Term
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Definition
| are movable, tangible, personal property and include the unborn young of animals, growing crops, and other items attached to real property but removed by the seller. Under Article 2A, minerals cannot be leased prior to their extraction. |
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Term
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Definition
| The Code defines a sale as the transfer of title to goods from seller to buyer for a price. The price can be money, services, other goods, or real property. |
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Term
| Lease–Article 2A defines a lease of goods as |
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Definition
| a “transfer of the right to possession and use of goods for a term in return for consideration, but . . . retention or creation of a security interest is not a lease.” The distinction between a lease and a security interest is important to the parties as well as to third persons. If the transaction is determined to be a lease, the residual interest in the goods belongs to the lessor, who need not file publicly to protect this interest. UCC Article 9 governs security interests. |
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Term
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Definition
| If a lease falls within the definition of a consumer lease under UCC Article 2A, the provisions of Article 2A that apply may not be changed by the agreement of the parties to the lease. Consumer leases within Article 2A are those between a lessor who is regularly engaged in the business of leasing or selling goods and lessee who is an individual taking the lease primarily for a personal, family, or household purpose. Total payments under the lease cannot exceed $25,000 to be an Article 2A consumer lease. |
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Term
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Definition
| A finance lease generally involves three parties—the lessor and the supplier are separate parties, unlike in the typical lease situation. The lessor in a finance lease provides financing to the lessee for a lease of goods provided by the supplier. As primarily a source of credit, the finance lessor typically has no special expertise as to the goods. |
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Term
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Definition
| Sales transactions are governed by Article 2 of the Code, but where general contract law has not been specifically modified by the Code, general contract law continues to apply. Transactions not within the scope of Article 2 include employment contracts, service contracts, insurance contracts, contracts involving real property, and contracts for the sale of intangibles such as stocks, bonds, patents, and copyrights. Leases of personal property are governed by Article 2A, but general contract law applies where Article 2A has not modified it. |
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Term
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Definition
| All parties to contracts under the Code must perform their obligations in good faith. The Code defines good faith as honesty in fact in the conduct or transaction concerned. In the case of a merchant, it also includes the observance of reasonable commercial standards of fair dealing in the trade. Revised UCC Section 1–201(20) provides that “good faith means honesty in fact and the observance of reasonable commercial standards of fair dealing,” thereby making the broader definition of good faith applicable to both merchants and non-merchants. |
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Term
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Definition
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Term
| Sales By and Between Merchants |
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Definition
| The Code establishes separate rules that apply to transactions between merchants or involving a merchant as a party. A merchant is a dealer in goods or a person who by his occupation holds himself out as having knowledge or skill peculiar to the goods or practices involved, or who employs an agent or broker whom he holds out as having such knowledge or skill. These rules exact a higher standard of conduct from merchants because of their knowledge of trade and commerce and because merchants as a class generally set these standards for themselves. |
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Term
| Manifestation of Mutual Assent |
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Definition
| In order for a contract to exist there must be an objective manifestation of mutual assent: an offer and an acceptance. |
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Term
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Definition
| must have: price, quantity, and specific description |
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Term
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Definition
| example of selling a car for the price of apple stock on nov 28 (must be easily ascertainable) |
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Term
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Definition
| A firm offer is a signed writing by a merchant to hold open an offer for the sale or purchase of goods. Such an offer is irrevocable for the stated period up to a maximum of three months, even if no consideration is given to the merchant offeror for the promise. An option is a contract to hold open an offer; it is binding on the offeror. |
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Term
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Definition
| The Code modifies the common law mirror image rule under which an acceptance cannot vary from the terms of the offer. Under the common law rule, where two businesses exchange preprinted forms with varying terms, no contract exists, even if the parties intend that there be a contract. The Code addresses this battle of the forms problem by focusing on the intent of the parties. The issue then becomes whether the offeree’s different or additional terms become part of the contract. If both parties are merchants, the additional terms will be part of the contract if they do not materially alter the agreement and no objection is raised. If either of the parties is not a merchant or if the additional terms do materially alter the offer, they are merely construed as proposals for addition to the contract. Different terms proposed by the offeree will not become part of the contract unless specifically accepted by the offeror. If the offeree expressly makes the acceptance conditioned upon assent to the additional or different terms, no contract is formed. |
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Term
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Definition
| offer sent via certified mail acceptance should be sent via certified mail |
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Term
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Definition
| opportunity to accept or not |
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Term
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Definition
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Term
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Definition
| If an auction sale is explicitly advertised or announced to be without reserve, the auctioneer may not withdraw the articles put up for sale unless no bid is made within a reasonable time. Unless the sale is advertised as being without reserve, it is with reserve. |
