VA Bar Contracts and Sales 3 — Questions and Answers
Question 1: The implied warranty of merchantability under UCC §2-314 arises automatically when:
- The buyer requests the warranty in writing before purchase
- The seller is a merchant who regularly deals in goods of that kind (Correct answer)
- Any seller, merchant or non-merchant, sells goods for value
- The goods are sold to another merchant for resale
Correct answer: The seller is a merchant who regularly deals in goods of that kind
Under UCC §2-314, the implied warranty of merchantability arises automatically when the seller is a merchant dealing in goods of that kind, guaranteeing the goods are fit for their ordinary purpose.
Question 2: The implied warranty of fitness for a particular purpose under UCC §2-315 arises when:
- The goods are sold by a licensed merchant dealer in those goods
- The seller knows the buyer's particular purpose and the buyer relies on the seller's skill or judgment to select suitable goods (Correct answer)
- The buyer expressly requests this warranty in the purchase agreement
- The goods are fit for their ordinary commercial purpose
Correct answer: The seller knows the buyer's particular purpose and the buyer relies on the seller's skill or judgment to select suitable goods
Under UCC §2-315, this warranty arises when the seller has reason to know the buyer's specific purpose and the buyer relies on the seller's expertise in selecting appropriate goods.
Question 3: Under the UCC perfect tender rule, a buyer has the right to reject delivered goods if:
- The non-conformity is material and substantially impairs the contract's value
- The goods or the tender of delivery fail in any respect to conform to the contract (Correct answer)
- The seller had a reasonable opportunity to cure and failed to do so
- The buyer notifies the seller of the defect within 24 hours of delivery
Correct answer: The goods or the tender of delivery fail in any respect to conform to the contract
UCC §2-601 allows a buyer to reject goods if they 'fail in any respect' to conform to the contract — this is a stricter standard than the common law substantial performance doctrine.
Question 4: When a seller tenders non-conforming goods giving the buyer a right of rejection, risk of loss under UCC §2-510:
- Immediately shifts to the buyer upon physical delivery of the goods
- Remains with the seller until the buyer accepts the goods or the defect is cured (Correct answer)
- Is split equally between buyer and seller until resolution
- Depends on whether the contract specifies FOB terms
Correct answer: Remains with the seller until the buyer accepts the goods or the defect is cured
Under UCC §2-510, if a seller tenders non-conforming goods giving the buyer the right to reject, risk of loss remains on the seller until the defect is cured or the buyer accepts.
Question 5: In a shipment contract designated 'FOB Seller's City,' risk of loss passes to the buyer:
- When the goods arrive at the buyer's location and are inspected
- When the seller duly delivers the goods to the carrier (Correct answer)
- When the buyer signs the bill of lading
- When the contract is executed by both parties
Correct answer: When the seller duly delivers the goods to the carrier
In a shipment contract (FOB seller's location), risk of loss passes to the buyer under UCC §2-509(1)(a) when the seller properly delivers the goods to the carrier.
Question 6: To effectively disclaim the implied warranty of merchantability under UCC §2-316, the disclaimer must:
- Be in writing, signed by both parties, and notarized
- Mention the word 'merchantability' and, if written, be conspicuous (Correct answer)
- Simply state that goods are sold 'as-is' without further specification
- Be presented to the buyer at least 10 days before the sale
Correct answer: Mention the word 'merchantability' and, if written, be conspicuous
Under UCC §2-316, a valid disclaimer of the merchantability warranty must specifically mention the word 'merchantability' and, if in writing, must be conspicuous to the buyer.
Question 7: Under UCC §2-207, a response to an offer that states it is 'expressly conditioned on acceptance of the additional terms herein' operates as:
- An acceptance that incorporates the additional terms automatically
- A counteroffer rather than an acceptance, so no contract is formed unless the offeror agrees (Correct answer)
- An acceptance with the additional terms treated as proposals between merchants
- A rejection that terminates the original offer
Correct answer: A counteroffer rather than an acceptance, so no contract is formed unless the offeror agrees
Under UCC §2-207(1), a response expressly conditioned on assent to different or additional terms acts as a counteroffer, not an acceptance, so no contract is formed unless the offeror agrees to those terms.
VA Bar Contracts and Sales 3
The implied warranty of merchantability under UCC §2-314 arises automatically when: