Legal Concepts Review for Exam
Overview of Test Preparation
- Importance of attending class for success in exams.
- Review of definitions and applications essential to understand for the test.
Key Definitions
Merchant:
- A merchant is someone who regularly sells or deals in goods or holds themselves out as having knowledge or skill related to the goods.
- Example: Selling computers as a part of a business qualifies as being a merchant.
Quantity Terms:
- The court can fill in missing terms in contracts for goods if they are left out.
Merchant's Promise in Writing:
- If a merchant makes a promise in writing, they cannot revoke the offer for a period of three months.
- Note: Important not to confuse with other contract scenarios.
Non-Merchant Contracts
- Between Non-Merchants:
- If one party makes an additional term, it is treated as a separate offer rather than a rejection of the original offer.
Statute of Frauds
- Written Confirmation:
- If one merchant sends written confirmation of an oral agreement, the other merchant must reject it within 10 days to avoid upholding the agreement.
Risk of Loss in Contracts
- FOB Seller's Address:
- Risk of loss passes to the buyer when goods leave the seller (shipping contract).
- FOB Destination:
- Risk of loss passes to the buyer only when goods reach their destination.
- If Non-Merchant:
- Risk passes when the buyer can pick them up.
Void vs. Voidable Title
- Void Title:
- Stolen goods have no title; the original owner can reclaim them.
- Voidable Title:
- Goods obtained through fraud can be voidable, meaning the true owner may or may not reclaim them based on circumstances.
Consignment
- Definition:
- Goods loaned to another individual or a business for sale; the consignee has title to those goods while they’re in their possession.
- Implication for Creditors: Creditors can claim those goods from consignee as they hold title.
Buyer’s Rights
Reject Nonconforming Goods:
- A buyer can reject goods that do not conform to the agreement if the defect is large or small, but within 30 days of acceptance.
- Merchants must make efforts to address rejected goods, such as arranging return shipments.
Material Defects After 30 Days:
- A buyer can still seek recourse for refunds if the defect is either material or minor even after 30 days if they have legitimate grounds.
Seller’s Rights
- Cure a Problem:
- A seller can fix issues with goods only before the contract expires. Attempting to fix after the expiration is not permitted.
Commercial Impracticability
- Definition: A seller can avoid contractual obligations if unforeseen circumstances render performance impractical to predict.
Article II Considerations
- Merchantability:
- Only applies to merchants. Goods must be fit for ordinary purposes and and significant defects must be identified (i.e., a major defect like a broken item).
Liability and Suing
- Negligence Law:
- Traditionally allowed for buyers only to sue sellers. Now, anyone can sue for negligence concerning faulty goods.
- McPherson v. Buick Motor Co.:
- Landmark negligence case allowing broader rights to sue in product liability contexts.
Product Liability Theories
- Theories for Suing:
- 1. Merchantability: Breach if goods aren't suitable for ordinary use.
- 2. Negligence: Supplier's carelessness leading to harm.
- 3. Strict Liability: Applies to anyone affected by defective products regardless of negligence care.
Exam Tips
- Study specific definitions and examples emphasized during the review sessions.
- Focus on distinguishing between void and voidable titles, terms of risk in various shipping terms, and buyer and seller responsibilities related to defects.
- Ensure understanding of rules and timings related to contracts and merchant dealings to excel in the exam.