LGS Test #2 Chapter 14

Obligation of sellor or lessor - Perfect tender rule

A common law rule under which a seller was required to deliver to the buyer goods that conformed perfectly to the requirements stipulated in the sales contract

Obligations of the buyer or lessee - partial acceptance

• If some of the goods delivered do not conform to the contract and the seller or lessor has failed to cure, the buyer or lessee can make a partial acceptance [UC C 2-601(c), 2A-509(1)].

Shipment Contract

A contract for the sale of goods in which the seller is required or authorized to ship the goods by carrier. The seller assumes liability for any losses or damage to the goods until they are delivered to the carrier.

sales contract

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

Destination Contract

A contract in which the seller is required to ship the goods by carrier and deliver them at a particular destination. The seller assumes liability for any losses or damage to the goods until they are tendered at the destination specified in the contract.

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.

Insurable interest

A property interest in goods being sold or leased that is sufficiently substantial to permit a party to insure against damage to the goods. A seller has an insurable interest in goods as long as he or she retains title to the goods

express warranty

A seller's or lessor's oral or written promise, ancillary to an underlying sales or lease agreement, as to the quality, description, or performance of the goods being sold or leased.

Delivery Via Carrier - Shipment Contracts.

A shipment contract requires or authorizes the seller to ship goods by a carrier, rather than to deliver them at a particular destination

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.

Implied Warranty of Merchantability

A warranty that goods being sold or leased are reasonably fit for the ordinary purpose for which they are sold or leased, are properly packaged and labeled, and are of fair quality. The warranty automatically arises in every sale or lease of goods made by a merchant who deals in goods of the kind sold or leased.

Implied Warranty of Fitness for a Particular Purpose

A warranty that goods sold or leased are fit for a particular purpose

document of title

A writing exchanged in the regular course of business that evidences the right to possession of goods (for example, a bill of lading or a warehouse receipt).

sufficency of the writing

A writing, including an e-mail or other electronic record, will be sufficient to satisfy the UCC's Statute of Frauds as long as it: 1. Indicates that the parties intended to form a contract 2. Is signed by the party (or agent of the party) against whom enforcement is sought

Obligation of buyer or lessee - Acceptance

After having had a reasonable opportunity to inspect the goods, the buyer or lessee can demonstrate acceptance in any of the following ways: 1. The buyer or lessee indicates (by words or conduct) to the seller or lessor that the goods are conforming or that he or she will retain them in spite of their nonconformity [UCC 2-606(1)(a), 2A-515(1)(a)]. 2. The buyer or lessee fails to reject the goods within a reasonable period of time [UCC 2-602(1), 2-606(1)(b), 2A-515(1)(b)]. 3. In sales contracts, the buyer will be deemed to have accepted the goods if he or she performs any act inconsistent with the seller's ownership [UCC 2-606(1)(c)].

Obligations in sales and lease contracts - anticipatory repudiation

An anticipatory repudiation is a breach of contract in which, before the time for contract performance, one party clearly communicates to the other the intention not to perform.

identification for future goods

Any goods that are not in existence at the time of contracting are known as future goods

fungible goods

Goods that are alike by physical nature, agreement, or trade usage.

Identification - Goods that are part of a larger mass

Goods that are part of a larger mass are identified when the goods are marked, shipped, or somehow designated by the seller or lessor as the particular goods to pass under the contract

Conforming goods

Goods that conform to contract specifications.

Identification for Existing Goods

If the contract calls for the sale or lease of goods that already exist in their final form, then identification occurs at the time the contract is made.

delivery via carrier - destination contracts

In a destination contract, the seller agrees to deliver conforming goods to the buyer at a particular destination

Breach: Remedies of the seller or lessor - goods being leased, not sold

In lease transactions, the lessor can lease the gods to another party and recover damages from the original lease

Obligation of buyer or lessee - Payment

In the absence of any specific agreements, the buyer or lessee must make payment at the time and place the goods are received

Irrevocable offers

Offers that cannot be withdrawn by the offeror; include offers in the form of an option contract, offers that the offeree partly performed or detrimentally relied on, and firm offers by a merchant under the Uniform Commercial Code.

Express warranties - statements of opinion and value

Only statements of fact create express warranties

Intangible property

Property that cannot be seen or touched but exists only conceptually, such as corporate stocks. Such property is not governed by Article 2 of the UCC.

tangible property

Property that has physical existence and can be distinguished by the senses of touch and sight.

Place of delivery

The buyer and seller may agree that the goods will be delivered to a particular destination where the buyer or lessee will take possession

Identification

The express designation of the specific goods provided for in the contract. It gives the buyer or lessee the right to insure the goods and recover the goods if they are damaged by a third party

Tender of delivery

Under the Uniform Commercial Code, a seller's or lessor's act of placing conforming goods at the disposal of the buyer or lessee and giving the buyer or lessee whatever notification is reasonably necessary to enable the buyer or lessee to take delivery.

Obligation of buyer and lessee - Right of inspection

Unless the parties otherwise agree, or for C.O.D. (collect on delivery) transactions, the buyer or lessee has an absolute right to inspect the goods before making payment.

Delivery without movement of goods

When a sales contract does not call for the seller to ship or deliver the goods (such as when the buyer is to pick up the goods), the passage of title depends on whether the seller must deliver a document of title.

Delivery with Movement of Goods—Carrier Cases:

When the contract involves movement of the goods via a common carrier but does not specify when risk of loss passes, the courts first look for specific delivery terms in the contract.

Breach: Remedies of the seller or lessor - Goods are unfinished

When the goods contracted for are unfinished at the time of the breach, the seller or lessor can do either of the following: 1. Cease manufacturing the goods and resell them for scrap or salvage value 2. Complete the manufacture and resell or dispose of the goods, and hold the buyer or lessee liable for any deficiency