1
Q
What happens to additional terms in acceptance-merchants?
A
Additional terms become part of the contract unless they are material, the offer is limited, or the party objects.
2
Q
What is the result of a shipment of a nonconforming goods delivery?
A
Acceptance and automatic breach;
Not an acceptance if shipper notifies that shipment is only an accommodation
3
Q
Describe the concept of a merchant’s battle of the forms.
A
Formation situation in which boiler plate language in merchant’s individual forms adds terms to the original offer
4
Q
Define “merchant.”
A
A person who deals in goods of the kind being sold, or a person who by occupation holds himself or herself out as having knowledge or skill.
5
Q
List the requirements for a sale of goods contract.
A
Intent;
Object;
Quantity.
6
Q
Is consideration required for the modification of a contract?
A
No consideration required; good faith is required
7
Q
What is the Uniform Commercial Code (UCC) supplied term (i.e., assumed term) if a contract term has an open payment term?
A
Payment is due at time and place buyer is to receive the goods.
8
Q
What is the Uniform Commercial Code (UCC) supplied term (i.e., assumed term) if a contract term has an open time for contracted performance?
A
In absence of agreement, it is a reasonable time.
9
Q
What law governs the sale of goods?
A
Uniform Commercial Code - Article 2.
10
Q
What is the Uniform Commercial Code (UCC) supplied term (i.e., assumed term) if a contract term has an open place of payment term?
A
Seller’s place of business or if none residence.
11
Q
List the three methods by which a seller can accept a buyer’s shipment order.
A
Delivery of conforming goods to carrier;
A prompt promise to ship; or
Shipment of nonconforming goods delivery without notice of accommodation
12
Q
What happens to additional terms in acceptance-non-merchants?
A
Additional terms do not become part of the contract - original offer terms control.
13
Q
Describe the elements of a merchant’s firm offer
A
Offer by a merchant;
States that it will be kept open (max of 3 months);
Signed or authenticated by merchant. Irrevocable for time stated or max of 3 months.
14
Q
What is the Uniform Commercial Code (UCC) supplied term (i.e., assumed term) if a contract term has an open price term?
A
A reasonable or market price at the time of delivery will apply or if price is to be fixed by either party good faith is required in doing so.
15
Q
Define “goods.”
A
All movable and tangible personal property other than money, investments, securities and things in action.
16
Q
Define “sale of goods.”
A
Passage of title to goods (personal property) from a seller to a buyer for a price.
No passage of title required for a bailment.
No price required for a gift.
17
Q
In what special circumstances will an offeree’s additional terms not be valid when both parties in the transaction are merchants?
A
The offeror limits acceptance to his or her terms;
The additional terms materially alter the contract;
The offeror specifically with notice objects to the additional terms.
18
Q
When does the title/risk of loss pass for sales on approval?
A
Title and risk of loss remain with seller until buyer accepts.
19
Q
How is the title/risk of loss affected by the passage of goods in a sale or return?
A
Passes upon possession of Buyer - returns to Seller if Buyer returns properly the goods.
20
Q
Define “future goods.”
A
For contracts under which goods are to be manufactured, identification occurs when the goods are in existence and either shipped, marked, or otherwise designated for buyer
21
Q
Define “void title.”
A
A thief in the chain of title.
22
Q
Define “identification.”
A
Occurs when goods are shipped, marked, or otherwise designated for the buyer; identification must occur before title and risk of loss pass.
23
Q
When does title/risk of loss pass when the shipping terms of cost, insurance, and freight are used?
A
When the seller:
- delivers identified conforming goods to the carrier;
- obtains a negotiable bill(s) of lading covering transportation to named destination;
- procures an insurance policy; and
- forwards to buyer all documents.
24
Q
Describe determination of “place of delivery.”
A
Unless the contract provides for shipment, delivery is the seller’s place of business or residence. There are no delivery terms under Uniform Commercial Cod Article 2 unless provided for in the contract.
25
When does title/risk of loss pass when delivery is required by a seller with no physical movement and the goods are represented by a negotiable document of title?
Title and risk of loss pass upon buyer's receipt of document.
26
What does the acronym BFP stand for?
Bona fide purchaser or good-faith purchaser (pure heart and an empty head because they do not know of any problems with the title).
27
When does the risk of loss pass in a non-delivery contract?
If seller is a merchant, risk of loss passes when buyer has actual receipt.
