MGMT Chapter 14

firm offer

arises when a merchant-offeror gives assurances in a signed writing that the offer will remain open. The merchant's firm offer is irrevocable without the necessity of consideration for the stated period or, if no definite period is stated, a reasonable period (neither to exceed three months) [UCC 2-205, 2A-205]. To qualify as a firm offer, the offer must be: 1. Written (or electronically recorded, such as in an e-mail). 2. Signed by the offeror (including e-signatures).

good

an item of property must be tangible and it must be movable

implied warranty

an unwritten guarantee that the good or service is fit for the purpose for which it was sold

warehouse receipt

is a receipt issued by a warehouser for goods stored in a warehouse

tender of delivery

occurs when the seller or lessor makes conforming goods available and gives the buyer or lessee whatever notification is reasonably necessary to enable the buyer or lessee to take delivery

cover

protect themselves by buying or leasing substitute goods for those that were due under the contract

bill of lading

receipt for goods that is signed by a carrier and serves as a contract for the transportation of the goods

identification

takes place when specific goods are designated as the subject matter of a sales or lease contract

requirement contract

the buyer agrees to purchase and the seller agrees to sell all or up to a stated amount of what the buyer requires.

sale

the passing of title from the seller to the buyer for a price

shipment contract

the seller is required or authorized to ship goods by carrier, such as a trucking company. The seller is required only to deliver the goods into the hands of the carrier, and title passes to the buyer at the time and place of shipment [UCC 2-401(2)(a)]. Generally, all contracts are assumed to be shipment contracts if nothing to the contrary is stated in the contract

three ways in which merchant status can arise

1. A merchant is a person who deals in goods of the kind involved in the sales contract. 2. A merchant is a person who, by occupation, holds himself or herself out as having knowledge and skill unique to the practices or goods involved in the transaction. This broad definition may include banks or universities as merchants. 3. A person who employs a merchant as a broker, agent, or other intermediary has the status of merchant in that transaction.

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. 1. That the goods conform to any affirmation (declaration that something is true) of fact or promise that the seller or lessor makes to the buyer or lessee about the goods. Such affirmations or promises are usually made during the bargaining process when a seller or lessor makes representations about a product. 2. That the goods conform to any description of them. 3. That the goods conform to any sample or model of the goods shown to the buyer or lessee.

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.

replevin

An action to recover specific goods in the hands of a party who is wrongfully withholding them from the other party.

insurable interest

Any financial interest in life or property such that, if the life or property were lost or harmed, the insured would suffer financially. The moment the contract goods are identified by the seller or lessor, the buyer or lessee has a property interest in them. That interest allows the buyer or lessee to obtain the necessary insurance coverage for those goods even before the risk of loss has passed

fungible goods

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

Implied Warranty of Fitness for a Particular Purpose

The implied warranty of fitness for a particular purpose arises in the sale or lease of goods when a seller or lessor (merchant or nonmerchant) knows both of the following: 1. The particular purpose for which a buyer or lessee will use the goods. 2. That the buyer or lessee is relying on the skill and judgment of the seller or lessor to select suitable goods [UCC 2-315, 2A-213].

perfect tender rule

Under the common law, the seller was obligated to deliver goods that conformed with the terms of the contract in every detail. Minor defects in performance were compensable under the doctrine of substantial performance. The UCC adopted the perfect tender rule. It states that if goods or tender of delivery fails in any respect to conform to the contract, the buyer or lessee may accept the goods, reject the entire shipment, or accept part and reject part [UCC 2-601, 2A-509].

bailee

a bailee is a party who—by a bill of lading, warehouse receipt, or other document of title—acknowledges possession of goods and/or contracts to deliver them. For instance, a warehousing company or a trucking company may be a bailee.

bailment

a temporary delivery of personal property, without passage of title, into the care of another, called a bailee

merchant

acting in a mercantile capacity, possesses or uses an expertise specifically related to the goods being sold.