commercial law- lanie cohen

mineral park land co v. howard - commercial impracticability

( obligation to extract gravel from land excused when it became ten to tweleve times more expensive)

§2-502 buyer's rights to goods on sellers repudiation, failure to deliver, or insolvency

(1) a buyer who has paid a part or all of the price of goods in which he has a special property (a) seller repudiates or fails to deliver as required. by contract or (b) seller becomes insolvent within 10 days after recipt of first installment on their price (2) buyer right to recover goods under subsection 1a vests upon acquisition of a special property, even if seller had not then repudiated or failed to deliver (3) if identification creating special property has been made to buyer he acquires right to recover only if they conform to contract

§2-302 Unconscionable Contract or Clause

(1) if court finds the any clause of the contract to have been unconscionable at the time was made, court may refuse to enforce it, or may enforce the remainder of the contract minus the portion that is unconscionable (2) when it is claimed that the contract or any clause may be unconscionable the parties get an opportunity to present evidence as to its commercial setting, purpose and effect to aid court in making determination

§2-602 Manner and Effect of Rightful Rejection

(1) rejection of goods must be within a reasonable time after delivery or tender> ineffective unless buyer notifies seller - if parties specfically provide buyer will have right to inspect and test goods, reasonable time for rejection will be extended

§2-607 effect of acceptance

(1) the buyer must pay at the contract rate for any goods accepted (2) acceptance of goods by buyer precludes rejection, unless the buyer has knowledge of the non-conformity and theres a reasonable assumption it would be cured (3) where tender has been accepted (a) buyer in a reasonable time after he discovers breach notify seller of breach or be barred from any remedy (b) if claim is one for infringement or like buyer is sued as a result of such a breach he must so notify seller within a reasonable time after he receives notice of litigation or be barred from remedy over for liability

§2-206 offer and acceptance in formation of contract

(1) unless unambiguous by language or circumstance (a) offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances (b)order or other offer to buy goods for prompt or current shipment shall be as inviting acceptance either by promise to ship or current shipment of conforming or non-conforming goods shipment of non-conforming goods does not constitute an acceptance if seller seasonably notifies the buyer that the shipment is offered only as an accomodation to the buyer (2) if the offeror isnt aware that the offeree has accepted by starting performance he can revoke - an acceptance does not have to mirror the offer's terms ( an acceptance that deviates from the offer is not necessarily a rejection and counteroffer) - if the seller notifies the buyer that the goods are nonconforming or ships goods that do not conform to the contract, this is not an acceptance it is an accomodation

UCC: Retraction of Anticipatory Repudiation

(1) until repudiating party's next performance is due he can retract his repudiation unless aggrieved party has since the repudiation canceled or materially changed his position or indicated that he considers the repudiation final ƒ

§2-611 Retraction of Anticipatory Repudiation

(1) until repudiating party's next performance is due he can retract his repudiation unless aggrieved party has since the repudiation canceled or materially changed his position or otherwise considers the repudiation final (2) retraction may be by any method clearly indicates to aggrieved party that repudiating party intends to perform must include any assurance justifiably demanded under §2-609 (3)retraction reinstates repudiating party's rights under contract w/ due excuse and allownace to aggrieved party for any delay occasioned by repudiation

§2-510 effect of breach on risk of loss

(1) where a tender or delivery of goods fails to conform to contract, risk of loss remains on seller until cure or acceptance (2) where buyer revokes acceptance he may to the extent treat the risk of loss as having rested on the seller from the beginning (3) where the buyer as to conforming goods identified to the contract for sale rejects or is in breach before risk of their loss has passed, seller may to extent of any defciency in his effective insurance treat risk of loss as resting on buyer for a commercially reasonable time

§2-702 sellers remedies on discovery of buyers insolvency

(1) where seller discovers buyer is insolvent he may refuse delivery (2)where seller discovers buyer has recieved goods on credit while insolvent he may reclaim the goods upon demand made within 10 days after reciept but if misrep of solvency has been made to particular seller in writing w/in 3 months before delivery the ten day limitation does not apply (3) sellers right to reclaim subject to rights of a buyer in ordinary course or other good faith purchaser

§2-614 substitued performance

(1) where without fault of either party or an agreed type of carrier becomes unavailable or agreed way of delivery becomes impracticable, and a reasonable alterantive is available, a substitute performance must be tendered and accepted (2) if manner of payment fails bc of some gov regulation, seller may withhold or stop delivery unless buyer provides an alternative way to pay. if delivery is taken, payment by means or in manner provided by regulation discharges buyers obligation unless regulation is discriminatory

§2-511- buyer means of payment

(1)tender of payment is a condition to the sellers duty to tender and complete any delivery (2) tender of payment is sufficient when made by any means or manner in ordinary course of business unless seller demands payment in legal tender and gives any extension of time necessary to procure it (3) payment by check is conditional and defeated as between parties by dishonor of check on due presentment

§2-312 warranty of title and against infringement; buyers obligation against infringement

(a) good title (b) goods delivered free from security interest, liens or anything of which the buyer at the time of contracting has no knowledge (2) if there is specific language that indicates the seller doesnt claim title to himself (3) a seller who is a merchant, goods delivered are free from any copyright, trademark or patent claims of a third person

9-108

- ***cant be super generic on the security agreement, but on the financing statement

2-601 (Perfect Tender Rule)

- a buyer who has not yet accepted non-conforming goods as a result of buyer's inspection has the right to reject the tender - rejection places the buyer in the same remedial position as if the seller had not performed at all - standard for rejection is more generous to buyer than the standard for revocation of acceptance under 2-608 - buyer must overcome the inference that the goods were conforming when tendered and that the buyer either did something or failed to do something: - a buyer cannot revoke for any defect, instead the buyer must show that the nonconformity represents a substantial impairment in value to him - buyer was duped bc of latent defects - seller promised to correct the problem, but did not - sellers assurances or other tactics at the time and place for tender deprived buyer of the opprtunity to inspect to inspect fully

does a merger clause effectively disclaim a warranty?