If seller is a non-merchant, risk of loss passes when goods are tendered to buyer.
28
Define "tender."
The seller's holding out to the buyer the goods in a reasonable manner, for a reasonable time, to allow the buyer to take possession of the goods.
29
Describe the free-on-board place of destination term.
Risk of loss and title pass from seller to buyer when goods have been tendered to the buyer at the destination.
30
Define "voidable title."
Title to goods that has come through a voidable contract, as when a minor purchases a car and then sells it to a third party.
31
List the ways in which a buyer can accept title of goods?
1. Due notification of acceptance;
2. Failure to reject within trial period;
3. Does any act inconsistent with seller's ownership.
32
Define "fungible goods."
Fungible goods are those that cannot be distinguished either because of homogenous qualities or because they are so mixed together; identified when shipped, marked, or otherwise designated.
33
Describe the general rule regarding passage of title and risk of loss.
In absence of agreement, the time title and risk of loss to identified goods passes from the seller to the buyer is dependent upon the contract's delivery terms.
34
At what point does title/risk of loss pass when the terms are Free on Board the buyer's place (city, warehouse, or residence)?
Upon the seller's tender of conforming goods at place of contract destination.
35
What does the acronym FAS mean?
A shipping term - Free alongside vessel (ship).
36
When does title/risk of loss pass for a sale on approval?
Neither title nor risk of loss pass until acceptance by the buyer.
37
When does the risk of loss pass in a warehouse (third party) delivery?
Risk of loss and title pass to buyer when the buyer has all necessary documents and the goods are available for pick-up.
38
When does title/risk of loss pass when delivery is required by the seller without physical movement and the goods are represented by a nonnegotiable document of title?
1. Title passes to buyer upon receipt of document;
2. Risk of loss passes after buyer receives document and has a reasonable time to present document to receive the goods.
39
What does the acronym CIF mean?
A shipping term - Cost, insurance and freight
40
When does title/risk of loss pass in free alongside shipping terms?
Title and risk of loss pass upon seller's delivery of conforming goods alongside the vessel in the manner usual in that port or on a dock designated and provided by the buyer
41
When does title/risk of loss occur for a sale or return?
Title and risk of loss pass as with an ordinary complete sale of goods.
42
At what point does title/risk of loss pass when the terms are Free on Board the seller's place (city, business, warehouse, or ship point)?
Delivery of conforming goods to carrier.
43
What does the acronym C&F mean?
A shipping term - Cost and freight.
44
When does the passage of title occur in a non-delivery contract?
If there is a document of title, title passes when buyer has the document.
If there are other documents, title passes when buyer has those documents.
If there are no documents, title passes at the time of contracting.
45
Describe the differences between the timing of risk of loss and the title in shipment contracts and non-shipment contracts.
In shipment contracts, risk of loss and title pass at the same time. In non-shipment contracts, risk of loss and title do not pass at the same time and depends on whether there is a document of title and whether there is a merchant or non-merchant seller for risk of loss.
46
Describe the free-on-board place of shipment term.
Risk of loss and title pass from seller to buyer when the goods are delivered to the carrier.
47
What does the acronym FOB mean?
A shipping term - Free on board.
48
What effect does a breach of a contract have on the passage of risk of loss?
Risk of loss does not pass until goods are conforming; if they never conform, risk of loss does not pass and return is at seller's risk
49
When does title/risk of loss pass when delivery is required by a seller with no physical movement and the goods are not represented by a document title?
1. Title passes when the contract is made;
2. If seller is a merchant, risk of loss does not pass until buyer gets possession;
3. If seller is a nonmerchant, risk of loss passes upon seller's tender of goods to the buyer.
50
List three types of express warranties.
1. Affirmations of fact or promises;
2. Sales by description;
3. Sales by sample or model.
51
What are the necessary requirements for a party in a transaction to disclaim an implied warranty of fitness for a particular purpose?
1. Must be in writing;
| 2. Conspicuous
52
What are the necessary requirements for a party in a transaction to disclaim an implied warrant of merchantability?
1. Must mention word merchantability;
2. Can be in writing or oral;
3. If in writing, must be conspicuous.
53
What is the difference between recovery under strict tort liability and recovery under negligence?
Punitive damages are available for negligence
54
List the justifications that a party in a transaction can use as a warranty defense.
