Sales - 6&7
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What are the factors under the Predominant Factors test for hybrid K?
- Language of K
- K billing
- Mobility of the goods
What is the majority rule under the predominant factors test in hybrid Ks?
If the primary purpose is goods, then Art. 2 applies, otherwise apply CL
Is serving food at a restaurant considered a good or service for UCC purposes?
What is the minority rule for hybrid Ks?
Gravamen of the Action Test - what is the main thrust of the K?
Instead of looking at the factors, look at the issues and ask "Is this a sales issue or a service issue?"
What are the common uses of hybrid Ks?
- big industrial equipment
- construction K
When does software become a good?
When it is put into something tangible and moveable
What are the elements for creation of a waiver?
- existence at time of waiver of something that can be waived (i.e. - right, privilege, benefit)
- actual/constructive knowledge that it can be waived
- intent to waive
Can conduct be a waiver?
yes if there is clear evidence - implied waiver
How can an implied waiver be proven?
when someone acts in a way that is inconsistent with how they would act if they kept their right
What are the elements for retracting a waiver?
- signed (SoF)
- notice is given
- no change of position
Can you have a waiver w/o consideration or detrimental reliance?
Does a K fail for indefiniteness when there are missing terms if the parties intended to have a K?
When can gap fillers be used?
When there are missing terms and use would honor the intent of the parties to the K in a reasonable way
What are the major differences b/t CL and UCC?
- no K defense
- no enforceable K defense
- determining K terms
- parol evidence rule
- waiver and modification
What is the SoL under 2-725?
4 years after the cause of action has accrued
Must the aggrevied party have knowledge of the breach for the SoL to begin to run under 2-725?
Is consideration requried for waiver and modification under the UCC?
no but subject to good faith
When does breach of warranty occur under 2-725?
when tender of delivery is made
What is the exception to the general rule that breach of warranty occurs at tender under 2-725?
- warranty explicitly extends to the future performance of the goods
- discovery of B depends on time of future performance
- must be explicit
Can the SoL in 2-725 be modified and if yes how so?
- can't be reduced to less than 1 year
- can't extend past 4 years
When can an aggreived party bring a CoA after the SoL has run under 2-725?
- the action was started w/in the SoL and then terminated for some reason other than voluntary discontinuance or dismissal for failure to prosecute
- there is another available remedy for the same breach
- new CoA is brought w/in 6 months of the termination of the first
If an action for anticipatory repudiation comes to trial before the time of performance has passed, how is the market price determined under 2-723?
according to the price of the goods prevailing at hte time when the aggreived party learned of the repudiation
Can parties to a K provide for additional or substitute remedies or limit or alter the measure of damages recoverable under 2-719?
If parties include a remedy in the K is this considered optional or exclusive under 2-719?
option unless expressly agreed to be exclusive
Where an exclusive remedy fails of its essential purpose under 2-719, what is the result?
the aggreived party may pursue any other remedy provided for in Art. 2
Consequential damages may be limited or excluded under 2-719 unless the limitation or exclusion what?
Limitation of CD for what type of injury is prima facie unconscionable under 2-719?
injury to the person in the case of consumer goods
What are the damages for the breach of warranty of title?
- V if as warranted - V at time/place of acceptance
Are ID and CD available for breach of the warranty of title?
What are the 3 criteria for ID?
- actually incurred
- reasonable in amount
- must represent expense incident to the delay or other breach
Is limitation of CD where the loss is commercial prima facie unconscionable under 2-719?
What are the criteria for CD?
- actually suffered
- reasonably certain of calculation
- S had reason to know about the needs or requirements of B at the time of K
- couldn't have been reasonably prevented via cover or otherwise
When is specific performance likely to be awarded to B for breach?
when the goods are unique and/or can't be replaced thru normal challenges
What is the measure of damages when the S has repudiated under 2-713?
difference b/t mkt price at time of scheduled delivery and K price
Can a B sue under 2-713 for non-delivery or repudiation when it has actually covered below the market value?
the courts are split on this
What are the requirements for an effective cover (2-712)?