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Term
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Definition
| The Code provides that a contract for the sale of goods costing $500 or more is not enforceable unless there is some writing (or electronic record) sufficient to evidence the existence of a contract between the parties. For leases, the figure is $1,000 or more. |
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Term
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Definition
| Contractual terms that are set forth in a writing intended by the parties as a final expression of their agreement may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement, but under the Code they may be explained or supplemented by: (a) course of dealing, usage of trade, or course of performance, and (b) evidence of consistent, additional terms, unless the writing was intended to be complete and exclusive. |
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Term
| performance of a contract |
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Definition
tender of delivery
time of tender
place of tender |
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Term
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Definition
| Under this UCC rule, the seller’s tender of performance must conform exactly to the contract. If the goods or the tender fail in any respect to conform to the contract, the buyer may (1) reject the whole lot, (2) accept the whole lot, or (3) accept any commercial unit or units and reject the rest. There are three qualifications of the buyer’s right to reject the goods upon the seller’s failure to comply with the perfect tender rule. |
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Term
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Definition
| When the time for performance under the contract has not expired or when the seller has shipped nonconforming goods in the belief that the nonconforming ten¬der would be acceptable, the Code recognizes that a seller may cure or correct the nonconforming tender. |
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Term
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Definition
| The buyer generally does not have to pay any part of the price of the goods until the entire quantity specified in the contract has been delivered or tendered to her. However, an installment contract expressly provides for delivery of the goods in separate lots or installments and usually for payment of the price in installments. If the contract is silent as to payment, the seller may demand payment for each lot if the price can be apportioned. The buyer may reject a nonconforming installment if it substantially impairs the value of that installment and cannot be cured. When the nonconformity or default of one or more of the installments substantially impairs the value of the whole contract, the buyer can treat the breach as a breach of the whole contract. |
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Term
inspection
rejection
acceptance
revoking acceptance
obligation of payment |
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Definition
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Term
| Nonhappening of Presupposed Condition |
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Definition
| The seller is excused from the duty of performance on the nonoccurrence of presupposed conditions that were a basic assumption of the contract, unless the seller has expressly assumed the risk. The Code excuses performance when performance may not be literally impossible, but where it is commercially impracticable. This requires more than mere hardship or increased cost. The impracticability must be a result of an unforeseen supervening event not within the contemplation of the parties at the time of contracting. |
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Term
| commercial impracticability |
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Definition
| The impracticability must be a result of an unforeseen supervening event not within the contemplation of the parties at the time of contracting. |
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Term
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Definition
| Where neither party is at fault and the agreed manner of delivery of goods becomes commercially impracticable, a substituted manner of performance, if commercially reasonable, must be tendered and accepted. |
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Term
| Right to Adequate Assurance of Performance |
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Definition
| When reasonable grounds for insecurity arise regarding either party’s performance, the other party may demand a written assurance and suspend his own performance until he receives that assurance. If the assurance is not received within a reasonable time not exceeding thirty days, the contract is repudiated. |
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Term
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Definition
| This is a clear indication by either contracting party that he is unwilling or unable to perform his duties under the contract before performance is due. If the anticipatory repudiation substantially impairs the value of the contract, the aggrieved party may (1) await performance for a commercially reasonable time or (2) resort to any remedy for breach. |
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Term
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Definition
| Transfer of title is fundamental to the existence of a sale of goods. Title cannot pass under a sales contract until existing goods have been identified to the contract. Future goods cannot be the subject of a present sale. If a buyer rejects the goods, title goes back to the seller. Title does not pass under a lease; the lessee obtains the right to possess and use the goods for a period of time in exchange for consideration.. |
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Term
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Definition
| This is the designation of specific goods as goods to which the contract of sale refers. Identification may be made at any time and in any manner agreed upon by the parties. Identification may be made by either the buyer of seller. If the goods are fungible, identification of a share of undivided goods occurs when the contract is entered into. |
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Term
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Definition
| The Code defines “security interest” as an interest in personal property or fixtures that ensures payment or performance of an obligation. Security interests are governed by Article 9 of the Code. |
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Term
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Definition
| For a contract or policy of insurance to be valid, the insured must have an insurable interest in the subject matter. The Code extends an insurable interest to a buyer’s interest in goods that have been identified to the contract, enabling the buyer to purchase insurance on the goods. The seller also has an insurable interest in the goods while he has title or a security interest in them. A lessor retains an insurable interest in goods if the lessee has an option to buy them. |
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Term
| Void and Voidable Title to Goods |
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Definition
