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Clemson - LAW 3220 - Study Guide - Final

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Clemson - LAW 3220 - Study Guide - Final

School: Clemson University
Department: Law
Course: Legal Environment of Business
Professor: Edward Claggett
Term: Fall 2015
Tags: Law
Name: Law 322 Final Exam (Exam 3) Study Guide
Description: These notes cover everything that will be on exam 3 during finals week.
Uploaded: 04/22/2016
5 5 3 33 Reviews
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background image Law  322   Exam  3  Study  Guide   Chapter  11  
 
1.  Goods  are  tangible  person  property,  does  not  apply  to  real  property  
2.  Merchants  are  involved  in  day  to  day  business  
3.  Article  two  governs  these  types  of  contracts  
a.  Designed  to  promote  commerce,  commercial  sales  of  goods  
b.  More  liberal  than  common  law  of  contracts  
i.  A  contract  can  be  formed  in  any  manner  that  shows  agreement   between  parties   ii.  Requires  the  parties  to  act  in  good  faith   iii.  If  some  terms  are  unclear,  then  article  two  and  the  courts  can   act  to  fill  the  gaps  and  fix  the  contract  to  make  it  binding   iv.  Designed  to  complete  the  contract   v.  Firm  offer=will  remain  open  for  a  fixed  period  of  time   1.  It  MUST  stay  open  for  that  period  of  time,  you  cannot   withdrawal  like  in  common  law  unless  the  subject   matter  of  the  contract  is  destroyed  or  becomes  illegal   vi.  Statute  of  Frauds-­‐what  must  be  writing  to  be  enforceable     1.  Any  contract  subject  to  article  two  for  the  sale  of  goods   for  $500  or  more  must  be  in  writing  to  be  enforceable   2.  Businesses  put  almost  every  contract  in  writing   vii.  Parole  of  Evidence  Rule-­‐oral  evidence  or  testimony   1.  You  cannot  introduce  oral  evidence  or  testimony  if  it   contradicts  the  written  words  of  the  contract   2.  More  liberal  than  common  law   a.  Can  introduce  oral  evidence  or  testimony  if  there   is  a  term  missing  in  the  contract  (as  a  way  to  fill  
in  the  gap),  if  the  contract  is  vague,  or  if  you  are  
trying  to  prove  fraud  was  committed  by  the  
other  party  to  get  you  to  sign  the  contract   viii.  For  price,  Look  at  parties  previous  behavior,  what  kind  of  price   have  they  used  in  the  past?  Look  at  other  people  in  the  same  
type  of  business  and  look  at  their  terms.  If  the  quantity  is  left  
blank:  
1.  Requirements  contract   a.  Says  to  the  buyer,  how  much  do  you  require?   Seller  says  whatever  you  require  I  will  produce  
at  the  time  they  have  entered  into  the  contract  
2.  Output  contract   a.  Looks  at  the  seller  and  asks  how  much  can  they   produce  and  the  buyer  says  they  will  take  the  
entire  output  
ix.  Cash  on  delivery-­‐pay  me  when  the  goods  show  up   1.  Don’t  leave  payment  terms  blank  if  you  are  the  buyer  
background image x.  Sellers  primary  obligation  is  to  deliver  goods  in  accordance   with  the  contract-­‐  “Get  me  100  widgets  in  60  days”  If  the  seller   does  this,  then  the  buyers  primary  obligation  is  to  pay  for  those  
widgets  in  accordance  with  the  contract  
xi.  Buyers  initial  right  is  to  inspect  the  goods  they  receive,  if  they   are  fully  in  accordance  with  the  contract  then  the  buyer  just  
needs  to  pay,  if  some  or  all  don’t  accord  with  the  contract  the  
buyer  has  3  rights:   1.  Accept  all  the  goods  
2.  Reject  all  of  the  goods  
3.  Compromise  in  the  middle,  accept  some,  reject  some   xii.  Buyer  has  the  obligation  to  immediately  notify  the  seller  about   the  problem,  and  the  seller  can  fix  the  problem  as  long  as  the  
time  in  the  contract  hasn’t  passed    
xiii.  Warranties  under  Article  two   1.  Every  contract  has  a  warranty  of  good  title,  good  clear   title   2.  There  are  three  ways  a  seller  can  create  an  expressed   warranty     a.  Any  promise  from  the  seller  to  the  buyer   b.  Any  description  of  the  goods  given  to  the  buyer  
c.  Any  sample  or  model  of  the  goods  that  the  seller  
gives  to  the  buyer   3.  Implied  warranty  of  merchantability   a.  Dealing  with  commerce,  implied  warranty  that   every  unit  will  be  useable  in  the  business,  exists  
in  every  contract  subject  to  article  two  
4.  Implied  warranty  of  fitness  for  particular  purpose   5.  All  warranties  create  strict  liability  for  the  seller   a.  Article  two  says  seller  can  disclaim  warranties  if   they  use  clear  and  conspicuous  language  in  the   contract  and  the  buyer  signs  the  contract   i.  Buyer  and  seller  can  agree  to  an  amount   of  damages  if  any  of  the  warranties  are  
breached  