- in good faith
- w/o unreasonable delay
- acted in a reasonable manner
In the situation of cover, will it matter if hindsight later proves that the method of cover used wasn't the cheapest or most effective?
- all that matters is that at the time and place the B acted in good faith and in a reasonable manner
What are the B remedies in general for breach (2-711)?
- cover (2-712)
- recover damages for non-delivery (2-713)
- Direct Damages (2-714)
- ID/CD (2-715)
- specific performance or replevin (2-716)
- self help (2-717)
What is the effect of acceptance?
- B must pay K price
- Can't reject
- can't revoke acceptance of NCGs UNLESS reasonable assumption that S would seasonably cure
- doesn't bar other remedies for NC
What are the 5 main ways to breach?
- late delivery
- defect in quality
- clouds on title
- over or under quality
- no delivery or repudiation
What is the measure of damages for non-delivery (2-713)?
difference b/t MP at the time B learned of the breach and KP
place - either tender or arrival depending on circumstances
Is a S entitled to CD?
no...limited to ID only
When is an action for price (2-709) allowed?
- goods have been accepted
- CG have been lost or damaged and RoL has passed to B
- goods identified to K and unable to resell or attempt would be futile
What are the measure of damages for nonacceptance or repudiation under 2-708(1)?
- KP - MP
- time and place of tender
- plus ID
- minus expenses saved
What is the measure of damages for nonacceptance or repudiation under 2-708(2) - lost volume S?
- measure of damages is the lost profit caused from B breach
- list price - cost to dealer
- list price - manufacturing costs
- S must show: (1) capacity to produce unit; and (2) profitable to produce it
If use of 2-708(1) will overcompensate the S then can the court force recover under 2-708(2) thereby limiting the S to only its lost profits?
What are the requirements for resale under 2-706?
- good faith
- commercially reasonable manner
- public or private sale
- identify broken K
In the case of resale, is oral notification to the B sufficient?
What are the requirements for a public sale under 2-706?
- only identified goods
- made at a usual place or market
- S must give B reasonable notice of time/place of resale
- S must provide for inspection for goods (if applicable)
- S may buy
Is the S accountable to the B for any profit he makes on a resale under 2-706 following B breach?
What are the S remedies for breach generally (2-703)?
- withhold delivery
- stop delivery
- identify the goods to the K or salvage unfinished goods (2-704)
- resell and recover damages (2-706)
- recover damages for nonacceptance (2-708)
- recover price (2-709)
- cancel (1-106(4))
When can a S proceed under 2-703 regarding its remedies?
- B wrongfully rejects
- B revokes acceptance of goods
- B fails to make a payment when due
- B repudiates
When can a B proceed under 2-711 regarding its remedies?
- S fails to make a delivery
- S repudiates
- B rightfully rejects
- B justifiably revokes acceptance
S will have an excuse by failure of presupposed condition (2-615) if it can establish of 3 things:
- delivery impracticable
- contingency the nonoccurrence of which was basic assumption of the K (foreseeable?)
- S didn't assume greater obligation under the K
Does the B have a claim under 2-615 excuse by failure of presupposed condition?
yes for frustration of purpose
Is it enough for an excuse under 2-615 that the S costs have gone up and/or performance would be at a loss?
NO however a severe shortage of raw materials or supplies that causes a marked increase would be
If some contingency affects only part of a S capacity to perform what is he obligated to do under 2-615(2)?
- allocate production and deliveries among his customers in any manner that is fair and reasonable
- may include regular customers not then under K as well
- may take into account his own requirements for further manufacture
Does the allocation in a fair and reasonable manner requirement under excuse by failure of presupposed condition (2-615) include auctioning off what is left to the highest bidders?
NO - not allowed a greater profit
If there is casualty to identified goods under 2-613 by no fault of either party that results in a total loss, what is the result?
