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Hard to remember Flashcards

1
Q

When is performance discharged?

A

When conditions fail; When parties agree; Novation; Statue of limitations (4 yrs); Bankruptcy; Illegality; Impossible to perform (under CL); commercial impractibility (extreme difficulty or cost under UCC)

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2
Q

What is the implied warranty of title?

A

Given in every sale of goods by merchants and nonmerchants, unless disclaimed. Seller has a good title and transfer is rightful and no liens, encumbrances, etc against goods are hidden from buyer

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3
Q

Is is possible to disclaim a written express warranty?

A

No

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4
Q

How do you disclaim an oral express warranty?

A

Must be specific and clearly visible to buyer

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5
Q

What is strict tort liability?

A

No privity is required; most states allow 3rd parties who could be expected to use or consume the product to sue.

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6
Q

What are the requirements to sue in a strict tort liability?

A

Product is defective in design, defective in manufacture, defective in lack of warnings. Seller is in the business of selling or manufacturing the defective product and product reached the buyer in the same condition it was when it left the manufacturer.

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7
Q

What is a disclaimer?

A

Words like “sold as is” “sold with all faults” and “as they stand.” Does not disclaim express warranty or implied warranty of title.

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8
Q

Risk of loss passing for FOB shipment

A

Passes when delivered to the carrier

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9
Q

Risk of loss passing for FOB desination

A

Passes to buyer at time of tender

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10
Q

Risk of loss for non-shipment contracts

A

If seller is a merchant, passes when buyer receives goods. If seller is a non-merchant, passes when good are tendered.

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11
Q

What is sale on approval?

A

When buyers are allowed to try out a product before buying. Such as a 30 day trial. Title passes when buyer accepts goods.

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12
Q

When are future goods identified?

A

When they are shipped, marked, or designated for the buyer.

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13
Q

Does a change in agreement for a UCC contract have to be in writing?

A

Only if it’s less than $500. Oral change is valid and binding.

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14
Q

What is the right of assurance?

A

If a party has reasonable grounds to believe that the other party will not perform as contracted, he may demand in writing that the other party give adequate assurance of due performance. If no assurance within 30 days, this failure is a repudiation of the contract.

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15
Q

What are the buyer’s rights to rejection?

A

Buy has the right to inspect and try out goods prior to acceptance. They can reject the entire shipment, accept entire shipment or accept any commercial unity and reject the rest.

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16
Q

What are the buyer’s responsibilities when rejecting nonconforming goods?

A

Must reject within a reasonable time after tender, not effective until known by seller of rejection, reasons for rejection should be given, buyer must use reasonable care over the nonconforming goods and buyer must follow any seller’s reasonable instructions at the seller’s cost. If goods are perishable buyer must make a reasonable effort to sell and if seller gives no instructions buyer can store goods, reship back or sell goods deducting costs and sales commissions.

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17
Q

What is the right to cure - fixing nonperformance?

A

Seller who tenders nonconforming goods may still have the ability to cure and not be in breach of contract.

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18
Q

What is contractural protection?

A

Type of covered opinion. Taxpayer has right to refund if all or part of the tax consequences are not sustained.

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19
Q

When are contract assignments prohibited?

A

When contract terms prohibit assignment, statute, personal contracts, and contract performance will materially vary from that expected by obligee.

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20
Q

What is an obligor?

A

Name given to party in the contract for the party’s detriment.

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21
Q

When are punitive damages award for fraud in the inducement?

A

VOIDABLE (pun. damages awarded if all 3 present)

  1. Involves material fact about subject matter
  2. One party has relied upon and been deceived by false representations.
  3. Intentional deception
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22
Q

What is an obligee?

A

Name given to party in the contract for the party’s benefit.

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23
Q

What is a reliance opinion?

A

Type of covered opinion. Greater than 50% chance that tax issue would be resolved in TP’s favor.

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24
Q

What are the UCC Statute of Frauds exceptions to writing requirement?

