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52 Cards in this Set
- Front
- Back
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How to answer a sales question
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1. Governing Law
2. Merchants? 3. Formation of K 4. Statute of Frauds 5. Terms of K (PER) 6. Duties of the Buyer/Seller 7. Warranties 8. Breach 9. Defenses to Performance 10. Remedies (Buyer & Seller) |
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Governing Law
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Article 2 governs transaction that involve a sale of goods, things that are moveable at the time of the sale.
• If there is blood and guts, think torts/product liabilities. • “Mixed” contract – Article 2 applies if the predominant purpose is the sale of goods. |
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Merchant
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Any person while engaged in a business or profession is a merchant. A merchant dealer is a seller who deals in a good of a particular kind.
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Formation of a K
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Made in any manner that shows agreement, including conduct.
• Verbal Offer and Acceptance (usual K rules) • Verbal Offer, Acceptance by Conduct (A buyer’s offer to buy seeking prompt shipment can be accepted either by seller’s promise to ship, or by shipment of conforming or non-conforming goods) • Contracts by conduct (no agreement but they proceed to manifest an agreement by shipping, accepting, and paying for goods) |
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Battle of the forms
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A definite, timely expression of acceptance in response to an offer creates a contract even if acceptance states terms additional to or different from those of the offer.
• Modification by additional terms (Contract initially consists of the terms of the offer, but the additional term is considered to be a proposal or offer to modify and the offeror may expressly assent to) o Between merchants, an additional term becomes part of the contract unless either (1) the offeror objects within a reasonable time, (2) the offer limits acceptance to its terms or (3) the new term is material (causing hardship or surprise) • Legal effect of different terms (If the acceptance contains terms that contradict terms in the offer, the knock out rule applies. The contract consists of only the terms which the offer/acceptance agree on) o Contradictory terms are removed and replaced by gap fillers o DOES NOT APPLY TO CONFIRMATIONS |
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Essential Term
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Quantity
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Modifications
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Must be made in good faith
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Statute of fruads
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A contract for the price of $500 or more is not enforceable unless the defendant has signed a writing indicating a contract between the parties and stated the quantity. (Can be informal writing, diff for both parties)
Exceptions • Merchant Confirmation: If a merchant gives sufficient signed writing to another merchant, who does not object in writing within 10 days, the statue is satisfies as to both parties. • Performance: Delivery and acceptance of goods or payment satisfies the statue for the quality of goods accepted or paid for. • Specially Manufactured Goods: No signed writing is required if the seller has made a substantial beginning of performance or procurement of an oral contract for specially manufactured goods. |
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Terms of K
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Express Terms (controls)
• Includes quantity & goods; output & requirements okay Implied Terms • Course of Performance, Course of Dealing, Trade Usage. Gap Fillers (court will fill in, except for quantity) • Price: Reasonable price at the time of delivery • Place of tender at seller’s place • Time for performance: Reasonable time • Payment due: Time of delivery |
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Express Warranty
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An express warranty is created by (i) any affirmation of fact or promise made by the seller, (ii) any description of the goods, (iii) any sample or model, if part of the basis of the bargain (buyer aware).
• Statement of opinion (puffery) is not a warranty. • “Can” disclaim, but not if inconsistent w/ warranties given (also PER) |
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Implied Warranty of Merchantibility
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Goods sold by a merchant who deals in goods of that kind are warranted to be fit for their ordinary purpose.
• Goods cannot be defective, good enough to satisfied the average reasonable buyer. • Applies to new and used goods and merchant/consumer buyers. • Disclaim by using words “merchantability” or “as is” and if in writing must be conspicuous. |
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Implied Warranty for a particular purpose
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Goods sold by a seller who is aware that the buyer is relying on the seller’s skill to provide goods fit for the buyer’s particular purposes.
• Disclaimer must be in writing and conspicuous. |
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Disclaimer of warranties
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• Disclaiming "all warranties, express or implied" is ineffective.