K is avoided
If there is a casualty to identified goods under 2-613 by no fault of either praty that results in a partial loss, what is the result?
B may demand inspection and at his option either treat the K as avoided or accept goods at an adjusted price
Is it a requirement for application of casualty to identified goods (2-613) that the goods actually were identified?
no - test is whether the nature of the K required goods which had to be identified at the time of K
What is the standard for rejection under an installment K?
substantial impairment of the value of installment and CANNOT be cured
Does the perfect tender rule apply to installment K?
Can parties K around the rules surrounding of an installment K?
no...if that is what is created then those are the rules that apply
When can a party cancel the entire installment K under 2-612?
whenever NC or default with respect to one or more installments substantially impairs the value of the whole
When must a NC installment delivery be accepted?
when it is curable and the S has given adequate assurance of cure
this refers to the cured delivery and not the NCGs initially sent
An aggreived party reinstates an installment K if he does what?
- accepts a NC installment and either:
- (1) doesn't seasonably notify B of cancellation, or
- (2) brings an action with respect ONLY to past installments, or
- (3) demands performance as to future installments
When can a repudiating party retract his repudiation under 2-611?
until the repudiating party's next performance
When is a repudiating party not allowed to retract its repudation under 2-611?
when the aggreived party has materially changed its position in reliance of the repudiation or cancelled the K
What is the effect of a retraction of repudiation under 2-611?
there is no breach and the K stands
Is a disagreement about K terms, if acting in GF, a repudiation?
Can a party simply ignore the repudiation and act as if it didn't happen?
no - can't wait forever and at some point will have to take action if want to recover
What constitutes an anticipatory repudiation under 2-610?
an overt communication of intention or an action which renders performance impossible or demonstrates a clear intention not to continue with performance
What are the aggreived parties options under 2-610 regarding an anticipatory repudiation?
- wait for performance for a commercially reasonable time
- resort to any remedy for breach
- suspend his own performance or pcoeed in accordance with S rights under 2-704
Is demand for adequate assurance under 2-609 mandatory or optional?
totally optional and not required to make a demand even if justified before entitled to recover for resulting breach
What can a party do when reasonable grounds for insecurity arise with respect to the performance of the other party to the K under 2-609?
- demand adequate assurance of performance in writing
- may if commercially reasonable suspend any performance for which he hasn't already received the agreed return until he gets that assurance
How is reasonableness measured as between merchants regarding the insecurity mechanism of 2-609?
according to commercial standards
Is subjective insecurity enough to justify a demand for adequate assurance under 2-609?
- no, the insecurity must be reasonable to be justified
- there must be a reason for the demand
- 2nd thoughts about the K aren't enough
Both demands and assurances under 2-609 should be _______
- clear and detailed
- based on good business sense
If an aggreived party accepts an improper delivery or payment can it still demand adequate assurance of future performance under 2-609?
How long does a party have to respond after receipt of a justified demand under 2-609?
What is the consequence for failing to respond to a justified demand under 2-609 w/in 30 days?
treated as a repudiation of the K and 2-610 rules apply
Is it possible for delinquencies on one Ks to justify a demand for assurance on another K?
Will rumors from a reliable source justify a demand for assurance?
Does the shaken faith doctrine apply to revocation of acceptance under 2-608?
What is the standard for revocation of acceptance (2-608)?
- defect substantially impairs the value to the B and accepted b/c either:
- (1) reasonable assumption that S would cure NC or
- (2) w/o discovery of NC or S said not to worry about it
Does the S have a right to cure under 2-608 revocation of acceptance?
- majority - no
- minority - yes
When does post revocation use constitute re-acceptance under 2-608?
only if B actions regarding the goods is deemed unreasonable
Is the S entitled to any recovery for B's post revocation use under 2-608?
yes - entitled to recover the reasonable value of that use which is generally the FMRV
What are the 2 prongs of the substantially impairs test in 2-608 for revocation of acceptance?
subjective - does the defect impair the value to this particular B given his needs and circumstances (eggshell B)
objective - some evidence that teh defect actually did impair the value to the B
When must the B notify the S of his revocation of acceptance under 2-608?