- a effective worded merger can have same effect as disclaimer - remember that the inclusion of a merger clause is not conclusive and a court may still decide that the writing is incomplete - it is only evidence of the parties intent - if other language in the contract conflicts with merger clause, court may say writiing is incomplete and look to parol evidence for clarification

acceptance takeaway as per §2-606

- acceptance under 2-606 relates to the parties performance obligations -a buyer who has accepted the goods bears the burden of proving that the goods were non-conformity or be barred from any remedy - a buyer who is deemed to have accepted the sellers tender must seasonably notify seller of the non-conformity or be barred from any remedy - notify in a timely manner or lose the right to revoke

§1-305 Remedies to be Liberally Administered

- aggrieved party may be put in as good as a position as if the other party had fully performed

§2-314 (2)(e) adequately contained, packaged and labeled

- analysis turns on failure to warn of dangers in the packaging of the foods; failure to warn of danger on label - if the product contained in the can cause harm, then there needs to be a label to warn the buyer - the container containing the actual product or good carries an implied warranty that the goods are adequately contained, packaged and labeled

Buyer's Right to Inspect Goods

- buyer has right to inspect goods before accepting and paying for them - if goods conform buyer is obligated to pay for inspection costs - if goods do not conform, buyer may demand costs of inspection from seller

§2-606: What Constitutes Acceptance of Goods

- buyer may have possession of the goods before she has accepted the goods - possession does not necessarily mean acceptance - acceptance occurs if buyer after reasonable opportunity to inspect, indicates buyer will take them even if nonconformities exist ( or if buyer fails to make an effective rejection, or if buyer treats them as buyer's property acceptance of goods occur when the buyer (a) reasonable opportunity to inspect goods signfies to seller that goods are conforming or that he will take or retain them in spite of their non conformity or (b)fails to make effective rejection but such acceptance does not occur until buyer has had reasonable opportunity to inspect them; or (c) any inconsistent w seller's ownership, if such act is wrongful as against seller is an acceptance only if ratified by him (2) acceptance of a part any commercial unit is acceptance of that entire unit

§2-607- notice of defects within time frame of disclaimer

- buyer must give notice of breach of defect in a reasonable time - if claim is for infringement, the buyer is sued as a result of such a breach he must so notify the seller within a reasonable time after he recieves notice of the litigation or be barred from any remedy over for liability established by the litigation - where the contract expressly creates an unlimited express warranty of merchantability and also provides a time limitation which indirectly limits the express warranty will prevail over the time limitation

§2-608 Revocation of Acceptance in Whole or in Part

- buyer must show that the defect substantially impairs the value of the goods - the distinction is that revocation of acceptance under the ucc allows the buyer to recover the price and recover consequential damages as well - buyer only recovers the price of the goods- no consequential damages allowed

9-516. What Constitutes Filing; Effectiveness of Filing

- communication of a record to filing office and tender of the filing fee or acceptance of record by filing office constitutes filing - refusal to accept record; filing does not occur with respect to a record that a filing office refuses to accept bc: (1) record is not communicated by method or medium of communication authorized by filing office (2) amount equal to or greater than applicable filing fee not tendered (3) filing office is unable to index record bc: (a) case of an initial financing statement, record does. not provide a name for debtor

§2-613 Casualty to Identified Goods

- contract requires performance goods identified when contract is made and goods suffer casualty without fault of either party before the risk of loss passes to buyer (a) if loss is totaled contract is avoided and (b) loss is partial or goods have deterioated as no longer to conform contract the buyer may nevertheless demand inspection and option either treat contract as avoided or accept goods with due allowance from contract price for deterioration or defciency in quantity without further right against seller

§1-303

- course of performance -conduct between the parties with an agreement that have had transaction involves repeated occasions for performance - course of dealing- previous transactions with a particular transaction regarding common basis of understanding for interpreting their expressions and other conduct - usage of trade - regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question - express terms- of an agreement and any applicable course of performance, course of dealing, or usage of trade must be construed whenever reasonable as consistent with each other. these prevail over course of performance, course of dealing, and usage of trade

ambiguous terms

- courts may accept evidence of consistent additional terms to clarify or remove the ambiguity - no contradictory terms

examples of goods

- cranes - permanent installations - crops, timber, oil, gas, minerals - unborn young animals - money if it is being bought and sold ( coin collection, currency exchange)

perfect tender rule

- doctrine of substantial performance does not apply to a contract for single delivery- perfect tender applies - right for a buyer of goods to insist upon perfect tender by the seller, the seller has to deliver goods that conform to each and every detail of the sales agreement- if goods do not conform the buyer may reject them and rescind the contract

how does the magnuson moss act affect warranty law?

- does not create warranties or require sellers to give warranties, but it does raise the disclosure requirements for written warranties for consumer products and it makes it more difficult to exclude warranties once given - full warranty means that the product must comply with standards set out in the act, so a seller must make clear if a warranty is limited. in the early days of the act there were a lot of full warranties being given, but that practice has died out and they are quite rare

9-503(a)(3) NO TRADE NAMES

- financing statement that provides only the debtor's trade name does not sufficiently provide the name of the debtor - use individual name - Ex: if debtor name is glenys spence operating under trade name or dba, trendy threads, use glenys spence, not trendy threads

psmi- equiptment

- has priority over conflicting interests in the same goods only if the

whether or not filing is required? 9-309(2)

- have to file - an assignment of accounts or payment intanginbles which does not by itself or in conjunction with other assignments to the same assignee transfer a significant part or the assignor's outstanding accounts or payment intangibles (1) sale of a payment intangible (2) sale of a promissory note (3)a security interest created by the assignment of a health-care-insurance recieveable to the provider of the health care goods or services

exception to perfect tender

- if parties agreed otherwise, if seller promptly notifies the buyer of its intention to cure lack of conformity and if is able do so within the period of time indicated in sales agreement

Forseeability

- if seller has explicitly assumed then it is forseeable - may depend on type of trade and a myriad of factors - if parties made contract knowing these events might happen, then 2-615 does not apply bc no contingency the nonoccurence of which was a basic assumption exists. - seller will be liable in damages if it is not able to deliver the goods bc of a happening of the event

when does risk of loss pass from seller to buyer?

