Term
What type of transactions does UCC Article 2 govern? |
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Definition
UCC Article 2 covers the law of sales of goods. |
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Term
Under what circumstances will a shipment of nonconforming goods not automatically constitute a breach of contract? |
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Definition
A shipment of nonconforming goods does not automatically constitute a breach of contract in the following circumstances:- If the seller notifies the buyer that the shipment is only an accommodation to the buyer
- If a buyer rejects goods as nonconforming before the time for contractual performance has expired. The seller then can notify the buyer of its intention to cure the nonconformity by delivering conforming goods.
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Term
Name a warranty implied in a sale by a merchant that is not implied in a sale by a nonmerchant. |
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Definition
An implied warranty of merchantability is implied in a sale by a merchant, but not in a sale by a nonmerchant. |
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Term
What persons, if any, other than the buyer, are covered by the seller's warranties in a transaction for the sale of goods? |
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Definition
A seller's warranty extends to any person in the buyer's family or household, or any guest in the buyer's home, who suffers injury resulting from breach of the warranty. |
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Term
What costs does a seller pay in C.I.F. sales that are not paid in an F.O.B. sale? |
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Definition
A seller pays the cost of insurance and freight charges in a C.I.F. sale, but not in an F.O.B. sale. |
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Term
Under the UCC, when does the risk of loss not follow title? |
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Definition
Under the UCC, risk of loss always follows title except when identified goods are at the seller's residence or place of business and the buyer is to pick them up. |
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Term
Describe three excuses for nonperformance of a sales contract. |
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Definition
Three excuses for nonperformance of a sales contract are the following: (1)Loss of identified goods (2)Unavailability of agreed-on shipping (3)Failure of a presupposed condition |
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Term
What remedy might be available to a seller who, after delivering the goods to a carrier, discovers that the buyer is insolvent? |
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Definition
If a seller, after delivering the goods to a carrier, discovers that the buyer is insolvent, the seller can withhold delivery of the goods or stop their delivery. |
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Term
Describe the elements of negotiability. |
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Definition
A negotiable instrument must have the following elements of negotiability:- Be signed by the maker or drawer
- Contain an unconditional promise to order to pay a certain sum in money
- Be payable on demand or at a definite time
- Be payable to order or bearer<.li>
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Term
Why is salability an essential characteristic for negotiable instruments? |
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Definition
Salability is an essential characteristic for negotiable instruments so that the seller does not have to wait for payment once the goods are delivered to the buyer. |
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Term
How can the payee of a negotiable instrument negotiate it to another specific person? |
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Definition
The payee of a negotiable instrument can negotiate it to another specific person by endorsement. |
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Term
What is the significance of being a holder in due course? |
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Definition
A holder in due course possesses a negotiable instrument but is free of personal defenses. |
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Term
Identify the characteristics of a holder in due course. |
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Definition
A holder in due course is one who possesses an instrument drawn to his or her order and who has taken the instrument under the following conditions:- For value
- In good faith
- Without notice that it is overdue or has been dishonored or without notice of any other persons' defenses against or claims to it.
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Term
Why should a financing statement be filed before the security interest attaches to consumer goods? |
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Definition
If the seller delays filing the financing statement until after the delivery of the goods to the buyer, the security interest is unperfected, and another security interest might attach to the property in the meantime. |
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Term
Describe two instances in which a perfected security interest is not superior to a later perfected security interest. |
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Definition
A perfected security interest is not superior to a later perfected security interest in the following two instances: (1) A holder in due course takes a negotiable instrument free of any perfected security interest in that instrument. (2) An artisan's lien for services or materials with respect to the collateral takes priority over a perfected security interest in that collateral. |
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Term
Describe a secured party's options upon a debtor's default. |
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Definition
A secured party's options under a debtor's default are as follows:- Right to sue on the underlying debt
- Right to foreclose
- Right to regain possession
- Right to retain or sell the collateral
- Right to dispose of the collateral as desired
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Term
What, if any, fair trade laws is the insurance business subject to? |
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Definition
Under the McCarran-Ferguson Act, the federal government generally does not regulate the business of insurance because it is subject to state regulations, and states usually apply their own antitrust laws to insurance. However, if a state does not have antitrust legislation applicable to insurance, federal antitrust laws apply. State laws, including Deceptive Trade Practices Acts, may apply to insurers. Some states have adopted the Model Insurance Fair Trade Practices Act. |
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Term
Why do manufacturers characterize as "limited" warranties that are essentially full warranties? |
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Definition
Manufacturers often characterize warranties that are essentially full warranties as limited to avoid "lemon law" provisions. |
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Term
What are the requirements of the Truth in Lending Act? |
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Definition
The Truth in Lending Act requires creditors to disclose finance charges and applies to all persons or organizations that regularly extend credit or make finance charges in connection with installment purchases. |
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Term
Identify the practices that violate the Fair Debt Collection Practices Act. |
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Definition
The Fair Debt Collection Practices Act prohibits collection practices such as using violent or criminal acts, using profane language, publishing lists of debtors, calling debtors repeatedly or in the middle of the night, threatening legal action with no intent to follow through, and contacting the debtor at work or at any unusual time or place, except with the debtor's consent. |
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Term
Under what circumstances might a reporting agency issue a consumer report? |
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Definition
A reporting agency can issue a consumer report under the following circumstances:- In response to a court order
- Under written instructions of the subject of the report
- To a person who, it has reason to believe, intends to use the information in connection with a credit transaction, for employment purposes, in connection with insurance underwriting, for determination of eligibility for a business license if the applicant's financial status is relevant, or for a legitimate business need for the information in connection with a business transaction.
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Term
Distinguish liquidation from reorganization as bankruptcy remedies. |
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Definition
Liquidation involves selling all the debtor's assets and distributing the proceeds to the creditors. Reorganization means the debor's affairs are set free of claims of creditors; and partial or full repayment of debts during the reorganization process. |
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Term
Who can initiate involuntary bankruptcy proceedings? |
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Definition
Any creditors who believe that a bankrupt person or organization favors other creditors or who continue to dispute the remaining assets of a bankrupt estate can petition the federal bankruptcy court for involuntary bankruptcy. |
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Term
What are the priorities among creditors in a liquidation proceeding? |
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Definition
The priorities among creditors in a liquidation proceeding are as follows:- Administrative expenses of the bankruptcy procceding
- Unsecured business debts
- A limited amount of wage claims
- Contributions to employee benefit plans
- Claims of unsecured individuals
- Unsecured claims of governmental units
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