Flashcards in Sales Deck (57):
Does an implied warranty of merchantability apply to goods that are borrowed?
No. Must be purchased.
How can an implied warranty of merchantability be disclaimed?
Generally with conspicuous language that mentions merchantability
Depending on circumstances statements that goods are sold "as is", "without faults", "no warranty"
When goods are sold by a merchant, what implied warranty arises?
implied warranty of merchantability.
What are the elements of an implied warrant of fitness for a particular purpose?
Warranty will be implied in sale of good when:
1) any seller has reason to know of particular purpose for which goods are used
2) seller knows that buyer is relying on seller's knowledge
3) buyer actually relies
Is an implied warranty of particular purpose limited to merchants?
No applies to all sellers.
Would statement such as "This product is the best" create a warranty?
No. Statement of opinion is not a warranty.
Is serving of food or drink for consumption on premises a sale of good subject to the warranty of merchantability?
Is the seller's knowledge of a defect in an implied warranty cause of action relevant?
No. Breach of implied warranty of merchantability based on absolute liability that is imposed on certain sellers.
Do the implied warranties extend to third parties?
Yes, if it is a natural person who is a family member or guest who would reasonable use the product.
In VA, an individual entrusting possession of goods to a merchant who deals in good of that kind gives the merchant what?
power to transfer all rights of the entruster to a buyer in the ordinary course of business.
When must revocation of goods occur?
within reasonable time and condition of the goods must not substantially change
Can a buyer reject a good when the buyer accepted it and someone else used it?
No rejection if accepted and used for a period of time.
Statute of Frauds for Contracts involving goods in VA
sale of goods of $500 or more must have writing to indicate a contract that has been made by parties and signed by party against whom enforcement is made.
Exceptions to statute of frauds for specially manufactured goods in VA
1) goods are specially manufacturer for buyer
2) goods are not suitable for sale to others in ordinary course of business
3) seller has made a substantial beginning of manufacturer or commitments for procurements.
Confirmatory Memo Rule for sales of goods
exception to statute of frauds - involving merchants
when one merchant sends a written confirmation to the other merchant with understanding that writing is sufficient and other merchant does not object
K and L orally agree that L will purchase 150 widgets from K at a price of $10. L gives K check for $70. Is there is an enforceable agreement?
Yes, but only to 7 widgets.
Is a writing required to satisfy the statute of frauds when one party accepts the goods and pays for the goods?
No - exception to statute of frauds.
J orally contracts to buy a car from S for $15,000. J gives S a down payment of $1,000. Is the contract enforceable?
Yes, generally enforceable because partial payment of goods and accepted
When a party make a demand for reasonable assurance and the other party does not provide satisfactory assurance within ___, the other party will have repudiated the contract.
What may a party who has reasonable doubts regarding the performance of the other party, what may they do?
May demand in writing adequate assurance of performance.
When buyer breaches by wrongfully rejecting, revoking acceptance of goods, or failing to make a payment, what can the seller do?
1) if in transit - stop shipment
2) sue for the contract price (if unable to sell goods)
3) sell goods and recover damages for difference between the contract price and resale price (plus incidental damages) or
4) sell unfinished product or stop manufacture
If a seller decides to resale the goods when a buyer wrongfully breaches a good, what must the seller do?
Give notice to the buyer of the manner of sale.
Sale must be commercially reasonable.
When is revocation effective?
When an offer does not specify how acceptance may be done, how can acceptance be accomplished?
acceptance by any reasonable means
Can a thief pass good title?
When offeror can reasonably expect that offeree will reply to his detriment on an offer, then offer is irrevocable for a reasonably period of time
- damages measured by extend of any detrimental reliance
What is the measure of damages when buyer breaches on a contract for the sale of specially manufactured goods?
Contract price, if unable to resale goods.
- foreseeable consequential damages are also recoverable
On an unilateral contract, when it is irrevocable?
Once performance has begun.
When are reliance damages available?
when expectation damages are too speculative (unique goods)
- designed to put plaintiff in position had contract never been formed
When is a buyer's right to reject good cut off?
