BA202 Exam 1

UCC

Model act that includes comprehensive laws that cover most aspects of commercial transactions.

Article II

Article of the UCC that governs the sale of goods

Sale of goods

The passing of title of goods from a seller to a buyer for a price

Goods

Tangible items that are moveable at the time of their identification to a contract

Mixed Sale

Sale that involves the provision of a service and a good in the same transaction

Merchant

Person who deals in goods of the kind involved in a transaction

Gap-Filling Rule

A rule stating that an open term can be “read into” a contract. If no price is listed, a reasonable price is assumed, until further negotiations

Firm Offer Rule

UCC rule stating that a merchant who (1) makes an offer to buy sell or lease goods, and (2) assures the other party in separate writing that the offer will be held open cannot revoke the offer for the time stated or, if no time is stated, for a reasonable time.

Accommodation

Shipment that is offered to a buyer as a replacement for the original shipment when the original shipment cannot be fulfilled.

UCC Statute of Frauds

Rule in the UCC that requires all contracts for the sale of goods costing $500 or more to be in writing.

Parol Evidence Rule

A rule stating that if a written contract is complete and final, any prior oral or written statements which alter, contradict, or add to the terms are inadmissible in a court regarding any disputes.

Identification of Goods

Distinguishing of the goods named in a contract from the sellers other goods

Document of Title

Actual piece of paper that is required in some transactions of pickup or delivery

Shipment Contract

Contract requires the seller to ship the goods to the buyer via a common carrier (Buyer bears the risk of loss)

Destination Contract

Contract that requires the seller to deliver the goods either to buyer’s place of business or to another destination specified in the sales contract (seller bears risk of loss)

Bailee

Holder of goods who is not a seller or a buyer.

Conditional Sales

Type of sale in which the seller entrusts possession of goods to a buyer on a trial basis.

Sale on Approval

Type of sale in which there is no actual sale unless and until the buyer accepts the goods

Sale or return

contract in which the seller delivers goods to a buyer with the understanding that the buyer may return the goods if they are not used or resold within a stated or reasonable period of time.

Consignment

Arrangement in which a seller delivers the goods to a buyer to sell on his or her behalf

Void Title

Situation in which a thief acquires no title to goods they steal

Voidable Title

Title that a purchaser has on goods obtained by fraud, a check that is later dishonored, or impersonation of another person.

Good Faith Purchaser for Value

Person to whom good title can be transferred from a person with a voidable title.

Buyer in the Ordinary Course of Business

Person who in good faith, and without knowledge that the sale violates the ownership or security interests of a third party, buys goods in the ordinary course of business from a person in the business of selling goods of that kind.

Entrustment Rule

Rule stating when an owner entrusts possession of their goods to a merchant who deals in goods of that kind, the merchant has the power to transfer all rights in the goods to a buyer in the ordinary course of business.

Breach

Failure of a party to perform an obligation in a sales contract

Perfect Tender Rule

Rule that says if the goods or tender of a delivery fail in any respect to conform the contract, the owner may opt to reject the shipment, accept the shipment, or reject part of the shipment and accept part of the shipment.

Right to Cure

an opportunity to repair or replace defective or nonconforming goods

Reasonableness

Term used throughout the UCC to establish the duties of performance by the parties to the sales and lease contracts.

Sellers remedies for breach of contract

1. Withhold Delivery 2. Sue for Breach of Contract 3. Stop Goods in Transit 4. Reclaim the Goods 5. Cancel the Contract

Buyers remedies for breach of contract

1. Reject nonconforming goods 2. Cover and recover damages 3. Sue for Breach of Contract 4. Sue for Ordinary Damages 5. Sue for Specific Performance

Right to Cover

Buyers right to buy replacement goods when the seller fails to deliver or breaches contract

Adequate Assurance of Performance

Assurance from the other party if there is an indication that a contract will be breached by that party.

Liquidated Damages

Damages that will be paid on a breach of contract that are established in advance.

Warranty

Sellers assurance to a buyer that the goods sold meet certain quality standards.

Express Warranty

Warranty created when a seller makes an affirmation that the goods they are selling meet certain standards of quality, description, performance, or condition.

Puffing

A commendation of goods made by a seller that does not create an express warranty. (Sales Talk)

Compensatory Damages

Damages that are generally equal to the difference between the value of the goods as warranted and the actual value of the goods accepted at the time of acceptance.

Implied Warranty of Merchantability

Unless properly disclosed, a warranty that is implied that sold goods are fit for the ordinary purpose for which they are sold.

Implied Warranty for Fitness for Human Consumption

Warranty that applies to food or drink consumed on or off the sellers premises, that assures it is fit for human consumption.

Implied Warranty of Fitness for a Particular Purpose

Warranty that arises when a seller warrants that the goods will meet the buyers expressed needs.

Name the 3 Implied Warranties

Implied Warranty of Merchantability

Implied Warranty for Fitness for Human Consumption

Implied Warranty of Fitness for a Particular Purpose