UCC: Sales

Requirements for SOF

-a writing -signed by parties to be bound (signatures are bare minimum, ex: check mark) -the quantity of items within the transaction

Express Warranties by Affirmation, Promise, Description, Sample

-an affirmation of fact and a promise is a statement orally or in writing which is subject to objective proof (something to be compared to) -any description of the goods which is made part of the basis of the bargain -any sample or model which is made as a basis for the bargain -basis for the bargain = anything that could have the tendency to induce a person to enter into an agreement -no specific time mentioned -a confirmation of the affirmations can be considered an express warranty and thus go towards the basis of the bargain

"Cover"; Buyer's Procurement of Substitute Goods

-buyer may "cover" by making in good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller -the buyer may recover from the seller the damages the difference between the cost of cover and the contract price together with any incidental or consequential damages

What Constitutes Acceptance of Goods

-buyer will accept all goods that are conforming or accepts the goods even if they are non-conforming (needs to preserve the right to sue the seller because of the non-conformity) -failure to make a rightful rejection signifies acceptance of conforming and non-conforming goods -anything that is against the seller's ownership interest constitutes an acceptance

Usage of Trade

-custom and trade in the industry -a particular party in interpreting a UCC contract can put on evidence for the custom or usage of that particular trade/business as to how contracts are supposed to be performed and interpreted

Person in the Position of a Seller

-if the buyer has goods that are non-conforming but that the buyer accepted and now they sue for breach of contract OR the goods can be rightfully rejected or rightfully revoked and now have the goods in their care and custody and could decline in value quickly the buyer can sell the goods = they become a person who is in the position of the seller which means all the available remedies of a seller can be used by that person -every time the seller breaches the buyer takes a security interest from the goods and thus allows the buyer to do the sale

Risk of Loss in Absence of Breach (when goods are conforming)

-if the contract does not specify to delivery and shipment = shipment contract and the risk of loss passes from the seller to the carrier who delivers the goods; if something happens between the carrier and delivery the risk of loss is on the BUYER -if the contract is FOB (place of origin) = shipment contract and the risk of loss passes to the carrier from the seller and thus risk of loss/insurable interest is to the buyer -if the contract is FOB (destination) = destination contract and the risk of loss is on the buyer only when the goods are duly tendered and delivered to the destination

UCC Standards for Parol Evidence

-if the writing (satisfied SOF) is intended by both parties to be the FINAL agreement then all you can do with the extrinsic evidence is present evidence of terms or other things within the contract that SUPPLEMENT and are NOT CONTRADICTORY to the terms of the written contract -if it is NOT the final agreement then extrinsic evidence can be presented on anything (supplement, contradict, inconsistent)

Shipment by Seller

-if this is not a shipment contract (outside the location of the seller) = seller tenders delivers when he delivers the goods to the facilities of the buyer -if the contract required the seller to delivery outside the seller's facilities = shipment has to be gathered and tender of delivery occurs when the goods are delivered to the carrier

Anticipatory Repudiation

-ignore and wait to see if something is going to happen in a commercially reasonable time -even if you are acknowledging the repudiation and we are waiting to get performance it does not prohibit you from seeking the remedies afforded

Excuse by Failure of Presupposed Conditions

-impossibility of performance = seller wont be in breach of contract if delivery is delayed or non-delivery is in whole or in part -the obligation of good faith comes into play if the caused affect only a part of the seller's capacity to perform, he must allocate production and delivers among his customers including regular customers -there must be notification when delay or non-delivery is know and they must provide the estimated quota -this is when is commercially impossible to perform the contract

Insurable Interest in Goods; Manner of Identification

-insurable interest doesnt exist until the goods have been identified to a particular contract -seller has an obligation to insure the goods at the location and once the goods have been identified to a contract the insurance obligation shifts depending on where the goods are located

Seller's Damages for Non-Acceptance or Repudiation

-measure of damages for non-acceptance or repudiation of the buyer = market price contract price differential (market price is to be measured at the time of the market price of the delivery) -lost volume seller: seller works with resale and get incidental damages or market price contract price differential is not enough to make the seller whole then they are entitled to their lost profits -particular goods you are selling to the buyer and has no resale market = specific performance

