Ucc Sales Issue Statements

Front 1

Opening Argument

Back 1

The Washington state version of UCC Article 2 controls, because the contract involves the sale of moveable goods.

Front 2

Definition of merchant

Back 2

• Special UCC provisions apply to “merchants” who are defined as parties who deal with goods of the kind or hold themselves out to have special knowledge or expertise in the goods.

Front 3

Requirement of good faith

Back 3

• All UCC contracting parties must perform in good faith. Merchants are held to a higher standard - honesty in fact and reasonable commercial standards of fair dealing.

Front 4

Contract formation in UCC

Back 4

• A valid contract requires offer, acceptance (mutual assent), consideration, legal capacity, and legal subject matter. The contract must comply with the Statute of Frauds if the contract is for the sale of goods for $500 or more, unless an exception exists such as admissions of a party, specially manufactured goods, a merchant’s confirming memo, or part performance.

Front 5

Missing terms

Back 5

• Under the UCC, a missing term does not invalidate a contract as long as there is reasonable basis to provide a remedy and the contract contains the quantity. The court provides the missing terms with the UCC default rules or in preferential order, course of performance, past course of dealings, and usage of trade.

Front 6

Acceptance with additional terms between merchants

Back 6

• A UCC acceptance may contain minor additional terms which between merchants are to be included in the agreement unless they materially alter the bargain, the offeror objects to their inclusion within a reasonable time, or any changes were precluded in the offer.

Front 7

Requirements of goods sold by a merchant

Back 7

• All goods sold by a merchant must be merchantable, pass without objection in the trade, be of fair average quality, and fit for the ordinary purposes for which they are used.

Front 8

Fitness for a particular purpose

Back 8

• Fitness for a particular purpose implied warranty applies where the seller has a reason to know the buyer is relying on his advice in selecting the item for their purpose.

Front 9

Seller limiting warranty liability

Back 9

• A seller may limit their warranty liability as long as the agreement does not fail of its essential purpose or deprive the buyer of the substantial value of the bargain.

Front 10

Warranty exclusions

Back 10

• Warranty exclusions and disclaimers must be clearly written, conspicuous to the buyer, conscionable, and consistent with any express warranties.

Front 11

Accommodation sale

Back 11

• To protect against being in breach, a seller may ship non-conforming goods by notifying the buyer it is an “accommodation sale.”

Front 12

Seller’s remedies

Back 12

• Upon a buyer’s breach, a seller may cancel and sue for rescission, resell the goods, seek incidental damages, or recover profit if they are a “lost volume” seller.

Front 13

Perfect tender

Back 13

• A “perfect tender” is required and a buyer may accept none, all, or any commercially reasonable portion of a non-conforming shipment. A seller’s warranties may be express or implied such as merchantability (pass without objection) or fitness for a buyer’s particular purpose.

Front 14

Buyer’s remedies

Back 14

• A buyer’s remedies after a rightful rejection is to “cover” their requirements by purchasing equivalent substitute goods elsewhere and recover the difference between the cover and contract price together with incidental and consequential damages.

Front 15

Specific performance

Back 15

• A buyer may only sue for specific performance if cover is not possible, the goods have been identified, and the goods have not been transferred to a bona fide purchaser.

Front 16

Mitigation

Back 16

• All parties have a duty to mitigate damages, especially a merchant buyer in possession of a seller’s goods following a non-conforming tender.