business law ch 18-22
the offer
In general contract law, the moment a definite offer is met by an unqualified acceptance, a binding contract is formed
firm offer
An offer (by a merchant) that is irrevocable without consideration for a period of time (not longer than three months).
Ucc
A contract for the sale of goods over $500
Once the seller or lessor has tendered delivery, the buyer or lessee is obligated to accept the goods and pay for them according to the terms of the contract. In the absence of any specific agreements, the buyer or lessee must do the following
Furnish facilities reasonably suited for receipt of the goods. Make payment at the time and place the buyer receives the goods > protected website for classroom use. Obligations of the Buyer or Lessee LO2 Payment. Right of inspection. Revocation of Acceptance
Home Products Store buys furniture from Relax-o Furniture, Inc. The parties agree that the furniture will be shipped "F.O.B. Relax-o's warehouse" to Home Products via Swift Shipping Corporation. The furniture is lost in transit. The loss is suffered by
Home Products only.
acceptance can be revoked
If acceptance was predicated on the reasonable assumption that the nonconformity would be cured, and it has not been cured within a reasonable period of If buyer does not discover the nonconformity until after acceptance, either: (a) because it was difficult to discover before acceptance or (2) If buyer does not discover the nonconformity until after acceptance, either: (b) because the seller's assurance the goods were conforming kept the buyer from inspecting the goods
perfect tender rule
If the goods (or tender of delivery) fail in any respect to conform to the contract, buyer has the right to (1) accept the goods, (2) reject the entire shipment, or (3) accept part and reject part. Exceptions Agreement of the parties. - Cure. - Substitution of carriers. - Installment contracts. - Commercial impracticability. - Destruction of identified goods. - Assurance and Cooperation
Anticipatory Repudiation
Occurs when one party clearly communicates to the other, her intention not to perform. The aggrieved party can: 1. Await performance by the repudiating party, hoping that he will decide to honor the contract.
tangible property
Property that has physical existence (such as a car).
tender of delivery
Requires seller to hold conforming goods at the buyer's disposal, and give the buyer reasonable notification to enable the buyer to take delivery.
Megan, an agent for a department store, orders one hundred dresses from Sal's Clothing Shop for the Spring Blossom Sale. There is no specific agreement in the sale contract indicating when title will pass to the department store. The title will pass to the department store when
Sal's Clothing Shop physically delivers the dresses to the department store.
destination contracts
Seller agrees to tender conforming goods to the buyer at a particular destination. Goods must be tendered at a reasonable hour and held at the buyer's disposal for a reasonable length of time The seller must also give the buyer appropriate notice and any documents of title necessary to obtain delivery from the carrier
place of delivery
The UCC provides for the place of delivery under a contract if the contract does not state or otherwise indicate a place. - Noncarrier Cases: seller's place of business. Shipment Contracts : unless otherwise agreed, seller must: 1. Put the goods into the hands of the carrier. 2. Make a reasonable contract for their transportation. Shipment Contracts : unless otherwise agreed, seller must: 3. Promptly deliver any documents necessary to enable buyer to obtain the goods from the carrier. 4. Promptly notify buyer that shipment has been made.
Good Faith and Commercial Reasonableness
The obligations of good faith and commercial reasonableness underlie every contract under the Uniform Commercial Code (UCC) and are read into every contract.
Mary owns a small real estate company that arranges apartment leases for college students. She leases an apartment for nine months to Sara, a new undergraduate in the area. On her son's eighteenth birthday, Mary gives him a gift of a car. On her daughter's sixteenth birthday, Mary gives her a gift of $500. Mary sells her home gym to her neighbor for $1,000. Which of Mary's transactions would be covered by Article 2 of the UCC?
The sale of the home gym
Obligations of the Seller or Lessor
The seller's or lessor's major obligation under a sales contract is to tender conforming goods to the buyer or lessee.
The Federal Trade Commission (FTC) rules that Hairy Heads, Inc., engages in deceptive advertising when it markets its product Hairy Head Helper as able to eliminate baldness in two weeks or less. In an action against Hairy Heads regarding Hairy Head Helper, the FTC orders Hairy Heads to run a series of ads informing the public that Hairy Head Helper cannot actually eliminate baldness. This is
a counteradvertising order.
Raw Material, Inc., and Sewn Fabric Corporation enter into a contract for a sale of muslin. The terms do not clearly indicate whether it is a destination or shipment contract. A court would most likely presume that it is
a destination contract.
Peter, an agent for Zippy Cars, Inc., writes a letter to Cassandra on March 1 stating that he will sell her a 2011 Subaru Outback for $20,000 between March 1 and April 30. Peter's letter to Cassandra is
a firm offer
merchant
a person who deals in goods of the kind involved in the sales contract or who holds herself or himself out as having skill or knowledge peculiar to the practices or goods being purchased or sold
A contract between Fresh Fruit Corporation and Green Grocer, Inc., requires Fresh Fruit to deliver goods to Green Grocer's place of business. This is
a shipment contract.
Rally Corporation enters into a contract to sell ski gear to SnoSportz Company, which sells a pair of the skis to Tyra, a consumer, who later sells them to Uli, another consumer. Article 2 of the UCC applies to the sales transactions between
all of the buyers and sellers.
