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Test 4 Flashcards

(80 cards)

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1
Q

lex mercatoria

A

law merchant, a new law focusing on agreements & contracts for goods

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2
Q

Purpose of UCC

A

to form contracts quicker & easier than common law

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3
Q

UCC vs Common Law - O&A

A

UCC - intention to bargain
no mirror image
letter of intent might form contract
not worried abt definite & certain
doesn’t need all the terms
gap fillers

Common Law:
mirror image rule
definite & certain terms
added terms is a counteroffer
modifications need to be agreed upon
Parol Evidence rule
letter of intent does not equal contract

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4
Q

UCC vs Common Law - Consideration

A

UCC:
modifications allowed even with no consideration

Common Law:
consideration needed

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5
Q

UCC & Common Law - Similarities

A

Quantity is needed
needs to be a legal sale of goods
need capacity & consent
If sale of over $500, still needs to be in writing

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6
Q

Merchant Exception

A

2 merchants make oral contract, one sends sufficiently definite confirming memo & both are immediately bound unless rejected within 10 days

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7
Q

Merchant standards

A

~ held to higher standards
~ good faith - how do they conduct themselves during performance of contract
~ unconscionability - what is within the contract itself & is it unevenly construed?
~ honesty in fact (no lying or misleading)
~ must exercise reasonable standards of fair dealing
~ additional terms are binding (between two merchants

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8
Q

Mixed Contracts

A

a contract dealing with both a good & service, UCC applies if predominant purpose is sale of goods

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9
Q

Good faith

A

how does one conduct themselves during performance of their obligation?

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10
Q

Unconscionability

A

what is within the contract & is it reasonable or is it unfairly construed?

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11
Q

Additional terms

A

terms that introduce issues not covered in original offer

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12
Q

Different terms

A

terms that contradict terms in the original offer

how court handles diff terms:
~ was there a clear oral agreement or an intent to bargain?
~ different terms cancel each other out, knock-out rule
~ UCC gap fillers

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13
Q

Knock-Out rule

A

if the different terms contradict each other, the court can “knock out” both terms & replace with gap fillers

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14
Q

Modification

A

no consideration requirement so long as both parties agree

  • if one party is a non-merchant, they must agree in writing to any modifications
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15
Q

Exceptions to SOF

A

Specialty Goods: seller made the goods specially for the buyer. verbal agreement is enforceable
Judicial Admission: anything admitted in court

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16
Q

Open Terms

A

terms may be left open EXCEPT quantity

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17
Q

Open Prices

A

~ price not required at formation
~ if no price in offer = reasonable price @ time of delivery
~ parties can agree to have third party set price, agree to market standard, agree for one party to set the price with good faith

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18
Q

Output Contract

A

seller must sell all to buyer

*this one doesn’t need quantity
modifications allowed if both agree

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19
Q

Requirements Contract

A

buyer must buy all from seller

modifications allowed if both agree

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20
Q

UCC SOF

A

~ requires writing for sale of goods over $500
~ not all details needed, but there needs to be some writing that indicates parties formed a contract

Defendant must have signed the contract to be binding

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21
Q

What is a warranty?

A

contractual assurance that goods will meet certain standards

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22
Q

Express warranty

A

warranty is clearly expressed by:
1. affirmation of fact or promise
2. description of goods
3. a sample or model

*plaintiff must prove that the warranty was part of the bargain

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23
Q

Implied warranties

A

doesn’t need to be in writing

2 kinds: of merchantability & of fitness for a particular purpose

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24
Q

Implied warranty of merchantability

A

merchantable: goods fit for ordinary purpose they are sold for, the goods sold will work for their intended purposes

if the merchant wants to exclude/modify, they must use the word “merchantable”