• In a sale from a merchant to a consumer, any disclaimer of implied warranty must state the qualities being disclaimed with particularity |
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Limitation of Liabilities
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A contract may disclaim liability for consequential damages if it would not be unconscionable to do so.
• A limitation of personal injuries is presumptively unconscionable |
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Risk of Loss
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Risk of Loss if the Parties Don’t Agree
• Goods delivered directly to the buyer: risk of loss passes when the buyer receives possession of the goods from a merchant seller • Goods delivered via a common carrier: Tender occurs and risk of loss passes when the goods are delivered to the carrier. Risk of Loss by agreement • FOB (destination). Either seller’s location (shipment contract) or buyer’s location (destination contract). Effect of breach on Risk of Loss If the tender of delivery is so non-conforming as to permit the buyer to reject, then risk of loss remains on seller until cure or acceptance. If the buyer wrongfully rejects, risk of loss remains on buyer for a reasonable time. |
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Breach by failing/refusing to perform
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• Repudiation: May cancel & sue (unequivocal statement)
• Insecurity: May demand assurances if rsble grounds for insecurity arise. May suspend performance until given. Must be in writing. If assurances are not given in reasonable time or within 30 days, same as repudiation |
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Duties of Buyer
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Inspect, Accept, or Reject
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Rejection
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Right to reject non-conforming goods, but must give rsble. timely notice.
• Single Delivery: Perfect tender rule applies, can reject in whole or part. • Installment: Buyer may reject only if its substantially non-conforming and cannot be cured. Whole contract may be canceled if the nonconforming installment substantially impairs the whole value of K |
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Duty of care after rejection
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• Goods are seller’s, take reasonable care and obey reasonable requests by the seller, duty to reasonably resell rejected goods that are perishable.
• Wrongful use of rejected goods may be conversion or acceptance. • Buyer who has paid all or part of the purchase price has a security interest in the rejected goods. May make a reasonable resell to liquidate interest. |
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Acceptance
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Obligates the seller to pay the contract price but does not waive damages
• Fails to give notice of rejection • Treats the goods as his own, or by reselling them. |
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Revocation of Acceptance
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• Acceptance was induced by difficulty of discovery the defect or assurances of cure (must have inspected)
• The defect substantially impairs their value • Buyer gives notice of revocation within a reasonable time after he should have discovered it, and • Buyer can return goods substantially unchanged. |
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Right to Cure
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Upon rejection, seller has the right to cure if time for performance remains or if rejection was a surprise.
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Notice of breach
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Buyer must give notice of breach within a reasonable time.
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Defenses
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Destruction of identified goods
Both parties are excused from performance if the contract requires identified goods at the time the contract (Dobbin) was made and they are lost without fault of either party before risk passes to the buyer. Impracticability A seller is excused if performance has become commercially impracticable because of failure of a basic assumption on which the contract was made. • War, Embargo, unexpected loss of seller’s sole supply. • Must give notice and if requested allocate delivery fairly btwn buyers |
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Buyer's Remedies
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• Non-Accepted Goods (cover/market price - contract price)
• Accepted Goods (conforming value - accepted value) (make sure notice) • Consequential Damages (e.g. lost profits, physical harm) o Foreseeable by seller at the time of contracting (notice) o Unavoidable by buyer (mitigation – could not cover) • Incidental damages (costs of inspection, storage, transportation) • Return of Price Paid (non-accepted goods only) • Costs saved (Deducted from the damages seller must pay) • Specific Perf (unique goods or buyer cannot substitute by cover) • Cancellation (installment contract; repudiation, failure to cure, or breach materially affects the value of an entire installment contract) |
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Seller's Remedies
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• Contract Price (three situations)
o Accepted goods, whether or not conforming o Conforming goods lost while buyer has risk of loss o Wrongfully rejected goods that seller cannot resell • Non-Accepted Goods (contract price - market/commercially rsnbl resale price w/notice) • Incidental Damages • Lost Volume (i.e. costs a sale) = lost profits + incidental damages |
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How to answer a sales question
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1. Governing Law
2. Merchants? 3. Formation of K 4. Statute of Frauds 5. Terms of K (PER) 6. Duties of the Buyer/Seller 7. Warranties 8. Breach 9. Cure 10. Defenses to Performance 11. Remedies (Buyer & Seller) |
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Governing Law
|
Article 2 governs transaction that involve a sale of goods, things that are moveable at the time of the sale.
