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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