| A void title is no title. A thief or finder of goods has no title and can transfer none. A voidable title is one acquired under circumstances that permit the former owner to rescind the transfer and reclaim title, as in the case of mis¬take, common duress, undue influence, fraud in the inducement, misrepresentation, or sale by a person without contractual capacity. If a buyer who has voidable title should resell the goods to a good faith purchaser for value, before the seller rescinds transfer of title, the good faith purchaser acquires good title, and the original seller’s right of rescission is cut off. |
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Term
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Definition
| This term addresses the allocation of loss between seller and buyer where the goods have been damaged, destroyed, or lost without the fault of either the seller or the buyer. |
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Term
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Definition
| seller is authorized or required only to bear the expense of placing goods with the common carrier and bears the risk of loss only up to such point |
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Term
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Definition
| the shipper bears the risk until the goods reach their end destination |
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Term
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Definition
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Term
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Definition
| car dealer letting him use the tahoe for the weekend hoping it would make him want to buy it |
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Term
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Definition
| an affirmation of fact or promise about the goods, a description of the goods, or a sample or model of the goods, which becomes part of the basis of the bargain. The seller need not use formal words such as “warrant” or “guarantee” or have knowledge of the falsity of a statement in order to be liable for breach of an express warranty. |
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Term
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Definition
| An implied warranty is a contractual obligation arising out of certain circumstances of the sale. It exists by operation of law, not in the language of the sales contract. |
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Term
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Definition
| Under the Code a merchant seller makes an implied warranty of the merchantability of goods that are of the kind in which he deals. This is a warranty of the merchant seller that the goods are reasonably fit for the ordinary purposes for which they are used, that they pass without objection in the trade under the contract description, and that they are of fair, average quality. |
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Term
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Definition
| Any seller, whether a merchant or not, makes an implied warranty that the goods are fit for a particular purpose, provided the seller selects the product knowing the buyer’s intended use and that the buyer is relying on the seller’s judgment. This warranty pertains to the buyer’s specific purpose, rather than the ordinary purpose, of the goods. A seller’s conduct may involve both the implied warranty of merchantability and the implied warranty of fitness for a particular purpose. |
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Term
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Definition
| A disclaimer is a negation of a warranty. The Code calls for a reasonable construction of words or conduct to disclaim or limit warranties. |
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Term
| Buyer’s Examination or Refusal to Examine |
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Definition
| If the buyer inspects goods before making the contract, implied warranties do not apply to defects that are apparent on examination. There are no implied warranties as to defects that an examination ought to have revealed where the buyer has examined as fully as she desires or when the buyer refuses to examine the goods. |
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Term
| Limitation or Modification of Warranties |
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Definition
| The Code permits a seller to limit or modify a buyer’s remedies for breach of warranty. A seller may not, however, use unconscionable limitations or exclude consequential damages. Article 2A has a similar provision for leases of goods. |
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Term
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Definition
| During the nineteenth century, the law became established that a plaintiff could not recover for breach of warranty unless he was in a contractual relationship with the defendant. This relationship is known as privity of contract. |
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Term
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Definition
| determines who benefits from a warranty and therefore may sue for breach. It pertains to noncontracting parties who are injured by the defective goods, including users, consumers, and bystanders who are not the contracting purchaser. The Code provides three alternatives, which state different limits for horizontal privity. The least comprehensive and most widely adopted alternative provides that a seller’s warranty, whether express or implied, extends to any natural person who is in the family or household of the buyer or who is a guest in his home if it is reasonable to expect that such a person may use, consume, or be affected by the goods and who is injured in person by breach of the warranty. A seller may not exclude or limit the operation of this section for injury to a person. Alternative B extends Alternative A to “any natural person who may reasonably be expected to use, consume or be affected by the goods.” Alternative C further expands the coverage of the section to any person, not just natural persons, and to property damage as well as personal injury. |
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Term
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Definition
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Term
| Strict Liability in Tort– |
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Definition
| Section 402A of the Restatement, Second, of Torts, imposes strict liability in tort on merchant sellers for both personal injuries and property damage resulting from selling a product in a defective condition, unreasonably dangerous to the user or consumer. The essential distinction between strict liability in tort and negligence is that actions in strict liability do not require the plaintiff to prove that the injury-producing defect resulted from any specific act of negligence of the seller. It applies even though the seller has exercised all possible care in the preparation and sale of the product |
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Term
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Definition
| A buyer who fails to notify the seller of any breach within a reasonable time is barred from any remedy against the seller. |
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Term
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Definition
| A defect of this kind occurs when the product is not properly made. Thus, it fails to meet its own manufacturing specifications. A chair that was missing screws would constitute a manufacturing defect. |
