bears the cost of inspection UNLESS the goods or delivery are defective and are rejected.

Front 29

UCC Distinction # 16(a): What is the effect of a supply failure that leaves a seller partially unable to satisfy a contract?

Back 29

The seller must still perform and must allocate available supply among all buyers in a reasonable and fair manner.

Front 30

UCC Distinction # 16(b): What if an agreed-upon method of delivery becomes commercially impracticable (e.g. the Suez Canal closes)?

Back 30

If neither party is at fault, any commercially reasonable method of delivery must be tendered and accepted.

Front 31

UCC Distinction # 16(c): What happens if particularly identified goods are damaged or destroyed prior to when risk of loss passes to buyer?

Back 31

1. If totally destroyed, the contract is avoided (impossibility)
2. If partially destroyed, the contract is avoided unless the buyer accepts the goods at a reduced price (such an acceptance extinguishes any claim of the buyer against the seller)

Front 32

UCC Distinction # 16(d): What happens if particularly identified goods are destroyed after risk of loss passes to buyer?

Back 32

Buyer must tender payment.

Front 33

UCC Distinction # 15(d): What does "shipping goods under reservation" mean?

Back 33

The seller authorizes the shipper to hold the goods until the buyer tenders payment.

Front 34

UCC Distinction # 16: What are lost volume profits damages and when are they available?

Back 34

They are the lost profits of a lost sale which we treat as an incremental lost sale instead of mitigation. We do so when the seller is a volume seller (seller with massive identical inventory such that it could have supplied both the breaching purchaser and resale purchaser with the same good).

Front 35

UCC Distinction # 17(a): When is specific performance available?

Back 35

For unique goods (e.g. art)

Front 36

UCC Distinction # 17(b): When is replevin available?

Back 36

1. When the buyer cannot cover a breach of a seller of a specifically identified good after reasonable efforts to do so.
2. When (1) buyer partially pays AND (2) seller becomes insolvent 10 days after payment.

Front 37

UCC Distinction # 17(c): When is the right of reclamation available?

Back 37

When (1) buyer is insolvent at time of purchase; (2) seller demands return of goods within 10 days of receipt, or within a reasonable time if buyer misrepresented the insolvency; and (3) buyer still has the goods.

Front 38

UCC Distinction # 17(c)(i): What other rights does a seller have against an insolvent buyer?

Back 38

May recall goods in transit if buyer is insolvent or fails to make a payment (BEFORE GOODS ARRIVE).

Front 39

UCC Distinction # 18: What is the SOL for goods contracts?

Back 39

Four years after accrual. Parties may contract down to one year, but cannot increase.

Front 40

UCC Distinction # 19: What is the title status of goods obtained by fraud or theft?

Back 40

1. If goods obtained by fraud, title is voidable and MAY be transferred to a good faith purchaser for value (and perfect title thereafter vests in the GFP)
2. If goods obtained by theft, true owner may assert rights even as against a GFP for value UNLESS (1) GFP makes improvements to good or (2) true owner indicates, by words or conduct, that thief had good title

Front 41

UCC Distinction # 6(f): How may a buyer accept goods?

Back 41

Signify acceptance to the seller through an express statement, any act inconsistent with the seller's continued ownership of the goods, or by failing to make an effective rejection within a reasonable time.