Buyer's Option as to Salvage of Rightfully Rejected Goods

-non merchant buyer -if there are no instruction = sell, reship, for purposes of the seller's account and get reimbursement (cost + commission) and none of this is an acceptance or conversion

Retraction of Anticipatory Repudiation

-once someone says they wont be able to deliver the goods and pay for the goods and now are in the position to needs the goods and find someone else = repudiation is final -can try to sell the goods to someone else = repudiation is final -retraction has to occur before the material change occurs -it is always important if you think someone has repudiated you request the adequate assurance and a failure of that will be the repudiation and then if someone wants to retract that you request for adequate assurance and make sure they comply with the assurance or the repudiation is final

Cure by Seller of Improper Tender or Delivery; Replacement

-once the seller gets notification of rejection, the seller must notify the buyer of his intention to exercise the right to cure and if that notice is timely and the non-conformity is cured and this occurs before the date of the contract is due = buyer must accept the cured goods -the seller is looking at the goods being shipped and approved which means there is a reasonable basis in the seller's mind that the goods will be accepted and is what the buyer wants = reasonable grounds they are going to be accepted; however, this contemplates the time of performance of the contract has passed and now the seller is surprised by buyer's rejection and then notice to the buyer of the cure then it gives reasonable time (based on buyer) and if the seller cannot perform in reasonable time = rejection of replacement goods

Exceptions to the SOF Requirements

-one of a kind good and the buyer declines the good and the seller receives such notice and the good has been earmarked and been identified to the buyer (item has to be specially manufactured & starting of the process to manufacturer the item) -an admission in testimony, pleading, or contract then there is a contract but ONLY to the extent to the quantity to which the party is admitting -part payment eliminates the writing requirement but ONLY to the extent of the part payment and not to the ENTIRE contract and applies to both buyer and seller

Effect of Breach on Risk of Loss (when goods are non-conforming)

-risk of loss never passes to the buyer from the seller if the goods are non-conforming and the buyer has the right of rejection -to the extent the buyer's own risk of loss doesnt cover the loss of the non-conforming goods which gives rise to a rightful revocation of acceptance then the risk of loss is on the seller -when the buyer doesnt pay the risk of loss doesnt pass to the buyer

Revocation of Acceptance in Whole or in Part

-the buyer may revoke his acceptance of a lot of commercial unit whose non-conformity substantially impairs its value to him if he has accepted it: buyer might accept the non-conforming goods with assurances from the seller of him fixing the non-conformity and the seller does nothing the buyer has a right to revoke; if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller's assurances -revocation must occur within a reasonable time after the buyer discovers or should have discovered the grounds for it and before any substantial change in condition of the goods which is not cause by their own defects

Obligations of Good Faith

-the parties are required under the UCC to act in good faith -if one party does NOT act in good faith = breach of contract

Seller's Stoppage of Delivery in Transit or Otherwise

-the seller may stop delivery of goods in the possession of a carrier or other bailee when he discovers the buyer to be insolvent and may stop delivery or fails to make a payment due before delivery of it for any other reason the seller has a right to withhold or reclaim the goods -acknowledgement the goods are in warehouse and being shipped to buyer -unless you have evidence the goods have been received by the buyer

Buyer's Damages for Non-Delivery or Repudiation

-time of measurement is the market price at the time of the buyer learning of the breach -market price is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance as of the place of arrival

Seller's Right to Identify Goods to the Contract Notwithstanding Breach or to Salvage Unfinished Goods

-when there has been the triggers of the buyer's breach and if there are more goods to be shipped they can be identified to the contract and even if they are not identified and are in substantial completion can be attributed to the contract -sometimes the parts that are used to put together the goods may be more valuable as part then the good itself and the manufacturer can finish the goods and resell them or not finish and resell the parts separately = seller's can do this as it is commercially reasonable

