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legal environment
exam 2-19
| Question | Answer |
|---|---|
| Sale of goods | transfer of ownership to tangible personal property in exchange for money, other goods, or the performance of services. |
| merchant | person that regulary deals in the kind of goods being sold, or purports to have some special knowledge about the goods, or employs an agent in the sale who fits either of these two descriptions |
| code requirements | requires that parties to sale contracts act in good faith and in a commercially reasonable manner, |
| lease | a transfer of the right to possess and use goods belonging to another. |
| gap fillers | contracts omit terms and leave things unclear. the code deals with these cases by filling in the blanks with common trade practices or by giving commonly used terms a specific meaning that is applied unless the parties agreement clearly indicates a contra |
| delivery terms | unless stated otherwise, the code says the goods ordered are to be delivered in a single lot shipment. |
| exclusive dealing contracts | obligate dealers to deal only n one manufacturers product line. |
| negotiable document of title | when the goods are being shipped by a professional carried |
| identification | occurs when the surrounding circumstances make it clear that the goods are those o which the contract refers |
| good faith | means honesty in fact in the transaction concerned |
| shipment contracts | FOB FAS CIF C&F --- if contract requires the seller to ship the goods by carrier but does not require that the seller guarantee their delivery to a specific destination, the risk passes to the buyer when the goods are delivered to the carrier. |
| FOB | FREE ON BOARD- calls for the seller to deliver the goods free of expense and at the sellers risk to the place designed |
| FAS | FREE ALONGSIDE- is common in maritime contracts and it normally accompanied by the name of a specific vessel and port. the seller must deliver the goods alongside the vessel at his or her own risk and expense |
| CIF | COST, INSURANCE, AND FREIGHT- the price of the goods included the cost of shipping and insuring them |
| C | COST AND FREIGT- the same as CIF expect that the seller is not obligated to insure the goods. |
| destination contracts | if the contract requires the seller to guarantee delivery of the goods to a specific destination, the seller bears the risk and expense of delivery to that destination |
| FOB destination | puts the expense and risk f delivering the goods to that destination on the seller |
| ex-ship | does not specify a particular ship but places the expense and risk on the seller until the goods are unloaded from whatever ship is used |
| no arrival no sale | places the expense and risk during shipment on the seller. if the goods fail to arrive through no fault of the seller, the seller has no further liability to the buyer |
| insurable interest | allows them to insure themselves against most of the risks they must bear. |
| sale or return | contract that the goods are delivered to the buyer primarily for resale with the understanding that the buyer has the right to return them |
| sales on approval | the goods delivered to the buyer primarily for the buyers use. the buyer is given opportunity to examine or try the goods to decide if he wants to accept them |
| Couch owned two-dozen tires, warehoused in XYZ Warehouse on a negotiable warehouse receipt. Couch sold the tires to Smith. Under these facts: | Risk of loss passes to Smith when Couch negotiates the warehouse receipt to him. |
| Which of the following is not a "shipment" contract? | No arrival, no sale |
| Wally stole a diamond ring from Shirley and sold it to Marty, who knew the ring was "hot." Under these facts: | Shirley retains title to the ring. |
| Wally stole a diamond ring from Shirley and sold it to Marty, who did not know the ring was “hot.” Under these facts: | Shirley retains title to the ring |
| The Uniform Commercial Code was prepared to simplify and modernize the rules of law governing commercial transactions. | Sale of Goods,Leases,Higher Standards for Merchants |
| Price Terms | If the parties omitted a price term or left the price to be determined at a future date, the Code supplies a price term. |
| Quantity Terms | Output/Requirement Contracts |
| Output/Requirement Contracts | Contracts that obligate a buyer to purchase a seller’s output or all the buyer’s requirements are governed by the UCC. |
| Output/Requirement ContractsExample: | Noble Roman’s, Inc. v. Pizza Boxes, Inc.: The court found that the letter from Rosenberg to Gilbert was a requirements contract. |
| Exclusive Dealing Contracts | The Code says that unless the parties agree to the contrary, sellers have a duty to use their best efforts to supply their buyers, who have a duty to use their best efforts to sell the goods. |
| Delivery Terms | Unless the parties agree to the contrary, the Code says that the goods ordered are to be delivered in a single |
| lot shipment to the seller’s place of business. | |
| Time Terms | If the contract is silent as to the time of performance and the time for payment, the Code requires performance must be tendered in a reasonable time and payment is due at the time and place of delivery. |
| Code Changes | The Code also contains some specific rules governing title (ownership) of goods. |
| B. General Title Rules | Physical Delivery,Delivery without Moving the Goods,Negotiable Document of Title |
| Physical Delivery | Title passes when the seller has completed physical delivery. |
| Delivery without Moving the Goods | If the seller is not required to move the goods, title passes at the time and place of forming the contract. |
| Negotiable Document of Title | A negotiable document of title is used when a professional carrier is moving the goods. |
| Buyer’s Rejection | Title automatically returns to the seller if the buyer rejects the goods due to a noncomformity. |
| Title and Third Parties | A person can only transfer the rights (title) in property that he himself possesses. |
| Transfers of Voidable Title | A seller who has voidable title can pass good title to a good faith purchaser for value. |
| Buyers in the Ordinary Course of Business | A buyer in the ordinary course of business takes goods free of any security interest in the goods that their seller may have given a third party. |
| Entrusting Goods | Anyone who entrust goods to a merchant gives that merchant the power to transfer valid title to that good to a buyer in the ordinary course of business. |
| Risk of Loss | The Code rejects the rule that risk of loss is based on title, and adopts specific rules governing risk of loss. |
| The Terms of the Agreement | Parties to a contract have the power to control who has the risk of loss by specifically stating it in the agreement. Shipment Contracts |
| Destination Contracts | Destination contracts require the seller to guarantee delivery to a specific destination; seller bears the risk of loss until delivery to that destination. Destination contracts are described in contracs as F.O.B. (place of destination). |
| Goods in Possession of Third Parties | If goods are to be delivered without being moved, risk passes to the buyer when buyer has power to take possession of the goods. |
| Risk Generally | If none of the above mentioned rules apply, the risk passes to the buyer on receipt of the goods if the seller is a merchant. If the seller is not a merchant, risk passes to the buyer when the goods are available for pick up by the buyer. Example: Capsh |
| Breach of Contract and Risk of Loss | The Code follows the trend set by common law of placing the risk of loss on a party who is in breach of contract. |
| Insurable Interest | Buyers may protect their interest in goods before they obtain title from the seller. |
| Sales on Trial | Under the UCC, risk of loss and title may differ in "Sales on Trial”. |
| Sale or Return | In a Sale or Return contract, title and risk of loss rest with the buyer. |
| Sale on Approval | In a Sale on Approval, risk of loss and title remain with the seller. |
Created by:
vukovich001