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Sales Flashcards

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1
Q

Policy goals for Contracts and the law of Sales (UCC)

A

-The sanctity of contracts
-Freedom to contract
-Certainty/predictability
-Uniformity
-Modernize
-Greater efficiency

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2
Q

What are the policy goals for contracts and the law of sales trying to do?

A

create jobs, and generate economic growth, and development.

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3
Q

Should the UCC should be strictly construed (or applied) so as to change the common law results as minimally as possible?

A

No

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4
Q

T/F The UCC Should be literally construed

A

True

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5
Q

(Y/N) If a court in State X is dealing with a UCC issue, is it more appropriate than usual for the court to follow a judicial decision in a different jurisdiction (such as State Y) that has already applied the same UCC provision to a similar issue?

A

Yes (policy goal of uniformity)

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6
Q

If the UCC speaks to the issue, then the [choose one: UCC/common law] rules apply. If the UCC does not speak to the issue, then the [choose one: UCC/common law] rules apply.

A

UCC, then Common Law

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7
Q

In drafting a contract governed by the UCC, can the parties choose to apply the law of any state they want (for example, if the parties are both in Illinois and all the activity will be in Illinois, will it be enforceable if they state that Hawaii law shall apply to the contract)?

A

No…The choice of law clause must have a reasonable relationship to the transaction.

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8
Q

Unless the parties agree otherwise, when interpreting a contract, what most important in determining the intent of the parties?

A

express terms of the contract

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9
Q

When may express terms of the contract be waived?

A

by the parties’ course of performance.

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10
Q

Does “failure to act in good faith, by itself . . . support an independent cause of action”?

A

NO

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11
Q

Are courts bound by the language in the Official Comments to the UCC provisions

A

No

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12
Q

Two areas in particular that the UCC does not address are

A

(i) whether the communication is an offer
(ii) whether there is sufficient consideration to form a contract

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13
Q

The law of sales is generally state or federal law?

A

state

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14
Q

What does UCC article 2 generally apply to?

A

the sale of goods

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15
Q

Goods?

A

All things that are moveable at the time of identification to the contract (UCC 2-105)

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16
Q

Divided transactions–when the contract divides payments between the goods and the services, this can apply to a situation where a party has tried to artificially turn two contracts into one…

A

The Predominant Purpose test

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17
Q

What is the predominant purpose test (dominant thrust)

A

Factor test
#1 the language of the contract
#2 the nature of the business of the supplier
#3 The reason the parties entered into the contract (parties intent)
#4 Amount paid for (i) the goods on one hard; and (ii) services on the other nd-

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18
Q

Generally, would the following transactions be subject to UCC Article 2? [In each situation, presume the invoice states a lump sum price; as a result, there is not a separate price stated for the goods or parts, and a separate price for the services)?

The purchase of a carpet?

A

Yes

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19
Q

Generally, would the following transactions be subject to UCC Article 2? [In each situation, presume the invoice states a lump sum price; as a result, there is not a separate price stated for the goods or parts, and a separate price for the services)?

The replacement of the brakes and brake lining in your car?

A

No

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20
Q

Generally, would the following transactions be subject to UCC Article 2? [In each situation, presume the invoice states a lump sum price; as a result, there is not a separate price stated for the goods or parts, and a separate price for the services)?

The purchase and installation of aluminum siding for your home?

A

Courts are split…

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21
Q

Helvey v. Wabash County REMC

A

It is necessary for goods to be (1) a thing; (2) existing; and (3) movable, with (2) and (3) existing simultaneously; electricity qualifies in each respect.

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22
Q

The Amazing Spider Man

A
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23
Q

Under the UCC, is there an obligation to act in good faith during contract negotiation or formation? (Article 1)

A

NO.

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24
Q

When does UCC impose an obligation to act in good faith? (Article 1)

A

in contract performance and enforcement, and even then the failure to act in good faith buy itself does not support an independent cause of action.