Seller's Remedies on Discovery of Buyer's Insolvency

-where the seller discovers that the buyer has received goods on credit whole insolvent he may reclaim the goods upon demand made within ten days after the receipt -misrepresentation of insolvency must be in writing -if you reclaim it then you dont have any remedies and whatever the cost was to do that you can change

Additional Terms in Acceptance or Confirmation: Conduct By Both Parties

1: if there is an offer to a contract to purchase or sell and the response comes back with different terms/conflicting terms for delivery = the time for delivery is knocked out of the contract 2: if the proposed contract wants to specific quantity of a good but no mention of delivery and the accepted contract comes back with the quantity AND delivery date = additional terms will become part of the bargain (between merchants) UNLESS the offer expressly limits acceptance to the actual terms in it, the additional terms materially alter the contract OR if there is confirmation written within a reasonable time -if its NOT between merchant then those additional terms are construed as proposals to be negotiated between the parties

How Do You Know Its A Final Agreement?

SOME will add a merger clause which indicates it is the final agreement -but NOT conclusive

Material Alteration

CANNOT ONLY affect the terms that change the obligations of each party but can ALSO affect the legal rights of either party to the contract

Course of Dealing

refers to many contract with the same buyer and seller -this is what happens and what the parties by their actions have agreed to -long term relationships where contract terms and the two parties perform on the contract which may or may not exactly correspond directly to the written words of the contract

Course of Performance

refers to one contract and in that course of the contract they may have written that every document/receipt, etc., from the contract needs to be handled within five days -depends on how the parties play -performance of a single contract one party accepts even though it wasnt in the timeframe and an additional contract is written between the parties, the same performance from the first contract is to be renewed for the second contract

Manner and Effect of Rightful Rejection

rejection of goods must be within a reasonable time after their delivery or tender, it is ineffective unless the buyer seasonably notifies the seller -after rejection any exercise of ownership by the buyer with respect to any commercial unit is wrongful as against the seller -the ordinary buyer gets a shipment of non-conforming goods and has done his inspection, the requirement is a notification of rejection (oral or written) and then the obligation of the buyer is to exercise reasonable care over the goods and if the buyer does something that is evident of an exercise of ownership over the goods, that is wrongful and now seller has a conversion lawsuit against buyer

Effect of Seller's Tender; Delivery on Condition

tender entitled the seller to acceptance of the goods and to payment according to the contract -the seller is the first person to act = tender of delivery when accepting the goods as long as the tender is of conforming goods where payment is due and demanded on the delivery (C.O.D) to the buyer of goods or documents of title, is right as against the seller to retain or dispose of them is conditional upon his making the payment due -payment can be made at or prior to delivery

Manner of Seller's Tender of Delivery

tender of delivery requires that the seller put and hold conforming goods at the buyer's disposition and give the buyer any notification reasonably necessary to enable him to take delivery -tender of delivery means the seller has to present to the buyer the goods at the location at which they are to be delivered absent a particular destination = goods will be delivered to the buyer's facilities

Tender of Payment by Buyer; Payment by Check

tender of payment is a condition to the seller's duty to tender and complete any delivery -if seller wants payment in a cash check then the processing time might take longer to process and get = reasonable time or a reasonable extension of time to provide it

Payment by Buyer Before Inspection

tender of payment is usually done by legal tender and can be specified by the seller and takes time to tender the payment the seller has to request an extension of reasonable time -payment can be required prior to delivery and such payment does not mean acceptance of the goods and does not preclude buyer from using under breach of contract

Parol or Extrinsic Evidence

terms may not by contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented -by course of performance, course of dealing, or usage of trade -by evidence of consistent additional terms unless the court finds the writing to have been intended as a complete and exclusive statement of the terms of the agreement

Deduction of Damages From the Price

the buyer on notifying the seller of his intention to do so may deduct all or any part of the damages resulting from any breach of the contract from any part of the price still due under the same contract

