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TYPES OF TRANSACTIONS COVERED BY THE UCC ART. 2 COVERED NOT COVERED The sale of: The sale of: Goods, i.e.

, tangible chattels Real Estate, Choses in action, Investment securities, Secured Transactions EXAMPLES OF GOODS SUBJECT TO ARTICLE 2 CERTAIN GOODS ASSOCIATED WITH REAL ESTATE MAY FALL UNDER ART. 2 Crops, either natural or cultivated Minerals, if to be severed by seller Water or ice, if to be severed by seller Timber to be cut, regardless of who severs Animals, including the unborn young of animals Fixtures so long as they may be removed w/o material harm to the land SUMMARY OF DISTINCTIONS FOR MERCHANTS SECTION TOPIC 1-201(19) Fair Dealing – merchant has higher standard than honesty in fact 2-201(2) SOF – merchant’s confirmatory memo rule (both merchants) 2-205 Merchant’s firm offer (firm offer must be made by merchant) 2-207(2) Additional terms in acceptance or confirmation – “battle of the forms” rule for merchants (both merchants) 2-209(2) Agreement excluding modification except by signed writing –form supplied by merchants (any non-merchant must sign this provision separately to show that the signor was aware it) 2-312 Warranty against infringement 2-314 Implied warranty of merchantability (of goods of that kind) 2-316(2) Disclaimer of implied warranty of merchantability (magic words) 2-403(2) Entrusting goods to merchant gives her power to transfer rights to buyer in ordinary course 2-509(3) ROL in the absence of breach (noncarrier cases) – passes on buyer’s receipt if seller is a merchant, otherwise on tender of delivery 2-605 Statement of defects – when both parties are merchants and the seller made a request in writing for a full and final written statement of all defects on which the buyer proposes to rely Exam Tip (Exceptions to the SOF) SCAPE Specially manufactured goods – if the seller has made a substantial beginning on their manufacture or commitments for their procurement Confirmation by a merchant in writing by a merchant to a merchant Admission by a party of the existence of the K in pleadings or court testimony – to the extent of the quantity admitted

and quantity.Performance – (1) partial acceptance of goods – to the extent goods were received and accepted and (2) partial payment with respect to the goods actually paid for Estoppel (detrimental reliance) – if one party has relied detrimentally on the oral agreement so that failing to enforce it would cause unconscionable injury or loss SUMMARY OF SIX STANDARDS OF MERCHANTABLE QUALITY GOODS MUST MEET ALL OF THE FOLLOWING SIX STANDARDS: (1) The goods must be fit for the ordinary purpose of such goods. contained. and Incidental Damages PERFECT TENDER RULE UNDER THE UCC BASIC RULE: If the goods or tender do not conform to the K in any respect. running within the variations permitted in the agreement. the bulk of the goods must be of fair average quality. accept the whole. (4) The goods must be of even kind. (3) If fungible. (5) The goods must be adequately packaged. ask yourself the following questions: . quality. (2) The goods must be capable of passing w/o objection under the K description. Buyer may reject the whole. and (6) The goods must conform to the promises made on the container or label. Demand specific performance. or Damages AFTER ACCEPTANCE OF GOODS Recover loss in value of goods. and labeled as required by the agreement.buyer can reject an installment only if the nonconformity substantially impairs the value of the installment (an even then the K is not breached unless the nonconformity of one or more installments substantially impairs the whole K (2-612) (2) Shipment Arrangements – buyer cannot reject unless the deviation in shipping procedures causes material delay or loss (2-504) Cure of a nonconforming tender is available if: (1) The time of performance has not yet expired. (2) Seller “seasonably” notifies buyer of an intention to cure. Cover. or do what is normally expected of goods. Consequential damages. or accept part and rejection part (2-601) UCC PROVISIONS THAT MITIGATE BASIC RULE: Substantial performance is sufficient: (1) Installment sales. and (3) Seller tenders conforming delivery within K time for performance (additional reasonable time allowed for surprise rejections)[2-508(1)] DETERMINING WHETHER TITLE HAS PASSED When analyzing a fact pattern to determine whether title has passed at a specific point in time. REMEDIES FOR BREACH OF WARRANTY BEFORE ACCEPTANCE OF GOODS Reject goods.

buyer has the following duties: (1) Store the goods with reasonable care for a reasonable time pending the seller’s removal (2) Follow the seller’s reasonable instructions to resell the goods (but only if the buyer is a merchant still in possession of the goods) (3) If the seller gives no instructions within a reasonable time. she will accept them. (3) Failing to make a valid rejection within a reasonable period of time. buyer may accept by words or conduct signifying approval in the following manner: (1) Indicating that the goods are conforming. such as by selling the goods CHECKLIST OF BUYER’S BUDIES UPON REJECTION OF GOODS After buyer has notified seller of the rejection of the goods. Reship the goods to the seller. buyer may: Store the goods for the seller’s account. (2) Indicating that although the goods are nonconforming. or Resell them for the seller’s account (especially perishable goods) . or (4) Acting in any way inconsistent with the seller’s continued ownership.Have the goods been identified either: (1) In the drafting of the K or (2) By subsequent action? Did the parties intend for title to pass at this time? ACCEPTANCE BY BUYER Under the UCC.

so sold for scrap When Seller learns of Buyer’s breach – sale must be in good faith and commercially reasonable When Seller learns of Buyer’s material breach. acceptance. finished if commercially reasonable to do so. when Seller learns of Buyer’s insolvency and demands return within 10 days in writing When Seller learns of Buyer’s insolvency. or when Buyer repudiates large shipments. including repudiation Who has possession of the goods Buyer or Seller Seller Buyer Carrier Seller Stop transmit of goods Identify conforming or unfinished goods Resell goods Seller Seller Cancel K . while goods are in transit When Seller learns of Buyer’s breach – unfinished goods may be identified in uncompleted state. revokes. fails to pay or anticipatory breaches In credit sales.Seller’s Prelitigation Remedies: Remedy Demand cash payment Withhold delivery Reclaim goods When Available When Seller learns of Buyer’s insolvency When Buyer wrongfully rejects.

Accountability of the payor bank for the amount of the item under §4-302 dealing with the payor bank’s responsibility for late return of items 5. A legal process. The payor bank’s knowledge or notice of an even such as the customer’s death. the close of the next banking day after the banking day on which the bank received the check IF A COLUMN A LEGAL EVENT OCCURS BEFORE ANY OF THE COLUMN B STEPS. clearing-house rule. THEN THE COLUMN A EVENT TAKES PRIORITY OVER THE ITEM. A stop payment order of the customer received by the payor bank 3. Payment of the item in cash by the payor bank 3. a cutoff hour no earlier than one hour after the opening of the next banking day after the banking day on which the bank received the check and no later than the close of the next banking day.4-303(a) Column A – the Four Legals (Priority of Items) 1. IF ANY COLUMN B STEP OCCURS FIRST. or a filing by the customer of a petition in bankruptcy 2. Acceptance or certification of the item by the payor bank 2. AND THE PAYOR BANK HAS A REASONABLE TIME TO ACT UPON IT. or if no cutoff hour is fixed. Settlement for the item by the payor bank w/o a right to revoke the settlement under statute. such as garnishment of the drawer’s assets. A set off exercised by the payor bank against the account of the drawer Column B 1. THEN THE ITEM HAS PRIORITY. that is served upon the payor bank 4. or agreement 4. When a check is the item. .