A

Merchant’s confirmation memo (two merchants req.)
Part performance
Specially manufactured
Admission in any proceeding under oath

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25
Q

To whom does a defrauder’s liability run to?

A

All foreseeable victims of the fraud.

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26
Q

What is substantial performance?

A

Ex) in home construction, using a different type of faucet than what was requested by customer to keep progress flowing. Questions to ask: Is it just as good for practical purposes? Was it done in good faith? Can party be compensated?

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27
Q

Is a malpractice insurance policy assignable?

A

No, designed for a particular insured.

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28
Q

What is accord & satisfaction?

A

Accord = agreement to waive legal rights, releasing another party from legal obligations. Satisfaction = actual payment of amounts agreed to in the accord.

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29
Q

What contracts are contrary to public policy?

A

Unconscionable contract; Exculpatory clauses “hold harmless” = disclaims liability regardless of fault

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30
Q

What is the requirement for keeping records for companies registered with SEC?

A

Keep records showing accurate company financial activities. Must have sufficient internal accounting controls (IAC’s).

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31
Q

What do the IAC’s need to show for companies registered with the SEC?

A
  • transactions are executed in accordance with management’s authorization
  • trans. are recorded to permit preparation of proper fin. statements and accountability for assets.
  • access to assets are authorized.
  • recorded assets are compared with existing assets at reasonable intervals
32
Q

What is article 2 acronym “AFTPDT”

A

Application, formation, terms, performance, damages, title

33
Q

What are the exceptions for liability for a carrier in transit?

A
  • acts of God
  • acts of public enemy
  • defective packaging by shipper
  • easily spoiled food
34
Q

What is an implied warranty of merchantability?

A

Only to be made by MERCHANTS.
Merchant warrants that goods are fit for ordinary use and proper kind/quality, properly packaged, and labeled to conform to statements of fact made on label.

35
Q

Can an implied warranty of merchantability be disclaimed?

A

Yes, must mention the word merchantability and be oral or written. Such as “with all faults” “as is” “no warranty of merchantability” and must be conspicuous.

36
Q

What is an express warranty?

A

Samples, models, descriptions. Part of the basis of the bargain and something important to buyer when make decision to purchase, can be oral or written, can be in brochures, advertisements, etc. Can be given my merchants/nonmerchants.

37
Q

What are the remedies for goods in transit?

A
  1. If insolvent, stop shipment and can recover within 10 days of delivery; (if buyer misrepresents solvency within 90 days prior to delivery on credit there is no time limit on seller’s ability to recover the goods) 2. buyer’s repudiation 3. Seller can stop shipment at any time until buyer actually takes possession of the goods or notifies buyer that goods are available to pick up
38
Q

What is replevin?

A

Buyer’s remedy. Only available is the buyer cannot cover as a remedy. Recovering identified property that is being improperly held by seller.

39
Q

When can buyer’s revoke acceptance?

A

When buyer was given reasonable assurance seller would cure a nonconforming shipment and cure has not taken place, discovered later that good were nonconforming, nonconformance was difficult to detect. Must be within a reasonable time of discovery and not effective until seller has notice of it.

40
Q

If obligations are assignable is the asignor still liable?

A

Yes, unless novation has been granted.

41
Q

Is conditional acceptance counted as acceptance?

A

No, this is never acceptance.

42
Q

What is preexisting duty?

A

You are not entitled to more consideration for what you are already legally obligated to do. ex)police officers collecting reward for catching a criminal

43
Q

What are the terms requirements under UCC?

A

subject matter, quantity if more than one

44
Q

What are the terms of requirements under CL?

A

Identification of the parties, subject matter, price stated, time for performance

45
Q

What is bargained for exchange?

A

the promise induces the detriment on each side and is not a gift.

46
Q

How and when is an offer revoked?

A

Revoked any time prior to acceptance. Effective when received. Must be received prior to acceptance by offeree.