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25
The obligation of good faith frequently arises when?
when a party has discretion under a contract, such as (i) if the party is given the authority to set the price; or (ii) if the party only has to purchase (or otherwise perform) if the goods (or other return performance) is satisfactory to the buyer.
26
most substantive UCC Article 2 provisions refer to
the sale of goods
27
In Helvery v. Wabash County, the parties are arguing about whether UCC Article 2 applies because
the difference in the Statute of limitations
28
Under the UCC, the statue of limitations is
4 years from the date the cause of action accrues, regardless of the date of discovery. 2-725
29
By agreement in the contract, can the parties extend the UCC Article 2 statute of limitations?
No 2-725
30
By agreement in the original contract, can the parties reduce the statute of limitations? (Yes/No) If yes, how short can it be?
Yes, 1 year.
31
In general, under UCC Article 2, the cause of action accrues when the
the other party breaches, regardless of when the aggrieved party discovers the breach.
32
Generally, a breach of warranty occurs when the goods are
tendered or delivered, unless the warranty expressly extends to future performance. In that case, the statute of limitations begins to run on the date of discovery within the warranty period.
33
According to the authors, a party may choose
the cause of action for the case based on (i) when the case is filed, and (ii) the available statute of limitations.
34
Epstein v. Giannattasio
When service is the predominant, and transfer of title to personal property the incidental, feature of a transaction, the transaction is not a sale of goods within the application of statutes relating to sales. Beauty parlor case = services...even tho product was used.
35
Connie Beale, Inc. v. Kathleen Plimpton
interior decorating = services
36
Bonebrake v. Cox, d/b/a Tamarack Bowl
The test for inclusion or exclusion of contracts involving mixed goods and services is not whether they are mixed, but, granting that they are mixed, whether their predominant factor, their thrust, their purpose, reasonably stated, is the rendition of service with goods incidentally involved, such as a contract with an artist for a painting, or is a transaction of sale with labor incidentally involved, such as the installation of a water heater in a bathroom.
37
Simulados Software Ltd. v. Photon Infotech Private, Ltd.)
Article 2 does not apply here...Photon agreed to perform a range of tasks, including writing code, reviewing code, and providing technical support. The contract also required Photon to create a web application and a website-authentication certification for downloads.
38
When is the UCC more likely to apply to computer software?
* When it is mass-produced; * Standardized, and * Generally available.
39
In the case of software meeting the description above, does it matter if the seller also provides ancillary services, such as: (i) training; (ii) repairs; (iii) system upgrades; (iv) installments; (v) tech support; (vi) modifications; (vii) corrected; and (viii) maintanance?
No.
40
What is the policy for wanting to apply the UCC to some types of software?
* Software is important to the commercial world. * Helps bring uniformity on a range of questions.
41
when is it more likely that a software sale will be outside the UCC?
* When it truly represents services; * When it is designed from scratch; * When the contract is mainly for one party’s knowledge and skill in creating software; * When the seller is developing a tailored, highly complicated automated software system; and * Most of the price paid if for knowledge, skill and ability rather than standardized software
42
Can the UCC apply to a sale between non-merchants (for example, at a garage sale)?
Yes
43
Can Article 2 of the UCC apply to a sale between non-merchants if the price is less than $500?
Yes
44
provisions of UCC Article 2 that only apply to merchants,
(i) the implied warranty of merchantability; (ii) the merchant’s firm offer rule; and (iii) some battle of the forms rules.
45
Flexible Definition of a “Merchant”
UCC 2-104(1): “Merchant” means a person who * Deals in the goods of the kind, or * By his or her occupation holds himself or herself out as having knowledge or skill peculiar to the practice or goods involved . . . .
46
will the person be treated as a “merchant” if the person has been involved in a “handful” of transactions or if the sales or only incidental?
No
47
Would a sporting goods store selling left-over paint from a remodeling project likes make the implied warranty of merchantability when selling the paint?
No, isolated sale.
48
Under the “occupation” test, your occupation generally is
how you make a living.
49
When is the practices test relevant?
UCC provisions that focus on whether a party is a merchant (such as the “merchant’s firm offer,” and the battle of the forms)
50
Practices test
