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Seller's Remedies
(1) resell the goods and sue for the difference between the actual sales price and the contract sales price; (2) keep the goods and sue for the difference between what the goods could be sold for, and what the contract sales price was.
Duties of Principal to Agent
(1) to compensate the agent (2) to reimburse the agent for money spent in the principal's service (3) to indemnify the agent for losses suffered in conducting the principal's business
General Title Rules
1) Physical Delivery The Code does have a general title section. It provides that title passes to the buyer when the seller has completely performed his or her duties concerning physical delivery of the goods 2)Delivery without Moving the Goods If delivery is to be made without moving the goods, title passes at the time and place of contracting if the goods have been identified to the contract 3) Negotiable Document of Title Sometimes when the goods are being shipped by a professional carrier, the parties will use a negotiable document of title 4)Buyer's Rejection In some instances, the buyer will reject the goods, perhaps because he does not believe that they conform to the contractual specifications.
Revocation of Acceptance
A buyer may revoke acceptance of nonconforming goods where (1) the nonconformity subtantially impairs the value of the goods and (2) the buyer accepted them without knowledge of the nonconformity due to the difficulty of discovering the nonconformity or the buyer accepted the goods because of assurances by the seller
Elements of Strict Liability
A product has been sold in a defective condition that makes it unreasonably dangerous to the user or consumer. The seller is engaged in the business of selling such a product. The product is expected to and does reach the consumer without substantial change in the condition in which it is sold. The consumer or other person sustains physical harm or property damage because of the defective condition.
Transfer of voidable title
A seller who has voidable title can pass good title to a good faith purchaser for value (2-403[l]). Sellers may obtain voidable title by impersonating another person when acquiring the goods from their rightful owner, paying for the goods with a bad check, failing to pay for goods sold on a "cash sale" basis, or obtaining the goods in some other fraudulent manner
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.
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.
Acceptance effect
Acceptance of goods occurs when a buyer, after having reasonable opportunity to inspect the goods, either indicates that he will take them or fails to reject them. To reject goods, the buyer must notify the seller of the rejection and specify the defect or nonconformity. If a buyer treats the goods as if he owns them, the buyer is considered to have accepted them effect After a buyer has accepted goods, she cannot later reject them unless at the time they were accepted, the buyer had reason to believe that the nonconformity would be cured. By accepting goods, the buyer does not forfeit or waive remedies against the seller for any nonconformities in the goods.
Creation of Agency Relationship
An agency relationship is created when Principle (P) manifests to Agent (A) that A should act on P's behalf and under P's control (subject to P's will) and A consents to so act. (mutual consent; courts can determine an agency exists even if P and A call it something else)
Implied Warranty of Fitness for a Particular Purpose
At times, the seller may know the particular purpose for which the buyer needs the goods and know that the buyer is relying on the seller to select goods suitable for that purpose. If these two conditions are met, then the seller makes an implied warranty that the goods will be fit for that particular purpose
receipt effects
If none of the special rules that have just been discussed applies, the risk passes to the buyer on receipt of the goods if the seller is a merchant. If the seller is not a merchant, the risk passes to the buyer when the seller tenders (offers) delivery of the goods (2-509[3]). For example, Frank offers to sell Susan a car, and Susan sends an email accepting Frank's offer. When he receives the email, Frank calls Susan and tells her she can "pick up the car anytime." That night, the car is destroyed when a tree falls on it during a storm. If Frank is a used-car salesman, he must bear the loss. If Frank is an accountant, Susan must bear the loss.
Shipment contract (risk of loss)
If the contract requires the seller to ship the goods by carrier but does not require that the seller guarantee their delivery to a specific destination, the risk passes to the buyer when page 318the goods are delivered to the carrier (2-509[1][a]). The following are commonly used shipping terms that create shipment contracts: FOB (free on board). FOB (free on board) calls for the seller to deliver the goods free of expense and at the seller's risk to the place designated. So, if the contract term is "FOB Chicago" or some other place of shipment, the seller bears the risk and expense of delivering the goods to the carrier (2-319[1][a]). If the term is "FOB vessel, car, or other vehicle," the seller must load the goods on board at his or her own risk and expense (2-319[1][c]). FAS (free alongside). FAS (free alongside) is commonly used in maritime contracts and is normally accompanied by the name of a specific vessel and port. The seller must deliver the goods alongside the vessel at his or her own risk and expense (2-319[2]). CIF (cost, insurance, and freight). CIF (cost, insurance, and freight) means that the price of the goods includes the cost of shipping and insuring them. The seller bears this expense and the risk of loading the goods (2-320). C&F (cost and freight). C&F (cost and freight) is the same as CIF except that the seller is not obligated to insure the goods.