• If there is blood and guts, think torts/product liabilities. • “Mixed” contract – Article 2 applies if the predominant purpose is the sale of goods. |
|
|
Merchant
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Any person while engaged in a business or profession is a merchant. A merchant dealer is a seller who deals in a good of a particular kind.
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Formation of a K
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Made in any manner that shows agreement, including conduct.
• Verbal Offer and Acceptance (usual K rules) • Verbal Offer, Acceptance by Conduct (A buyer’s offer to buy seeking prompt shipment can be accepted either by seller’s promise to ship, or by shipment of conforming or non-conforming goods) • Contracts by conduct (no agreement but they proceed to manifest an agreement by shipping, accepting, and paying for goods) |
|
|
Battle of the forms
|
A definite, timely expression of acceptance in response to an offer creates a contract even if acceptance states terms additional to or different from those of the offer.
• Modification by additional terms (Contract initially consists of the terms of the offer, but the additional term is considered to be a proposal or offer to modify and the offeror may expressly assent to) o Between merchants, an additional term becomes part of the contract unless either (1) the offeror objects within a reasonable time, (2) the offer limits acceptance to its terms or (3) the new term is material (causing hardship or surprise) • Legal effect of different terms (If the acceptance contains terms that contradict terms in the offer, the knock out rule applies. The contract consists of only the terms which the offer/acceptance agree on) o Contradictory terms are removed and replaced by gap fillers o DOES NOT APPLY TO CONFIRMATIONS |
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Essential Term
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Quantity
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|
Modifications
|
Must be made in good faith
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Statute of fruads
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A contract for the price of $500 or more is not enforceable unless the defendant has signed a writing indicating a contract between the parties and stated the quantity. (Can be informal writing, diff for both parties)
Exceptions • Merchant Confirmation: If a merchant gives sufficient signed writing to another merchant, who does not object in writing within 10 days, the statue is satisfies as to both parties. • Performance: Delivery and acceptance of goods or payment satisfies the statue for the quality of goods accepted or paid for. • Specially Manufactured Goods: No signed writing is required if the seller has made a substantial beginning of performance or procurement of an oral contract for specially manufactured goods. |
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Terms of K
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Express Terms (controls)
• Includes quantity & goods; output & requirements okay Implied Terms • Course of Performance, Course of Dealing, Trade Usage. Gap Fillers (court will fill in, except for quantity) • Price: Reasonable price at the time of delivery • Place of tender at seller’s place • Time for performance: Reasonable time • Payment due: Time of delivery |
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Expres Warranty
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An express warranty is created by (i) any affirmation of fact or promise made by the seller, (ii) any description of the goods, (iii) any sample or model, if part of the basis of the bargain (buyer aware).
• Statement of opinion (puffery) is not a warranty. • “Can” disclaim, but not if inconsistent w/ warranties given (also PER) |
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Implied Warranty of Merchantibility
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Goods sold by a merchant who deals in goods of that kind are warranted to be fit for their ordinary purpose.
• Goods cannot be defective, good enough to satisfied the average reasonable buyer. • Applies to new and used goods and merchant/consumer buyers. • Disclaim by using words “merchantability” or “as is” and if in writing must be conspicuous. |
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Implied Warranty for a particular purpose
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Goods sold by a seller who is aware that the buyer is relying on the seller’s skill to provide goods fit for the buyer’s particular purposes.
• Disclaimer must be in writing and conspicuous. |
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Disclaimer of warranties
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• Disclaiming "all warranties, express or implied" is ineffective.
