Chapter 12 Business Law

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.

UCC Express Warranties

a seller's or lessor's oral or written promise

Anticipatory Repudiation

is a party's manifestation of an intent not to perform a contractual obligation made before his or her performance is due.

What is the term for what a merchant gives a written, signed assurance that he or she will not revoke an offer for a stated period of time?

a firm offer

In what situations does the UCC overrule common law?

The UCC applies to contracts that sell goods.

The Uniform Commercial Code applies to what type of contract?

Contracts of goods over $500

What does title to stolen goods transfer?

never

How does the 1980 United Nations Convention on Contracts for the International Sale of Goods (CISG) differ from the Uniform Commercial Code (UCC)?

- the CISG does not apply to consumer sales. - under the UCC, an irrevocable offer must be writing, but under the CISG it can be oral. - The CISG is stricter on requiring mirror image acceptances.

In what ways does Article 2 of the Uniform Commercial Code (UCC) differ from contract rules under the common law?

- under the UCC, merchants have more flexibility in having open terms. - under the UCC, any manner of showing agreement to contract is accepted, but under the common law acceptance must mirror the offer. - under the UCC, the only required definite term is quantity of product being sold. Other terms such as price and delivery time can be left open.

What of the following qualifies as a "good" under Article 2 of Uniform Commercial Code?

a commercial freezer unit

UCC Price

reasonable price at the time for delivery

What characteristics must an item possess to be classified as a "good"?

1. it must be tangible 2. it must be moveable

UCC Acceptance

A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

n which of these situations does an express warranty exist? Choose 2 answers A.) An employee at Crane Outdoor Shop promises Korinne that their outdoor furniture does not fade in the sun. Korrine states she wants to buy the furniture for indoor use, and it will not be in the sun. B.) Crane Outdoor Shop sells only online. The product postings include detailed descriptions of the features, but no pictures. C.) Crane Outdoor Shop advertises they have the best outdoor furniture in the state. D.) 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.

B and D

Who is a merchant?

Deals in the goods of the kind involved in the sales contract.

Under the Uniform Commercial Code (UCC), what is the only required term for a valid sales contract?

a quantity of goods being sold.

UCC Warranties

express implied only relate to a BREACH OF CONTRACT Imposes duty on the seller or lessor

Perfect Tender Rule

standard under the UCC that a seller's performance under a sales contract must strictly comply with contractual duties and that any deviation discharges the injured party

The default provision of the Uniform Commercial Code (UCC) is that, unless otherwise specified, title to goods being sold passes when:

the goods are physically delivered to the buyer.

UCC Delivery

the place for delivery is the seller's place of business

Under the UCC, risk of loss passes to the buyer:

whenever the contract designates it to pass

What rights does the perfect tender rule give buyers of goods?

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.

How do parties determine which is the appropriate law for mixed contracts?

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

What is a merchant's firm offer? What are the requirements?

> don't need to have consideration > time frame: 3 months with specification > signed on paper

UCC Consideration

UCC does not require a contract modification to be supported by new consideration.

Strict Product Liability

legal responsibility for harm or injury caused by a product regardless of fault

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

UCC Payment

payment is due at the time and place at which the buyer is to receive the goods

Which section of the Uniform Commercial Code (UCC) applies to contracts for sales goods?

Article 2

What must a plaintiff prove in an express warranty case?

Buyer reliance on the seller's promises

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.

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

implied warranty of merchantability

What are the methods of payment by the buyer or lessee?

pay by any means specified by the parties or any reasonable means if the parties do not specify a method of payment.

UCC Implied Warranties

these exist in all transactions unless a written contract excludes (disclaims) them