BLAW 220 Chapter 12 Questions

What is an implied warranty implied from prior dealings or trade custom?

When both parties to a sales or lease contract have knowledge of a well-recognized trade custom, the courts will infer that both parties intended for that trade custom to apply to their contract.

When will the UCC apply when dealing with contracts about the sale of goods and the service provided?

If the predominant factor of the contact weighs more heavily towards the sales of goods and the service provide in only a minor part of the contact.

How can the buyer prove substantial impairment?

In some situations, the UCC requires a buyer to show more to invoke the perfect tender rule, and in these situations, the buyer must show the defects substantially impair the value of the goods.

What happens in the case of an acceptance which does not conform exactly with the terms of an offer?

The UCC sets forth specific rules governing which terms will be included in the contract. (aka battle of the forms)

What can the buyer do only with proper notice?

The buyer can deduct damages from payments still due.

What is course of dealing?

When a buyer has accepted small flaws in past transactions, this can create an expectation to the seller that the buyer will continue to accept those small flaws.

What does substitution of carriers mean?

The seller has the right to change from the agreed-upon delivery method, if necessary.

Define Right to Cure:

The seller has the right to replace the defective goods that the buyer has rejected.

What is the implied warranty of merchantability?

The seller promises the product is in good working condition and will do what it is supposed to do.

What do courts normally construe opinions to be as?

Sales puffery.

What is a good title?

Sellers warrant good and valid titles, and the rightful sale of transfer.

What is revocation of acceptance?

When buyer returns goods or stops using them.

To properly reject goods, the buyer must:

1) Inform the seller of the defect. 2) Act in good faith. 3) Let the seller try to cure.

What are exceptions to the Statute of Frauds?

1) Specially manufactured goods 2) Admissions 3) Partial performance

What are disclaimers

A seller can eliminate or limit express or implied warranties through the use of disclaimers.

What is the relationship between assurance and cooperation?

Party can demand adequate assurance of due performance in writing, therefore failure to cooperate and respond can be treated as repudiation.

What does the UCC regulate?

Requirements for a sales contract, as well as the duties and obligations of the parties involved.

What are implied warranties?

"as is" or "with all faults" phrases used

If a consumer falls when a step on a new ladder breaks, what warranty could apply?

Implied warranty of merchantability.

What type of warranty does not occur if goods are examined or refused to be examined?

Implied.

What practice is routine in some industries?

In some cases, the parties agree in advance, in the contract, to accept imperfect goods.

Article 2 excludes what type of goods?

Intangible goods.

What is the communication of acceptance?

It is the beginning performance in which the offeror must be notified of the offeree's performance within reasonable time.

Examples of substantial impairment:

1) The buyer has accepted the goods and later revokes acceptance. 2) The buyer is rejecting an installment delivery of goods.

What are the requirements of sufficient writing?

1) Parties intended to form contract. 2) Signed by party against whom enforcement is sought.

The Uniform Commercial Code applies to what types of contract?

Contracts for goods over $500.

What is the steps in the right to cure (repair, adjust, or replace)?

1) Delivery is rejected because of nonconforming goods. 2) Performance time not expired. 3) Timely notice of intent to cure provided. 4) Cure made within contract performance time.

What are the 2 types of warranties?

1) Express 2) Implied

What does performance depend on?

Cooperation.

Opinions by ___________ may be accepted.

experts

What are UCC restrictions on application of the perfect tender rule, in which courts regularly apply these limitations.

1) Agreement of the parties 2) Right to cure 3) Usage of trade 4) Course of dealing 5) Course of performance 6) Substantial impairment 7) Substitution of carriers

What are the requirements of a seller's promise to sell a suitable good for the buyer's purpose?

1) At the time of sale or contract, the seller knows the buyers particular purpose. 2) The seller has a particular skill or judgement. 3) The seller knows the buyer is relying on the seller's skill or judgement. 4) The seller makes a recommendation based on the buyer's purpose. 5) The seller's promise and advice on which product to buy and how to use the product are correct.

In an implied warranty of fitness for a particular purpose the seller has reason to know:

1) Buyer's particular purpose to use goods. 2) Buyer is relying on the skill and judgement of seller to select goods.

What should you do when the seller or lessor refuses to deliver the goods?

1) Cancel contract. 2) Obtain paid goods if seller is insolvent. 3) Sue for specific performance if goods are unique, or damages are an inadequate remedy. 4) Obtain cover. 5) Sue to obtain identified goods, wrongfully held by the third party. 6) Sue for damages. 7) Reject goods.

