Business law chapter 14-15lemonwater
ASSIGNMENT 5 (CHAPTERS 14-15) QUESTIONS
Name: Sarah Tawfik MTMAIL Address: [email protected]
Type accurate, detailed, and explanatory answers in the spaces below. Email them in Word document to [email protected] (Do not use D2L). Feel free to email me or call me at 615-292-3030 or 615-585-5353 (leave message if no answer; do not text) if you have any questions.
Chapter 14 (Sales and Lease Contracts)
1. What does UCC Article 2 cover?
Article 2 of the UCC sets forth the requirements for the sales contracts, or contracts for the sale of goods, as well as the duties and obligations of the parties involved in the sales contract. Article 2 modifies some of the common law contract requirements. Article 2 deals with the sale of goods, not real property (real estate), services, stocks, or bonds.
2. Who is considered a Merchant under the UCC?
A merchant is considered a person who, by occupation, holds themselves out as having knowledge and skill unique to the practices or goods involved in the transaction. It also may include banks or universities. A person is a merchant when they, acting in a mercantile capacity, possess or use an expertise specifically related to the goods being sold. State courts sometimes split on whether farmers should be considered merchants.
3. What is considered a sale under the UCC?
The UCC defines a sale as “the passing of title (evidence of ownership rights) from the seller to the buyer by a price set by the seller. The price may be payable in cash or in other goods or services.
4. What is considered a lease under the UCC?
A lease is a transfer of the right to possess and use goods for a period of time in exchange for payment. Article 2A covers any transaction that creates a lease of goods or a sublease of goods. Article 2A applies to the leases of goods rather than sales of goods, thus reflect differences between sales and lease transactions. Leases of personal property have become increasingly common (goods such as automobiles and industrial equipment).
5. Does the UCC Article 2 apply to shares of stock?
Article 2 only deals with the sale of goods. It does not apply to shares of stock or bonds.
6. Under the UCC, is the payment term in a contract fully enforceable?
An agreement to modify a sales or lease contract without consideration must be in writing form to be enforceable. Sometimes, when a consumer is buying goods from a merchant-seller, the merchant supplies a form that contains a prohibition against oral modification. In this situation, the consumer must sign a separate acknowledgment of the clause for it to be enforceable.
7. If A orders items from B which delivers those items to A, is this considered a sale of goods?
8. What will a court generally presume in case of a dispute if some terms in a deal are left open?
9. Recognize an example of an offer that is irrevocable for a stated period of time?
A used car dealer emails a letter to Fernando on January 1, stating, “I have a used Toyota RAV4 on the lot that I will sell to you for $22,000 anytime between now and January 31.” This email creates a firm offer, which is a written offer that the offer will remain open. The car dealer will be liable for breach of contract if he sells that car to another person before January 31. This is because the merchant’s firm offer is irrevocable without the necessity of consideration for the stated period of time.
10. Recognize some examples of when identification has taken place under the UCC.
11. Are the concepts of identification and risk of loss the main criteria for determining the rights and liabilities of the parties to a contract where the items are destroyed before they can be delivered?
There are three concepts to determine the rights and liabilities of the parties to a contract where the items are destroyed before they are delivered. Those concepts include identification, risk of loss, and insurable interest. These three concepts have replaced the concept of title. The title concept made it difficult to determine when title actually passed from the seller to the buyer, and it was also difficult to predict how a court would decide which party had the title at the time of a loss. This is why the three concepts were created.
12. When does title to goods generally pass from seller to buyer?
Title and risk of loss cannot pass to the buyer from the seller unless the goods are identified to the contract. Once goods exist and are identified, the provisions of UCC 2-401, the buyer and seller can reach an explicit agreement as to when title will pass (“unless otherwise explicitly agreed”). Without an explicit agreement, title passes to the buyer at the time and place the seller performs by delivering the goods.
13. What generally determines when risk or loss passes from seller to buyer?
At the various stages of a sale or lease transaction, the question arises as to who bears the risk of loss, or who suffers the financial loss if the goods are damaged, destroyed, or lost in transit. Under the UCC, the risk of loss does not necessarily pass with title. When risk of loss passes from a seller to a buyer is generally determined by the contract between the parties.
14. What is a shipment contract?
In a shipment contract, the seller or lessor is required or authorized to ship goods by carrier, but is not required to deliver them to a particular destination. The risk of loss in a shipment contract passes to the buyer or lessee when the goods are delivered to the carrier.
15. Does the seller or buyer generally suffer the loss when goods in transit (being shipped from seller to buyer) are destroyed or ruined?
