BUSI4350 - Chapter 20

force majeure clause

A provision in a contract stipulating that certain unforeseen events—such as war, political upheavals, and acts of God—will excuse a party from liability for nonperformance of contractual obligations.

course of dealing

Prior conduct between parties to a contract that establishes a common basis for their understanding.

lessee

A person who pays for the use or possession of another's property.

forum-selection clause

A provision in a contract designating the court, jurisdiction, or tribunal that will decide any disputes arising under the contract.

If several terms of a mixed contract are left blank:

the predominant factor test must be applied to determine which law applies and whether UCC gap fillers can be used.

American Home Store, headquartered in San Diego, is getting ready for its Fourth of July sale. American orders $1,000 worth of American flags from Canadian Manufacturing, Inc., which is headquartered in Montreal, Canada. American places the order by telephone, and Canadian orally accepts. Two days later, American discovers that it can get the flags cheaper from a manufacturer in Denver. When American attempts to cancel the contract with Canadian, American finds that under the 1980 United Nations Convention on Contracts for the International Sale of Goods (CISG):

the contract is enforceable even though it is not in writing.

Article 2 of the UCC applies to what types of contracts? Choose 2 answer choices.

1. Contracts for the sale of goods and services when it is predominately goods 2. Contracts for the sale of goods

What characteristics must an item possess to be classified as a "good"? Choose 2 answers.

1. It must be moveable. 2. It must be tangible.

What products are included in the UCC definition of goods? Choose 2 answer choices.

1. Oil and gas, if the seller removes 2. Crops harvested by the seller

How do parties determine which is the appropriate law for a mixed contract? Choose 2 answer choices.

1. The predominant-factor test dictates the proper choice of law. 2. Common law is appropriate for some mixed contracts.

A sales or lease contract will not fail for indefiniteness even if one or more terms are left open as long as both of the following are true: (Choose 2 answers.)

1. There is a reasonably certain basis for the courts to determine a remedy in the case of a breach. 2. The parties intended to make a contract.

How does the 1980 United Nations Convention on Contracts for the International Sale of Goods (CISG) differ from the Uniform Commercial Code (UCC)? Choose 3 answers.

1. Under the UCC, an irrevocable offer must be in writing, but under the CISG it can be oral. 2. The CISG is stricter on requiring mirror image acceptances. 3. The CISG does not apply to consumer sales.

In what ways does Article 2 of the Uniform Commercial Code (UCC) differ from contract rules under the common law? Choose 3 answers.

1. Under the UCC, merchants have more flexibility in having open terms. 2. Under the UCC, any manner of showing agreement to contract is accepted, but under the common law acceptance must mirror the offer. 3. Under the UCC, the only required definite term is quantity of product being sold. Other terms such as price and delivery time can be left open.

choice-of-law clause

A clause in a contract designating the law (such as the law of a particular state or nation) that will govern the contract.

choice-of-language clause

A clause in a contract designating the official language by which the contract will be interpreted in the event of a future disagreement over the contract's terms.

sales contracts

A contract for the sale of goods under which the ownership of goods is transferred from a seller to a buyer for a price.

fully integrated contract

A contract that completely sets forth all the terms and conditions agreed to by the parties and is intended as a final statement of their agreement.

merchant

A person who is engaged in the purchase and sale of goods. Under the Uniform Commercial Code, a person who deals in goods of the kind involved in the sales contract; for further definitions, see UCC 2-104.

lessor

A property owner who allows others to use his or her property in exchange for payment.

predominant-factor test

A test courts use to determine whether a contract is primarily for the sale of goods or for the sale of services.

lease agreement

In regard to the lease of goods, an agreement in which one person (the lessor) agrees to transfer the right to the possession and use of property to another person (the lessee) in exchange for rental payments.

course of performance

The conduct that occurs under the terms of a particular agreement. Such conduct indicates what the parties to an agreement intended it to mean.

You have a small business supply store. You order fifty boxes of paper from Hammerhill Paper Supply and tell them you need the paper delivered within four days, and Hammerhill agrees to provide the paper within four days. Neither you nor Hammerhill mentions the price of the paper, though. How do you think the price of the paper will be determined if you get into a legal dispute with Hammerhill about it?

The court will determine a reasonable price at the time of delivery.

sale

The passing of title (evidence of ownership rights) from a seller to a buyer for a price.

Which of the following qualifies as a "good" under Article 2 of the Uniform Commercial Code?

a commercial freezer unit

What is the term for when a merchant gives a written, signed assurance that he or she will not revoke an offer for a stated period of time?

a firm offer

Hyster Material Handling sells 300 order pickers to Amazon. The order pickers cost $25,000 each, and each comes with a maintenance contract that costs $2,000 per year. After six months, a dispute arises between the parties when Hyster fails to perform all the monthly maintenance required under the contract, and Hyster decides to sue. Because the contract covers both goods and services, to determine what law applies to this contract the court will:

apply the predominant-factor test and determine that UCC Article 2 applies.

Under the Uniform Commercial Code (UCC), what is the only required term for a valid sales contract?

quantity of goods being sold

In a contract where the payment is broken down such that 80 percent of the cost is for materials and 20 percent is for installation of those materials, the contract will be governed by:

the UCC.

Larue owns a horse ranch. Larue enters into a contract with Dora for the purchase of thirty saddles for his ranch to be delivered on a specific date. If the price of the saddles is not included in the contract, under the U.C.C.:

the court will determine a reasonable price at the time for delivery.

requirements contract

An agreement in which a buyer agrees to purchase and the seller agrees to sell all or up to a stated amount of what the buyer needs or requires.

output contract

An agreement in which a seller agrees to sell and a buyer agrees to buy all or up to a stated amount of what the seller produces.

firm offer

An offer (by a merchant) that is irrevocable without consideration for a period of time (not longer than three months). A firm offer by a merchant must be in writing and must be signed by the offeror.

usage of trade

Any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question.

Which section of the Uniform Commercial Code (UCC) applies to contracts for sales of goods?

Article 2

The Uniform Commercial Code applies to what types of contract?

Contracts for goods over $500

tangible property

Property that has physical existence and can be distinguished by the senses of touch, sight, and so on. A car is tangible property.

intangible property

Property that is incapable of being apprehended by the senses (such as by sight or touch). Intellectual property is an example of intangible property.

In what situations does the UCC overrule common law?

The UCC applies to contracts that sell goods.

Tanya is in the business of selling rubber mats. Ralph is in the business of selling real estate. Logan is in the business of selling stocks and bonds. Article 2 of the U.C.C. governs the sale of the items sold by:

Tanya only.

seasonably

Within a specified time period. If no period is specified, within a reasonable time.

Dakotah is the cheerleading coach for Northfield High School. Dakotah places an order by telephone with Cheerleader Supply Inc. for thirty cheerleader uniforms. Each uniform is to be emblazoned with the Northfield High emblem and a cheerleader's name. The total cost of the uniforms is $900. Two weeks after placing the order, Dakotah realizes she ordered the wrong style of uniform, so she contacts Cheerleader Supply and attempts to cancel the order. Cheerleader Supply at this time is almost through completing the work on the order. Cheerleader Supply:

can enforce the contract, even though it is not in writing, because it is for specially manufactured goods.