Warranty of title and Against Infringement; Buyer's Obligation Against Infringement

there is a contract for sale a warranty by the seller that -(a) the title conveyed shall be good and its transfer rightful (not fake or stolen goods) -(b) the goods shall be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge a warranty will be excluded or modified ONLY by specific language or if the circumstances do not present a title (time square street vendors) the buyer provides the specifications to the seller and the obligations given towards the buyer and releases the seller from any obligations if there are complications with the specifications given by buyer

Additional Terms in Acceptance or Confirmation

there is no contract when there is language in the agreement that requires an expressed consent by both parties to what is maintained in the document and that equates the acceptance of such contract -the contract exists but the additional terms will be negotiated out -if everyone acts like there is a contract then the conduct will show there is a contract

Absence of Specified Place for Delivery

there is no place of delivery then it is provided under this section

Output, Requirements and Exclusive Dealings

they take care of themselves and are authorized to do so

Casualty to Identified Goods

trigger = goods required to be identified when the contract is made - casualty loss - if the loss is totaled then the contract is voided BUT if the loss is partial the buyer has the option to take what's left with due allowance for any deterioration or short fall

Buyer's Remedies in General; Buyer's Security Interest in Rejected Goods

triggers = seller's failure for delivery, seller's repudiation, rightful rejection and rightful revocation -the buyer can now cancel and if there has been something paid to the seller the buyer gets that money back -buyer is whole but still needs the goods: cover (buyer goes out and finds the same goods and finds the difference between the cover price and the contract price); market price contract price differential; specific performance -if it is a breach of warranty = measure of damage is whatever is commercially reasonable but the difference between the value of the good given and the value of the good as what it was promised

Seller's Remedies in General

triggers = wrongful rejection, wrongful revocation of acceptance, failure to make a payment or repudiation (indication of non-performance) -withhold delivery of such goods -stop delivery by any bailee -resell and recover damages -recover damages for non-acceptance (market price contract price differential) -cancel

Substituted Performance

triggers this = if the place that your loading or unloading fails or the agreed type of carrier becomes available or the agreed manner of delivery becomes commercially impracticable and there is a commercially reasonable substitute such substitute must be tendered and accepted (limited application) -the means of payment has been governmentally shut down and if substitute performance is available MUST be tendered and accepted

Right to Adequate Assurance of Performance

when reasonable grounds for insecurity arise with respect to the performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return -the seller looks at the buyer and the buyer hasnt been able to make payment before performance or seller hasnt received payment -the buyer can be insecure by supply chain problems they can use this section in writing to explain why they are insecure and demand insurance that there is going to be performance -under commercially reasonable standards they can stop making payments or manufacturing the items -exmaine what the response is to a request for adequate assurance to performance to see if it makes commercially reasonableness sense -determine whether the other wise is repudiating their performance to the contract

Merchant Buyer's Duties as to Rightfully Rejected Goods

when the seller has no agent or place of business at the market of rejection a merchant buyer is under a duty after rejection of goods in his possession or control to follow any reasonable instructions received from the seller with respect to the goods and in the absence of such instructions to make reasonable efforts to sell them for the seller's account if they are perishable or threaten to decline in value speedily. instruction are NOT reasonable if on demand indemnity for expenses is not forthcoming -buyer is entitled to reimbursement from the seller or out of the proceeds for reasonable expenses of caring for and selling them, and if the expenses include no selling commission -the merchant buyer is held only to good faith obligations

Waiver of Buyer's Obligations by Failure to Particularize

when you are giving your notice of rejection (merchant or ordinary buyer) you have to be specific as to the non-conformity as to justify rejection

Buyer's Right to Inspection of Goods

where goods are tendered or delivered or identified to the contract for sale, the buyer has the right before payment or acceptance to inspect them at any reasonable place and time and in any reasonable manner. when the seller is required or authorized to send the goods to the buyer, the inspection may be after their arrival

Procedure on Notice Claiming Excuse

where the buyer receives notification of a material or indefinite delay or an allocation justified under the preceding section he may by written notification to the seller as to any delivery concerned, and where the prospective deficiency substantially impairs the value of the whole contract under the provisions of this article relating to breach of installment contract then also as to the whole -contract is terminated -modify the contract by agreeing to take his available quota in substitution if after receipt of such notification from the seller the buyer fails so to modify the contract within a reasonable time not exceeding 30 days the contract is terminated

