Business Law Ch 18-21

Blue Rorschach Inc. has an immediate requirement for 80 laptops and contracts with Zenzo Electronics for 80 Dell laptops at $550 each. However, Zenzo Electronics breaches the contract and fails to deliver the laptops. Blue Rorschach then immediately contracts Dell Computers, buys 100 laptops at $600 per laptop and then sues Zenzo Electronics for the breach of contract.What is the amount of legal damages that Blue Rorschach can recover from Zenzo because of the breach of contract?

$4000

Under the UCC, what course of action can the sellers pursue in case of shipment of noncorforming or defective goods?

Right to cure

Recovery for Breach of Warranty

- Warranty must be a contributing factor that enticed buyer to enter into the contract. - Retailer is liable for the express warranties made by manufacturers of goods it sells.

Bailee

A holder of goods who is not a seller or a buyer (a warehouse).

Merchant

A person who 1) deals in the goods of the kind involved in a transaction or 2) by his occupation holds himself out as having knowledge or skill peculiar to the goods involved in the transaction.

UCC Statute of Frauds

A rule in the UCC that requires all contracts for the sale of goods costing $500 or more and lease payments involving payments of $1000 or more to be in writing.

Mixed Sale

A sale that involves the provision of a service and a good in the same transaction.

Accomodation

A shipment that is offered to a buyer as a replacement for the original shipment when the original shipment cannot be filled.

Finance Lease

A three-party transaction consisting of a lessor, a lessee, and a supplier (vendor). Lessor acquires title to the goods or right to their possession and use in connection with the terms of the lease.

Lease

A transfer of the right to the possession and use of named goods for a set term in return for certain consideration.

Acceptance

Act that occurs when a buyer or lessee takes either of the following actions after a reasonable opportunity to inspect the goods that are the subject of a contract. Signifies to the seller in words or conduct that the goods are conforming or that the buyer will take or retain the goods despite their non-conformity. Fails to effectively reject the goods within a reasonable time after their delivery or tender by the seller. Buyer may accept only commercial units.

Document of Title

An actual piece of paper, such as a warehouse receipt or bill of lading, that is required in some transactions of pickup and delivery. - If required, title passes when and where the seller delivers the document to the buyer.

Usage of trade

Any practice or method of dealing that is regularly observed or adhered to in a place, a vocation, a trade, or an industry.

Implied Warranty of Fitness for Human Consumption

Applied to food or drink obtained from restaurants, grocery stores, fast-food, coffee shops, bars, vending machines, and other purveyors of food and drink. - Foreign Substance Test - based on foreign objects found in food - Consumer Expectation Test - To determine merchantability based on what the average consumer would expect to find in food products

Warranty Against Infringements

Automatic warranty provided by a seller who is a merchant who regularly deals in goods of the kind sold or leased that warrants that the goods are delivered free of any third-party patent, trademark, or copyright claim.

Warranty Disclaimers

Statement that negates express and implied warranties. Written disclaimers must be conspicuously displayed to be valid. Rules: "As Is" Disclaimer - with all faults Disclaimer of the implied warranty of merchantability, fitness for a particular purpose

Jason orders one hundred remote-controlled toy cars from RyBy Toys. In the contract, it is stipulated that RyBy Toys will transport the toy cars via FlyByNight, a national carrier service. RyBy Toys makes the arrangements and hands over the toys to FlyByNight without the remote-controllers. Which of the following is a breach of contract?

RyBy shipping the toys without remote-controllers

The ________ requires all contracts for the sale of goods costing $500 or more and lease contracts involving payments of $1,000 or more to be in writing

Statute of Frauds

UCC 2-201

Sale of goods priced at $500 or more must be in writing.

Conditional Sales

Seller entrusts possession of goods to a buyer on a TRIAL basis.

Jason orders one hundred remote-controlled toy cars from RyBy Toys. In the contract, it is stipulated that RyBy Toys will transport the toy cars via FlyByNight, a national carrier service. RyBy Toys makes the arrangements and hands over the toys to FlyByNight without the remote-controllers. What was the nature of the contract between Jason and RyBy Toys?