1. Lack of Privity;
2. Statute of Limitations;
3. Failure of Notice of Breach.
55
When does an implied warranty that arises from a course of dealing or trade usage apply?
When both parties have a knowledge of a well-recognized usage of trade, or by numerous past performances, infer a warranty course of action intended to be performed.
56
List the requirements for establishing strict tort liability.
1. Product is in a defective condition that is unreasonably dangerous by design, production, or lack of warning.
2. Seller is in the business of manufacturing, distributing, or selling the product.
3. The product reaches the buyer in the same condition as when it left the seller's possession (i.e., it has not been altered).
57
Describe the elements of a disclaimer of an implied warranty of merchantability.
If written, must be conspicuous. Must use terms such as "No warranty of merchantability" or general disclaimer of "As is," "With all faults," or "As they stand."
58
Can an express warranty be withdrawn?
It is not possible to make an express warranty and then withdraw it when it has been a basis of the bargain.
59
Give examples of language that effectively disclaims implied warranties of merchantability and fitness for a particular purpose.
1. "As is" sale;
2. "Sold with all faults;"
3. Any other language brought to Buyer's attention plainly making a disclaimer.
60
List the requirements for establishing negligent product liability.
1. Product is in a defective condition that is unreasonably dangerous by design, production, or lack of warning.
2. Seller is in the business of manufacturing, distributing, or selling the product.
3. The product reaches the buyer in the same condition as when it left the seller's possession (i.e., it has not been altered)
4. Seller had knowledge that the product was defective and did not take steps to fix the problem.
61
Describe the elements of a disclaimer of a warranty of title.
Must be in writing and conspicuous or be obvious from the nature of the goods or the transaction that there is no warranty of title
62
Explain when the implied warranty of merchantability is given.
1. Seller is a merchant; and
| 2. Goods are warranted to be fit for ordinary use, of proper kind, properly packaged, and conform to the label.
63
What are the requirements for a disclaimer of oral express warranties?
1. Specific;
2. Unambiguous;
3. Clearly and conspicuously drawn to attention of buyer.
64
List the four types of warranties that are given under Article 2 sales contracts.
1. Express Warranties;
2. Implied Warranty of Title;
3. Implied Warranty of Merchantability;
4. Implied Warranty of Fitness for a Particular Purpose.
65
List the protections given by the implied warranty of title.
1. Seller has a good title and transfer is rightful;
2. There are no outstanding liens, encumbrances or security interests;
3. If seller is a merchant, goods shall be delivered free from third party infringement claims.
66
List the criteria required for an implied warranty of fitness for a particular purpose
1. The seller must expressly or impliedly know the purpose or buyer's use;
2. The buyer must rely on seller in making selection.
67
Describe the elements of a disclaimer of an implied warranty of fitness for a particular purpose.
Must be written; must be conspicuous; General disclaimer of "As is," "With all faults," or "As they stand" disclaims this and warranty of merchantability.
68
List the rights and duties of a seller or buyer upon either party's failure to perform.
1. Right of assurance to performance;
| 2. Duty of cooperation.
69
List the options that a buyer has when a seller tenders goods that fail to confirm to the contract (i.e., the perfect tender rule).
1. Reject the entire shipment;
2. Accept the entire shipment;
3. Accept any commercial unit and reject the rest.
70
List the rights of a buyer upon delivery of the goods.
1. Right of inspection unless agreed to the contrary;
| 2. Right to reject any nonconforming tender.
71
Describe a buyer's right of inspection.
Available to buyer for reasonable time; right to open packages, examine goods and conduct tests.
72
Describe the concept of "right to demand assurances."
Right of one party to demand additional guarantees of performance under the contract when none has taken place or cannot take place.
73
What actions should occur to ensure a proper rejection of nonconforming goods?
1. Must do so within reasonable time after tender;
2. Must be known by Seller - generally with specific reasons for rejection;
3. If Buyer in possession - Buyer needs to exercise reasonable care of goods;
4. If goods need to be sold (e.g., perishable) - Buyer must make reasonable effort to do so; Buyer to receive reimbursement for cost plus 10% sales commission.
74
Describe the perfect tender rule
Seller must deliver goods to buyer that conform in every respect; no standard of material breach here but, rather, any breach.
75
List the possible actions of a non-breaching party if an anticipatory breach has occurred.
1. For a commercially reasonable time await performance;
2. Treat breach as final and resort to remedies;
3. Suspend their own performance without liability for breach
76
Define "anticipatory breach."
