Business Law: Ch 13: The UCC Sale and Lease Contracts

Quiz yourself by thinking what should be in each of the black spaces below before clicking on it to display the answer.

Help!

Question

Answer

The scope of the UCC and Article 2 and 2A:

Facilitates commercial transactions.

🗑

The UCC Article 2 governs contracts for __________

sale of goods

🗑

T or F: UCC Article 2 preempts common law

True

🗑

Where UCC Article 2 is silent, ____________ governs

common law

🗑

Article 2 only applies to ____; the common law of contracts governs ____, ______, or _______

goods; real estate, services, or intangible

🗑

Mixed goods-services: The ________________ test

Predominant-Factor

🗑

A ___ is the passing of title from seller to a buyer for a price (payable in ___, ____, or _____)

sale; cash, goods, and services

🗑

Goods must be ______ and ______

tangible and movable

🗑

Define tangible:

has physical existence

🗑

Define movable:

carried from place to place

🗑

Goods Associated with Real Estate can fall within Article 2 if: (3 things)

1. Contract for sale of minerals or a structure is a good IF severance is made by seller. 2.Sale of growing crops 3.Other "things" attached to real property, capable of being severed without harm to land

🗑

T or F: If severance by buyer, sale is governed by Article 2

False; common law

🗑

"Predominant Factor" Test --- if goods, then _____ governs, if services then _____ governs the entire contract

UCC, common law

🗑

UCC Article 2 imposes special standards upon a “_______” who has special business expertise and is not a casual buyer/seller.

merchant

🗑

UCC Article 2 has 3 criteria for merchant

1.Deals in good of the kind in sale 2.Holds themselves out as having special expertise, knowledge, or skill 3.Person who employs a merchant

🗑

Define a Lease Agreement:

contract for lease of personal goods between a lessor and a lessee

🗑

Define Lessor:

transfers right to possess and use goods under lease

🗑

Define Lessee:

acquires right to possess and use goods

🗑

Define a Consumer Lease:

lessor, lessee who leases for personal, family, or household use, and total payments less than $25,000

🗑

What is unique about Finance Leases?

Involve a 3rd party-supplier

🗑

What is different between valid offers with UCC vs. common law?

common law- a binding contract is formed when a valid offer is unequivocally accepted WHEREAS with the UCC- more flexible and allows for open pricing, payment, and delivery terms

🗑

Open Terms. UCC 2-204: even if terms are undetermined

a contract may still exist.

🗑

[Open Terms Offer] When is indefiniteness is OK in a contract?

as long as the parties intend to make a contract and there is a reasonable basis for a court to grant a remedy

🗑

[Open terms offer] Define open price term

If parties have not agreed on pricing, court can determine “reasonable price at the time of delivery.”

🗑

[Open terms offer] Define ppen payment term

payment is due at the time and place in which buyer receives goods.

🗑

[Open terms offer] Define open delivery term

Unless otherwise agreed, buyer takes delivery at the Seller’s place of business.

🗑

[Open terms offer - delivery term] Seller has duty to make arrangements ______

in good faith

🗑

[Open terms] Define open quantity

generally courts will not impose a quantity and there is no remedy, unless the contract is either a requirements or output contract

🗑

[Open terms] Describe exceptions to open quantity

1.Requirements Contract 2.Output Contract 3.UCC good faith limitation

🗑

[Open terms - exception to open quantity] Describe requirements contract

buyer agrees to purchase what the buyer needs or requires. (generally includes exclusivity).

🗑

[Open terms - exception to open quantity] Describe output contract

buyer agrees to buy all of seller’s production or output

🗑

[Open terms - exception to open quantity] Describe good faith limitation

Amount purchased should be close to normal production year.

🗑

Describe: Merchant's Firm Offer

Offer made by merchant in a signed writing is irrevocable for reasonable period of time

🗑

Does a merchant's firm offer require consideration?

🗑

Does a merchant's firm offer need to be in writing?

Yes

🗑

Does a merchant's firm offer need to be signed by the offeror?

Yes

🗑

[Acceptance] Either by prompt shipment of _________ or ________ goods

conforming; non conforming

🗑

[Acceptance] Describe non-conforming goods

is both an acceptance and a breach unless goods sent as an “accommodation” to buyer, with prompt notice by buyer.