What are seller or lessor's rights?

1) Cancel contract. 2) Withhold delivery. 3) Resell or dispose goods, and sue to recover damages. 4) Sue to recover purchase price or due lease payments. 5) Sue to recover damages for buyer's nonacceptance.

In which of these situations does an express warranty exist? Choose 2 answer choices.

1) Crane Outdoor Shop sells only online. The product postings include detailed descriptions of the features, but no pictures. 2) Crane Outdoor Shop shows products on the showroom floor as examples of what they sell, but all purchases are made online and another sample of that item is delivered to the customer's home.

What is sales puffery?

A common sales technique where the seller brags about the product.

When does Article 2 apply?

If goods outweigh services.

What constitutes an express warranty?

Statements of fact.

What are the requirements of express warranties?

1) Goods conform to any affirmation or promise of fact. 2) Goods conform to any description of them. 3) Goods conform to any sample or model of the goods shown.

What is an option contract?

A contract where the offeree considers the offeror's irrevocable promise to keep offer open for a time period.

What standard does the UCC hold merchants to?

A higher standard.

What is a firm offer?

An offer that remains open with assurance and signature.

What can be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of goods?

An order or other offer to buy goods for prompt or current shipment.

What is the buyer entitled to when attempting to recover damages for accepted goods?

Appropriate incidental and consequential damages.

What is a lease agreement?

Bargain of goods between lessor and lessee.

When does the perfect tender rule not apply?

If seller and buyer agree.

What happens if identified goods are destroyed?

If the goods were identified at the time the contract was formed, then the parties are excused from performance.

What does no infringements mean?

A merchant promises that the delivered goods are free from any trademark, copyright, or patent claims.

How is an implied warranty created?

By law.

What happens when the UCC is silent?

Common law applies to any aspects of contract law.

What word must be in a disclaimer of the implied warranty of merchantability?

Merchantability.

What does the Right to Cure mean?

The seller has the right to replace the defective goods that the buyer has rejected.

In the basis of bargain, what words are not required?

Warrant or guarantee.

What is implied warranty?

Warranty created by the law and used to impose it on the manufacturer or seller.

What are the several types of implied warranties included in the UCC?

1) Implied warranty of merchantability. 2) Implied warranty of fitness for a particular purpose. 3) Warranties implied from prior dealings or trade custom. 4) Warranty of title. 5) Warranty against infringement.

What are specially manufactured goods?

1) Made for a particular buyer or lessee. 2) Goods not suitable for resale or lease to others in the ordinary course. 3) Seller or lessor has made commitments or substantially started to manufacture goods.

What are examples of reasonably certain basis for court to grant the appropriate remedy?

1) Open price term. 2) Open payment term 3) Open delivery term. 4) Duration of an ongoing contract. 5) Options and cooperation regarding performance. 6) Open quality terms.

What are the requirements of an offer?

1) Parties intended to make a contract. 2) Reasonably certain basis for court to grant the appropriate remedy.

What happens when unconscionability is present in the contract?

1) Refusal to enforce contract. 2) Enforce conscionable part of contract only. 3) Limit unconscionable application to avoid unconscionable result.

Who is a merchant under Section 2-104?

1) Retailer, wholesaler, or manufacturer of those goods. 2) Holds self as having special knowledge and skills related to goods. 3) Employer as broker, agent, or other intermediary that has merchant status.

What is Article 2 specifically for?

1) Sale of goods only. 2) Varying rules depending on buyer or seller being a merchant. 3) Statute of limitations (4 years)

What is the place of delivery?

1) Seller's place of business. 2) Seller's residence. 3) Location of goods.

How can a seller create express warranty in writing, with spoken words, or with actions in 3 ways?

1) Stating the goods will match any facts or promises the seller makes (affirmation of fact or promise). 2) Stating the goods will match the description offered. 3) Stating the goods will match the sample shown.

What are some defenses against express warranty

1) The express warranty is specific and can be proven true or false, as opposed to an opinion or sales puffery. 2) The express warranty is written. 3) The defects are not obvious. 4) The seller has greater experience than the buyer has.

How do parties determine which is the appropriate law for a mixed contract? Choose 2 answer choices.

1) The predominant-factor test dictates the proper choice of law. 2) Common law is appropriate for some mixed contracts.

What rights does the perfect tender rule give buyers of goods? Choose 2 answer choices.