Occurs when either the seller or the buyer repudiates the contract prior to the required contract date of performance.
77
Define "cure."
If a seller tenders delivery of nonconforming goods prior to the contract date, and buyer rejects the goods, the seller can with notice indicate the intent to cure, and the seller is not in breach if the seller tenders conforming goods within the contract time period.
78
Define "substituted performance."
If without fault of the seller the agreed facilities or type of contract carrier is not available or delivery impractical, but a commercially reasonable substitute carrier is available, seller must use substitute carrier and buyer must accept delivery and pay.
79
What option does the buyer have for tender of payment?
1. Can be by any customary means;
| 2. Seller could demand cash.
80
Describe the general rules of performance for a seller and a buyer.
1. Seller obligated to ship or tender delivery of conforming goods;
2. Buyer a duty to accept and pay for conforming goods.
81
List the conditions that must exist to revoke a previous acceptance of goods.
1. Buyer was given reasonable assurance of cure and cure has not occurred;
2. Buyer was assured goods were conforming and later discovered they were not;
3. Buyer's discovery of the nonconforming was difficult to detect.
82
What actions constitute the acceptance of a product by the buyer?
1. After opportunity to inspect signifies goods are conforming or will accept anyway;
2. Fails to reject after inspection or reasonable opportunity to do so;
3. Does act inconsistent with seller's ownership of product.
83
What are the buyer's remedies when the seller tenders nonconforming goods or refused to deliver conforming goods?
```
Cancel and with notice Rescind;
Cover;
Sue for breach of contract;
Specific performance;
Replevin;
Buyer can recover prepayment if Seller becomes insolvent within 10 days of receipt or pay balance and get the goods.
```
84
What types of limitations may be put in place on remedies of a breach?
Liquidated damage agreements;
Contract limitations - such as limited to repair or replacement;
Statute of Limitation time runs out.
85
When can a buyer have specific performance as a remedy?
When the goods are rare or unique
86
What are the seller's remedies if the buyer is insolvent or in breach when the buyer has possession of the goods?
Can reclaim the goods within 10 days if buyer received the goods on credit while insolvent;
Can sue for purchase price.
87
When is a seller entitled to lost profits?
In situations in which no other remedy provides compensation, such as when specially manufactured goods are ordered but the buyer breaches prior to production beginning. Lost profits compensate for the downtime in the seller's production facilities.
88
What are the buyer's remedies when the buyer accepts nonconforming goods with notice?
Sue for ordinary damages;
Sue for breach of warranty;
Deduct damages from purchase price.
89
When can a buyer recover consequential damages?
When the buyer has to pay penalties or damages for being late on performance owed to third parties.
90
When is a seller entitled to the full contract price when the buyer breaches?
When the goods cannot be resold, such as in specially manufactured goods.
91
Upon a buyer's breach, what remedies does the seller have when the seller retains possession of the goods?
```
Withhold delivery;
Identify Goods to Contract and proceed with other remedies;
Cancel and/or rescind contract;
Resell the goods;
Sue for breach of contract.
```
92
Describe the concept of replevin.
If seller refuses to tender delivery of identified goods to the buyer, and the buyer cannot cover, the buyer can file a suit in equity requiring the seller to deliver the goods to the buyer.
93
What are the seller's remedies if the buyer is insolvent or in breach when the goods are in transit?
If buyer insolvent, can stop any quantity shipped;
| If not, and Buyer is in breach, can only stop if shipment is a carload, truckload, planeload, or larger shipment.
94
What is the statute of limitations used to file actions against a party that breached a contract?
Four years from cause of action - by agreement can be shortened to not less than one year but not extended;
For breach of warranty action - cause of action starts with tender of delivery - not discovery of breach.
CPA REG
flashcards
Decks in class (14)
# Cards
-
Ethics, Professional, and Legal Responsibility68
-
Business Law - Contracts111
-
UCC -Article 2: Sales94
-
UCC-Article 3: Negotiable Instruments57
-
UCC-Article 5: Letters of Credit5
-
UCC-Article 7: Documents of Title13
-
UCC-Article 9: Secured Transactions33
-
Debtor-Creditor Relationships70
-
Agency39
-
Federal Securities Regualtion39
-
Other Federal Laws and Regulations68
-
Federal Personal Property Laws22
-
Property Transactions42
-
Income7