Shipment Contract

Accommodation Shipment

Shipment that is offered to a buyer as a replacement for the original shipment when the original shipment cannot be filled. - Can send similar items, but the buyer can reject

Void Title

Situation in which a thief acquires no title to goods he steals. - Purchaser does not acquire title to the goods. - Lessee has no leasehold interest in stolen goods. - Rightful owner can reclaim.

Statement of Opinion

Commendation of goods, made by a seller, that does not create an express warranty.

Electronic Agent

Computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances in whole or in part, without review or action by an individual.

Course of performance

Conduct of the parties concerning the contract in question.

What type of transaction is covered under the Magnuson-Moss Warranty Act?

Consumer transaction

Contract

Created when offeree sends acceptance to the offeror, not when offeror receives it. UCC permits acceptance by any reasonable manner or method of communication.

Payment

Due from buyer when & where goods are delivered. Goods can be paid in any manner acceptable in ordinary course of business. If cash is required, buyer must be given an extension to procure the cash.

A buyer cannot revoke his acceptance if he or she has already accepted nonconforming goods.

FALSE

A manufacturer is liable for express warranties made by wholesalers and retailers

FALSE

A shipment contract requires the seller to deliver goods to a destination specified in the sales contract

FALSE

Article 2 of the Uniform Commercial Code (UCC) adopts rules for risk of loss that are closely tied to title.

FALSE

Destination contracts are an example of noncarrier delivery

FALSE

Goods that are already in existence but which are to be sold at a future date are known as future goods

FALSE

If a buyer breaches a sales contract before the seller has delivered the goods, the seller cannot recover damages from the buyer.

FALSE

If no document of title is required, title only passes at the time and place of delivery

FALSE

If the bailee refuses to honor a document of title or other direction to deliver, the risk of loss remains on the buyer.

FALSE

In a shipment contract, delivery occurs when the shipment reaches the destination.

FALSE

Only written express warranties are valid.

FALSE

Shipment of the original offer to a buyer is called accommodation.

FALSE

The written confirmation rule requires that both parties to an oral agreement send written confirmation of the sale or lease

FALSE

Under the consumer expectation test, if a person were injured by eating a nail in a cherry pie, then the implied warranty would be breached.

FALSE

Magnuson-Moss Warranty Act

FEDERAL Statute that regulates written warranties on consumer products. Requires that warranty be labelled as either Full or Limited.

Breach

Failure of a party to perform an obligation in a sales or lease contract. UCC provides the injured party with a variety of prelitigation and litigation remedies. Material breach = big Minor breach = small

The ________ states that a merchant who offers to buy, sell, or lease goods and gives a written and signed assurance on a separate form that the offer will be held open cannot revoke the offer for the time stated or, if no time is stated, for a reasonable time.

Firm offer rule

From the following options, identify the commonly used shipping term that calls for the seller to arrange to ship the goods and put the goods in the carrier's possession.

Free on Board F.O.B.

UCC Article 2A

Governs leases of goods

UCC Article 2 (Sales)

Governs the sale of goods. Applies to Mixed Sales only if the goods are predominantly part of the transaction.

Risk of Loss in Non-Breach of Sales Contract

If goods are to be delivered to the buyer without the seller moving them, the risk of the loss passes to the buyer when: - Buyer receives negotiable document of title/goods - Bailee acknowledges buyer's right to possession. - Buyer receives a nonnegotiable document of title and has reasonable time to demand goods.

Delivery of Goods without Moving Them

If no document of title and goods are indentified, the title passes at the time of contracting.

Open payment term

If parties to a sale contract do not agree on payment terms, payment is due at the time and place at which the buyer is to receive the goods.

Open delivery term

If parties to a sale contract do not agree on time, place, and matter of delivery, the place of delivery is the seller's place of business.

Which of the following is true of a finance lease?

It consists of a lessor, a lessee, and a supplier.

Which of the following is true of how an implied warranty of merchantability is created?

It is implied by law if the seller or lessor is a merchant.

A ________ is a transfer of the right to the possession and use of named goods for a set term in return for certain consideration.