”, “almost every person in business is a merchant.” UCC 2-104, Official Comment #2 (Bonus Material p.34) Just engaging in non-specialized business practices such as “answering the mail” would be sufficient.
51
Could a bank or a university be a “merchant” under the practices definition? (Yes/No)
Yes
52
Would an attorney who is a busy, solo-practitioner be considered a “merchant” when they purchase exercise equipment for their personal use at their home?
NO
53
Harry’s Eyeglasses Inc. (Harry’s) manufactures and sells eyeglasses. Harry’s purchased a frame-making press machine from Diagon Alley Optics Inc. (Diagon Alley). Harry’s sent a purchase order with terms and conditions favorable to them, and Diagon Alley responded with an order acknowledgment with terms and conditions favorable to Diagon Alley. This might be descried as a __________________. In this situation, would both parties be treated as “merchants” when applying UCC 2-207? (Yes/No) Why? Is Harry’s regularly engaged in the sale of these machines? (Yes/No) Is Harry’s a dealer with respect to these machines? (Yes/No)
battle-of-the-form situation, Yes, Diagon is a dealer; Harry’s likely engages in business practices such as answering the mail. No, No
54
After 10 years, the frame-making press machine is not as reliable as it once was, and a new machine would be more productive and efficient. Harry’s sells the machine to another company which believes the machine will be adequate for their purposes. In making this sale of the machine, is Harry’s likely to be treated as a “merchant” for purposes of making the implied warranty of merchantability inder UCC 2-314 with respect to this sale? Why?
No, Harry’s is not a dealer and perhaps has no special skills or knowledge (although depending on Harry’s history with these machines, MBTA v. Ferigamo might support the opposite conclusion).
55
Common law mirror image rule
if you receive an offer, in order for your response to create a contract, your response must match (in other words “mirror”) the terms of the offer.
56
: Under the common-law mirror-image rule, presume that in response to an offer, you say something like, “Yes, I agree to your terms, except that all disputes have to go to arbitration.” Would your response be an acceptance? (Yes/No) How would you legally characterize your response?
No, As a counter-offer, which is both a rejection and a new offer.
57
Under the common law, presume that the other side never says “Yes” or “No” regarding your proposal of an arbitration clause; however, you and the other side proceed with the transaction (you buy the real estate, or you begin working as an employee for the other side, etc.). In that situation, a contract has been formed by conduct, and the arbitration clause [choose one: is/is not] part of the contract;
is. This would be an application of the last-shot
58
Does Article 2 of the UCC follow the mirror image rule?
no
59
In general, under Article 2 of the UCC, presume that A and B are merchants, and A makes an offer to sell goods to B, and B responds, “I assent to your terms, provided that, if you do not object within 10 days, all disputes must go to arbitration.” Could that be an acceptance? (Yes/No)
yes.
60
are construction and building contracts (that incorporate materials into the structure) subject to UCC Article 2
no
61
Customer receives a treatment at a beauty salon (e.g. permanent wave, hair coloring, etc.), products are used, and the customer is injured. Does Article 2 of the UCC likely apply to the transaction? (Yes/No) Can the customer likely recover on a UCC breach of warranty claim? (Yes/No)
no, no
62
Under the predominant purpose test, will UCC Article 2 always apply to an interior design contract if the price of the goods exceeds the price of the services?
no...not predominant price test
63
are trademarks and tradenames goods under UCC Article 2?
no
64
Dorton v. Collins & Aikman plus Northrop Corp. v. Litronic Indus.
Under U.C.C. § 2-207, an acceptance containing different or additional terms is effective, and when between merchants, the additional terms are deemed accepted.
65
the law’s willingness to enforce a meaning which both parties actually intended, even where this diverges from the ‘plain’ or ‘reasonable’ meaning of the words, represents not a true ‘objective’ standard, but one based on
mutual assent.”
66
Bazak Case: (Casebook p. 82-83) General policy reasons for special UCC rules that apply only to merchants: The drafters of the UCC wanted to:
Policy #1: provide sensible rules better adjusted to the realities of commercial transactions. Policy #2: promote predictable, dependable and decent business practices; and Policy 3d: avoid unfairness.
67
Under UCC Article 2, is it essential that a court be able to determine the precise time of contract creation?
No
68
What is the only essential term for a contract governed by UCC Article 2?
The quantity. If the parties intended to be bound, all the other terms can be filled-in (with so-called “gap-fillers” provided by UCC Article 2).
69
Generally, under the UCC, can a contract modification be enforced without consideration? (Yes/No)
Yes, [Thus, UCC Article 2 rejects the “prior duty rule.”]