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Term
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Definition
| A defect of this kind occurs when a product is made as specified but is dangerous or hazardous because the design is inadequate. Design defects result from poor engineering, poor choice of materials, or poor packaging. (Restatement (Third) of Torts does not impose strict liability for design defect or failure to give proper warnings or instructions.) |
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Term
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Definition
| A seller has a duty to provide adequate warning of possible danger, to provide appropriate directions for safe use, and to package the product in a safe manner. |
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Term
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Definition
| Section 402A liability applies only if the defective product is unreasonably dangerous. An unreasonably dangerous product is one that poses a danger beyond that which would be contemplated by an ordinary consumer who buys it with common knowledge of its characteristics. Most courts let the jury decide what a consumer would expect. |
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Term
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Definition
| Obstacles to recovery in warranty cases generally do not present problems in strict liability actions under Section 402A. The section was drafted to avoid most of these obstacles. |
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Term
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Definition
| Strict liability is based on tort law and is not subject to contractual defenses. It is not governed by the Code, not affected by contract limitations or disclaimers, and not subject to any requirement that notice be given to the seller within a reasonable time. In commercial transactions, however, most courts have allowed enforcement of clear and specific disclaimers of Section 402A liability between merchants of relatively equal economic power. |
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Term
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Definition
| With respect to horizontal privity, strict liability in tort of manufacturers and other sellers extends not only to buyers, users, and consumers, but also to injured bystanders. In terms of vertical privity, strict liability extends to any seller who is in the business of selling the product, including a wholesaler or distributor as well as the manufacturer and the retailer. The rule of strict liability in tort also applies to the manufacturer of a defective component part. |
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Term
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Definition
| The element common to all products liability defenses based on the plaintiff’s conduct is that the plaintiff’s improper conduct played such a contributing role in the injury that it would be unfair to blame the product or its seller. |
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Term
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Definition
| Under comparative negligence, damages are apportioned between the parties in proportion to the degree of fault or negligence found against the parties. Most courts apply comparative negligence to strict liability cases. |
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Term
| voluntary assumption of risk |
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Definition
| Under the Second Restatement of Torts assumption of risk is the plaintiff’s express or implied consent to encounter a known danger. This is a defense in an action based on strict liability in tort. The burden of proof of this defense is on the defendant. Under the Third Restatement, implied voluntary assumption of risk is not a defense. |
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Term
| misuse of abuse of a product |
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Definition
| Misuse or abuse occurs when the injured party knows, or should know, that he is using the product in a manner not contemplated by the seller. This is a defense to a strict liability case. A manufacturer will not avoid liability using this defense if the misuse of the product was foreseeable. |
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Term
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Definition
| Section 402A provides that liability only exists if the product reaches “the user or consumer without substantial change in the condition in which it is sold.”(putting chips in cars) |
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Term
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Definition
| This Restatement changes product liability and expands Section 402A. Adoption by states of the Third Restatement has been slow. Liability applies to anyone in the business of selling or distributing products if a defective product harms persons or property. This Restatement does not use the term strict liability. It instead defines different liability standards for manufacturing defects, design defects, and failure to warn. It imposes strict liability only for manufacturing defects. Liability for inadequate design or warning is imposed only for foreseeable risks of harm that were avoidable by using an alternative reasonable design, warning, or instruction. |
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Term
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Definition
| When the buyer defaults, the seller has been deprived of the rights for which it bargained. The buyer’s default may consist of (1) wrongfully rejecting the goods; (2) wrongfully revoking acceptance; (3) failing to make a payment due on or before delivery; or (4) repudiating the contract in whole or in part. The seller’s goods-oriented remedies for these defaults are withholding delivery of the goods, stopping delivery of the goods by a carrier, identifying conforming goods to the contract not already identified, and reclaiming the goods on the buyer’s insolvency. The seller’s money-oriented remedies include reselling the goods and recovering damages, recovering damages for nonacceptance of the goods or repudiation of the contract, recovering the price, and recovering incidental damages. The seller can also cancel the contract, which is an obligation-oriented remedy. The Code’s remedies are cumulative; more than one may be used by an aggrieved seller. |
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Term
| To Reclaim the Goods upon the Buyer’s Insolvency |
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Definition
| The unpaid seller may reclaim goods from an insolvent buyer by demand made to the buyer within ten days after the buyer has received the goods. If the buyer has committed fraud by a misrepresentation of solvency made to the seller in writing within three months prior to delivery of the goods, the ten-day limitation does not apply. This right is subject to the rights of a buyer in the ordinary course of business or other good faith purchaser. Use of this remedy precludes the use of other remedies. |
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Term
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Definition
| total liabilities exceed total value of assets |
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Term
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Definition
| inability to pay debts in ordinary course of business or as they become due |
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