Lease

Miranda Airways, a commercial air carrier, has a contract with Wurtherton Inc., an airplane manufacturer, to purchase a new plane. Due to a sudden shortage of cash, Miranda Airways goes to MetrosBank. MetrosBank issues a document to Wurtherton, which says that if Miranda does not pay for the transaction, MetrosBank would. Wurtherton considers the offerand then sends an acceptance with additional terms. The additional terms stipulate that Miranda Airways could have the new airplane for a period of 10 years and then return it to Wurtherton. Miranda Airways agrees to the acceptance, and Wurtherton hands over the new airplane to them. What is the nature of the contract between Miranda Airways and Wurtherton?

Lease

UCC 2A-201

Lease contracts requiring payments of $1000 or more must be in writing.

Title

Legal, tangible evidence of ownership of goods.

Caveat emptor

Let the buyer beware.

Consensus ad idem

Meeting of the minds/ideas

Seller in Breach of Sales Contract

Occurs when seller tenders or delivers non-conforming goods to the buyer. Seller has duty to deliver conforming goods. Risk of Loss remains on the seller until: 1) Defect or non-conformity is cured 2) Buyer accepts the non-conforming goods

A buyer or lessee who rightfully covers may sue the seller or lessor for additional expenses paid.

TRUE

A consignment is treated as a sale or return contract under the UCC.

TRUE

A lost volume seller can recover damages from a defaulting buyer who has sold to another buyer.

TRUE

A party in a contract that uses its bargaining power unfairly can render the contract unconscionable

TRUE

A sales contract evidenced by writing cannot be contradicted by a prior oral or written agreement.

TRUE

A seller can recover lost profits in a case where damages measured by the difference between contract price and market price would not put the seller in the same position as the performance of the contract would have

TRUE

A seller's or lessor's statement of opinion of the goods does not create an express warrant

TRUE

A shipment contract requires the seller to ship the goods to the buyer via a common carrier.

TRUE

An express warranty can only be limited if the warranty disclaimer and the warranty can be reasonably construed with each other

TRUE

Article 2A of the UCC deals with lessors and lessees.

TRUE

As per the UCC law of sales, contract modifications do not require considerations.

TRUE

If a seller is a merchant withrespect to certain goods, there is an implied warranty that the quality of the goods must pass without objection in the trade

TRUE

If the parties to a sales contract do not agree to the time, place, and manner of delivery of the goods, the place for delivery is the seller's place of business.

TRUE

In a no-arrival, no-sale contract, the seller is not required to deliver replacement goods to the buyer

TRUE

In a sale on approval, there is no sale unless and until the buyer accepts the goods.

TRUE

Limited warranties are made more often by sellers and lessors than are full warranties

TRUE

The foreign food test is used to find breaches in the implied warranty of fitness for human consumption.

TRUE

The formation of sales and lease contracts requires consideration.

TRUE

The real ownercannot reclaim goods from a good faith purchaser

TRUE

The right to cure rule can be invoked by the seller.

TRUE

The right to withhold delivery is available to the seller if the buyer or lessee wrongfully rejects or revokes acceptance of the goods.

TRUE

The warranty against infringements protects trademarks and copyright claims.

TRUE

Under common law, the inclusion of additional terms in the acceptance of an offer is considered a counteroffer rather than an acceptance.

TRUE

Written disclaimers must be conspicuously displayed to be valid.

TRUE

Goods

Tangible items that are movable at the time of their identification to a contract. Money, stocks, bonds, patents, and real estate are NOT tangible goods.

Consideration

Required for the formation of sales & lease contracts. - Under UCC, modifications require NO consideration. - Modification must be made in good faith.

Installment Contracts

Requires or authorizes goods to be delivered and accepted in separate lots. Entire contract can be rejected ONLY if the default substantially impairs the value of the entire contract.

Good Faith Purchaser for Value

Person to whom good title can be transferred from a person with voidable title.

Compensatory Damages

Recoverable for breach of warranty. Difference between value of goods as warranted and the actual value of the goods accepted at the time and place of acceptance. Purchaser or lessee can recover for personal injuries that are caused by a breach of warranty.