70
Merchant's Firm Offer
If a merchant makes an offer, in writing, stating that the offer will be held open for a certain period of time (e.g., the offer is “firm until Friday”), and the merchant signed, initialed, or put that promise on a piece of paper with the merchant’s logo. (cannot be revoked before the specified future time).
71
If the “merchant’s firm offer” fails to state the time period,
it will be for a reasonable time, but not to exceed 30 days. UCC 2-205
72
Will a rain check qualify as a merchant's firm offer?
Yes
73
Under UCC 2-207, could a response to an offer which includes additional or different terms could be an acceptance between merchants [unless that response expressly limits the deal to include the additional or different terms.]
Yes
74
Dorton v. Collins & Aikman:
* Buyer made an offer (over the phone). * Seller responded with a signed order acknowledgment adding a clause requiring arbitration of all disputes.
75
Columbia Nitrogen Corp. v. Royster Co
Evidence of course of dealing and trade usage is admissible to supplement and explain a contract as long as the proffered evidence can be reasonably construed as consistent with the terms of the written agreement.
76
St. Ansgar Mills Inc. v. Duane Streit
Written confirmation of an oral agreement, when received within a reasonable time, will bring an agreement within the Uniform Commercial Code’s exception to the Statute of Frauds, if the agreement is between merchants.
77
Bazak Int’l. Corp. Mast Indus. Inc
The merchant’s exception to § 2-201 of the Uniform Commercial Code does not require writings to contain express confirmatory language so long as they are sufficient to indicate that a contract has been entered into between the parties.
78
Is an expression of assent is an acceptance?
Yes, unless the assent/response basically says “acceptance is conditional on your assent to my additional or different terms.” [UCC 2-207(1)]
79
Does the warranty of title automatically arise by operation of law on a sale, even if the seller does not expressly state, orally or in writing, that they have title to goods?
yes
80
few types of transactions in which the warranty of title likely would not automatically be made:
* A sheriff’s sale; * An executor’s or estate’s sale; * A foreclosure sale --
81
is the warranty of title an “implied warranty” under the UCC?
Technically No, because generally under UCC 2-316(3), implied warranties can be disclaimed (or nullified) by (conspicuously) stating that the sale is “as is” or with all faults,” or that the sale is made “without warranties, express or implied.”
82
Would any of those phrases, such as “as is,” be sufficient to disclaim the warranty of title? (Yes/No)
No
83
Is the warranty of title only made by a merchant seller?
No
84
if a seller is going to successfully disclaim implied warranties
the disclaimer should prevent the customer from having those expectations.
85
statute that requires disclaimer to be conspicuous for implied warranties
UCC 2-316(2)
86
Can a non-conspicuous disclaimer be effective if the customer has actual knowledge?
Courts are split
87
The specific statutory provision on “as-is” disclaimers [choose one: does/does not] mention that the “as is” language must be conspicuous to be effective
does not (many courts require it to be conspicuous)
88
Policy reasons for conspicuousness
(i) the law should not encourage the use of fine print; (ii) disclaimers are generally disfavored; and (iii) consumers should not be surprised.
89
When the buyer examined as fully as it desired (or it refused to examine; despite the seller’s demand that it examine Is there an implied warranty?
there is no implied warranties for defects that a it reasonable examination would have revealed
90
Would the fact that a buyer examined the goods nullify any express warranties?
NO
91
Implied warranties may also be eliminated by
evidence of usage of tr trade, course of dealings, or course of performance.
92
To eliminate implied warranties
the usage of trade must be used so regularly that it should be expected to be used in the transaction; that one or both parties is unaware of the usage of trade is not determinative.
93
Is expert testimony of usage of trade generally expected?
Yes
94
Can usage of trade add terms to a contract that neither party were aware of?
Yes, 1-303(4)
95
In order to be a usage of trade
it must be used so regularly as to justify an expectation that it would be used in the transaction
96
Whether the practice or method is observed regularly enough to qualify as a usage of trade is a question of [choose one: law/fact]
fact, but in order to submit the issue to the jury, there must be substantial evidence of the usage of trade.
97
The interpretation of a usage of trade in a case is a question of [choose one: law/fact] for the court.
law
98
3 significant differences between suing in strict tort liability and suing on a warranty
(i) privity; (ii) notice; and (iii) the statute of limitations

Commercial Law (19 decks)

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