UCC Article 2: Sale of Goods

Revocation

1) Buyer has right to revoke acceptance, but on more limited grounds than rejection 2) Can revoke acceptance of lot or commercial unit whose non-conformity substantially impairs its value to buyer if accepted: - in reasonable expectation of cure and there has been no seasonable cure, or - without discovery of non-conformity, acceptance was reasonably induced either by the difficulty of discovery or by seller's assurances

Effect of Acceptance

1) Buyer must pay for any goods accepted 2) Buyer may not reject 3) Where tender accepted, buyer must within reasonable time notify seller of any breach

Exclusion or Modification of Warranties

1) Can exclude implied warranties via exclusionary expressions like "as is" "with all faults" or other language with a common understanding calls the buyer attention to exclusion of warranties and make plain there are no implied warranties 2) If buyer before entering into contract, inspected or refused to examine goods, no implied warranty for defects which examination would have revealed 3) If neither 1 or 2 are present, to exclude warranty of merchantability, must mention merchantability, and in case of writing be conspicuous exclusion/modification 4) If neither 1 or 2, to exclude/modify implied warranty of fitness, must be in writing and conspicuous

Statute of Frauds and Goods Contract

1) Contract for sale of goods above $500 must be in writing - otherwise not enforceable 2) Exceptions - between merchants a written confirmation will suffice unless receiving party gives notice within 10 days in writing of objection to contents - specially manufactured goods - admission by party against whom enforcement is sought in pleading or in court - goods for which payment has been made and accepted - goods received and accepted

Implied Warranty of Fitness for Particular Purpose

1) Goods fit for particular purpose 2) Can be made by any seller, not limited to merchant 3) Made if the seller at time of contracting has reason to know that any particular purposes and the buyer is relying on the seller's skill or judgement to select suitable goods

Contract Formation under Article 2

1) May be made in any manner sufficient to show agreement, including conduct by both parties that recognize existence of contract 2) Open terms will not fail for indefiniteness of terms if the parties intended to make a contract and there is reasonably certain basis for giving appropriate remedy

Offer and Acceptance of Contract for Sale of Goods

1) Offer shall be construed as inviting acceptance in any manner and by any reasonable medium 2) Order to buy goods for prompt or current shipment invites acceptance by: a) prompt promise to ship b) prompt or current shipment of conforming or non-conforming goods, unless seller notifies buyer that shipment is offered only as accomodation c) BUT where beginning a requested performance is a reasonable mode of acceptance, offeror must be notified of acceptance within a reasonable time or may treat the offer as having lapsed before acceptance

Who can sue on warranties?

1) Party in contractual privity - aka buyer 2) Article 2 also creates statutory privity between certain persons and seller of goods, that enables certain persons injured by the goods to sue 3) DE created privity between seller and natural person - seller's implied or express warranty extends to any natural person who may be reasonably expected to use, consume, or be affected by the goods and who is injured by breach of the warranty - cannot b excluded by seller in contract

The Effect of a Rejection

1) Seller may cure if time for performance has not expired 2) After rejection, buyer cannot exercise ownership over the rejected goods, and, if buyer is in possession has to exercise due car at seller's disposition for reasonable time sufficient to permit seller to remove them 3) If no instruction from seller, buyer may store for seller's account, reship, or resell for seller's account 4) Merchant buyer must follow seller's instructions with respect to the goods, in absence of instructions need to take efforts to sell the goods for seller's account if goods are perishable

Shipment vs. Destination Contract

1) Shipment Contract - FOB Seller's Place - seller must put goods of possession of a carrier and make contract for their reasonable shipment *Risk shifts to buyer upon deliver by seller to carrier of the goods* 2) Destination Contract - FOB Buyer's Place - risk shifts to buyer only on delivery of goods to buyer - seller must tender to buyer under delivery contract at reasonable hour with reasonable notice to take delivery 3) Contract Does Not Specify - if contract does not specify, the place for delivery of goods is to the FOB Seller's Place at the seller's place of business = shipment contract

Merchant under UCC 2

1) deals in goods of that kind, or 2) by occupation, holding oneself out as having skill or knowledge of goods or practices involved

How to satisfy SOF with writing

1) describe the goods, and must be signed by the defendant trying to assert SOF defense - how you can sign under UCC is broad 2) indicate it is a contract for sale of goods 3) Include the quantity (need not be exact) - requirements contract is measured by buyer's needs - output contract measured by seller's output

Express Warranties of Quality

1) do not need to be in wriitng 2) Do not need to include formal words like "warrant" or "guarantee" 3) Seller does not need to specifically intend to make a warranty 4) Created by any: - affirmation of fact or promise made by seller to the buyer which relate to the goods and become a basis of the bargain - description of the goods or sample, or a model which is made a part of the basis of the bargain creates an express warranty that the goods conform to it - but statements merely of the value of purporting to be merely seller's opinion or accommodation do not create a warranty

When does risk of loss of goods, from damage or theft shift to buyer from seller?