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25
Examples of express warranties
~ statement specific, can be proven, tested, & verifies ~ in writing, such as a brochure ~ seller has great expertise & recommends it ~ description of goods
26
Implied warranty of fitness for particular purpose
seller knows buyer is relying on their skill & judgement, implied warranty that those goods will be fit for that particular purpose Keys: 1. seller knows particular purpose AT TIME OF CONTRACTING 2. seller has skill 3. there is no specific exclusion or modification in the contract
27
Warranty of Title
seller of goods warrants that the title is valid & goods are free of any security interest that buyer knows nothing about, unless clearly excluded or modified the warranty
28
Disclaimers
a statement that a particular warranty does not apply (express or implied)
29
Privity
plaintiff can only sue those involved in the contract
30
Seller's obligations - Tendering
"tender the goods" 1. make conforming goods available 2. keep goods available for reasonable period 3. deliver to buyer any documents needed to take possession
31
Perfect Tender Rule
buyer may reject all good if they fail to conform to contract - good faith still applies
32
Perfect Tender Rule Exceptions
~ usage of trade ~ course of dealings: based on previous transactions between the two (based on multiple contracts) ~ course of performance: similar to above but deals when there is only one contract covering multiple deliveries
33
Cure
seller's right to remedy if buyer rejects by delivering conforming goods before contract deadline
34
Substantial Impairment
A Perfect Tender exception situations where buyer is rejecting goods bc of a defect, the buyer must show how the defect substantially impacts the goods' value. otherwise, they cannot reject
35
Destruction of Goods
if identified goods are totally destroyed before risk passes to buyer, contract is void if goods are partially destroyed, buyer can choose to accept partial or void the contract seller is not responsible if the destruction is not their fault
36
Commercial Impracticability
An unpredictable event excuses performance of a contract if the event was not within the parties' contemplation when they made the agreement
37
Repudiation
done by buyer, indicates they will not perform can be done expressly, by conduct, or by refusing to answer a written demand
38
Stop Deliver
Seller's remedy seller's right to refuse to deliver if buyer breaches before delivery
39
Resale
mitigation of damages, seller can resell goods if buyer refuses to accept to recover any losses, resale must be commercially reasonable Damages = contract price +incidental damages - resale price - expenses saved If no resale: Damages = contract price - market value of goods @ time of delivery
40
Action for the Price
seller may recover contract price if: 1. buyer has accepted goods or 2. seller's goods are conforming & the seller is unable to resell after reasonable effort Damages = contract price + incidental damages - savings
41
Buyer's Remedies
cover non-delivery acceptance of nonconforming goods specific performance
41
Cover
reasonable obtaining similar or substitute goods
42
Non-Delivery
if the buyer doesn't choose to cover (or reasonably cover), they can choose to claim damages for non-delivery Damages = market value - contract price - expenses saved + incidental & consequential damages
43
Acceptance of Nonconforming Goods
buyer accepts goods but notifies seller that the goods are nonconforming damages = value of goods as promised + incidental & consequential damages
44
Specific Performance
same as with common law buyer can require seller to give them the conforming good they agreed on if it is a unique, one of a kind item
45
Fixtures
goods attached to real estate
46
Security Interest
interest in a personal property that ensures performance of some obligation
47
Security agreement
contract where debtor gives security interest to secured party
48
Perfection
Secured party letting the rest of the world know it has a security interest
49
Financing Statement
the document used to perfect
50
Consumer Goods
goods used for personal, family, or household purposes
51
Attachment
indicates the moment the security interest becomes enforceable against the debtor 3 step process 1. security agreement exists 2. secured party has given value 3. debtor has rights to the collateral
52
Perfection methods
1. by filing (financing statement) - gives names, described collateral, outlines security interest, most common 2. by possession (a pledge) - secured transaction where debtor gives collateral to secured party 3. by control - deposit accounts, letter-of-credit rights may be perfected ONLY by control 4. of consumer goods - Purchase Money Security Interest (PMSI), interest taken by the person who sells the good or advances money so the debtor can buy it, perfects automatically
53
Difference between Possession & Control
Possession: tangibly giving the item to the secured Control: giving the secured control over an asset you don't physically own/have (deposit accounts, chattel paper, letter-of-credit), can be oral
