University:
Indiana University Bloomington
Course:
Financial and Managerial Accounting: Information for Decisions - John J. Wild
Academic year:

2024
Views:

283

Pages:

3
Author:

bratrochanter

Summary of Appendix B: Additional Provisions from the UCC Article 2 Sales Price and Payment Terms 1. Price Payable (§ 2–304): o The price in a sale may be paid in money, goods, or realty. o Obligations related to the goods are subject to Article 2, while obligations involving realty are not. 2. Open Price Terms (§ 2–305): o A contract is valid even if the price is not set, provided:  The price is determined later or defaults to a "reasonable price" at delivery. o If a party fails to set the price in good faith, the other may cancel the contract or set a reasonable price. Quantity and Delivery Terms 1. Output, Requirements, and Exclusive Dealings (§ 2–306): o Quantity is based on good faith output or buyer needs, but must align with prior estimates or norms. o Exclusive dealing contracts impose a duty on sellers to supply and buyers to promote sales using best efforts. 2. Delivery in Lots (§ 2–307): o Default requires a single delivery unless the contract specifies otherwise. 3. Place of Delivery (§ 2–308): o The default delivery location is the seller’s place of business or residence unless specified. 4. Delivery Timing (§ 2–309): o Shipments or actions must occur within a "reasonable time" unless otherwise agreed. o Indefinite-duration contracts can be terminated with reasonable notice. 5. Payment Timing (§ 2–310): o Payment is due when the buyer receives the goods, unless otherwise stated. Warranties 1. Warranty of Title (§ 2–312): o Sellers warrant they have good title to the goods and that goods are free of liens unless disclosed. 2. Express Warranties (§ 2–313): o Created through:  Affirmations of fact, promises, or descriptions forming the basis of the bargain.  Samples or models provided during the sale process. 3. Implied Warranty of Merchantability (§ 2–314): o Goods must be fit for ordinary use, conform to trade standards, and match the contract description. 4. Implied Warranty of Fitness for a Particular Purpose (§ 2–315): o Applies when a buyer relies on the seller’s expertise for a specific use. 5. Exclusion of Warranties (§ 2–316): o Warranties may be excluded with conspicuous language, such as “as is” or “with all faults.” 6. Cumulation and Conflicts (§ 2–317): o Warranties (express or implied) are cumulative unless inconsistent, in which case the parties’ intent determines precedence. 7. Third-Party Beneficiaries (§ 2–318): o States choose among alternatives to extend warranties to specific third parties, such as family members or others expected to use the goods. Special Delivery Terms 1. F.O.B. and F.A.S. Terms (§ 2–319): o F.O.B. (Free on Board):  Specifies whether the seller’s obligation ends at the point of shipment or delivery to a destination. o F.A.S. (Free Alongside Ship):  Requires the seller to place goods alongside a designated vessel at their expense and risk. Unconscionability (§ 2–302):  Courts may refuse to enforce contracts or clauses deemed unconscionable, or modify them to avoid unfair outcomes. Performance Adjustments (§ 2–311):   Parties may leave details to be specified later, but decisions must be made in good faith and within commercial reasonableness. Failure to cooperate in performance adjustments can be treated as a breach.