UCC Article 2 Sales Mnemonics .txt

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UCC Article 2 Sales Mnemonics .txt
2011-07-05 16:05:39
UCC Article Sales Mnemonics

UCC Article 2 Sales Mnemonics
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  1. If BOTH PARTIES ARE MERCHANTS the additional terms in an acceptance become part of the contract unless “O-CAN”,O: offeror OBJECTS to the original terms within a reasonable time
    C: original offer expressly CONDITIONED agreement exclusively to those terms contained in the offer
  2.  A: when the additional terms materially ALTER the contract terms, then those terms do not become party of the contract
    • • a term contained in the acceptance MATERIALLY ALTERS the contract offer if it would cause surprise or hardship if the offeror were not made aware of its existence.
    • Materially altering terms are "J-STRAW"
  3.  NON-MERCHANTS: where one or both parties are non-merchants, then offeror can remain silent and is not bound to accept either material or non-material additional terms that have been added to the acceptance
    • • The UCC considers them mere proposals that do not become part of the contract.
    • Materially altering k terms are J-STRAW,Materially Altering k terms are (J-STRAW)
    • o J – clause bestowing JURISDICTION upon a particular court; or, requiring offeror to consent to jurisdiction in a particular court
    • o S- SHORTENING the SoL to sue for non-conforming goods
    • o T – limiting TORT liability or limiting the seller’s liability for a buyer’s consequential damages (3 R Clause)
    • o R – altering the UCC rules for RISK of loss
    • oA –adding an ARBITRATION clause (unless arbitration was the customary practice in that trade)
    • oW – a clause disclaiming the 'M-FEET' WARRANTIES (i.e. merchantibility, fitness for a particular purpose, express warranty, etc...)•
    • Note: ‘J-STRAW’ is not an excusive list. Materially altering k terms can also include other terms that would materially alter a contract’s offer.
    • •Additional terms added to an acceptance that DO NOT MATERIALLY ALTER the offer become part of the contract UNLESS objection is timely made by the offeror.
  4. A: ACCEPTANCE can be revoked
    • R: REJECTION of non-conforming goods
    • A sales contract may contain the following express or implied warranties. [M-FEET],•MERCHANIBILITY
    • oUnless, expressly excluded, a merchant impliedly warrants, that the goods sold are “fit for their ordinary purpose”.
    • oThe goods must pass without objection in the trade under the description in the contract – not the best, not the worst – but fair and average quality.
    • oThe implied warranty of Merchantability is given by only a limited class of merchants – namely, merchants with respect to goods of that kind.
    • This restricts the merchantability warranty that is narrower than just those who engage in business.
    • oThus, a merchant, making only an isolated sale of this type of good, is not considered a merchant and gives no implied warranty of merchantability.
    • Ex: I go to barber shop. They try to sell hair tonic. I buy hair tonic. It takes my hair out. I can go after them for breach of implied warranty of merchantability.
    • Ex: I go to barber shop. They sell me a tv. TV fails at home. I can’t go after barber for implied warranty of merchantability becaus
    • Express Warranties are SAD,oExpress Warranties (EW) can be given by both merchants and non-merchants.
    • oBut, in order to sue on an EW, the EW must have been the “basis of the bargain”. That is, the buyer must have seen/heard the EW and relied on the Express Warranty.
    • oExpress Warranties derive from the SAD
    • SAMPLE
    • •Any sample/model that was the basis of the bargain
    • oEx: The “Shamwow” sample that influenced your decision that allegedly absorbs 12x its weight and soaks up to 3 gallons of water.
    • •Any written/oral affirmation of fact/promise made by the seller to the buyer relating to the goods that becomes part of the basis of the bargain which induced the buyer to purchase the goods.
    • •Statements made by the seller during contract negotiations are considered affirmations of fact
    • •UNLESS that statement would be construed by a reasonably prudent person (RPP) only as a seller’s opinion or puffery.
    • •Any description of the goods in an advertisement/brochure/catalog.
    • oAny S
    • Plaintiff’s claim against Seller for defective good can be based upon one or more overlapping PINE theories of liability.
    • Hint: I PINE for defective product liability,oProducts liability
    • oImplied warranty breach – contract theory implied warranty
    • oNegligence tort theory
    • oExpress Wararnty – contract theory for breach of ‘SAD’ Express Warranty
    • G.P.PALMS is not liable for breach of warranty.,•In a breach of warranty claim, the Seller Can Raise the Following Defense to Breach of Warranty
    • oG-PPALMS
    • 1) GOVERNMENT Contractor Defense
    • •A manufacturer cannot be held liable for a defectively designed military product, if the (1) defect was caused by the government’s own design specifications AND (2) the manufacturer warned the government of any known dangers.
    • 2)P - Lack of PRIVITY of Contract
    • •Breach of warranty claims arising from sale of goods require some form of privity of contract with the seller who has expressly/impliedly warranted the performance of that product.
    • •Parties who have entered a contract with each other (i.e. buyer and seller) are in direct privity.
    • oAt common law, only buyers in direct privity could recover for the harm caused by the defective/unsafe product.
    • •Extension of PRIVITY
    • ooHousehold Privity: Under UCC Article 2, a seller express/implied warranties extend horizontally beyond the buyer to any natural person who suffers a physical injury (per
    • a DIM product is defective,•A manufacturer (or regular seller) of a DUD (defective and unreasonably dangerous) product is strictly liable for physical harm proximately caused by the product’s dangerously defective DIM conditions (DEFECTIVE design, INADEQUATE warning, MISTAKE in manufacture)