BUL3310 Exam 3 Review

What is the underlying purpose of Article 2 of the UCC?

To promote the completion of business transactions through the use of standard default rules covering unforseen contigencies.

What does UCC Article 2 cover?

Governs the sale of goods, including the formation, performance, and enforcement of sales contracts.

What legal principles apply to the case of Veggie Time, Inc. and Fresh Farmer?

May involve commercial impracticability, a defense under UCC Article 2, where unforeseen circumstances (such as flooding) make performance impossible or excessively burdensome.

What are the key elements required for a valid sales contract under UCC Article 2?

Agreement (offer and acceptance), consideration, and compliance with the Statute of Frauds (if applicable).

What is the Statute of Frauds, and how does it apply to sales contracts?

Requires certain contracts, including the sale of goods over $500, to be in writing to be enforceable.

What is UCC Article 2A, and how does it differ from Article 2?

Governs lease contracts for goods, while the other governs the sale of goods.

What are the different types of warranties under UCC Article 2?

Express warranties (explicit promises about the goods)

Implied warranty of merchantability (goods must be fit for ordinary use)

Implied warranty of fitness for a particular purpose (seller knows the buyer's specific need)

What is an output contract, and how does it relate to the Veggie Time case?

Requires the seller to sell all of its production to a buyer. In the Veggie Time case, Fresh Farmer agreed to sell all of its corn to Veggie Time.

When can a party be excused from performing under a sales contract?

Under the doctrine of commercial impracticability, a seller may be excused if unforeseen events make performance unreasonably difficult or impossible.

What is the "perfect tender rule" under UCC Article 2?

States that a buyer has the right to reject goods if they fail to conform to the contract in any way.

What are the exceptions to the perfect tender rule?

Cure (seller corrects the defect within the contract time)

Substantial impairment (applies to installment contracts)

Commercial impracticability (unforeseen events prevent performance)

What is the difference between a shipment contract and a destination contract?

One has seller delivers goods to a carrier; risk of loss passes to buyer when shipped.

Other has seller must deliver goods to a specific place; risk of loss remains with seller until delivery.

What are the buyer’s remedies for a seller’s breach under UCC Article 2?

Cancel the contract

Cover (buy substitute goods and recover damages)

Sue for damages

Specific performance (for unique goods)

Reject nonconforming goods

What are the seller’s remedies for a buyer’s breach under UCC Article 2?

Withhold delivery

Resell the goods and recover damages

Sue for contract price

Cancel the contract

What is a firm offer under UCC Article 2?

An irrevocable offer by a merchant to buy or sell goods, held open for a stated time (or up to 3 months) without consideration.

What is the difference between a sale on approval and a sale or return?

One is buyer tests goods before deciding to keep them; risk remains with the seller.

The other buyer takes goods for resale but can return unsold goods; risk is on the buyer.

What are the requirements for a valid lease contract under UCC Article 2A?

Agreement between lessor and lessee

Consideration (value exchanged)

Identification of goods being leased

Terms of payment and delivery

How does the UCC define a merchant?

Someone who regularly deals in goods of the kind or has specialized knowledge about the goods.

What is risk of loss, and how is it determined under UCC Article 2?

determines who is responsible if goods are damaged before the buyer receives them. It depends on the contract type:

• Shipment contract: Risk passes to the buyer when the seller delivers to the carrier.

• Destination contract: Risk passes when goods arrive at the buyer’s location.

• Non-merchant seller: Risk passes to the buyer when goods are tendered (ready for pickup).

• Merchant seller: Risk passes when the buyer physically receives the goods.

What is an express warranty?

a specific promise made by the seller about the quality or performance of goods, such as statements, descriptions, or samples.

How can implied warranties be disclaimed?

can be disclaimed with “as is” or “with all faults” language.

Implied warranty of fitness for a particular purpose can be disclaimed if done in writing and clearly stated.