Wa Barbri - Sales

Front 1

Applicability of Article 2

Back 1

Applies to sale of goods

Goods = things moveable at time of sale

DOES not apply to service contracts, property

Mixed contract? What is the predominate purpose? Goods = Article 2

Front 2

LIST

methods for showing agreement

Back 2

Verbal offer and acceptance

Verbal offer, acceptance by conduct

Verbal acceptance with additional/different terms

Written confirmation of oral agreement

Front 3

DEFINE

verbal acceptance with additional/different terms rule

Back 3

Battle of forms

A definite, timely expression of acceptance in response to an offer creates contract even if"

1) the acceptance states terms additional to
2) or different from those of the offer

Valid offer must be made first

Front 4

What happens with additional term in acceptance?

Back 4

Additional term in acceptance: seen as acceptance and proposal to modify contract; can be accepted by offeror or it falls away; between merchants - additional term becomes part of contract unless offeror objects within reasonable time OR new term is material (causing surprise or hardship)

Front 5

What is the legal effect of different terms?

Back 5

Legal effect of different terms: If acceptance contains terms that contradict terms in the offer, the knock-out rule applies; contract consists of only the terms on which the offer and acceptance agree; contradictory terms are each removed from both forms and replaced by gap filler terms from Article 2

Front 6

What are the essential terms of a contract?

Back 6

Essential terms: common law, no contract formed

Article 2, only terms of what is sold and quantity required

Agreement on other terms not necessary if parties intended to contract and court can gap-fill terms

Front 7

LIST

alternatives to statute of frauds writing requirement

Back 7

Merchant confirmation

Performance

Specially manufactured goods

Front 8

DEFINE

merchant confirmation

Back 8

If merchant gives sufficient signed writing to another merchant, who does not in writing object within 10 days, statute satisfied as to both parties; battle of forms additional terms rule applies

Analyze formation/modification issues first, then analyze statute of frauds issue second

Front 9

DEFINE

commercial context

Back 9

Commercial context: way to fill gaps; courts assume parties intend their contract to be consistent with their commercial context unless expressly state otherwise; general commercial practices and party history apply

Course of performance (two occasions before, 5% variance accepted); course of dealing (earlier contracts paid for delivery); trade usage (common practice in industry)

Express terms always control over commercial context if express terms exist

Front 10

DEFINE

express warranty

Back 10

Express warranty: any description of goods that becomes part of the basis of the bargain creates an express warranty that goods will conform to the description

Buyer must be aware of warranty; seller can make warranty by showing sample or model; opinion does not create warranty, is just mere puffery

Front 11

DEFINE

implied warranty of merchantability

Back 11

Implied warranty of merchantability: goods sold by a merchant who deals in goods of that kind are warranted to be fit for their ordinary purposes

Only by merchant who deals in goods of the kind (occasional sale no good); fit for ordinary purposes means goods must be non-defective and must work; buyer expectation is the test

Front 12

DEFINE

implied warranty for fitness of particular purpose

Back 12

Implied warranty for fitness of particular purpose: goods sold by seller aware that buyer is relying on seller’s skill to provide goods fit for buyer’s particular purposes are warranted to be fit for that purpose

Front 13

When can seller disclaim warranties?

Back 13

Cannot disclaim express warranty

Cannot disclaim “all warranties, express or implied”

To disclaim merchantability, must use word “merchantability” or “as is” and must be conspicuous

Fitness for particular purpose disclaimer must be written and conspicuous

In merchant to consumer sale, any disclaimer must state qualities being disclaimed with particularity

Front 14

DEFINE

risk loss

Back 14

Applies when goods lost, stolen, damages; seller must tender to buyer; if loss occurs before tender, seller liable; if occurs after tender, buyer liable

Common-carrier shipment = buyer has risk loss when seller gives items to common-carrier

Front 15

LIST

types of breach

Back 15

Repudiation (statement, actions, etc. demonstrating will not perform)

Insecurity (party has reasonable grounds to doubt other party will perform; suspend performance and demand assurance)

Front 16

DEFINE

buyer's right to reject goods

Back 16

Buyer has right to reject non-conforming goods

1) in single delivery contract, perfect tender rule applies: if tender of delivery is non-conforming in any respect, buyer can reject whole/any part of delivery, or may accept whole and any part

2) if installment contract, buyer can reject delivery only if substantially non-conforming; buyer must accept goods with minor non-conformities and seek damages for breach afterwards

Buyer must give timely notice of rejection of goods

Front 17

When can buyer revoke acceptance?

Back 17

1) acceptance must be induced by difficulty of discovering defect or assurance of cure

2) defect substantially impairs value to buyer

3) buyer gives notice of revocation within reasonable time after he should have discovered defect

4) buyer can return goods substantially unchanged

Front 18

DEFINE

buyer duty of care for rejected goods

Back 18

Goods buyer rejects belong to seller; buyer must take reasonable care of rejected goods and obey reasonable requests by seller

After rejection, wrongful use can be conversion or acceptance; buyer who pays all or part of purchase price has a security interest in goods, however, to secure repayment of the price

DEFENSES
Destruction of identified goods: if at no fault of either party and good identified in K, no liability

Impracticability: if commercially impracticable because of failure of basic assumption, seller excused

Front 19

Buyer's damages for non-accepted goods

Back 19

If buyer substitutes goods, cover - if buyer buys substitute goods, damages are cost of covered minus contract price plus consequential damages and return of price already paid, minus costs saved by breach

If cost of cover is less than contract price, market formula - market price minus contract price applies plus consequential damages and incidental damages, minus costs saved by breach

Consequential damages must be foreseeable by seller at time of contracting AND unavoidable by buyer

Front 20

Buyer's damages for accepted goods

Back 20

Notice of breach is essential to recovery

Remedy = measure of damages is value of conforming goods minus value of accepted goods plus consequential damages and incidental damages, minus costs saved by breach

Front 21

Seller's remedies

Back 21

Recovery of contract price if
1) accepted goods, whether or not conforming
2) conforming goods lost while buyer has risk of loss
3) wrongfully rejected goods that seller cannot resell


Non-accepted goods: resale or market formula damages

Resale damages: upon giving notice to the buyer, seller may make a commercially reasonable resale of the goods; if so, damages are contract price minus resale price plus incidental damages

Market formula: seller who fails to resell = contract price minus market price plus incidental damages

Lost volume: if buyer’s breach cost seller a sale, can recover lost profits plus incidental damages