Klint Microsystems, a microprocessor manufacturer, was contracted by ZeitarStudios to manufacture specially designed microchips to be used in an audio engineering process. Zeitar was to pay Klint $300,000 as per the contract. Klint decided to redesign their existing microchips and make them suitable for Zeitar. While the finished microchips were being shipped via a carrier, Klint was informed of Zeitar's insolvency. Klint cancelled the shipment before it was delivered. Klint then resold the chips to another studio where they had to settle for $150,000 as the chips were now only suitable for specific audio engineering processes.What right to remedy did Klint exercise when they stopped shipment to Zeitar

right to stop goods in transit

A sales contract that requires the seller to send the goods to the buyer but not to a specifically named destination is knownas a(n) ________.

shipment contract

In a shipment of containers of widgets, which of the following would be considered an implied warranty?

that the widgets are of an even kind, quality, and quantity within each unit

Kenneth purchased a car from his localdealership, Quartent Cars. However, since the car was not available in the color that Kenneth favored, the sales contract stipulated that Kenneth could immediately pick up the car of his preferred color from a nearby warehouse. The warehouse was owned by Mr. Henderson. Kenneth received the document of title for the car upon payment and presented it to Mr. Henderson a week later. But Mr. Henderson informed Kenneth that the car was damaged during a fire at the warehouse. What role does Mr. Henderson fulfill in the contract?

the Bailee

Which of the following parties to a shipment contract bears the risk of loss of goods during transport

the buyer

What is "course of dealing" when interpreting the express terms of a written statement?

the conduct of the parties in prior transactions and contracts

A contract is created when ________.

the offeree dispatches the acceptance

The right of a seller or lessor to refuse to send goods to a buyer or lessee upon breach of a sales or lease contract by the buyer or lessee or the insolvency of the buyer or lessee is known as the ________

the right to withhold delivery

A title for goods obtained by a seller through fraud, impersonation, or a dishonored check is referred to as a(n) ________

voidable title

A statement that negates express and implied warranties is known as a ________

warranty disclaimer

Joe's Alternative Realty leased a piece of real estate to WideEye Builders. While still on lease, Joe's Alternative Realty gave that same piece of real estate as security interest to procure a loan from Cloudnine Bank. The real estate, which wascollateral, was eventually repossessed by the bank from WideEye Builders, after Joe's Alternative Realty defaulted on their loan payment. What warranty had Joe's Alternative Realty breached with WideEye?

warranty of no interference

Eliza buys a car from TinCar Autos with a warranty that says any defect of the car will be repaired or replaced free for a period of six months after the sale. TinCar has taken security interests in the car. Before completely paying off for the car, Eliza sells the car to Mona for cash. Mona is unaware of TinCar's security interest in the car. After Eliza misses several ofher payments, TinCar discovers that Mona has the car, and repossesses it. Which warranty breach can Mona assert to recover from Eliza?

warranty of no security interests

When is a delivery considered to be complete in a shipment contract?

when the seller hands over the shipment to the carrier

Risk of Loss in a Shipment Contract

The buyer bears the risk of loss during transportation. - Risk passes to the buyer when the seller delivers the conforming goods to the carrier.

Which of the following is true for the perfect tender rule under installment contracts?

The buyer can reject a shipment only if it impairs the value of the entire contract.

Mansfield Dairies entered into a contract with Aratez Inc., a dairy product food processing company, to provide dairy products for a period of four years. The contract included a provision for a one-year limitation period in case of breach. But with less than a year left on the contract, Mansfield Dairies stopped shipment of milk products to Aratez Inc. Under the UCC statute of limitations, which of the following would be true with reference to Aratez's right to bring a lawsuit against Mansfield Dairies forbreach of contract?

The lawsuit could be filed anytime within one year from the breach.

Sale

The passing of title of goods from a seller to a buyer for a price.

Larry, a merchant seller, contracted with Simon to buy welding equipment. The contract stipulated that Larry would pick up the equipment from Simon's warehouse on the 14thday from the date of the contract. But Larry could not make the pick up on that date and before he could do so on the 15thday, the warehouse was burned down by miscreants. In this situation, who bears the risk of loss of the goods that were to be received by Larry?