ii.  Buyer  can  allow  to  disclaim  one  or  two   warranties     xiv.  Remedies  and  damages   1.  Article  two  law  is  designed  to  put  the  non-­‐breaching   party  back  in  the  same  economic  position  had  the  
contract  been  performed  (Monetary  damages)  
2.  Nonbreaching  party  has  the  right  to  mitigate  damages    
3.  Nonbreaching  party  must  notify  the  other  party  of  a  
canceled  contract   4.  If  the  buyer  breaches,  the  seller  has  the  right  to  get  all   the  goods  back  
background image xv.  Does  not  provide  for  punitive  damages  to  be  awarded,  only  see   if  fraud  is  committed     xvi.  Applies  to  contracts  for  sale  of  goods  to  merchants  in  the   United  States   1.  Article  two  doesn’t  control  foreign  buyers  or  sellers   a.  Should  make  sure  the  contract  is  in  writing  
b.  Should  provide  how  the  parties  will  agree  to  
resolve  disputes  (usually  arbitration)   c.  If  you  don’t  want  to  arbitrate,  you  should  decide   where  you  are  going  to  litigate   d.  CISG-­‐international  convention  (last  resort  if  you   didn’t  put  anything  in  your  agreement)   i.  Applies  to  commercial  sale  of  goods  in   international  transactions   ii.  Tries  to  fill  in  the  gaps,  but  doesn’t   specifically  provide  for  how  you  will  try  
to  resolve  disputes  
iii.  Still  need  to  resolve  jurisdiction  and   choice  of  law   4.  Uniform  Commercial  Code  designed  to  promote  uniformity  and  consistency   of  law-­‐Article  two  is  underneath  this    
Chapter  13  
  1.  Negotiable  Instruments-­‐transferred  for  value   a.  Why  do  we  have  them?  Substitute  for  cash,  way  to  extend  credit  to   debtors   b.  Requirements-­‐  law  is  in  article  three  of  UCC   i.  Written  agreement   ii.  Unconditional  order  or  promise  to  pay  (check,  promissory   note)   iii.  Must  be  signed  by  the  maker  or  the  drawer   iv.  Must  be  payable  on  demand  or  at  a  specified  time  (check)   v.  Must  be  made  out  to  the  order  of  or  the  bearer   1.  Bearer  instruments  are  risky  to  use  if  they  get  lost   vi.  Must  be  a  certain  sum  of  money   c.  Four  major  types     i.  Three  party  instruments  (orders  to  pay)   1.  Drawer-­‐creates  the  instrument  
2.  Drawee-­‐person  who  is  going  to  make  the  payment  like  a  
bank  or  financial  institution   3.  Payee-­‐who  is  going  to  get  the  money?   a.  Drafts   i.  Three  party  instrument,  order  to  pay,  can   be  payable  by  a  bank,  corporation,  a  
background image charity,  a  trust,  can  be  payable  currently  
or  in  the  future  
b.  Checks   i.  A  check  is  a  draft   ii.  A  check  is  draft  that  can  only  be  paid  by  a   bank  or  financial  institution  and  has  to  
payable  on  demand  
ii.  Two  party  instruments  (promises  to  pay)   1.  “I  am  promising  to  pay  you  back”   a.  Notes     i.  Promissory  note  (most  common)   1.  I  will  pay  you  back  with  specified   interest  at  a  certain  date   ii.  Collateral  note   1.  Assets  of  the  borrow  if  they  don’t   pay,  they  can  seize  the  assets     2.  Assets  of  the  debtor  or  the  person   borrowing=collateral   b.  Certificates  of  deposit   i.  Note  that  is  issued  by  the  bank  to  one  of   its  depositors   d.  Merchants  want  to  sell  on  credit  so  that  they  can  expand  their   business,  sell  more  product   e.  Must  have  a  credit  policy  
f.  If  you  are  going  to  sell  goods  on  credit,  it  is  good  to  get  a  security  
interest   i.  Have  the  person  sign  a  financing  agreement   ii.  File  with  secretary  of  state  (perfecting  your  security  interest)   iii.  Prefer  to  be  a  secured  creditor   g.  Guarantor  and  surety   i.  Co-­‐sign  for  someone  else’s  borrowing   ii.  Surety  is  primarily  liable,  creditor  can  come  directly  against   the  surety   iii.  Guarantor  is  only  secondarily  liable   h.  Security  interest  over  inventory   i.  Can  get  one  (floating  lean)   1.  Floating  lean-­‐security  interest  in  inventory   ii.  If  you  have  one  and  the  borrower  defaults,  you  have  the  right   to  go  reclaim  those  goods  as  long  as  it  doesn’t  breach  the  
peace,  otherwise  get  the  police  
i.  Leans   i.  Attachment  lean   1.  Court  order   ii.  Judgment  lean   1.  Court  reaches  a  decision,  they  issue  a  judgment  

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School: Clemson University
Department: Law
Course: Legal Environment of Business
Professor: Edward Claggett
Term: Fall 2015
Tags: Law
Name: Law 322 Final Exam (Exam 3) Study Guide
Description: These notes cover everything that will be on exam 3 during finals week.
Uploaded: 04/22/2016
15 Pages 103 Views 82 Unlocks
  • Better Grades Guarantee
  • 24/7 Homework help
  • Notes, Study Guides, Flashcards + More!
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