Acceptance of goods, unless defect is difficult to discover
If a contract is made because of fraudulent misrepresentation and inducement, what can the non-fraudulent party do?
Seek rescission of a voidable contract.
If the buyer is unable to find cover goods, does the UCC allow for specific performance?
Yes, only when goods are unique and cannot be replaced easily
- also there may be action in detinue since goods are identified in contract and not delivered.
What is the duty of a buyer who rejects goods but keeps them until seller can pick up the goods?
Buyer must act with reasonable care and obey any reasonable instructions as to the rejected goods.
What can a buyer do with goods that are rejected but who receives no instructions from the seller?
1) Reship goods to seller;
2) store goods for seller's account; or
3) resale goods - entitled to recover expenses and reasonable commission (10%)
A buyer rejects goods and holds them for the seller to pick up. Before the seller picks up the goods, the buyer uses a portion of the goods. What is the buyer liable for?
Conversion - value of goods (not the contract price)
Subsequent exercise of ownership is wrongful.
After rejection any exercise of ownership by the buyer with respect to any commercial unit is ____.
Wrongful as against the seller.
Liable for conversion (value of the goods)
A seller must be given the opportunity to ____ before the buyer seeks to cover.
Cure is available if it is before the contract delivery date.
Oral modifications to contracts of good require what?
Consideration is not required
Is good faith or consideration need to make an oral modification to a contract of goods in VA?
"observation of reasonable commercial standards of fair dealing in the trade"
Can a seller reclaim goods in a buyer's possession when the buyer is insolvent and there is a perfected attached creditor with an after acquired clause interest in the goods?
Yes, if seller discovers that a buyer is insolvent and has received the goods on seller's credit, then seller may reclaim the goods upon demand made within 10 days after receipt.
As between merchants, if a seller sends purchaser order confirmation that contains nonmaterial terms, are those terms included?
Yes, if not objected to in a reasonable time period.
As between merchants, if a seller sends purchaser order confirmation that contains a clause providing for interest on overdue notices, is that term a material or nonmaterial variation?
As between merchants, if a seller sends purchaser order confirmation that contains a clause disclaiming express and implied warranties, is that term a material or nonmaterial variation?
material - does not become part of the contract unless separately acceptance by buyer.
If a contract provides an assortment of goods to be delivered and does not specify who will choose, what is the default UCC rule?
assortment is at the buyer's option.
What are terms that the UCC will supply if not provided in the contract?
2) place of delivery - default is seller's place of business
3) time for shipment
4) time for payment
What damages is a non-breaching entitled to regarding of the breach for a sale of goods?
incidental damages - expenses related to breach
Is a buyer obligated to pay for nonconforming goods?
Yes, if goods are properly tendered.
When buyer refuses to accept goods, and the breach is wrongful, what can the seller recover?
Difference between contract price and market price at time of delivery, plus incidental damages.
When buyer refuses to accept goods, and the breach is wrongful, what can the seller recover if unable to resell goods?
Full contract price.
Watch for goods that can spoil (food).
What is a loss volume seller entitled to recover?
profits, because they would have been able to make two sales instead of one.
What a party indicates that they will not perform through words, actions, or circumstances, what can the other party do?
This is anticipatory breach.
1) await performance by the other party for a commercially reasonable time
2) resort to any remedy for breach
3) suspend own performance
What is the measure of damages when selling party refuses to deliver contracted for goods?
difference between contract price and i) the market price (benefit of bargain) or ii) the cost of buying replacement goods (cover)
- market price determined at time of learning of breach
Consequential damages may be available when?
buyer has requirements that sells had reason to know of at item of the contracting and cannot be prevented by buying substitute goods
When a party relied on fraudulent misrepresentations the contract is ___.
Is consideration needed for valid waiver of a term in a contract?
No. waiver may be done by express or implied contract.
In an installment contract, if the waiver is not supported by consideration and there is no detrimental reliance, the beneficiary of waiver can insist on ___.
strict compliance with the terms of the contract for future installments by giving notice that he is revoking the waiver.