The risk of loss lies with Simon for not protecting the goods.

Which of the following sales would be covered by Article 2 of the Uniform Commercial Code?

The sale of tangible goods

Risk of Loss in a Destination Contract

The seller bears the risk of loss during transportation.

Which of the following is essential for a revocation of acceptance to be effective?

The seller must be notified of the revocation within a reasonable time

Voidable Title

Title that a purchaser has on goods obtained by: 1) Fraud 2) Check that is later dishonored 3) Impersonation of another person

Battle of the Forums

UCC Rule stating that if both parties are merchants, then additional terms contained in the acceptance may become part of the sales contract if certain requirements are met.

Firm Offer Rule

UCC Rule that says that a merchant who 1) makes an offer to buy, sell, or lease goods and 2) assures the other party in a separate writing that the offer will be held open cannot revoke the offer for the time stated or, if not time is stated, for a reasonable time. No consideration is needed for modification.

Agreements that Affect Remedies

Under UCC, parties may agree to remedies in addition to those available or agree to limit remedies

The ________ is a model act passed in 1949 that includes comprehensive laws that cover most aspects of commercial transactions.

Uniform Commercial Code

Open price term

When the sales contract does not contain a specific price (open price term), a "reasonable price" is implied at the time of delivery.

Which of the following would constitute the creation of an express warranty for goods?

description of the goods

A(n) ________ is an actual piece of paper, such as a warehouse receipt or bill of lading, which is required in some transactions of pickup and delivery of sold goods

document of title

________ is a shipping term in a contract that requires the seller to bear the expenseand risk of loss until the goods are unloaded from the ship at its port of destination.

ex-ship

A full warranty is an example of a(n) ________.

express warranty

Which of the following constitutes an acceptance by the buyer?

failing to reject the goods within a reasonable time after delivery

What kinds of goods are termed as future goods?

goods that are not yet in existence

Unless properly disclaimed, a warranty is implied that sold or leased goods are fit for the ordinary purpose for which they are sold or leased, as well as other assurances, known as the implied warranty of ________

merchantability

A warranty in which the seller warrants that he or she has valid title to the goods he or she is selling and that the transfer of title is rightful is known as a warranty ________.

of good title

Gap-filling rule

A rule that says an open term can be "read into" a contract. Contract does not fail because of indefiniteness if: 1) Parties intended to make a contract 2) Reasonable certain basis for giving an appropriate remedy

Non-Carrier / No Movement of Goods

Buyer is required to pick up the goods from the seller. Merchant-Seller - If the seller is a merchant, the risk of loss does not pass to the buyer until the goods are received. Responsible until you pick up. (Costco) Nonmerchant-Seller - Pass the risk of loss to the buyer on "tender of delivery" of the goods. Tender of delivery occurs when the seller 1) places or holds the goods available for the buyer to take delivery and 2) notifies the buyer of this fact. Responsible after you purchase. (Yard Sale)

Warranties

Buyer's assurance that the goods meet certain standards. Based on contract law expressly stated or implied by law.

Course of dealing

Conduct of the parties in prior transactions and contracts.

A finance lease involves a lessor leasing money to a lessee.

FALSE

Article 2 of the UCC applies to sales contracts for the sale of intangible goods.

FALSE

Destination Contract

Contract that requires the seller to deliver the goods either to the buyer's place of business or to another destination specified in the sales contract. Title changes once delivered at business.

Shipment Contract

Contract that requires the seller to ship the goods to the buyer via a common carrier. (No specific destination) Title changes once goods are on the carrier.

Express Warranty

Created when seller affirms/promises that the goods meet certain standards of quality, description, performance, or condition. Can be written, oral, or inferred from seller's conduct. Not required to be made. Can be made by mistake because the seller does not specifically intend to make the warranty.

Liquidated Damages

Damages that will be paid upon a breach of contract that are established in advance. - Pre-established damages and substitute for actual damages in the contract.

Identification of goods

Distinguishing of the goods named in a contract from the seller's or lessor's other goods. - Already existing goods are id'd when a contract is made & names the specific goods sold & leased. - Goods that are part of a larger mass of goods are id'd when the specific merchandise is designated.