- w/in a reasonable time after the B discovers or should have discovered the problem AND
- before any substantial change in goods not caused by their defects
What are the duties and rights imposed on a buyer who revokes acceptance under 2-608?
the same as those imposed on a B who rejects goods (2-602 thru 2-604)
Is it possible for a B to both revoke acceptance and recover damages for breach?
If the defect is minor can the B revoke acceptance under 2-608?
no he is stuck with only $ damages
May a B revoke for a NC known to him at the time of acceptance?
Is oral notification regarding revocation of acceptance ok?
Who has the BoP for establishing any breach with respect to accepted goods under 2-607?
What constitutes acceptance of goods under 2-606?
- overt acceptance after inspection - signification
- acceptance by omission - ineffective rejection
- acting inconsistently with S ownership
Does use of goods as intended during an inspection period qualify as acting inconsistently with S ownership under 2-606?
If the B accepts a part of any commercial unit, is he thereby accepting that entire unit under 2-606?
Under 2-605 the B failure to state in connection with rejection a particular defect which is ascertainable by reasonable inspection precludes him from relying on the unstated defect to justify rejection or to establish breach in what 2 circumstances?
- where S could have cured it if stated seasonably
- b/t M - S made a request in writing after rejection for a full and final written statement of all defects on which B was relying
If the S fails to give the B instructions w/in a reasonable time regarding rejected goods in B's possession, what are the B's options under 2-604?
- store them
- reship them to S
- resell them for S account
If a B stores, reships, or resells rejected goods under 2-604 for the benefit of the S, does this constitute acceptance or conversion?
Is a B obligated to do anything with respect to rejected goods under 2-604 if the S fails to give instructions?
What are a M-B duties regarding rightfully rejected goods under 2-603 when the S has no agent or place of business where the goods were rejected?
- follow any reasonable instructions received from S
- if no instructions, make reasonable efforts to sell them for S account if perishable or rapidly declining in value
If a M-B sells rightfully rejected goods for the S account under 2-603, what, if any, compensation is he entitled to?
reimbursement from S or out of the proceeds for reasonble expenses of caring for and selling goods
may not exceed 10% of gross proceeds
B has the right to reject goods if 4 criteria are met (2-602)?
- No acceptance
- No term prohibits
What is the procedure for rightful rejection under 2-602?
- w/in a reasonable time after delivery
- seasonably notify S of rejection
- can't excercise ownership (unless necessity)
- B has to "care" for the goods
Is the B obligated to follow the S instruction regarding rightfully rejected goods under 2-602?
no duty to follow S instructions and S can't make B reship the goods back to S
If the B demands that the S come pick up the rejected goods, under 2-02 must the S do this?
Does the B notification of rejection under 2-602 have to be in writing?
Does a B generally have to particularize its reason for rejection under 2-602?
no - must only let S know that B rejects the goods however if you aren't specific and defect is obvious & curable then can't rely on that defect to reject later
Has a B effectively notified the S of rejection when he tells the S he is unhappy with the goods?
What is the perfect tender rule under 2-601?
- if the goods or the tender of delivery fail in any respect to conform to the K, the B may:
- (1) reject the whole; or
- (2) accept the whole; or
- (3) accept any commercial unit(s) and reject the rest
What have the drafters included in the UCC to make the perfect tender rule less harsh?
- GF requirement (1-304)
- S right to cure (2-508)
- CoPCoDUoT (2-504)
- Inapplicability to installment K (2-612)
- Revocation after acceptance has different standard (2-608)
What is the only limitation on partial acceptance under the perfect tender rule of 2-601?
GF and commercial reasonableness must be used to avoid undue impairment of the value of the remaining portion of the goods
Who has the BoP of proving conformity of goods at moment of tender if the goods are rejected?
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