- in a shipment contract- the risk of loss passes once the seller places conforming goods into the hands of the carrier a destination conract-the risk of loss does not pass from seller to buyer until the conforming goods arrive at their specified destination - if goods are in a warehouse are to be delivered without being moved, risk of loss passes from seller to buyer on buyers receipt of a document of title covering the goods - in all other instances risk of loss passes to buyer on his receipt of the goods if seller is a merchant, or if seller is non merchant on sellers tender of delivery, no matter if buyer is not yet in receipt of the goods

what language will disclaim and what circumstances will foreclose the warranty of title?

- in an ordinary sales transaction, warranty of title can be disclaimed or modified only by specific language in a contract - lease transactions must be: specific, in writing, and conspicous

disclaimers and the parol evidence rule

- intended to protect the seller against false allegations of oral warranties - sellers protection is subject to restrictions: written agreement may be contradicted by parol evidence if intention was not to be final expression of their agreement - a disclaimer in a writing that is NOT final will NOT negate an oral warranty previosuly made by the seller - even if writing was intended as final expression of part of the agreement, it may be supplemeted with evidence of consistent additional terms if writing was not intended as complete and exclusive statement of the terms of the agreement

validity of the forms

- must pay attention to technical requirements to create security interest under article two docs: security agreement and financing statement security agreement- contract between debtor and creditor, where debtor gives creditor in the collateral in exchange for value financing statement- notice that is filed in the place specified in 9-501 to alter other creditors of the existence of other security interested

§2-503- seller must perform by making conforming goods available to the buyer

- notify the buyer that the goods are available - hold the goods for a reasonable period of time to allow the buyer to retrieve them or -ship them according to the buyers instructions -the goods tendered must conform with respect to both quality and quantity

repudiation and non delivery

- outright failure to deliver is a breach of contract

9-509 persons entitled to file a record

- person may file an initial financing statement, amendment that adds collateral covered by a financing statement or amendment that adds a debtor to a financing statement if: - debtor authorizes filing in an authenticated record

security agreement should also express

- primary debt/ obligations - conditions of default - secured creditors rights/ remedies on defualt and - the debtors other undertakings, such as maintence, insurance - where collateral is in possesion of secured party, no written security agreement is required by law- possession substitutes for the debtors authentication - if collateral is not in secured party's possesion or control secured party must comply with requirements

2-503(1) tender of delivery requires that the seller

- put and hold conforming goods at the buyers disposition and give the buyer any notification reasonably necessary to enable him to take delivery

§2-207 battle of the forms

- rejects the mirror image rule at common law - courts may invoke the common law mirror image when it comes to dickered terms - adding or changing dickered terms creates a counter offfer - dickered terms= are the specific terms that are agreed upon by both parties during negotiations - any acceptance that indicates an intention to enter into a contract is valid unless it is made conditional on the acceptance of additional or different terms -need to be both merchants

in re wild west world

- retention or reservation by the seller of the title in goods shipped or delivered to buyer is limited in effect to a reservation of a security interest. - once a seller ( though unpaid) delivers the goods to the buyer, seller acquires a security interest in those goods, and must file a ucc-1 to perfect its interest

Adequate Assurances

- right to demand performance gives protection to a party whose prospects for performance are undermined although the other party has not committed an anticipatory repudiation - if one party has recieved a communication that raises substantial doubts about party's willingness to perform but is not so unequivocal as to constitute a clear repudation, former has a basis for demanding adequate assurances, in effect requiriing the other party to resolve doubt and clear up insecurity - failure to do so is equivalent of a repudation and thus a total breach- despite its utility, adequate assurance is not a remedy - a party who relies on section w/o justification will herself be committing an anticipatory repudiation - must be reasonable

§2-501 insurable interest in goods; manner of identification of goods

- risk of loss cannot pass until goods identified - title cannot pass until goods are identified - parties can agree to time and manner of identification - exsiting goods- identified when specific goods named, including goods in bulk future goods- identified when conceived ( if for unborn young to be born within 12 months) born, planted, shipped, marked, or designated - seller has insurable interest s long as seller retains title or has security interest - lessor has insurable interest during term of lease - buyer/lessee has insurable interest in identified goods - both parties may have insurable interest simultaneously

implications of warranty of title §2-312

- seller automatically warrants that buyer will own the goods - will get them free and clear of liens and will not be subject to legal claims of another, and - do not confuse giving a warranty of title with actually giving good title, if seller sells stolen goods, buyer gets a warranty of title- which seller breaches - but buyer does not own the goods- buyer does not get good title bc the goods were stolen - seller does not have to be a merchant for the warranty to attatch

Destination Contract

- seller delivers goods either to buyers place of business or another destination specified in the sales contract

disclaiming express warranties

- some courts say it is repugnant to disclaim and express warranty

9-502 Contents of Financing Statement

- sufficent only if: provides the name of the debtor, provides the name of the secured party or a represenative of the secured party, and indicates collateral covered by the financing statement

passage of title

- unless otherwise agreed or addressed elsewhere - title passes to buyer at time and place at which seller completes his performance of delivery despite any doc of title to be delivered or any reservation of a security interest - if delivery is made w/o movement of goods, title passes when doc of title is delivered, or if no docs are delivered, title passes at a time and place of contracting

