R6 - Business Law (Sales)

Question 1

UCC Article 2 applies only to what?

Answer 1

Sale of goods

Question 2

Merchant’s firm offers are irrevocable for the time stated, or if no time is stated, for a reasonable time, but in no event longer than what?

Answer 2

3 months (OR 90 days)

Question 3

What are the three components to qualify as a merchant’s firm offer?

Answer 3

• seller must be a merchant
• offer must be in writing and signed by merchant
• offer must give assurances it’ll be kept open for a certain time

Question 4

The general rule under the UCC is that a specific ________ must be stated in a sales contract.

Answer 4

Quantity

Question 5

The general rule under the UCC is that a specific quantity must be stated in a sales contract. An exception is made for ______ and __________ contracts.

Answer 5

Output and requirement

Question 6

Rick, a book distributor, offers to sell Steve, a bookstore, 100 books for $1 each. Steve accepts. Rick subsequently discovers that he’ll lose money on the deal, and so asks Steve if he would be willing to pay $1.05 for each book. Steve agrees. Is the modification binding?

Answer 6

YES

EXPLANATION: Modifications under UCC are enforceable without consideration.

Question 7

What is the UCC statute of limitations?

Answer 7

Four years from date of breach

Question 8

If a merchant sends another merchant a written confirmation of a contract that is sufficient to bind the sender, it will also bind the recipient if she does not object within how many days?

Answer 8

10 days

Question 9

Contracts for the sale of goods for $500 or more must be evidence by a writing signed the party being sued. What are the four exceptions (SWAP)?

Answer 9

Specially manufactured goods
Written merchant’s confirmatory memo
Admission in court
Performance

Question 10

Is risk of loss dependent on title?

Answer 10

NO

Question 11

With shipment contracts risk of loss passes to the buyer when?

Answer 11

When the goods are delivered to the carrier (“in truck”)

Question 12

With destination contracts, risk of loss passes to the buyer when?

Answer 12

When the goods reach the destination and seller tenders delivery

Question 13

What does FAS stand for?

Answer 13

Free Along Side

Question 14

What does CIF stand for?

Answer 14

Cost, Insurance, and Freight

Question 15

If you see the term FAS, who has the risk of loss?

Answer 15

Buyer

EXPLANATION: Free Along Side is a price term that requires the seller to deliver the goods alongside of a specified vessel. Risk of loss passes to the buyer when the seller gets the goods alongside the vessel.

Question 16

If you see the term CIF, who has the risk of loss?

Answer 16

Buyer

EXPLANATION: The term CIF means the contract price includes the cost of the goods, insurance, and freight. Risk of loss is on buyer during shipment.

Question 17

If it’s FOB - Seller’s Location, what type of contract is it?

Answer 17

Shipment contract

EXPLANATION: Buyer has risk of loss.

Question 18

If it’s FOB - Buyer’s Location, what type of contract is it?

Answer 18

Destination contract

EXPLANATION: Seller has risk of loss.

Question 19

What is a tort?

Answer 19

Wrongful act

Question 20

If you want to sue someone for ordinary negligence, what must you prove?

Answer 20

Defendant failed to use reasonable care

Question 21

Those injured by goods can sue in tort for what?

Answer 21

Strict products liability

Question 22

What is the focus on in strict products liability?

Answer 22

Focus on the product and not on the seller’s conduct

Question 23

What are the key elements of strict products liability?

Answer 23

• Defective product
• Caused injury
• Unreasonably dangerous
• Seller in the business of selling these goods
• No substantial changes

Question 24

Is privity required with strict products liability?

Answer 24

NO

EXPLANATION: Plaintiff need not have bought and seller need not have sold to the injured party.

Question 25

What is defined as the right to recover goods wrongfully in the hands of the seller?

Answer 25

Replevin

Question 26

How long are copyrights good for under federal law?

Answer 26

Author’s life + 70 years

Question 27

How long are patents good for under federal law?

Answer 27

GR: 20 years

Question 28

On September 27, Summers sent Fox a letter offering to sell Fox a vacation home for $150,000. On October 2, Fox replied by mail agreeing to buy the home for $145,000. Summer did not reply to Fox. Do Fox and Summers have a binding contract?

Answer 28

No, b/c Fox’s letter was a counteroffer

EXPLANATION: In a common law contract situation, a communication will be effective as an acceptance only if it assents to each and every term of the offer (the mirror image rule).