• In a sale from a merchant to a consumer, any disclaimer of implied warranty must state the qualities being disclaimed with particularity |
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Limitation of Liabilities
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A contract may disclaim liability for consequential damages if it would not be unconscionable to do so.
• A limitation of personal injuries is presumptively unconscionable |
|
|
Risk of Loss
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Risk of Loss if the Parties Don’t Agree
• Goods delivered directly to the buyer: risk of loss passes when the buyer receives possession of the goods from a merchant seller • Goods delivered via a common carrier: Tender occurs and risk of loss passes when the goods are delivered to the carrier. Risk of Loss by agreement • FOB (destination). Either seller’s location (shipment contract) or buyer’s location (destination contract). Effect of breach on Risk of Loss If the tender of delivery is so non-conforming as to permit the buyer to reject, then risk of loss remains on seller until cure or acceptance. If the buyer wrongfully rejects, risk of loss remains on buyer for a reasonable time. |
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Breach by failing/refusing to perform
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• Repudiation: May cancel & sue (unequivocal statement)
• Insecurity: May demand assurances if rsble grounds for insecurity arise. May suspend performance until given. Must be in writing. If assurances are not given in reasonable time or within 30 days, same as repudiation |
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Duties of Buyer
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Inspect, Accept, or Reject
|
|
|
Rejection
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Right to reject non-conforming goods, but must give rsble. timely notice.
• Single Delivery: Perfect tender rule applies, can reject in whole or part. • Installment: Buyer may reject only if its substantially non-conforming and cannot be cured. Whole contract may be canceled if the nonconforming installment substantially impairs the whole value of K |
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Duty of care after rejection
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• Goods are seller’s, take reasonable care and obey reasonable requests by the seller, duty to reasonably resell rejected goods that are perishable.
• Wrongful use of rejected goods may be conversion or acceptance. • Buyer who has paid all or part of the purchase price has a security interest in the rejected goods. May make a reasonable resell to liquidate interest. |
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Acceptance
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Obligates the buyer to pay the contract price but does not waive damages
• Fails to give notice of rejection • Treats the goods as his own, or by reselling them. |
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Revocation of Acceptance
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• Acceptance was induced by difficulty of discovery the defect or assurances of cure (must have inspected)
• The defect substantially impairs their value • Buyer gives notice of revocation within a reasonable time after he should have discovered it, and • Buyer can return goods substantially unchanged. |
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Right to Cure
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Upon rejection, seller has the right to cure if time for performance remains or if rejection was a surprise.
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Notice of breach
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Must give notice of breach within a reasonable time.
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Defenses
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Destruction of identified goods
Both parties are excused from performance if the contract requires identified goods at the time the contract (Dobbin) was made and they are lost without fault of either party before risk passes to the buyer. Impracticability A seller is excused if performance has become commercially impracticable because of failure of a basic assumption on which the contract was made. • War, Embargo, unexpected loss of seller’s sole supply. • Must give notice and if requested allocate delivery fairly btwn buyers |
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Buyer's Remedies
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• Non-Accepted Goods (cover/market price - contract price)
• Accepted Goods (conforming value - accepted value) (make sure notice) • Consequential Damages (e.g. lost profits, physical harm) o Foreseeable by seller at the time of contracting (notice) o Unavoidable by buyer (mitigation – could not cover) • Incidental damages (costs of inspection, storage, transportation) • Return of Price Paid (non-accepted goods only) • Costs saved (Deducted from the damages seller must pay) • Specific Perf (unique goods or buyer cannot substitute by cover) • Cancellation (installment contract; repudiation, failure to cure, or breach materially affects the value of an entire installment contract) |
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Seller's Remedies
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• Contract Price (three situations)
o Accepted goods, whether or not conforming o Conforming goods lost while buyer has risk of loss o Wrongfully rejected goods that seller cannot resell • Non-Accepted Goods (contract price - market/commercially rsnbl resale price w/notice) • Incidental Damages • Lost Volume (i.e. costs a sale) = lost profits + incidental damages |