Letter of Credit

Document that is issued by a bank of behalf of a buyer who purchases goods on credit from a seller that guarantees that if the buyer does not pay for the goods, then the bank will pay the seller.

Additional Terms

In certain circumstances, the UCC permits an acceptance of a sales contract to contain additional terms and to act still as an acceptance rather than a counteroffer.

Warranty of No Interference

Lessor warrants that no person holds a claim or an interest in the goods that arose from an act or omission of the lessor that will interfere with the lessee's enjoyment of his or her leasehold interest.

Implied Warranty

Not expressly stated in sale or lease contract but instead are implied by law. Implied warranty of merchantability Implied warranty of fitness for human consumption Implied warranty of fitness for a particular purpose

Buyer in Breach of Sales Contract

Occurs when the buyer: (Buyer has duty to accept & pay for conforming goods.) 1) Refuses to take delivery of conforming goods 2) Repudiates the contract 3) Breaches the contract

Place of delivery

UCC stipulates place of delivery based on the following rules: - Noncarrier cases (seller's place of business is default) - Carrier Cases: Shipment & Delivery

Exceptions to the UCC Statute of Frauds

1. Specially manufactured goods 2. Admissions in pleadings or court. 3. Part acceptance.

Lessee

A person who acquires the right to possession and use of goods under a lease.

Lessor

A person who transfers the right of possession and use of goods under a lease.

Obligation

Action a party to a sales or lease contract is required by law to carry out.

Implied Warranty of Fitness for a Particular Purpose

Arises where a seller warrants that the goods will meet the buyer's expressed needs. Applied to both merchant and nonmerchant sellers. Breached if the goods do not meet the buyer's expressed needs.

Consignment

Arrangement in which a seller (the consignor) delivers goods to a buyer (the consignee) to sell on his behalf.

Article 5 UCC

Article of the UCC that governs letters of credit.

Revocation of Acceptance

Buyer can revoke acceptance if: 1) Goods are non-conforming 2) Non-conformity substantially impairs value of goods to the buyer 3) Seller's promise to timely cure are not met 4) Goods were accepted before the non-conformity was discovered and the non-conformity was difficult to discover. 5) Goods were accepted before non-conformity discovered & seller assured buyer that goods were conforming.

Right of Inspection

Buyer has the right to inspect goods BEFORE paying. May reject con-conforming rules. Parties may agree to time, place, and manner of inspection. If contract is silent, inspection must occur at reasonable time and place.

Implied Warranty of Merchantability

Fit for the ordinary purpose for which they are sold as well as other assurances. Adequately contained, packaged, and labeled. - Goods must be of an even kind, quality, & quantity within each unit. - Must conform to any promise or affirmation of fact made on the container or label. - Quality of the goods must pass without objection in the trade. - Fungible goods must meet a fair average or middle range of quality.

Future goods

Goods not yet in existence (ungrown crops, unborn stock animals) ID'd when goods are shipped, marked, or designated by the seller or lessor as goods to which the contract refers.

Destruction of Goods

If goods identified in a sale or lease contract are totally destroyed without fault of either party before the risk of loss passes to either party, the contract is void.

Open time term

If parties to a sales contract do not set a specific time of performance for any obligation under the contract, the contract must be performed within a reasonable time.

Open assortment term

If the assortment of goods to a sales contract is left open, the buyer is given the option of choosing those goods.

Perfect Tender Rule

If the goods or tender of delivery fail in any respect to conform to the contract, the buyer may opt to: 1) Reject entire shipment 2) Accept whole shipment 3) Reject part and accept part of the shipment

Passage of Title to Goods

If the parties do not agree to a specific time, title passes to the buyer when and where the seller's performance with reference to the physical delivery is completed.

(Adequate) Assurance of performance

If there is an indication that a contract will be breached by the other party, the first party can demand assurance of performance. Performance may be suspended until adequate assurance of performance is received from the other party.

Entrustment Rule

Merchant has the power to transfer all rights in the goods to a buyer in the ordinary course of business. - If the owner entrusts the possession of his goods to a merchant who deals in goods of that kind, and then sells it to someone else, the real owner cannot reclaim the goods from the buyer. They can only sue the merchant.