54
After-Acquired Property Clause
property acquired after taking on the debt, which then becomes additional collateral
55
Buyers in Ordinary Course (BIOC)
commercial buyers 1. someone who buys in good faith 2. seller routinely deals in such goods BIOC takes goods free from security interest even if perfected
56
Buyers of Consumer Goods
buyers of consumer goods specifically buyer takes free of security interest if they're not aware of the security interest, they pay value, buying for own use, and secured party has not filed a financing statement
57
Priority (secured interests)
The secured party who has perfected wins if neither perfect, the first to attach wins if both are perfected, the one who did it first wins control & possession always win
58
Default
debtor defaults when fail to make payments or enters bankruptcy 2 options: 1. take possessions of collateral (repossession) 2. sue for money owed on the debt *cannot seek partial satisfaction on consumer goods
59
Disposal of Collateral
sell, lease, or otherwise dispose of collateral in commercially reasonable manner
60
Deficiency & Surplus
insufficient or excess funds after disposal of collateral secured can go after amount left over if deficiency secured must pay back any surplus
61
Right of Redemption
debtor's right to pay full value of debt to get the collateral back until secured disposes of it
62
Termination
debtor fulfills obligation
63
Retention (Acceptance) of collateral
secured party can keep/retain the collateral as full or partial satisfaction of debt if seeking partial, they must notify debtor, who can then object & secured must sell the item
64
Chapter 7 - who, what, how, difference
who - individuals or organization what - liquidation, "fresh start" how - voluntary or involuntary difference: focuses on liquidation, releases debtor from debt (as long as in good faith) if 11 & 13 fail, debtor's case will likely be converted to Chapter 7
65
Chapter 11 - who, what, how, difference
who - individual or organization, but more typically organization what - reorganization, no trustee, come up with plan to reorganize & pay off debts how - voluntary or involuntary difference: typically reorganization for organizations, whereas chapter 13 is for individuals
66
Chapter 13 - who, what, how, difference
who - consumer individuals what - reorganization, trustee appointed to bankruptcy estate, only debtor can create the plan how - only voluntary repay portion of debt with future earnings, must have a job (regular source of income) difference: for consumer individuals
67
Trustee
oversees administration of bankruptcy estate
68
Bankruptcy Estate
new legal entity, collection of all debtor's property, minus exempt, passed into estate & overseen by trustee *individuals may keep some property to survive on
69
Creditor's Committee
made up of largest unsecured creditors
70
Plan of Reorganization
Chapter 11 - first 120 days, can last up to 18 months, debtor has opportunity to develop plan
71
Cram Down
if only one class of creditors vote in favor, even though everyone else disagrees, the court can impose the plan anyway if the court rejects the plan, the creditors get a chance at making their own
72
Automatic Stay
Upon petition filed, any attempt to collect on debt incurred before the petition must stop
73
Order for Relief
the start of the whole process, aka official acknowledgement that debtor is under jurisdiction of the bankruptcy court
74
Priorities (bankruptcy)
1. Perfected (secured) claims - if collateral is not enough to fulfill debt, secured moves to tier 3 where they will hope there is enough left over to pay the rest off 2. Priority (alimony, child support, admin exp, intoxication injuries, etc) 3. Unsecured
75
Voidable Preference/Transactions
trustee can void payments or liens made by a debtor to a creditor just before bankruptcy filing
76
Reaffirmation
debtor can reaffirm debts that they promise to pay afterward can only do this if the debt payment will not make their expenses higher than income after proceedings
77
Discharge
Part of Chpt 7 after termination of bankruptcy case, creditors cannot make a claim against debtor for any money owed prior to petition filed, debtor is no longer liable for any of the debt owed
78
Circumstances that Prevent Discharge
~ under chpt 7, only indv debts can be discharged, not organizations ~ revocation: if court discovers debtor fraud, court can revoke discharge w/i one year ~ Dishonesty/Bad Faith: court can deny all discharged if it finds evidence of hidden assets, fraudulent transfers, falsified records, etc ~ Repeated filings: under chpt 7 & 11, cannot receive discharge for 8 years under chpt 13, cannot receive chpt 7 discharge for 6 years
79
Primary purposes of bankruptcy UCC
1. retain as many of debtor's assets as possible 2. divide assets fairly between dr & cr 3. divide assets fairly between the crs

Business Law (3 decks)

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