Fundamental Aspects of Sales Flashcards
(13 cards)
Warranty of Merchantability (Generally)
Promise to the buyer that the goods will be fit for their ordinary purpose–only applies when made by a merchant
Standard for Merchants (test)
A person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction
Article 2 Statute of Limitations (UCC §2-725(1))
4 years allotted to bring suit for breach of a sales contract, from the time the cause of action accrued, whether or not the plaintiff was aware of it
Scope of the UCC
Article 2 (and others) of the UCC guides the law of sales, and the common law serves as a “gap filler.” It specifically applies to the sale of goods.
Goods (Defined)
All things which are moveable at the time of identification to the contract for sale
Mixed Sales (Modern Test) – applied when agreed upon by parties
Whether the sale of goods predominate the transaction
YES: then apply UCC to the transaction as a whole (subject to other laws concerning non-good portions)
NO: then do not apply the UCC beyond the specific goods
UCC § 1-303 Gap Fillers based on conduct
- UCC § 1-303(a): When the writing is silent, an agreement may be established by implication based upon implicit terms in the “course of performance.”
- UCC § 1-303(b): “Course of dealing” based upon prior business creating implicit standard terms between the parties.
- UCC § 1-303(c): “Usage of trade” applies when there is a custom in an industry concerning the performance of a term, and the custom will prevail whenever inconsistent with the gap filler.
Leases v. Sales (Economic Realities Test)
Whether a reasonable likelihood exists that at the time the transaction was entered, the lessor will receive the goods back at a time when they still hold meaningful economic life
Lease Types (True Lease v. Disguised Lease)
True Lease: reasonable likelihood the lessor will retain some residual interest in the goods
Disguised Lease: intended for security–sold on credit but retains a special right to foreclose if the seller fails to pay the price
Predominant Purpose Test (Factors)
- Purpose of entering the transaction
- Language of the agreement
- Portion of the price towards the services v. goods
- Nature of the business between the parties
Gravamen of the Action Test
Whether the goods or the services are the primary issue within the action–applies Art. 2 (if appropriate) even if the predominant purpose would have been the services.
UCC Article 9 (Generally)
applies to any transaction intended to create a security interest in personal property or fixtures, including interests created by contract such as a lease intended as security.
Sale (Defined)
unconditional transfer of absolute title to goods