§2-513 right to inspect takeway

- unless the contract states otherwise, the buyer bears the cost of inspection. if the goods are non-conforming, buyer can recover those costs as incidential damages under 2-716 - parties are free to stipulate in their contract designated time, place, and manner of inspection - in the abscence of a contractual provision on inspection, the buyer is within its right to inspect at any reasonable place and time and in any reasonable matter - inspection is not mandatory, but a buyer who declines the opportunity to inspect the goods or who fails to inspect in a timely manner will suffer the consequences of having adopted the goods, no matter their nonconformity and may be precluded from a remedy

Retraction of Repudiation

- until non-breaching party treats repudiation as breach, party can retract by notice- parties will be restored to their original obligations - repudiating party has power of retraction subject to a limitation of material reliance - if notification of the retraction comes to the attention of the injured party before he materially charges his positiion in reliance on repudiation or indicates to the other party that he considers the repudiation to be final

privity

- warranty suits based on contract actions require privity of contract - buyer must prove that a contract existed between the parties in fact and in law - an issue of privity arises where the buyer purchases goods from a retailer, but is seeking to sue the manufacturer of those goods

§2-508 Cure by Seller of Improper Tender or Delivery; Replacement

- where any delivery by seller is rejected by buyer bc non-conforming and time for performance has not yet expired, seller may try to notify buyer he will try to cure within the contact time - buyer rejects a non-conforming tender seller had reasonable grounds to believe be acceptable with or without money the seller may notify buyer to have a further reasonable time to substitute a conforming tender (2) provided that where the buyer rejects a nonconforming tender which the seller had reasonable grounds to believe would be acceptable with or without money allowance the seller may, if he notifies buyer have a further reasonable time to substitute a conforming tender

ucc approach to in writing

- writing must identify the goods - will recongize even if it incorrectly states the quantity, although the court will not enforce beyond the quantity stated in the writing - other missing terms may be filed by various ucc gap fillers

§2-605

-buyer must state reasons for rejection with particularity - seller must be given notice of particular defect in order to cure

in re troupe

-consumer goods are goods that are used or bought for use primarily for personal, family, or household purposes - equiptment is defined as goods other than inventory, farm products, or consumer goods

the financing statement

-document filed in the appropriate public office to perfect the creditors rights in the collateral against later parties - once the debtor signs the security agreement, the creditor has authority to file the financing statement, no further signing is needed by either party

§2-615 Excuse by Failure of Presupposed Conditions ( impracticability)

-if performance as agreed has been made impracticable by the occurence of a contingency the non-occurence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable foriegn or domestic gov regulation or order whether or not it later proves to be invalid - if affects only part of sellers capacity to perform,

in what way must the buyers title or possession be interfered with, and who must cause such interference for the buyer to have a cause of action under §2-312?

-if the object of the sale is subject to a valid but undisclosed security interest or a valid claim of title by a third person, the warranty in 2-312(1) is breached and the seller is liable in damages - the seller does not have to be a merchant and ignorance of the defect in title is not a defense - as long as the buyer has no knowledge of the defect in title, the buyer will prevail

compliance with governmental regulation

-one of the most forseeable events - delay in delivery or nondelivery is not a breach if performance as agreed has been made impracticable by compliance in good faith with any applicable foreign or domestic gov regulation - parties must still demonstrate that performance is impossible and party must not have induced the gov regulation that it complains of or - regulatory order is as a result of consent order arising from a negotiation with the gov to bring actions into compliance with regulations

how to escape liability

-party must show that its performance; has been made impracticable, by the occurence of a contingency the nonoccurence of which was a basic assumption on which the contract was made, or by compliance in good faith with any foreign or domestic gov. regulation or order broken into three elements: (1) seller assumed risk of some unknown contingency - assumption of risk is determined by whether the contingency was forseeable (2) nonoccurence of contingency must have been a basic assumption underlying the contract; and (3) occurence of that contingency must have made performance commercially impracticable

krell v. henry - frustration of purpose

-performance of the contract becomes virtually worthless to the other party

shipment contract

-seller should make proper shipping arrangements - deliver the goods into the carriers hands

who must the buyer sue?

-some courts hold that a warranty of title runs only to the immediate buyer - some courts require privity of contract

if there is a contradiction as per §1-303, the order of priority is

1. express terms 2. course of performance 3. course of dealing and 4. usage of trade

what are the two types of express warranty?

1. full warranty- covers repairs or replacement of a defective product at no cost 2. limited waranty- excludes certain parts of the product from coverage, or requires the customer to pay some portion of repairs

§2-204 formation

1. parties intended to make a contract and 2. there is a reasonably certain basis for the court to grant an appropriate remedy

predominant factor test

1. whether the predominant factor, thrust, purpose, reasonbly stated, is the rendition of services, with goods incidentially inolved, or 2. whether the essence or dominant factor in the formation of the contract was the provision of goods

when it comes to pmsi in equiptment you have how many days to perfect after you deliver the goods to the buyer?

20 days to file the financing statement

a financing statement is good for how long?

5 years

buyer in the ordinary course of business

A buyer who, in good faith and without knowledge that the sale violates the ownership rights or security interest of a third party in the goods, purchases goods in the ordinary course of business from a person in the business of selling goods of that kind - only a buyer that takes possession of the goods has a right to recover the goods from the seller under article 2 may be a buyer in the ordinary course of business - cant be a person who has a debt to someone else

the economic loss doctrine

A common law rule holding that when an injury is purely economic, and arises from a contract made between two businesses, the injured party may only sue under the UCC., not under tort

Unconscionability

A determination that a contractual term was so procedurally or substantively unfair and offensive that the harmed party should be relieved from its consequences

Commercial Impracticability 2-615

A doctrine that may excuse the duty to perform a contract when performance becomes much more difficult or costly due to forces that neither party could control or contemplate at the time the contract was formed. - an act is impracticable when it can only be done at an excesive, unreasonable and unbargained -for cost - you should put a force majeure clause-A contractual provision that excuses performance because of unforeseen events outside the parties' control - valid defense not only when performance is impossible, but also when supervening circumstances make performance impracticable - impracticable when it can be done at excessive, unreasonablle and unbargained for cost

Magnuson-Moss Warranty Act

Provides that if seller decides to issue written warranty for consumer good, seller must specify whether warranty is "full" or "limited" - designed to prevent deception in warranties by making them easier to understand

entrustment

The transfer of goods to a merchant who ordinarily deals in that type of goods. If the merchant subsequently sells them to a good-faith third-party purchaser, the buyer acquires good title to the goods.

how do you recognize when you have a ucc 2-207 issue?

