Business Law Ch. 11
Which of the following qualifies as a "good" under Article 2 of the Uniform Commercial Code?
a commercial freezer unit
warehouse receipt
a receipt issued by one who is engaged in the business of storing goods for compensation
shipment contract
a contract that requires the seller to ship the goods to the buyer via a common carrier
shipment contract
a contract that requires the seller to ship the goods to the buyer via a common carrier all contracts are assumed to be shipment contracts if not otherwise specified
bill of lading
a legal contract that defines responsibility for goods while they are in transit
lease agreement
a lessor's and lessee's bargain with respect to the lease of goods, as found in their language and as implied by other circumstances
merchant
a person or company involved in wholesale trade, especially one dealing with foreign countries or supplying merchandise to a particular trade.
lessee
a person who acquires the right to possession and use of goods under a lease
What characteristics must an item possess to be classified as a "good"?
tangible and moveable
fungible goods
Goods that are alike by physical nature, agreement, or trade usage.
predominant-factor test
A totality of the circumstances test that asks whether the purpose of the contract is primarily for goods or services
output contract
agreement to purchase all of a particular producer's production
cure
goods are replaced/repaired
lessor
landlord
intangible property
Property recognized by law even though it has no physical existence.
tangible property
Property that has a physical form
delivery ex-ship
Risk of loss passes to buyer when goods leave ship
course of dealing
previous conduct between the parties
sale contracts
contracts for the sale of goods
fungible goods
goods of an essentially identical nature
requirements contract
contract to buy all requirements of the buyer from the seller
usage of trade
language and customs of an industry
document of title
Paper exchanged in the regular course of business that evidences the right to possession of goods (for example, a bill of lading or a warehouse receipt).
what law governs contacts for the international sale of goods?
United Nations Convention on Contracts for the International Sale of Goods
firm offer
binding offer stating in writing how long it is to be held open
Dakotah is the cheerleading coach for Northfield High School. Dakotah places an order by telephone with Cheerleader Supply Inc. for thirty cheerleader uniforms. Each uniform is to be emblazoned with the Northfield High emblem and a cheerleader's name. The total cost of the uniforms is $900. Two weeks after placing the order, Dakotah realizes she ordered the wrong style of uniform, so she contacts Cheerleader Supply and attempts to cancel the order. Cheerleader Supply at this time is almost through completing the work on the order. Cheerleader Supply:
can enforce the contract, even though it is not in writing, because it is for specially manufactured goods.
course of performance
conduct between the parties concerning performance of the particular contract
C. I. F.
cost, insurance, and freight Requires, among other things, that the seller "put the goods in the possession of a carrier" before risk passes to the buyer [UCC 2-320(2)]. (These are basically pricing terms, and the contracts remain shipment contracts, not destination contracts.)
What is the term for when a merchant gives a written, signed assurance that he or she will not revoke an offer for a stated period of time?
firm offer
F. A. S.
free alongside ship Requires that the seller, at the seller's own expense and risk, deliver the goods alongside the carrier before risk passes to the buyer [UCC 2-319(2)]. An F.A.S. contract is essentially an F.O.B. contract for ships.
bailment
giving possession and control of personal property to another person
The default provision of the Uniform Commercial Code (UCC) is that, unless otherwise specified, title to goods being sold passes when:
goods physically delivered to buyer
destination contract
A contract in which the seller is required to ship the goods by carrier and deliver them at a particular destination. The seller assumes liability for any losses or damage to the goods until they are tendered at the destination specified in the contract.
document of title
A writing exchanged in the regular course of business that evidences the right to possession of goods (for example, a bill of lading or a warehouse receipt).
Which section of the Uniform Commercial Code (UCC) applies to contracts for sales of goods?
Article 2 of the UCC sets forth the requirements for sales contracts, as well as the duties and obligations of the parties involved in the sales contract.
Tanya is in the business of selling rubber mats. Ralph is in the business of selling real estate. Logan is in the business of selling stocks and bonds. Article 2 of the U.C.C. governs the sale of the items sold by:
Tanya only
F.O.B
free on board. products delivered with all transport charges paid Indicates that the selling price of goods includes transportation costs to the specific F.O.B. place named in the contract. The seller pays the expenses and carries the risk of loss to the F.O.B. place named [UCC 2-319(1)]. If the named place is the place from which the goods are shipped (for example, the seller's city or place of business), the contract is a shipment contract. If the named place is the place to which the goods are to be shipped (for example, the buyer's city or place of business), the contract is a destination contract.
identification
in a sale of goods, the express designation of the goods provided for in the contract
Under the Uniform Commercial Code (UCC), what is the only required term for a valid sales contract?
quantity of goods being sold The quantity of goods involved must be expressly stated in the contract. If the quantity term is left open, the courts will have no basis for determining a remedy.
American Home Store, headquartered in San Diego, is getting ready for its Fourth of July sale. American orders $1,000 worth of American flags from Canadian Manufacturing, Inc., which is headquartered in Montreal, Canada. American places the order by telephone, and Canadian orally accepts. Two days later, American discovers that it can get the flags cheaper from a manufacturer in Denver. When American attempts to cancel the contract with Canadian, American finds that under the 1980 United Nations Convention on Contracts for the International Sale of Goods (CISG):
the contract is enforceable even though its not in writing
Larue owns a horse ranch. Larue enters into a contract with Dora for the purchase of thirty saddles for his ranch to be delivered on a specific date. If the price of the saddles is not included in the contract, under the U.C.C.:
the court will determine a reasonable price at the time of deliery
How does the 1980 United Nations Convention on Contracts for the International Sale of Goods (CISG) differ from the Uniform Commercial Code (UCC)?
- The CISG does not apply to consumer sales. (it only applies to sales between merchants of goods and it does not cover cosumer sales, sales of securities, ships, securities, vessels, or aircraft) - Under the UCC, an irrevocable offer must be in writing, but under the CISG it can be oral. - The CISG is stricter on requiring mirror image acceptances. (If a written offer is modified by the offeree and then returned to the offeror, the CISG deems this to be a rejection and counteroffer; under the UCC, a contract will be formed irrespective of whether the acceptance is a "mirror image" of the offer.)
In what ways does Article 2 of the Uniform Commercial Code (UCC) differ from contract rules under the common law?
1. Under the UCC, merchants have more flexibility in having open terms. (The UCC provides more flexibility in contract formation than exists in common law contracts, thereby accommodating the reality of business practices. The requirements for common law contract formation would be too burdensome for merchants.) 2. Under the UCC, any manner of showing agreement to contract is accepted, but under the common law acceptance must mirror the offer. (When a battle of the forms ensues between merchants, the conflicting terms are not fatal to the contract under the UCC. This is a major departure from the mirror image rule required by common law contracts. For the UCC, the primary issue is whether the parties intended to enter into a binding agreement.) 3. Under the UCC, the only required definite term is quantity of product being sold. Other terms such as price and delivery time can be left open.
destination contract
A 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 passes when the goods are tendered at that destination
insurable interest
something of value that, if lost, would cause you financial harm
identification takes place when
specific goods are designated as the subject matter of a sales or lease contract
