UCC Article 2
What is a "requirements contract" and are they recognized as valid under the UCC?
In a requirements contract, the buyer agrees to buy all that it needs or requires of a specified item from a seller. The seller is essentially the sole source supplier for the buyer.
Yes! Requirements contracts are recognized as being sufficiently definite under the law.
What are the main 3 elements of a valid contract?
Offer
Acceptance
Consideration
What subject matter is covered by UCC Article 9?
Secured Transactions
Name a requirement of a buyer who rejects non-conforming goods.
Rejection must be timely.
Buyer must cover to limit his own liability if the Seller cannot supply conforming goods.
What risk does a lender assume if it fails to properly secure (by attachment and perfection) its security interest in specific property when loaning funds or financing a purchase?
The risk is that their debt will be unsecured, and if the debtor becomes insolvent or files for bankruptcy that their claim will be unsecured and not satisfied by specific collateral, which greatly decreases the amount and likelihood of getting paid.
What is the purpose of the Uniform Commerical Code
To facilitate interstate commerce through enactment of uniform laws across states.
Distinguish between an assignment of contract rights and a delegation of contract duties
An assignment of contract rights confers the rights to the benefits of a contract to another party.
A delegation of duties transfers the obligation to perform under the contract to another party.
What type of property can be used as security under Article 9 of the Uniform Commercial Code
Personal Property
An exculpatory clause disclaims liability by the Seller for injury or damage to the Buyer.
Ex. Earnhardt valet is not liable to damages to cars parked in the Daytona Parking Garage.
What is a secured creditor's rights if a borrower defaults
Repossess the property.
Keep it in full satisfaction of the debt, OR
Sell it and apply the proceeds to expenses of collection then the underlying debt.
How do you determine if a contract that contains both goods and services is subject to Article 2 of the UCC?
You determine whether the contract is for predominantly goods or predominantly services.
What remedies can a non-breaching party request in a lawsuit for breach of contract. (Name 1)
1-Rescind (cancel) the contract
2-Damages
3-Both of the above
Under UCC Article 9, whose interest is the Secured Party protected against by correctly following the process of "attachment" of its security interest?
The borrower's interest.
What is the effect of a contract executed by a mentally incompetent individual who is NOT subject to a guardianship?
The contract is voidable at the sole option of the person subject to the disability.
What do we call the concept that a party to a contract has an affirmative duty to minimize his damages in the event of a breach of contract?
Cover or mitigation of damages.
Define the implied warranty of merchantability.
The warranty of merchantability represents that the item is of average quality of like goods and are fit for the ordinary purpose for which such goods are used.
Name characteristics that would require a contract to be in writing under the Statute of Frauds
Value is more than $500
Involves an interest in land
Cannot be fulfilled within 1 year
Promise to pay the debt of another
Promise of an Executor to (personally) pay debts of an Estate
Promises made in consideration of marriage
Under UCC Article 9, whose interest is the Secured Party protected against by correctly following the process of "perfection" of its security interest?
What is the effect of a contract signed by a person that is subject to a court ordered guardianship?
Contract signed by a subject of a court ordered guardianship are void and unenforceable by either party.
What is the impact of statement of fact vs. statement of opinion with relationship to warranties?
A statement of fact about a good may result in an enforceable warranty. A statement of opinion will not lead to an enforceable warranty.
Define the concept of implied warranty of fitness for a particular purpose.
Where a Seller knows that a Buyer is purchasing the goods for a specific purpose and the Buyer relies on the Seller's representation that the goods sold meet or perform for such purpose, there is a warranty that the goods are fit for such purpose unless it is disclaimed by the Seller.
Under the majority rule, are Non-Compete agreements valid between an employer and employee? What factors will a court look at to help determine validity?
Yes, under the majority rule, non-compete agreements are valid and enforceable between an employer and employee if they are reasonable in scope, which may include looking at geographic area covered, what type of activity is limited, and for how long.
Two Banks assert a security interest in property used as collateral for a loan. How do you determine which one has priority over the other?
1st to perfect their interest
If neither, then first to attach their interest
What is the effect of a counteroffer on the original offer?
Define Fraud (in context of contracts)
Deception of one person by another through false statements or statements of which they are unsure of the truth.