47
Q

What is a trade acceptance?

A

Time draft. Seller extends credit to buyer and seller must be the drawer and payee.

48
Q

What is the purpose of negotiable instruments?

A

Method of payment that allows ease of tansfer of funds and payment rights; Contract’s rights to payment can be assigned but original parties still have defenses and rights that interfere with payment rights; Way to separate payment rights from contract rights.

49
Q

What is a promissory note?

A

A note payable on demand or within a definite time to a specific payee or to the bearer.

50
Q

What are non negotiable instruments?

A
  1. Letter of credit.
  2. Warehouse receipts
  3. Bill of lading
  4. Stock and bond (t-bonds)
  5. Contracts
51
Q

What is a sight draft?

A

Draft payable on demand immediately when presented

52
Q

What is a time draft?

A

Payable by drawee at a specific time

53
Q

Can a holder ship through to remove knowledge in order to become a HDC?

A

NO. If you know about a problem you cant improve your status by gaining HDC.

54
Q

Requirements to be an HDC

A

Must be a holder, Must take instrument for value (pv), take in good faith, and without notice that the instrument is overdue, been dishonored

55
Q

Who has primary liability for a neg. instrument?

A
  1. Makers of CD’s and notes

Check = no party has primary liability unless certified check from bank

56
Q

Who has secondary liability for a neg. instrument?

A

Drawers are secondarily liable if drawee fails to pay a draft.
Indorsers (unqualified) - HDC can hold indorser liable except when endorsed “without recourse”

57
Q

What has 3 parties and payable on demand?

A

Check

58
Q

What has 3 parties and payable in future?

A

Draft

59
Q

To maintain negotiability commercial paper must be:

A

in writing; signed by drawer/maker; be without condition for payment; amount stated; payable to order or bearer

60
Q

What is a restrictive endorsement?

A

For deposit only. Doesn’t stop negotiations.

61
Q

A check must be presented within how many days to hold endorser liable?

A

7

62
Q

How do you negotiate order paper?

A

Delivery and endorsement

63
Q

What is the time restriction for turning to secondary parties on checks?

A

30 days

64
Q

What is the bank failure proposition?

A

If a check is not presented within 30 days and the bank fails in the mean time, drawer is excused from any amount over FDIC insurance.

65
Q

What is a qualified endorsement?

A

Without recouse - payment is not guaranteed

66
Q

Does conditional endorsement affect negotiability?

A

No, anyone acquiring the instrument can disregard the condition and demand payment as if condition did not exist.

67
Q

What is a special endorsement?

A

Converts bearer instrument info or continues an order instrument. Specifies a person to whom payment and to whose order payment is to be made. Requires signature endorsement of the person specified plus delivery to negotiate further.

68
Q

Who has liability for forged signatures?

A

Drawer’s signature = bank

Payee/endorsers signature = 1st party to accept after forged

69
Q

What is fraud in the execution?

A

Person did not know they were signing a contract

70
Q

What are personal defenses?

A

LOSE TO HDC

Lack of consideration/value given; beach of contract; duplicate payments; fraud in the inducement; voidable contracts

71
Q

What are real defenses?

A

WIN TO HDC

Material alterations to instrument; forgery; bankruptcy; insanity; fraud in the execution; illegal; minority

72
Q

What does being a HDC require?

A

Holding a negotiable instrument, taking in good faith, having no knowledge of defenses, giving a PV for instrument

73
Q

What are the 5 warranties with every CP transfer?

A
  1. title
  2. no defense will stand against it
  3. no material alteration
  4. no knowledge of bankruptcy
  5. all signatures are legit
74
Q

What does a blank endorsement do?

A

Transforms into bearer paper. Blank = bearer

75
Q

How do you negotiate bearer paper?

A

Delivery only

76
Q

What is the warranty liability when you sign commercial paper?

A

By signing, you warrant to all future parties. But not signing you warrant to current party only.

REG (20 decks)

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