Transaction involves the sale of goods; Agreement made orally and one or both parties send a written confirmation with the terms as orally agreed, but terms which were not discussed are added. The acceptance to an offer (an acknowledgement) adds minor suggestions or proposals. Pre-printed forms for ordering and confirming orders are used.; There are conflicting terms in the pre-printed portions of the order and confirmation that are not negotiated.

St. Ansgar Mills, Inc. v. Streit

Written confirmation of an oral agreement, when received within a reasonable time, will bring an agreement within the Uniform Commercial Code's exception to the Statute of Frauds, if the agreement is between merchants.

under the ucc buyer or lessee loses the protection of the implied warranty as to defects if

a buyer or lessee actually examined the goods as fully as desired before entering the contract or - refuses to examine the goods according to the sellers or lessors demand that there be an examination

§2-204 Formation in General

a contract for the sale of goods is formed even if one or more terms are left open as long as: 1. parties intended to make a contract and 2. there is a reasonably certain basis for the court to grant an appropriate remedy

bill of lading

a doc used to acklnowledge the receipt of a shipment of goods

9-324 (PRIORITY OF PURCHASE-MONEY SECURITY INTERESTS)

a perfected pmsi in goods other than inventory or livestock has priority over a conflicting security interest in the same goods, and a perfected security interest in its identifable proceeds also has priority, if the psmi is perfected when the debtor receives possession of the collateral or within 20 days

pmsi- inventory §9-324

a perfected purchase money security interest in inventory has priority over a conflicting security interest in the same inventory- has priority over a conflicting security interest in chattel paper or an instrument constituting proceeds of the inventory and in proceeds of the chattel paper- cash proceeds are recieved on or before the delivery of the inventory to a buyer; perfected when: (1) psmi is perfected when debtor receives possesion of the inventory (2) pmsi secured party sends an authenticated notifcation to holder of conficting security interest (3) holder of conflicting security interest receives the notification has or expects to acquire a purchase money security interest in inventory of debtor and describes inventory (4) notfication states that person sending notification has or expects to acquire a pmsi in inventory of debtor and dezscribes inventory (c) holders of conflicting inventory security interst to be notified, if holder of conflicting security interest has filed a financing statement covering the same types of inventory (1) pmsi is perfected by filing, before the date of filing or (2) if pmsi is temporarily perfected w/o filing or possession before the begining of the 20 day period

a person is entitled to file certain amendments

a person may file an amendment other than an amendment that adds collateral covered by a financing statement or an amendment that adds a debtor to a financing statement only if: (1) secured party authorizes it (2) amendment is a termination statement for a financing statement as to which the secured party of record has failed to file or send a termination statement as required, the debtor authorizes the filing, and the termination statement indicates that the debtor authorized it to be filed

example of voidable title

a property owner may only seek recovery against the wrongdoer- may not seek to recover his property from one who purchased from the wrongdoer in good faith

§2-316 (3)

a seller may shift the risk of the quality of the goods to the buyer by demanding that the buyer examine the goods sold - seller must DEMAND that the buyer examine the goods for any defects - even if the seller does not make demand, if the buyer voluntarily examines the goods or a sample or model, the seller may also be free from liability - if buyer refuses to examine goods after a contract has been formed, implied warranties are not disclaimed - an implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade

tender in shipment contracts- seller must

a. put goods in possession of carrier and make contract for transport b. obtain and promptly delivery or tender any doc necessary to enable buyer to obtain possession of the goods c. promptly notify buyer of shipment - failure to notify buyer is ground for rejection only if material delay or loss ensues

types of implied warranties

a. warranty of title and against infringement - goods will be free of third party claims of title and ownership of intellectual property b. the warranty of merchantability- goods sold will be fit for the ordinary purposes for which such goods are used c. the warranty of fitness for a particular purpose- where the seller at the time of contracting has reason to know of any particular purpose for which the goods are required and that the buyer is relying on the sellers skill or judgement to select or furnish suitable goods, there is an implied warranty that goods shall be fit for such purposesexpr

Doctrine of Anticipatory Repudiation

allows a non-breaching party to suspend performance and recover damages before performance is due if the other party has made an unequivocal statement or action suggesting that performance will not occur

ellig v. molina

although the confirming letter was sent after the transaction was concluded, it still satisfied the requirement for a writing

sol

an action for breach of contract under the ucc must be commenced within four years after the cause of action accrues- four years after the breach occurs, or one year after the breach should have been discovered, but no later than five years after the time that the right accrued

express warranties

an express promise is one that is found in spoken or written words

what is puffing

an expression of opinion by a seller or lessor that is not made as a representation of fact

merchants firm offer §2-205

an offer can be revoked at any time except: - a merchants firm offer in a signed writing for sale or lease of goods, even if there is no consideration - a firm offer arises when a merchant makes an offer and gives assurance in a signed writing that the offer will remain open for the stated period, or if no definite time is stated, a reasonable time period ( generally 3 months) - offeror must be a merchant, the offerree does not have to be a merchant -if offerror pays consideration, then this will be an option K, not a merchants firm offer - ucc does not specify rules for option k