Retail Music, Inc., offers to buy from Super Products Corporation (SPC) 1,000 blank CDs of a certain brand. Without notifying Retail, SPC timely ships CDs of a different brand. This shipment is
an acceptance of the offer and a breach of the parties' contract
Excellent Exercise Equipment, Inc. (EEE) advertises a treadmill for $199. When Garth tries to buy one of the treadmills, George, the salesperson, tells him that they are backordered and will take over a year to arrive. George then shows Garth another treadmill that is $1,999 and tells him that he can have the more expensive model delivered the next day. This is
bait-and-switch advertising.
Bild-Rite, Inc., is a Colorado-based firm that does business with clients throughout North America. Bild-Rite oversees construction projects, and buys and sells commercial buildings, undeveloped land, and construction supplies and other goods. Bild-Rite has had to deal with work-site theft and vandalism. With respect to these circumstances, the Uniform Commercial Code (UCC) provides a framework for
commercial transactions for the sale of and payment for goods.
performance
duties or obligations of the parties under contract
Margaret, who is not an expert on horses, offers to sell a horse, a saddle blanket, and a bridle to her neighbor Betty for $2,000. Betty signs the bill of sale and pays the $2,000, but says that she wants a saddle as well. If Margaret does not give Betty a saddle along with the other goods and Betty files suit against Margaret for breach of contract, the court will probably
enforce the contract according to the original terms
lesse
exchange for rental payments
Levi, a well-known lumber dealer with a good reputation, buys a load of lumber and pays for it with a check that is later dishonored. Sam, who is unaware of the bad check, buys the lumber from Levi. Sam is a(n
good faith purchaser.
Jason contracts with Golf Carts Unlimited, Inc. to buy five golf carts. The contract lists the five carts as GC001, GC002, GC003, GC004, GC005. Identification
has taken place
lessor
is a person who sells the right to the possession or use of goods
Elizabeth buys a car from Silas, who is 16 years old. Elizabeth then wants to sell the car to her neighbor, John. Elizabeth's title to the car is
voidable
National Home Products, Inc., in its advertisements, makes false claims about its own products and about the products of its competitors. National may be subject to sanctions for the false claims about
its products and its competitors' products.
Leo buys a bicycle from his brother, Mike, who is a used car dealer. Mike agrees to keep the bike at his house until Leo picks it up. A tree falls on Mike's garage and destroys the bike. The loss is suffered by
leo only
Kirsten receives unsolicited merchandise in the mail. Kirsten
may keep the merchandise without any obligation to the sender.
Perfect Potato Chip Company makes an offer that Snack Foods Corporation would like to accept. Under the "mirror image rule" relating to offer and acceptance, an acceptance
must include only those terms and conditions contained in the offer
lease agreement
one person (the lessor) agrees to transfer the right to the possession and use of the property to another person (the lessee) in exchange for rental payments.
Wild Things, Inc. (WTI), in its ads, makes claims about its products that are obvious exaggerations and claims that are false but appear to be true. WTI may be subject to sanctions for
only its false claims
Paychex Loan Company extends credit in the ordinary course of its business. Under the Truth-in-Lending Act, Paychex must inform potential borrowers of
only its own credit terms.
Herman's Hammer Company and Melissa's Mallets, Inc. both make hammers. Both companies only use steel produced in the United States to make their hammers. Herman's Hammer Company displays an ad in the local hardware store that says, "Buy from Herman's - we only use American steel, while competitors like Melissa's Mallets use inferior foreign steel!" The statement in the ad is
puffery
cure
refers to the seller's or lessor's right to repair, adjust, or replace defective or nonconforming goods
On behalf of Premier Shipbuilding Corporation (PSC), Rita orders 1,000 cases of 1/4-inch nuts from Steel Parts Company's 10,000-case lot. Steel Parts separates 1,000 cases from the lot. Title and risk of loss
shift to PSC when Steel Parts separates the cases.
Expert Stitching Corporation enters into a contract to sell denim clothing to Fine Fashion Company, which in turn sells a pair of jeans to Grady, a consumer. In contrast to standards that apply to consumers, the UCC imposes on merchants
special business standards.
Sweets Store buys chocolate from Tasty Candies, Inc. The parties agree that the chocolate will be shipped "F.O.B. Sweets" via United Railroad Corporation. The chocolate is lost in transit. The loss is suffered by
taste only
Blythe's application to Community Bank for a credit card is denied. Blythe can obtain information on her credit history in a credit agency's files under
the Fair Credit Reporting Act.
The credit department of Mega-Mart often calls Nora at work about an overdue bill. Nora's employer objects. This is a violation of
the Fair Debt Collection Practices Act.
Rita, the manager of the State University (SU) soccer team, orally agrees to lease a certain number of specially made SU banners from Top Banners, Inc. This lease is enforceable only if Top has made a substantial start on making the banners and
the banners are not suitable for others in the course of Top's business
Sale
the passing of title to property from the seller to the buyer for a price Article 2 of the UCC states that it "applies to transactions in goods
VuTech Company agrees to sell digital video equipment to Home & Business Stores, Inc., for Home & Business to sell to its customers. Their contract will not be enforceable unless it includes
the quantity of the goods.
breach
when a person cannot carry out the promised performance, the innocent party will look for remedies for the breach.