Buyer's duties
If the shipping terms are cash on delivery (COD), then the buyer must pay for the goods before inspecting them unless they are marked "Inspection Allowed." However, if it is obvious even without inspection that the goods do not conform to the contract, the buyer may reject them without paying for them first (2-512[1][a]). For example, if a farmer contracted to buy a bull and the seller delivered a cow, the farmer would not have to pay for it. The fact that a buyer may have to pay for goods before inspecting them does not deprive the buyer of remedies against the seller if the goods do not conform to the contract
negligence
Improperly manufacturing the goods. Misrepresenting the character of goods or their fitness for a particular purpose. Failing to disclose known defects, adequately warn about known dangers, or instruct about proper use. Failing to use due care in designing the goods.
Gap Fillers
In contracts governed by the Uniform Commercial Code (UCC), terms that can be inserted into a contract when those terms are not definite and certain.
Defenses to Strict Liability
Most states that have adopted strict liability do not allow the injured party to recover if the injuries resulted from the misuse of the product
Buyer in Ordinary Course
Purchases the collateral from a merchant's inventory; takes the collateral free of perfected security interests held by merchant's secured creditors in the inventory For example, Art's Jeep Sales borrows money from First Financial Services and gives First Financial a security interest in all its inventory of vehicles. The security interest gives First Financial the right to seize Art's inventory if it defaults on the loan. If Bob buys a new Jeep from Art's, he takes the Jeep free and clear of First Financial's security interest if he is a "buyer in the ordinary course." The basic purpose of this exception is to protect those who innocently buy from merchants, thereby promoting confidence in such commercial transactions
requirements for contract formation
that parties to sales contracts act in good faith and in a commercially reasonable manner. Further, when a contract contains an unfair or unconscionable clause, or the contract as a whole is unconscionable, the courts have the right to refuse to enforce the unconscionable clause or contract
Express Authority
the authority of an agent, stated in the document or agreement creating the agency
Risk of loss in a shipment contract
the buyer bears the risk of loss during transportation
price and quantity
The Code limits quantity in such cases to "such actual output or requirements as may occur in good faith" (2-306[1]). Even good faith amounts may not be tendered or demanded if they are "unreasonably disproportionate" to any stated estimate in the contract or to "normal" prior output or requirements if no estimate is stated (2-306[1]) price:." If a price term is simply omitted, or if the parties agreed to agree on price at a later date but cannot, or if the parties agreed that price would be set by some external agency (such as a particular market or trade journal) that fails to set the price, the Code says the price is a reasonable price at the time for delivery
Strict Liability
The legal responsibility for damage or injury even if you are not negligent
the terms of agreement
The parties have the power to control who has the risk of loss by specifically saying so in their agreement (2-509[4]). This they may do directly or by using certain commonly accepted shipping terms in their contract. In addition, the Code has certain general rules on risk of loss that amplify specific shipping terms and control risk of loss in cases in which specific terms are not used (2-509).
Seller's duties
The seller's basic obligation is to tender delivery of goods that conform to the contract with the buyer. Tender of delivery means that the seller must make the goods available to the buyer. This must be done during reasonable hours and for a reasonable period of time so that the buyer can take possession of the goods
implied warranty
an unwritten guarantee that the good or service is fit for the purpose for which it was sold
who benefits from warranties
buyer, In most states, the buyer is permitted to sue both the retailer and the manufacturer in the same suit. This is true both for implied warranties and for express warranties that may have been made by the manufacturer.
Buyer's Remedies
cancel contract, get goods from other supplier, sue seller for damages, reship goods, store goods
Exclusion of Warranties
exclusions and modifications are not looked on with favor by the courts.
Buyer's rejection of goods
f a buyer has a basis for rejecting a delivery of goods, the buyer must act within a reasonable time after delivery. The buyer must also give the seller notice of the rejection, preferably in writing (2-602). The buyer should be careful to state all the defects on which he is basing the rejection, including all that a reasonable inspection would disclose.