Merchant

a person who deals in goods of the kind -does NOT need to be an expert just deals in goods of the kind -can be both the seller and the buyer (ex: WalMart)

Goods

all things which are movable at the time of identification to the contract -the particular goods at the subject of the contract have been earmarked for that specific contract

Seller's Resale Including Contract for Resale

allows the seller to conduct a private or public sale and notice must be given to the buyer, but seller is not accountable to the buyer on any resale -public sale = seller cannot buy -private sale = seller can buy -KEY: if you use the resale as the remedy then the damages are the difference between the resale price and the contract price together with any incidental damages

Formal Requirements SOF (between merchants)

an oral conversation has taken place and one member of the party sends a confirmation email/letter/fax of the oral agreement to the other party and as long as that particular confirmation is in writing, signed, and quantity then the party receiving it has reason to know of its contents = satisfies the SOF -UNLESS the party receiving the confirmation has sent written notice of objection of its contents within 10 days of receiving the confirmation letter

Repudiation

any indication, orally or written or by conduct, that the person is not going to comply with the particulars of the contract

Scope of Article 2 of UCC

applies to transactions in good -NOT the sale of goods

Hybrid Transactions

both a good and service -majority view: look towards the predominant purpose of the contract

"Unless Otherwise Agreed"

every party to a contract is free to ignore the UCC and put in their own specific provisions regarding anything with regard to performance of contract or the remedies for the breach -if they chose to put their own provisions = common law contracts applies

F.O.B.

free on board -designation that becomes important

Implied Warranty: Merchantability; Usage of Trade

goods shall be merchantable is implied in a contract for their sale if the seller is a MERCHANT with respect to goods of that kind -are fit for the ordinary purpose for which such goods are used

Modification & Rescission

if a contract is between MERCHANTS such a provision requiring all modifications and rescissions by a signed wiriting then you only need ONE to sign to become part of the agreement -if there are conflicting terms to whether it needs to be in writing then they cancel each other out -if there is one requiring it in writing and the other says nothing then it is an additional term and does not materially alter the rights of the parties and thus become part of the bargain a contract between only ONE merchant then the provision needs to be in writing and signed by the NON-MERCHANT party if there is not a modification requiring to be in writing when the contract satisfied the SOF, then it can be administered orally

Open Price Term

if no party puts the price in the contract the UCC will put the price for them

Buyer's Right on Improper Delivery

if the goods or the tender of delivery fall in any respect to conform to the contract, the buyer may: -reject the whole (rejection must be of non-conforming goods and any non-conforming goods permits the buyer to reject the goods) -accept the whole -accept any commercial unit or units and reject the rest

Absence of Specified Time Provisions, Notice of Termination

if there is no specific time illustrated in the contract then the UCC gives a time of 'reasonableness'

Delivery in Single Lot or Several Lots

if there is no specification then the goods are coming in a single lot

Liquidation or Limitation of Damages; Deposits

if you can predict what can be the reasonable damages then put it in the contract and are limited to what the liquidated damages are -will be measured by the market price is for the goods at the date and time of the breach of contract -if the market value is substantially lower than the liquidated damages provisions will be removed -if its a 10-20% difference of the market price from the liquidated damages then they will give it to you -where the seller justifiably withholds delivery of goods because of the buyer's breach, the buyer is entitled to restitution of any amount by which the some of his payments exceeds: (a) liquidated damages provision if valid then received (EX: $4,000, liquidated damages is $3,000 = recover $1,000); (b) restitution buyer would receive if they breached the contract and if no liquidated damages provisions are in the contract then the buyer gets back 20% of what he already paid for OR $500 whichever is SMALLER -the seller keeps the rest of the payment

General Obligations of Parties

is mutual - seller is to delivery and buyer is to pay

Formation of Contract in General

may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract -there is evidence of an agreement