🗑

[Acceptance] Communication of Acceptance is _______

required

🗑

[Acceptance] What are some additional terms when one party is a merchant

Contract is formed according to origingal terms of the offer

🗑

[Acceptance] When both parties are merchants: the contract incorporates new terms unless

1.original offer expressly limits new terms 2.material change 3.offeror objects within reasonable time

🗑

UCC adopts common law rule requiring consideration. However, __________ do not need consideration

modifications

🗑

Modifications must be _________

made in good faith

🗑

[The Statute of Frauds] Sale of goods over $______ must have a signed writing to be enforceable

$500

🗑

[The Statute of Frauds] Sufficiency of writing: signed by ______________________.

party against whom enforcement is sough

🗑

[The Statute of Frauds] Sufficiency of writing: Is it enforceable beyond quantity of goods shown in the writing?

normally not

🗑

[The Statute of Frauds] What are special rules for contracts between merchants?

After oral agreement, one of the merchants sends a signed, written memorandum containing essential terms to the other merchant within a reasonable time.

🗑

[The Statute of Frauds] EXCEPTIONS! (3)

1. Specially Manufactured Goods 2. Admissions by breaching party 3. Partial performance: oral contract is enforcable IF payment has been made or goods have been accepted

🗑

How does Parol Evidence impact formation of sales and leases?

Terms of a written agreement intended to be the final expression of parties’ intentions, cannot be contradicted by prior or contemporaneous agreements

🗑

What are the exceptions to Parol Evidence?

consistent terms, course of dealing and trade, course of performance.

🗑

What makes a contract unconscionable?

Contract is one that is so unfair and one-sided it is unreasonable to enforce it. Court can: set it aside, refuse to enforce the unconscionable provision, limit the contract.

🗑

Does risk always pass with title?

Nope

🗑

UCC replaces title with ______, _____, and ______

identification, risk of loss, and insurable interest

🗑

Describe Identification:

For any interest to pass to buyer, goods must be (1) in existence and (2) identified as specific goods in sales contract.

🗑

Identification takes place when ________________________

specific goods are designated as the subject matter of the contract.

🗑

Identification: Gives buyer the right to_______ (2 things)

1.To obtain insurance on the goods. 2.To recover from third parties who damage the good.

🗑

[Identification: Existing Goods] if contract calls for ascertainable goods in existence, identification takes place ___________________________

at the time contract is made.

🗑

[Identification: Future Goods] Animals - takes place when

Animals born within 12 months of contract, identification takes place at conception

🗑

[Identification: Future Goods] Crops - takes place when

For crops harvested within 12 months of contracting, identification takes place at time of planting (or when crops begin to grow).

🗑

[Identification: Future Goods] Everything but animals and crops takes place when

when goods shipped, or marked or designated by seller

🗑

[Identification: Goods Part of a Larger Mass] takes place when

marked, shipped, or designated by seller

🗑

[Identification: Goods Part of a Larger Mass] Exception

fungible goods which are naturally alike (grades of wheat, oil, wine). –undivided interest.

🗑

Describe Passage of Title

Contract between seller and buyer usually determines when title passes.

🗑

[Passage of Title] Title can pass _____________ or _________-

Upon physical delivery, or when agreed to by the parties

🗑

[Passage of Title] Title passes ______

If not otherwise agreed in contract, title passes based on whether contract is shipment or destination contract

🗑

[Passage of Title] - Shipment contracts

title passes at time and place of shipment.

🗑

[Passage of Title] - Destination contracts

title passes when goods are tendered at the destination.

🗑

[Passage of Title] - Without movement of goods and With document of title (bill of lading)

title passes when and where document delivered.

🗑

[Passage of Title] - Without movement of goods and without document of title

title passes when sales contract is made, if goods have been identified, or when identification occurs if they have not been identified.