UCC Uniform Commercial Code

Model act that includes comprehensive laws that cover most aspects of commercial transaction. All states have enacted all or part of the UCC as statutes. Must be passed by each state.

Sale on Approval

No actual sale occurs until the buyer accepts the goods. Risk of loss & title pass when the goods are accepted by the buyer. Acceptance of the goods occurs if the buyer: 1) Expressly indicates acceptance 2) Fails to notify the seller of rejection of the goods within the agreed-on trial period. 3) Uses the goods inconsistently with the purpose of the trial.

Seller Remedies

Right to Withhold Delivery - right to refuse delivery to buyer on breach of contract or the insolvency of the buyer. Right to Stop Delivery of Goods in Transit - stop delivery if buyer repudiates contract, fails to make payment, or gives the seller some other right to withhold the goods. SELF-HELP Right to Reclaim Goods - Right of seller to demand the return of goods under specified situations. Right to Dispose of Goods - Right of a seller to dispose of goods (resell) in a good faith and commercially reasonable manner. {If they get less that value, they can sue original buyer for difference.} Right to Recover Purchase Price - if buyer fails to pay, breaches the contract & seller cannot dispose of the goods, or if the goods are damaged or lost after the risk of loss passes to the buyer. Right to Recover Damages for Breach - Recover damages as the difference between the contract price/rent and the market price at the time & place the goods were to be delivered. Right to Cancel a Contract - If buyer or lessee breaches the contract by rejecting or revoking acceptance of the goods, failing to pay, or repudiating all or any part of the contract. UNFINISHED GOODS - Seller may cease manufacturing the goods & resell them for scrap or salvage value. - Complete the manufacture of the goods and resell, release, or dispose of them to another party.

Buyer Remedies

Right to reject non-conforming goods or improperly tendered goods. Right to recover goods from an insolvent seller or lessor. (If they have wholly or partially paid for the goods from a seller who becomes insolvent within 10 days of receiving first payment.) Right to Obtain a Specific Performance - Equity doctrine/ decree of court that orders a seller to perform his obligations under contract. (Usually unique goods like artwork, specially manufactured goods.) Right to Replevy Goods - An action by a buyer to recover (sues) scarce goods wrongfully withheld by a seller. Right to Cancel a Contract - if seller fails to deliver conforming goods or repudiates the contract. Right to Recover Damages for nondelivery, repudiation, or for accepted nonconforming goods.

Written confirmation rule

Rule stating that if both parties to an oral sales or lease contract are merchants, the Statute of Frauds writing requirement can be satisfied if 1) one of the parties to an oral agreement sends a written confirmation of the sales or lease within a reasonable time after contracting and 2) the other merchant does not give written notice of an objection to the contract within 10 days after receiving the confirmation.

Statute of Limitations

Rule that provides that an action for breach of any written or oral sales or lease contract must commence within 4 years after the cause of action accrues. - May be reduced to 1 year - Cannot be extended beyond 4 years

Parol Evidence Rule

Rule that states that if a written contract is a complete and final statement of the parties' agreement, any prior or contemporaneous oral or written statements that alter, contradict, or are in addition to the terms of the written contract are inadmissible in court regarding a dispute over the contract.

Sale or Return Contract

Seller delivers goods to a buyer with the understanding that the buyer may return the goods if they are not used or resold with a stated reasonable period of time. Risk of loss & title pass to buyer when buyer has possession of goods.

Tender of Delivery

Seller or lessor's basic obligation. Obligation of a seller to transfer and deliver goods to the buyer or lessee in accordance with a sales or lease contract. - Put and hold conforming goods at the buyer's or lessee's disposition. - Give the buyer or lessee any notification reasonably necessary to enable delivery of goods

Cure

Seller takes back items that don't match contract and replace with appropriate replacement.

Warranty of Good Title

Seller warrants that he has valid title to the goods he is selling & that the transfer of title if rightful.

Warranty of No Security Interests

Sellers warrant that the goods they sell are delivered free from any third-party security interests, liens, or encumbrances that are unknown to the buyer.