1) The right to reject the seller's goods if the goods are not exactly as described in the contract 2) The right to accept delivery of all of the goods.

What are scenarios that require additional terms?

1) When one party of both parties are non-merchants. 2) When both parties are merchants. 3) Prior dealings between merchants. 4) Conditioned on offeror's assent. 5) Additional terms may be stricken.

What is a warranty?

A promise that goods will meet certain standards.

What is an 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.

what is the Uniform Commercial Code (UCC)

A statute adopted in part or whole by all of the US states to govern commercial transactions, and its main purpose is to simplify and clarify the rules regarding business transactions so they are more efficient, consistent, and predictable across the US.

What is an express warranty?

A warranty that can be a promise from a manufacturer or seller.

What is an implied warranty of merchantability?

A warranty that goods being sold or leased are reasonably fit for their ordinary purpose, are properly packaged and labeled, and area of fair quality.

What is an implied warranty of fitness for a particular purpose?

A warranty that goods sold or leased are fit for the particular purpose for which a buyer or lessee will use the goods.

What is acceptance in terms of sales and lease contracts? UCC 2-206(1)(b)

Acceptance of an offer to buy goods "either by a prompt promise to ship [,] or by the prompt or current shipment of conforming or nonconforming goods.

What does the UCC require?

All parties to a contract act in good faith.

Disclaimers

Allows a seller to eliminate or limit express or implied warranties.

What is an implied warranty against infringement?

Also under the UCC, the seller warrants that the goods are free from copyright, patent, or trademark infringement.

What does Article 2 of the UCC apply to?

Applies to contracts that sell goods or to mixed contracts (selling a mix of both goods and services, if the predominant purpose of the deal is to sell goods) for sales of $500 or more.

Which Article of the UCC applies to contracts that sell goods or to mixed contracts for sales of $500 or more?

Article 2

What must a plaintiff prove in an express warranty case?

Buyer reliance on the seller's promises

How is an expressed warranty created?

By seller's words or actions.

What are contracts for services governed under?

Common law.

What type of law governs contracts for services?

Common.

______________ law requirements also apply to ____________________

Common; sales contracts

What is required in an acceptance of a sales or lease contract?

Communication of acceptance.

What is a merchant?

Defined by the UCC as a knowledgeable party involved in the business of selling those particular goods on a routine basis. aka professional at selling those goods.

What is the tender of delivery?

Delivery in a reasonable hour and in a reasonable manner.

What is the predominant-factor test?

Determines whether the UCC or common law applies.

What is the measure of damages?

Equals the difference between the goods' accepted value, and their value if they had been delivered as warranted.

What are the different ways that the seller can create express warranties?

Face-to-face interactions, through advertising, and through written materials.

True or False: Article 2 deals with the sale of goods, real property, and intangible property.

False.

What does the doctrine of commercial impracticability apply to?

Foreseen problems.

What must the buyer do in order to pursue remedy?

Give notice to seller.

What is the reasoning behind implied warranties?

Goofs should meet certain standards of quality, even if the seller does not promise those standards in an express warranty.

What does the UCC do?

Holds merchant to a higher standard, requiring merchants to act fairly as the business community would routinely expect--no lying or misleading goods.

What is the perfect tender rule? UCC 2-601, 2A-509

If goods or tender of delivery fail in any respect, buyer has rights to: accept the goods, reject entire shipment, or accept part and reject part of shipment.

Why should a consumer look out for disclaimers?

If the consumer is relying on promises or warranties.

Linda wants to buy some equipment and needs computer software to use the equipment. Linda asks the salesperson if the software is Mac-compatible because she owns only one computer and it is a Macbook. The salesperson states that the computer software is Mac-compatible and many of his customers use the software on their Apple computers. The software box offers no information regarding operating system requirements. When Linda arrives home and opens the package, she discovers the software is not Mac-compatible. The store states it will not accept returns of opened software, and the salesperson says he was relying on what other customers told him. What will be the result if Linda files a lawsuit?

Linda wins under implied warranty of fitness for a particular purpose.

What is the Magnuson-Moss Warranty Act?

Modifies UCC warranty rules, where consumer transactions are involved, no seller is required to give a written warranty for consumer goods, and if seller makes express warranty, $25+ warranty must be full or limited.

In the formation of a sales and lease contract, the offer must have _________________________.

Open terms.

What are opinions?

Opinions are not express warranties.

What is partial performance?

Oral contract enforceable if payment or goods accepted.

What are admissions?