🗑

[Passage of Title - Sales or Leases by Nonowners] Void Title

true owner gets goods back; Person selling goods obtained by stealing

🗑

[Passage of Title - Sales or Leases by Nonowners] Voidable title (3 things)

1. Person selling goods obtained by fraud, paid with bounced check, minor, or purchased on credit when seller was insolvent 2.Good faith purchaser keeps goods 3. leases - good faith lessee retains possession

🗑

[Passage of Title - Sales or Leases by Nonowners] Describe the entrustment rule

Merchant must deal in goods of that kind. ---- Gives power to transfer valid title to good faith purchaser in ordinary course of business.

🗑

[Risk of Loss] T or F: ROL passes with title

False: ROL does not necessarily pass with title

🗑

[Risk of Loss] Unless otherwise agreed, ROL passes to buyer _________________

depending on whether delivery is with or without movement of the goods.

🗑

[Risk of Loss- with movement of goods] Shipment Contracts; ROL passes to buyer ______________-

when goods tendered to Carrier. If goods damaged in transit, Buyer’s bears risk of loss

🗑

[Risk of Loss- with movement of goods] Destination Contracts, ROL passes to buyer ______________

when goods tendered at contractually specified destination.

🗑

[Risk of Loss- without movement of goods] Often goods are held by a _______ on behalf of the seller in a bailment arrangement

bailee

🗑

[Risk of Loss- without movement of goods] ____________ give bailee possession of goods and/or contracts to deliver them

Documents of title

🗑

[Risk of Loss- without movement of goods] What are some examples?

Warehouse, trucking company

🗑

[Risk of Loss- without movement of goods] Held by Seller (Mechant) ROL passes to buyer ________

takes physical possession of goods. (ROL remains with seller until buyer takes physical possession.)

🗑

[Risk of Loss- without movement of goods] Held by seller (not merchant) ROL passes to buyer _________

on Tender of Delivery (goods available for pickup)

🗑

Define Baillee

a party who by document of title acknowledges possession of goods or contract to deliver them.

🗑

[Risk of Loss- without movement of goods] Held by bailee, ROL passes to buyer _______________

Buyer receives document of title; bailee acknowledges Buyer’s right to goods and buyer receives title and has reasonable time to pick up

🗑

[Risk of Loss- breached contract by sellor or lessor]

Rejection - risk stays with seller.; Revocation of acceptance - risk passes back to seller to the extent that buyer’s insurance does not cover the loss.

🗑

[Risk of Loss- breached contract by buyer or lessee]

Goods are identified, risk passes to buyer for a commercially reasonable amount of time after seller learns of the breach, to the extent that seller’s insurance does not cover loss.

🗑

Generally, when a contract is breaches, the _______bears ROL

breaching party

🗑

[Insurable interest] _______ has an insurable interest in goods that have been identified.

buyer

🗑

[Insurable interest] _______has an insurable interest in goods as long as they retain title or a security interest.

seller

🗑

Both ______ and ______ can have an insurable interest at the same time

buyer and seller

🗑

CISG: Applies to __________ and not _______ or ________

merchant sales; consumer sales; services

🗑

[CISG] T or F: contain Mirror image rule

True

🗑

[CISG] What is different about irrevocable offers?

offer can become irrevocable w/o signed writing

🗑

[CISG] - Statute of Frauds

Contract may not need to be in writing to be enforceable

🗑

[CISG] - Necessity of a Price Term

Or contract might not exist.

🗑

[CISG] Time of contract formation

When offeror received acceptance. --- UCC requires notice to other party if acceptance is by performance.

🗑

Review the information in the table. When you are ready to quiz yourself you can hide individual columns or the entire table. Then you can click on the empty cells to reveal the answer. Try to recall what will be displayed before clicking the empty cell.

To hide a column, click on the column name.

To hide the entire table, click on the "Hide All" button.

You may also shuffle the rows of the table by clicking on the "Shuffle" button.

Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.

Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.

Normal Size Small Size show me how

Created by: savelae

Popular Law sets

Criminal Law Flashcards

Code of Criminal Procedure ***NOT OFFICIAL STUDY GUIDE***

Feb. 2012 Bar Exam

Barbri Review

AZC1 United States Constitution

Healthcare Compliance Exam

Barbri Review

Texas Penal Code

Arrest Search & Seizure ***Not official TCLEOSE Study Guide***

Iowa Pharmacy Law Exam Flashcards