UCC and Sales Contracts
What does UCC stand for?
Uniform Commercial Code
What are contract terms called when the UCC allows them to be left unspecified?
Open terms.
What type of warranty is created when a seller makes a specific factual promise about a product that becomes part of the bargain?
Express Warranty
What are the two basic types of negotiable instruments?
Notes and drafts.
What is a person who possesses a negotiable instrument payable to that person or to bearer called?
Holder.
Which article of the UCC governs the sale of goods?
Article 2
What are goods called when they meet all the requirements of a sales contract?
Conforming goods.
What implied warranty generally guarantees that goods sold by a merchant are fit for their ordinary purpose?
Implied warranty of merchantability
What type of negotiable instrument contains a written promise to pay money?
Promissory note.
What does HIDC stand for?
Holder in Due Course
Under the UCC Statute of Frauds, a contract for the sale of goods generally must be in writing when the price is at least what amount?
$500
A seller fails to deliver merchandise, so the buyer purchases replacement goods from another seller. What is this remedy called?
Cover
A customer tells a salesperson that she needs boots for hiking in extremely cold temperatures and relies on the salesperson's recommendation. What warranty may apply
Implied warranty of fitness for a particular purpose.
Is a check classified as a note or a draft?
Draft
Name two requirements for becoming a holder in due course.
Any two:
Takes the instrument for value.
Takes the instrument in good faith.
Takes the instrument without notice of specified problems or claims.
What is a firm offer under the UCC?
A merchant's signed written offer that promises to remain open for a stated period, subject to a maximum of three months without consideration.
Two businesses have consistently followed the same payment practices in previous transactions. What UCC concept describes this history?
Course of dealing
What federal law regulates written warranties on consumer products and requires certain warranty disclosures?
Magnuson-Moss Warranty Act.
What does it mean when a negotiable instrument is payable to bearer?
Whoever possesses the instrument is entitled to payment, subject to applicable law.
What is the difference between a real defense and a personal defense against a holder in due course?
Real defenses generally can be asserted against an HIDC, while personal defenses generally cannot
Two merchants orally agree to a sale. One sends a signed written confirmation, and the other does not object in writing within 10 days. What UCC exception may make the agreement enforceable?
The merchant confirmation exception to the Statute of Frauds
A merchant sends an acceptance that includes additional terms not contained in the original offer. Which UCC section governs whether these terms become part of the contract?
UCC Section 2-207, commonly called the battle of the forms.
A car dealer tells a customer that a vehicle has only 25,000 miles, but it actually has 90,000 miles. What type of warranty may the dealer have breached?
Express warranty
Name three requirements for a negotiable instrument under UCC Article 3
Any three of the following:
Signed by the maker or drawer.
Contains an unconditional promise or order.
States a fixed amount of money.
Is payable on demand or at a definite time.
Is payable to order or bearer, subject to exceptions.
Contains no unauthorized additional promises or instructions.
A consumer purchases a defective refrigerator using a financing agreement containing the FTC Holder Notice. Why might the consumer be able to raise a claim against the finance company?
The FTC Holder Rule preserves certain consumer claims and defenses against the holder of the financing agreement.