Implied Warranty of Merchantability- merchant

applies to every sale or lease of goods made by a merchant who deals in goods of the kind sold or leased ex: ski equiptment seller

mixed contracts- mix of goods and services

apply either the predominant purpose test or the gravaman test

Implied Warranty of Fitness for a Particular Purpose

arises when any seller or lessor knows the particular purpose for which a buyer or lessee will use the goods and knows that the buyer or lessee is relying on the skill and good judgement of the seller or lessor to select suitable goods

9-203 (a) (b) attachment

attatchment concerns the creation of an enforceable security interest - a security interest atatches to collateral when it becomes enforceable against the debtor with respect to the collateral, unless an agreement expressly postpones the time of attatchment - attatchment is important because that is when the security interest becomes enforceable against the debtor - enforceability- except as otherwise provided, a security interest is enforceable against the debtor and third parties with respect to the collateral only if; (1) value has been given (2) debtor has rights in collateral or the power to transfer rights in the collateral to a secured party, and (3) one of the following condtions is met: (a) the debtor has authenticated a security agreement that provides a description of the collateral and if the security interest covers timber to be cut, a description of the land concerned

§2-207 additional terms in acceptance or confirmation

between merchants such terms become part of the contract unless: (a) the offer expressly limits acceptance to the terms of the offer (b) they materially alter it or (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is recieved

course of dealing/usage of trade applies when

both parties to a sales or lease contract have knowledge of a well-reconginzed trade custom, or where the parties have dealt with each other regarding the particular good

breach of warranty

breach of the promises made by the seller or lessor

document of sales

buyer agrees to pay cash when the sellers agent presents a sight draft and a bill of lading - once the buyer pays against doc, the sellers delivery obligations are discharged and she is entitled to payments at the time and place where buyer is to recieve the docs regardless of where the goods are recieved - under this type of contract buyers generally have no right to inspect goods unless it has expressly reserved the right

substantial performance rule

buyer can reject any nonconforming installment of goods only if the nonconformity substantially impairs the value of that installment and cannot be cured - to cancel the entire contract- buyer must show problems with one installment is so severe

security agreement

contract between the parties - does not have to be called a security agreement- if its oral or something else the court can admit parole evidence to determine - the debtor grants a security interest in the collateral as security for the payment or performance o specified obligations - attachment of a security interest secured creditor a property right provides that attachment occurs when the security interest is enforceable against the debtor with respect to collateral

crop failure

contract for sale of agricultural commodities is another fertile area for the defense issue: whether the parties contemplated that the seller would grow the crop on his own land? - generally courts grant relief to farmers if the parties contemplated that the crops to be sold would be grown on the farmers land and when there was no exceptation that the farmer would go to the market for replacements - if no specific land contemplated, expectation is that seller would find replacement market for a substitute crop and excuse will be unsuccessful

§2-719 limitations on warranty

contract may limit remedies, such as providing that no damages are available and the only remedy is repair or replacement - consequential damages may be limited, unless limitation is unconscionable - even if a contract contains a perfectly drafted clause that explicitly states the exclusive remedy, the buyer can still resort to 2-719 (2) to avoid the effect of that clause

paradine v. jane

contracts must be performed regardless of fault; parties to a contract agree that under certain circumstances, no performance will be due

cif

cost, insurance, freight ( indicate a shipment contract)

the code does not require actual knowledge but

courts have in case law, actual knowledge can result from course of dealing, course of performance, or usage of trade

incoterms- used for international contracts

defines responsibiltiies for buyers and sellers for delivery of goods under sales contract, how costs and risks are allocated to parties. they are regularly incorporated into contracts for sale of goods worldwide

when bad things happen to goods, who bears risk of loss?

depends on - parties agreement - whether one party or the other is in breach, and - moment in transaction when loss occurred

impractbility doctrine

excuse a party from performing ( or paying damages) when events or changed circumstances render the other party's counter-performance worthless to it

§2-316 Exclusion or Modification of Warranties

express warranties- can be spoken or written words - assertion that goods will conform to certain standards - description of goods are express warranties - general test: would a reasonable buyer or lessee regard the representation as part of the basis of the bargain implied warranties- must mention merchantability. must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicous - seller has to be a merchant - implied warranty that goods will conform to reasonable expectations of the buyer, can also be excluded or modified by course of dealing or course of performance or usage of trade,

overall of §2-202

expressly allows evidence of course of dealing. or usage of trade to explain or supplement terms intended by the parties as a final expression of their agreement, unless the contract expressly states that this evidence cannot be used to explain or supplement the written contract

what needs to happen in the financing statement?

file a continuation statement

9-251

financing statement must provide the names of the debtor and the secured party and must indicate the collateral covered by financing statement - communication of financing statement to appropriate filing office

document of title

formal document that confers or proves ownership is a document of title, they include a bill of lading, dock warrant, dock reciept, warehouse reciept, and order for the delivery of goods

fas

free along side- used for vessel ship

fob

free on board- named place ( sellers place of business

merger clause

fully integrated contract - may convince a court that the writing was intended to be the complete and exclusive statement of the terms of the agreement - dont rely on anything inconsistent that is not in the contract example: this is the parties entire agreement on this matter, superseding all previous negotiations or agreements

the secured party may achieve perfection of the security interest by

gaining control over the collateral

what does conforming mean? §2-106(2)

goods or conduct including any part of a performance are conforming or conform to the contract when they are in accordance with the obligations under the contract

morgan county feeders

goods used in a business are equiptment, when they are fixed assets or have as indentifiable units, a relatively long period of use - goods are inventory even though not held for sale, if they are used up or consumed in a short period of time in production of some end product

§2-401

if contract requires you to send the goods to buyer and you do not have to deliver them at destination, title passes at time of shipment - if deliver at particular destination title passes at time you tender them to destination - if you do not move goods: you deliver a doc of title, title passes at time you deliver doc or title passes at time of conclusion of sales agreement

§2-601 - buyer's rights on improper delivery

if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may (a) reject the whole or (b) accept the whole or (c) accept any commercial unit or units and reject the rest

implied warranties

implied promise is one that is created by the law and need not be in a party's words of promise

trade usage

in UCC, standard practices or terminology in an area of business that the courts may presume to exist between parties when a contract is unclear about a particular aspect of a business relationship, there doesnt have to be absolute precision - must be binding on party who it offered - must not be inadmissible under the parol evidence rule

virgina electric and power co v. westinghouse electric corp

increased costs alone does not excuse performance unless the rise in cost is due to some unforseen contingency which alters the eseential nature of the performance

continuation statement that is not filed within the 6-month period prescribed is

ineffective

substantial performance applies for what under the ucc?

installment contracts

if the debtor owns the colalteral out right

it is obviosult yours- you have rights in the collateral

when seller and buyer have not specified in their contract what happens in event of goods being lost, destroyed, stolen, etc

loss is placed on party who is most likely to insure the goods ad they are transported or on the party best able to prevent a loss - where seller is a merchant- risk of loss passes to buyer upon buyers actual receipt of goods and where seller is not a merchant, risk of loss passes to the buyer when the seller tenders delivery

course of dealing and usage of trade

meaning of any agreement, language of parties, and actions must be interpreted in light of comercial practices and other surrounding circumstances

zabriskie

mere taking of possession by the purchaser is not equivalent to acceptance. before he can be held to have accepted, a buyer must be afforded a reasonable opportunity to inspect the goods

if someone buys a car, signs a security interest, what do we do?

must be perfected by a notation on the certificate of title

sof

needs to be in writing for the sale of goods for the price of $500 or more - if not in writing it will not be enforceable unless it meets one of the exceptions (1) if writing comes in a reasonable time and the party recieving knows the contents (3) if goods are specially manufactured and can't be sold to others

does the security interest perfect automatically, if the transaction is a pmsi in consumer goods?

no, a purchase money security interest in consumer goods, except in section 9-311(b) with respect to consumer goods that are subject to a statute or treaty

oral statements in merger clauses are what

not binding

taylor v. caldwell - doctrine of impossibility

object. necessary for performance is destroyed ( venue for event is burned to the ground)

§2-205 firm offers

offer by merchant in a signed writing to buy or sell goods give assurance that it will be held open is not revocable for lack of consideration, during the time stated or if no time is stated for a reasonable time, no event may such period of irrevocability exceed three months

the suez case

performance not rendered legally impossible based on increased expense alone

intermediate approach to economic loss doctrine

permit recovery in tort for damage to the defective product alone under limited exceptions ( nature of the defect, the type of risk and the manner in which the injury arose)

minority approach to econmic loss doctrine

permits recovery in tort for purely economic loss ( bc whether economic or personal injury, the damage is caused by the defs conduct)

fob for destination contracts

place of destination

pmsi in livestock

pmsi livestock lender has priority over a non-pmsi livestock lender if four conditions are met: 1. perfected when debtor receives possession of the livestock 2. pmsi secured party sends an authenticated notification to holder of conflicting security interest 3. holder of conflicting security interest receives the notification within 6 months before the debtor receives possession of the livestock, and 4. notification states person sending notification

what is the primary test used by courts to determine whether software is a good under the ucc

predominant factor test- where courts look to the essence of the agreement, on a case by case basis how to characterize the transaction

the first to file or perfect gets

priority

warranty

promise given to a customer that a product will meet certain standards - imposes a duty on the seller or lessor ( if goods are leased) to remedy certain defects in the goods leased or sold

battle of the forms

provides for the inclusion of additional terms in an acceptance or written confirmation in a contract even though the parties had not previously discussed those terms

voidable title

reconciles the rights of a true owner who was induced to transfer title in goods to a wrongdoer with the rights of an innocent purchaser from the wrongdoer - title in the wrongdoer is voidable bc the true owner is entitled to rescind the transaction and recover the goods from that individual - right of canceling is cut off, however by a transaction to a good faith purchaser. voidable title doctrine places burden of loss on property true owner who participated in transaction that led to good faith purchaser recieving property

§2-201: sufficency of a signed writing

requires a writing signed by the party to be charged ( the person resisting enforcement of the contract) or his agent ( someone authorized to sign on his behalf - the party trying to enforce the contract must provide a signed writing by the party who is raising the sof defense - doesnt need to be signed by both parties, must be signed by the def

installment contract

requires or authorizes the delivery of goods in separate lots to be separately accepted. even though the contract contains a clause " each delivery is a separate contract" or its equivalent - buyer may reject any installment which is non-conforming if non-conformity substantially impairs value but if non-conformity does not fall within subsection 3 and seller gives adequate assurance of its cure, buyer must accept installment

if the seller delivers nonconforming goods what happens?

risk of loss remains with the seller, risk will remain with seller until seller cures breach - a buyer who recieves a large shipment and later discovers a portion of the shipment is non-conforming will bear risk up to level of buyers insurance coverage

control generally means

secured party has taken the steps described in these sections, so it is obvious to anyone investigating the state of the collateral that the secured party has rights therein

if buyer breaches contract by rejecting goods once they have been identified, but before delivery who does risk of loss go to?

seller

non-negotiable bill of lading

sets one specific cosginee, reciever, or buyer to whom goods must be shipped - carrier may deliver to buyer without demanding the bill

strikes/labor disputes

should be included in the force majeure clause

describing the collateral

the debtor has authenticated a security agreement that provides a description of the collateral - a secured creditor relying on an authenticated security agreement, must be certain that it reasonably identifies the collateral by - item - category - type defined

rights in the collateral

the debtor must have rights in the collateral, a debtor cannot grant a security interest in property in which she has no rights - does not mean debtor must own property 1. if the debtor owns a limited interest in the asset, the security interst will generally attatch only to the extent of the debtors interest 2. some debtors who acquired their limited interest by fraud may be able to grant a bona fide purchaser

the filing system

the filing system can be high imprecise and difficult and expensive to use - filing itself is relatively easy - searching can be difficult and a failed search can lead to adverse consequences only if debtor previously granted a security interest to a competing creditor and failed to mention that fact on her application

rule for enforceability

the imwp made in connection w/ sale of goods must be conspicuous to a reasonable person