1) parties may agree to when the risk shifts 2) absent such agreement, the shift is determined by the type of contract by which goods are to be shipped - shipment contract - destination contract

Manner of Rejection

1) rejection must be within a reasonable time after delivery or tenure - ineffective unless seller is notified

Warranty of Title and Against Infringement

1) title is good and free of any security interest or other lien of which the buyer at time of contracting has no knowledge 2) not limited to merchant, applies to all sellers 3) Also a merchant who regularly deals in this type of good gives implied warranty against infringement

Express/Implied Warranties in Contract for Sale of Goods

Both types of warranties exist - can be with respect to quality or chain of title of the goods *Buyer can sue on warranties even after taking delivery*

Effect of Revocation

Buyer has same rights and duties with respect to the goods involved as if it had rejected them

Rejection or Acceptance of Goods

Buyer may reject or accept non-conforming goods, in whole or by commercial units - see perfect tender rule

Acceptance made conditional on assent to additional or new terms

Conduct by both parties recognizing existence of contract is sufficient, even if the wriitngs do not establish a contract, and in such case the terms are: 1) terms on which the writings agree, and 2) supplementary terms incorporated from UCC

No Mirror Image Rule in UCC Article 2

Definite and seasonable acceptance can state different terms - timely expression of acceptance

Can an agreement vary the UCC provisions

Sure, by agreement *However, faith, diligence, reasonableness, and care cannot be waived*

Firm Offer Rule

Essentially if you have merchant offeror in sale of goods transaction who in writing promises to hold offer open for no more than 3 months, irrevocable for that time period or no more than 3 months

Perfect Tender Rule

If a seller ships non-conforming goods, the Buyer may reject or accept the whole, and also may elect to accept any commercial unit or units and reject the rest *Buyer can also revoke its acceptance of non-conforming goods under certain circumstances*

Wrongful Rejection by Buyer

It is a breach by the buyer, which leads to remedies for seller

Rejection in Installment Contract

MAY only reject installment if non-conformity: 1) substantially impairs the value of the installment, and 2) Cannot be cured, or 3) The non-conformity is a defect in the documents *BUT IF the non-conformity or default with respect to one or more installments substantially impairs the value of the whole contract, then there is a breach of the whole contract

Implied Warranty of Merchantability

Made by a merchant with respect to goods of that kind To be merchantable, must be: - fit for the ordinary purposes for which goods are used; - pass without objection in the trade; - in case of fungible goods, of fair or average quality within the description, and; - satisfy other UCC requirements

Express Warranties

Must be expressly created by the seller -reliance not required *Cannot disclaim if created* *If oral express warranty, may use parol evidence to determine if it occurred*

Time and Manner of Revocation

Must be made within a reasonable time after buyer discovers or should have discovered the ground for revocation, and Before a substantial change in the condition of the goods not caused by defects in the goods *Buyer must notify the seller*

Forming a Contract for Goods

Need to comply with various requirements

Acceptance

Occurs when the buyer: 1) after reasonable opportunity to inspect, buyer signifies to seller that the goods are conforming, or they will take or retain them despite non-conformity 2) Fails to make effective rejection 3) Does any act inconsistent with seller's ownership and acceptance is ratified *Acceptance of part of a commercial unit is acceptance of the whole commercial unit*

Battle of the Forms Issues

Terms in acceptance may be different from terms in the stated offer (UCC has no mirror image rule) - what will the terms be if offeror and offeree have stated different terms?

Exclusion/Modification of Warranty of Good Title

Only can be excluded or modified by specific language or by specific circumstances that give buyer reason to know that seller does not claim title to himself and is only such right or title the seller has *cannot fully exclude this warranty*

Gap Fillers in UCC Sale of Goods

when terms are ambiguous or missing, courts may imply terms based on course of performance, course of dealing, and custom and usage (in that order) *Further courts always consider reasonableness, good faith, no duty for seller to physically deliver to buyer, and that there is presumed simultaneous exchange of goods and money when filling gaps*

Additional Terms in Acceptance (when acceptance not conditional on assent to new terms)

These are proposals for additions to the contract Between merchants, become terms, UNLESS: 1) offer expressly limits acceptance to the terms of the offer 2) the extra/different terms materially alter contract 3) notice of objection to the terms has been given or is given in reasonable time after receiving them

Which types of transactions does Article 2 apply to?

Transactions involving the sale of goods or fixtures *Transactions involving a mix of goods/non-goods/services still governed by Article 2 if primarily for goods* *Does not apply to real estate transactions, service contracts, healthcare*