Depending on the circumstances, the seller or the buyer may be responsible for the value of damaged goods. If there is no contract involved in the sale of goods, a civil court judge may determine who is responsible for the damaged goods if a lawsuit is filed. Generally, a sale of goods involves a sale of goods contract, and the terms of the contract usually explain who is responsible for the value of the damages goods. The seller is usually responsible in the beginning of the transaction. This is because only the seller has been in possession of the goods. The responsibility for the goods will pass to the buyer after the seller has successfully delivered the goods directly to the buyer.
16. Does the seller or buyer pay the cost of transport when the seller arranges with the buyer to transport goods as “F.O.B.” (from the seller’s location)?
17. What is an insurable interest?
Insurable interest is when parties to sales and lease contracts obtain insurance coverage to protect against damage, loss, or destruction of the goods. Any party purchasing insurance must have sufficient interest in the insured item to obtain a valid policy
18. If A agrees to sell goods to B under a shipment contract, must A place the goods into the hands of a carrier?
19. For the seller to exercise its right to cure a faulty shipment received by the buyer, how soon must the seller notify the buyer of its intent to cure?
20. What are the options for a buyer who is notified by the seller that delivery of goods will be delayed longer than the terms in the contract?
21. What can a seller do when the buyer refuses delivery of goods it bought and cancels the contract?
22. What is the measure of damages for a seller who delivers goods to a buyer but then the buyer does not pay for them?
23. What is the measure of damages for a buyer when the seller fails to deliver goods as contracted?
24. Under most circumstances, is a seller presumed to have warranted its title as good and valid to goods it sold to a buyer?
25. What is an implied warranty of merchantability?
An implied warranty is one that the law derives by inference from the nature of the transaction or the relative situations or circumstances of the parties. An implied warranty of merchantability is when every sale or lease of goods made by a merchant who deals in goods of the kind sold or leased automatically gives rise to an implied warranty of merchantability. A merchant who is in the business of selling ski equipment makes an implied warranty of merchantability every time he sells a pair of skis. A neighbor selling her skis at a garage sale, does not. To be merchantable, goods must be reasonably fit for the ordinary purposes for which goods are used.
Chapter 15 (Creditor-Debtor Relations and Bankruptcy)
26. What is meant by pledging collateral to get a loan?
Collateral in this sense means a specific property such as a car or house pledged by a borrower to ensure payment. This means those assets are being used to secure a loan. The collateral is pledged when the loan contract is signed and serves as protection for the lender. The pledging of collateral by a financial institution is necessary to protect the federal government against risk of loss.
27. What is a writ of execution?
A writ of execution is when a creditor wins a judgement against a debtor and the debtor will not or cannot pay the amount due. The writ of execution is what the creditor can request from the court. It is an order that directs the sheriff to seize and sell any of the debtor’s nonexempt real or personal property. The writ applies only to property that is within the court’s geographic jurisdiction. The proceeds of the sale are used to pay the judgement.
28. Is A discharged from an agreement after he co-signs B’s credit application and B then agrees to a higher rate of interest without telling A?
29. What would require a president’s personal guaranty to pay a loan for her business be in writing if the business defaults on the loan?
30. Why should a lender record a mortgage that it has given a loan on?
31. What does the Statute of Frauds require for a mortgage involving the transfer of real property or real estate?
32. What would give a lender the right to foreclose on a mortgage for which it has lent money?
33. Can the homestead exemption sometimes operate to cancel out a portion of a lien on a debtor’s real property?
34. Under any chapter of the Bankruptcy Code, what can failing to file the necessary documents with the debtor’s petition for relief result in?
35. What must a voluntary petition in bankruptcy include?
36. Under the Bankruptcy Code, what is the means test used for?
37. What is a court likely to do if it finds the use of Chapter 7 would constitute substantial abuse?
38. If a voluntary petition in bankruptcy is found to be proper, would the court’s entry of an order for relief put an automatic stay into place?
39. Under Chapter 7, what may happen to a debtor who fails to appear at the creditors’ meeting when required?
40. For what is a bankruptcy trustee accountable?
41. Under Chapter 7, what is the highest priority class for payment of claims?
42. Under Chapter 7, what happens to the debtor’s remaining debts once the proceeds of the bankruptcy have been distributed?
43. What is a Chapter 11 reorganization?
44. What is the primary effect of a discharge under Chapter 7?
45. Under Chapter 11, what two parties must approve a plan to conserve and administer the debtor’s assets?
46. Under Chapter 11, what debtor’s obligations are most likely to be discharged?
47. Does a Chapter 13 plan allow a debtor to retain possession of his or her assets?
48. Under Chapter 13, must a repayment plan provide for the same treatment of each claim within a particular class of claim?
49. Does Chapter 13 impose on the debtor the requirement of good faith at the time of the filing of the petition and the time of the filing of the plan?
50. Under Chapter 13, after the completion of all payments under the plan, which debts will the court grant a discharge of?