§2-301 general obligations of parties

the obligation of the seller is to transfer and deliver the goods and that of the buyer is accept and pay in accordance with the contract - tender of delivery is a condition to the buyers duty to accept the goods and, unless otherwise agreed to pay for them

requisties for attatchment - value

the secured creditor must give value- consideration the secured creditor gives to bind the debtor to the security interest 1. value- all forms of consideration that would support an ordinary contract, as well as past consideration. usually involves a direct loan or a commitment to sell goods or credit: borrowers obligation is usually evidenced by a promissory note, lend money, a commitment to lend, sale of goods on credit 2. future advance: collateral may secure value, the secured credit

UCC §2-105(1) - goods

things that are movable- other than the money in which the price is to be paid, investment securities and things in actions

§9-311 Perfection of Security Interests in property subject to certain statutes, regulations, and treaties

this applies when there is motorvehicle statute which provides for a security interest obtaining priority over the rights of a lien creditor with respect to the property

insolvent

unable to pay debts when they become due - when one party is insolvent, non-breaching party can bring an action for reclamation. - applies to both buyer and seller

§2-308. Absence of Specified Place for Delivery.

unless otherwise agreed, delivery occurs at: -sellers place of business or - if goods are identified in the knowledge of both parties in same other place, delivery at that place

gravaman test

when a strict liability or product liability occurs in the course of the performance of a hybrid transaction. it splits the law to where items that are goods are governed by the ucc and common law contract law will govern the rendition of a service aspect of the case.

doctrine of excuse

when an unforseen contingency or calamity renders sellers performance impossible or impracticable, the contract is likely silent on how the parties must proceed

Doctrine of Excuse

when an unforseen contingency or calmity renders sellers performance impossible or impractiable. the contract is likely silent on how the parties must proceed - determines whether the seller will be released or discharged from its contractual obligations

§2-610 Anticipatory Repudiation

when either party repudiates the contract with respect to performance not yet due the loss of which will impair the value of contract; aggrieved party may: (a) for a comercially reasonable time await performance by repudiating party or (b) resort to any remedy for breach even though he has notified repudiating party that would await latter's performance and has urged retraction ; and in either case suspend his own performance or proceed in accordance w/ provisions of this article on sellers right to identify goods to contract notwithstanding breach or salvage unfinished goods

failure of a source of supply

when parties contemplate a source of supply and source becomes unavailable, defense may succeed - source of supply most not only fail; it must have: (1) mutually contemplated by parties as sole source of supply (2) failure must not have been forseeable at time of contracting and (3) party seeking to be excused must have employed all due measures to insure that the source did not fail

§2-609. Right to Adequate Assurance of Performance

when reasonable grounds for insecurity arise with respect to the performance of either party the offer may in writing demand adequate assurance of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already receieved the agreed return

Parol Evidence Rule

when the contract is in the final written conclusion, terms may be explained or supplemented by consistent additional terms or by course of dealing, usage of trade, or course of performance

when does an express warranty arise?

when the seller does something affirmative to create buyer expectations about the characteristics or performance of the goods

§2-504

where contract does not specify delivery at a particular destination, unless otherwise agreed, seller must put goods in possession of a carrier and make a contract for transportation and promptly notify buyer of shipment

what constitutes a reasonable time to act depends on the nature, purpose, and circumstance of the case?

where the product at issue involves goods of a complex nature and the depends on the seller's expertise that the goods will perform properly for the intended use, a buyer has an opportunity to put those goods to use or test the goods before determining whether the goods conform to the contract

2-314(2) pass without objection in the trade

where the product is so poorly designed and the defective design is outside of the norm for the type of goods ( enough to cause economic loss for the buyer) cant sell them or have to sell them at a deep discount

§2-317- cumulation and conflict of warranties express or implied

where warranties conflict with each other, determining which of the two conflicting warranties should prevail. applies often in situations where seller has made an express warranty and failed to exclude or limit the implied warranties, if the express warranty cannot be reasonably read as consistent with the implied warranties

is an attorney who fails to file a continuation statement guilt of malpractice?

yes

2-609

you need to have reasonable grounds for insecurity arise

Revocation of Acceptance

you need to have words substantial and performance

you see reservation of title

you see a security interest

if you are not perfected

you will not have priority over the security interest

what happens if you don't file a continuation statement?

youre unperfected

anticipatory repudation analysis

§1. whether the words or actions of the defendant constitute an anticipatory repudiation §(because if the non breaching party is mistaken in her assumptions, and cease her own performance or resells the goods, she may be liable for anticipatory repudiation). §If clearly a repudiation (no ambiguity), then treat as a present breach of contract; BUT, §If ambiguity in words or actions, which causes insecurity, then non-breaching party should: §2. Go to 2-609 - should the insecure party ask for adequate assurance? (may or may not be in writing, but must be a clear demand) §What are reasonable grounds for insecurity? (subject to usage or trade, course of dealing, etc.) §When has a party given an "adequate assurance" of due performance? §When is it commercially reasonable to suspend performance while awaiting assurance? (code says "not exceeding thirty days," but this could be on a case by case basis (i.e. could be a trap for the unwary). §Look at reasonable commercial standards, good faith, etc. §If no assurances given, then seller may treat as repudiation, declare a breach; unless: §2-611: Buyer retracts before seller materially changes position in reliance on the repudiation.