Oral contracts enforceable with testimony of sale or lease.

What are warranties implied from prior dealings or trade custom?

Parties having knowledge of a well-recognized trade custom is seen as intending for that trade custom to apply to their contract.

What is express warranties?

Prevent false allegations.

What may create an express warranty?

Reasonable reliance.

What does the UCC govern?

Sales contracts (Article 2) and lease contracts (Article 2A).

What does Article 2 of the UCC apply to?

Sales contracts that sell goods and/or to mixed contracts (selling a mix of both goods and services, if the predominant purpose of the deal is to sell goods) for sales of $500 or more.

What is stated in UCC 2-614 (1)?

Seller or lessor required to arrange substitute and the buyer or lessee can reject an installment only if the nonconformity substantially impairs the value of the installment and cannot be cured.

How does commercial impracticability impact partial performance?

Seller or lessor required to distribute any remaining goods or deliveries fairly and reasonably among the parties to whom it is contractually obligated to.

What is course of performance?

Similar to course of feeling, but the expectation of continued conduct between parties is based on acceptance of flawed goods within the current contract.

What is usage of trade?

Some industries have an expected practice of dealing in which buyer accept small flaws on a regular basis.

What type of statement can create express warranties?

Statements of facts.

What is the UCC?

Statutory law that overrules common law to aid interstate business transactions, common law applies to any aspects of contract law where the UCC is silent. The parties can agree to terms other than what the UCC provides.

What are examples of intangible items?

Stocks, bonds, patents, copyrights, and contract rights.

What are goods?

Tangible and movable items, intangible items, and goods associated with real estate.

What is the mirror image rule?

Terms of acceptance matches terms of the offer.

What does the UCC ensure?

That the goods supplied conforms with the specifications set forth in the terms of the contract.

What is understood when there is an offer to make a contract?

That there is an invitation of acceptance in any manner and by any medium reasonable in the circumstances.

In what situations does the UCC overrule common law?

The UCC applies to contracts that sell goods.

What is the basis of the bargain?

The buyer must show he or she relied on the seller's promises.

You have a small business supply store. You order fifty boxes of paper from Hammerhill Paper Supply and tell them you need the paper delivered within four days, and Hammerhill agrees to provide the paper within four days. Neither you nor Hammerhill mentions the price of the paper, though. How do you think the price of the paper will be determined if you get into a legal dispute with Hammerhill about it?

The court will determine a reasonable price at the time of delivery.

Breeze Manufacturing agrees to purchase goods from Hawkins Inc. In what situation could Breeze reject a shipment of goods from Hawkins under the perfect tender rule?

The goods do not meet the specifications detailed in the contract.

What is a sale?

The passing of ownership rights to seller to buyer for a price.

What right to cure does the seller have if the deadline to perform has not yet passed?

The right to deliver conforming goods before the contract deadline.

What are implied warranties implied from prior dealings or trade custom?

The seller agrees to comply with past practices between the parties or normal practices or customs for that type of business or product.

What right to cure does the seller have if the contract deadline has passed?

The seller has a right to cure if he or she reasonably believed the original goods were acceptable, and gives notice of an intent to cure. The buyer must accept the replacement goods unless the delay would cause serious harm.

What must the seller and buyer do?

The seller must supply and the buyer must accept the goods upon tender. A breach by either side will allow yer non-breaching party to seek a remedy.

What are the requirements of a disclaimer of the implied warranty of fitness?

The word fitness is not needed, but it must be in writing and conspicuous.

What can a buyer do if he or she unknowingly purchases goods with liens?

They can sue, but not if they knew of liens.

What is the main intent behind the UCC?

To help businesspeople for a contract quickly and informally.

What is Article 2A?

Transfer of right to possess and use goods for a time period with payment which includes subleases and only applies to leases of commercial and consumer goods.

True or False: A contract is formed when an offer to contract is accepted, and there is an exchange of value known as consideration between the parties.

True.

True or False: The parties can agree to terms other than what the UCC provides.

True.

What can qualify as a signature?

Typed and written name.

What is the perfect tender rule?

Under the UCC, buyers have a right to reject the seller's goods if the goods are no exactly described in the contract. A buyer also may accept some goods and reject others, or the buyer may choose to accept all if the delivered goods.

What is an implied warranty of title?

Under the UCC, the seller warrants good title, free of security interests, such as liens.

What is the special rule for contracts between merchants?

Upon oral agreement, merchant sends signed written confirmation to the other merchant within a reasonable time.