[h] CPCU 410 – Module 4
[q] Sales contract
[a] An agreement between a buyer and seller to transfer goods for a fixed sum. The contract can be bilateral or unilateral.
[q] Uniform Commercial Code
[a] A comprehensive set of laws governing all commercial transactions in the United States. The Code is not a federal law but a uniformly adopted state law.
[q] UCC Article 2
[a] An article of the Uniform Commercial Code that governs laws relating to the sale of goods.
[q] Types of specialized sales contracts
Sale on approval.
Sale and return.
[q] Sale on approval
[a] A specialized type of sales contract. Involves a sale to a customer who wants to try the goods before buying them. An unsatisfied buyer can return goods. Title and risk of loss remain with the seller until the goods are accepted by the buyer.
[q] Sale and return
[a] A specialized type of sales contract. Involves a sale to a person who intends to resell the goods. The person has the right to return goods if they do not sell, and the seller retains ownership until the goods are paid for or resold.
[q] Auction sale
[a] A specialized type of sales contract. Involves a public offering of goods for sale. An auctioneer invites the crowd to make an offer, and the taking of the highest bid represents the acceptance of the offer.
[q] UCC Statute of frauds
[a] Under the Statute, a contract for the sale of goods for $500 or more must be in writing. The written contract can be in any form and can consist of several communications.
[q] Federal Trade Commission Act
[a] A fair trade law that attempts to ensure free competition. Prohibits unfair acts affecting commerce, but does not apply to insurance industry.
[q] Magnuson-Moss Warranty Act
[a] A fair trade law that supplements the Federal Trade Commission Act. Under the Act, if a producer of goods provides a warranty, it must conform to standards.
[q] Truth in Lending Act
[a] A consumer credit law with a primary purpose of ensuring that consumers know terms and interest rates of their credit transactions.
[q] Truth in Lending Act credit card provisions
[a] Credit card provisions:
Cardholder’s liability is $50 if the card is stolen and used without permission.
Companies cannot issue credit cards to people who do not apply for them.
Cardholder can withhold payment without a finance charge when the price is in dispute.
Cardholder that is not satisfied with a purchase can withhold payment due after making good faith effort to return property.
[q] Fair Credit Reporting Act
[a] A consumer credit law that applies to consumer-reporting agencies. Agencies must exercise their responsibilities with fairness.
[q] Chapter 7 bankruptcy
[a] A bankruptcy liquidation proceeding in which nonexempt assets are distributed to creditors and any remaining debt is discharged.
[q] Debt not discharged under Chapter 7
[a] Debt that is not discharged:
Property or services obtained through fraud.
Malicious injury claims, such as drunk driving.
Alimony and child support.
[q] Chapter 11 bankruptcy
[a] A bankruptcy proceeding that involves a reorganization of a debtor’s business affairs and assets. Generally filed by corporations which require time to restructure their debts.
[q] Real property
[a] A type of property that includes land, buildings, and other structures attached to the land.
[q] Personal property
[a] Any property that is not real property. It can be tangible or intangible.
[q] Property ownership
[a] A relationship between the owner and the rest of society that includes three features:
The right to exclude others from use.
The right to transfer title.
The obligation to use property in ways that don’t interfere with others’ rights.
[q] Property possession
[a] The exercise of control over property.
[q] Intellectual property
[a] A work or invention resulting from one’s creativity to which one has rights and for which one may apply for a patent, copyright, or trademark.
[a] A type of intellectual property protection granted by a government entity. It protects written documents, pieces of music, software, and other forms of expression.
[a] A type of intellectual property protection granted by a government entity. It protects designs or sets of words that identify a product or service.
[a] A type of intellectual property protection granted by a government entity. It protects a new and useful invention.
[a] An addition or increase to existing property, such as an animal producing offspring.
[a] The intermingling of property owned by different individuals
[q] Elements required of a gift
[a] The temporary possession of property. Elements include:
Transfer of possession.
Acceptance of the property by the bailee.
Bailee’s agreement to return the property.
[q] Bailee’s rights
[a] Rights depend upon the person benefitting from the bailment:
Bailee’s benefit – bailee’s right to use property limited to the bailor’s contemplated use.
Bailor’s benefit – bailee’s right to use the property only to the extent necessary to protect it.
Mutual benefit – bailee can use the property based on rights specified in the agreement.
[q] Bailee’s duties
[a] Duties depend upon the person benefitting from the bailment:
Bailee’s benefit – extraordinary degree of care.
Bailor’s benefit – slight care.
Mutual benefit – reasonable care.
[q] Bailor’s rights
[a] A bailor has the right to compensation, if bailment benefits bailee only or both parties.
[q] Bailor’s duties
[a] Bailor’s duties:
Mutual benefit – bailment implies a warranty that property is in good condition.
Bailee’s benefit – must notify bailee of known defects.
[q] Fee simple estate
[a] Outright ownership of property. Represents the most complete form of property ownership.
[q] Life estate
[a] The right to use property for one’s lifetime. The length of the life estate can be measured by the tenant’s life or any other person.
[q] Types of concurrent estates
Tenancy by the entirety.
Tenancy in common.
[q] Joint tenancy
[a] Concurrent ownership of property by two or more persons who may or may not be related. The property ownership must be equal between the various owners, and surviving owners have rights of survivorship when one owner dies.
[q] Tenancy by the entirety
[a] Concurrent ownership of property between spouses. The property ownership must be equal between the spouses, and a surviving spouse has rights of survivorship when one spouse dies. Individual creditors of a husband or wife cannot subject the property to a claim.
[q] Tenancy in common
[a] Concurrent ownership of property by two or more persons who may or may not be related. The property ownership may be unequal between the various owners, and there are no rights of survivorship.
[q] Community property
[a] Property acquired during marriage in certain states, in which both a husband and wife own 50% of the property each. This type of property does not have survivorship rights.
[q] Cooperative ownership
[a] A type of property ownership that typically involves real property and involves the ownership of the property by a corporation. Owners purchase stock in the corporation.
[q] Condominium ownership
[a] A type of real estate ownership in which the owner has a direct property interest in their unit and common areas.