MBE Advanced Sales

Question 1

Types of Warranties

Answer 1

Warranty of Title
Warranty Against Infringement of Copyright
Express Warranties
Implied Warranty of Merchantability
Implied Warranty of Fitness for Particular Purpose

Question 2

When can a seller get the full contract price?

Answer 2

1. Buyer has accepted the goods;
2. Conforming goods are lost or damaged after the risk of loss passed to the buyer; or
3. Identified goods are unable to be sold

Question 3

When does risk of loss pass to the buyer in a Shipment Contract?

Answer 3

1. Seller gives possession of goods to the carrier;
2. Seller makes an appropriate contract for shipment; and
3. Seller notifies buyer that goods have been shipped

Question 4

When can terms be explained or supplemented under the Parol Evidence Rule?

Answer 4

1. Course of dealings
2. Trade or Business use
3. Course of current performance
4. Consistent additional terms if the writing is not completely integrated

Question 5

Elements for Recapture

Answer 5

1. Buyer was insolvent at time of purchase
2. Seller demands return within 10 days (or within a reasonable period if buyer misrepresented solvency to seller in writing)
3. Buyer still has the goods

Question 6

Buyer’s Damages as to Accepted Goods

Answer 6

Nonconforming Goods: Amount of Loss

Breach of Warranty: Repair or Replacement Cost

Question 7

Elements of a Firm Offer

Answer 7

1. Made with words of firmness
2. In writing
3. Signed by the merchant

Question 8

Requirements for Proper Rejection of Goods

Answer 8

1. Notification of seller of rejection within a reasonable time;
2. Notification of seller as to defect (if ascertainable by reasonable inspection that seller could cure if notified); and
3. Hold goods for a reasonable time for seller to retrieve

Question 9

CIF Contract

Answer 9

Price: cost of goods, insurance, and freight

Always a shipment contract

Question 10

Elements of Assurance of Performance

Answer 10

Must be in writing with reasonable grounds for insecurity

Acceptance of prior improper delivery/payment doesn’t waive demands for future performance

Repudiation results if assurance isn’t provided within a reasonable time (30 day max)

Question 11

Warranty Against Infringement of Copyright

Answer 11

Given by a merchant seller who regularly deals in goods of the kind warranted

Does not apply if the buyer furnishes specifications for the goods

Question 12

When does the UCC govern the removal/sale of goods associated with real property?

Answer 12

Structures to be removed from land & minerals: if severance by seller

Growing crops/timber are separate from the land regardless of who severs

Fixtures that can be severed without materially harming the land regardless of who severs

Question 13

C&F Contract

Answer 13

Price: cost of goods and freight

Always a shipment contract

Question 14

Breach of Sales Contract or Warranty Statute of Limitations

Answer 14

4 years after cause of action accrues
Can be reduced to no less than 1 year
Cannot be expanded beyond 4 years

Question 15

Elements of Revoking Acceptance

Answer 15

1. There is a defect that substantially impairs the value to the buyer and buyer reasonably didn’t discover the defect or believed the seller would cure and didn’t
2. Timely notification within a reasonable time after nonconformity was or reasonably should have been discovered
3. Can’t be a substantial change in the condition of the goods
4. Buyer has the same rights/duties as if he had rejected the goods initially

Question 16

Auction Types (2)

Answer 16

Reserve (Default): goods may be withdrawn until the auctioneer announces the completion of the sale
Non-Reserve: goods cannot be withdrawn unless no bid is received

Question 17

When does risk of loss pass to buyer in a Non-Carrier Contract?

Answer 17

Non-Merchant Seller: after seller tenders goods

Merchant Seller: when buyer takes physical possession

Question 18

When does risk of loss pass to buyer in a Destination Contract?

Answer 18

When seller tenders the goods to the buyer at the destination point

Question 19

Implied Warranty of Fitness for Particular Purpose

Answer 19

Given by any seller who has reason to know at the time of contracting that the buyer intends to use a good in a specific way and the buyer relies on the seller’s skill or judgment to buy/furnish the goods

Question 20

Express Warranties

Answer 20

Any affirmation of fact or promise made by the seller to the buyer that relates to the goods and becomes a part of the basis of the bargain (e.g., sample, model)

Question 21

Implied Warranty of Merchantability

Answer 21

Warrants that a good is fit for ordinary, commercial purposes and is of average quality
Can only be given by a merchant who regularly deals in goods of the kind contracted for
Breach occurs at time of sale
Strict Liability: seller need not be aware of breach

Question 22

Warranty of Title

Answer 22

Includes freedom from security interests, liens, and other encumbrances
Can be disclaimed or limited (e.g., seller sells the rights he has)

Question 23

An additional term in the acceptance is not part of the final contract UNLESS:

Answer 23

1. Both parties are merchants
2. The term does not materially alter the contract;
3. The offer does not expressly limit acceptance to the terms of the offer; and
4. The offeror does not object to the term within a reasonable time

Question 24

Buyer’s Duties After Rejection

Answer 24

1. Sell goods in good faith/commercially reasonable (account to seller for excess over amount they hold as a security interest)
2. If no security interest, hold goods with reasonable care for enough time for seller to retrieve, reship to seller, or resell them for seller’s account
3. Entitled to usual sales commission not to exceed 10% of gross proceeds

Question 25

Exception to Perfect Tender: Installment Contracts

Answer 25

A nonconforming installment can be rejected only if the nonconformity substantially impairs the value of that installment and cannot be cured

Question 26

When a Seller Cannot Stop Transit

Answer 26

1. Buyer has received the goods;
2. Bailee has acknowledged buyer’s right to the goods; or
3. Document of title has been negotiated to buyer

Question 27

When is Replevin Available?

Answer 27

1. Goods are identified in the contract;
2. Cover is unavailable; and either
3. The goods are undelivered and partial payment was made by buyer +/- the seller becomes insolvent within 10 days of first payment