NCA Commercial Law flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Perfect tender rule

Under UCC 2-601, a buyer may reject goods if they fail in any respect to conform to the contract, subject to the seller's right to cure within the contract time.

Cover damages

Under UCC 2-712, a buyer may purchase substitute goods in good faith and recover the difference between the cost of cover and the contract price, plus incidental and consequential damages.

Fundamental breach (CISG)

Under CISG Art. 25, a breach is fundamental if it causes detriment that substantially deprives the aggrieved party of what it was entitled to expect, allowing avoidance of the contract.

Attachment (security interest)

A security interest attaches when value has been given, the debtor has rights in the collateral, and the debtor has authenticated a security agreement describing the collateral.

Purchase-money security interest

A PMSI arises when the secured party gives value to enable the debtor to acquire rights in the collateral, or the seller sells the collateral on credit; it has special priority rules.

First-to-file-or-perfect rule

Among conflicting perfected security interests in the same collateral, the first to file a financing statement or perfect by another method has priority, regardless of order of attachment.

Ordinary-course buyer

A buyer who purchases goods in the ordinary course from a seller engaged in selling goods of that kind takes free of a security interest created by the seller, even if perfected.

Holder in due course

A holder who takes a negotiable instrument for value, in good faith, and without notice of dishonor, default, claims, or defenses, and therefore takes free of personal defenses.

Real defenses

Defenses that may be asserted against a holder in due course, including infancy, duress, fraud in the factum, discharge in insolvency, and material alteration.

Shelter rule

Under UCC 3-203, a transferee of an instrument acquires the rights of the transferor, including holder-in-due-course status, even if the transferee does not independently qualify.

Automatic stay

Under 11 U.S.C. 362, the filing of a bankruptcy petition automatically enjoins collection actions, lien enforcement, and setoffs against the debtor.

Preference

Under 11 U.S.C. 547, a transfer to a creditor within 90 days before the petition (one year for insiders) while the debtor is insolvent is avoidable if it enables the creditor to receive more.

Absolute priority rule

A Chapter 11 plan may be confirmed over a dissenting class only if the class receives full value and no junior class receives anything unless the senior class is paid in full.

Truth in Lending Act

Federal law requiring creditors to disclose the annual percentage rate, finance charge, amount financed, and total of payments before a consumer credit transaction is consummated.

Right of rescission

Under TILA, a borrower may rescind a loan secured by the principal dwelling within three business days of consummation or of receiving required disclosures.

FTC Holder Rule

A rule allowing a consumer to assert against an assignee of a consumer credit contract any claim or defense arising from the sale that the consumer could assert against the seller.

Fair Debt Collection Practices Act

Federal law restricting third-party debt collectors from harassment, false representations, and abusive practices, and requiring a validation notice within five days of initial contact.

Apparent authority

Authority a third party reasonably believes an agent possesses based on the principal's manifestations, not on the agent's own statements or conduct.

Undisclosed principal

A principal whose existence is not disclosed to the third party; the third party may sue either the agent or the principal, but not both.

Franchise disclosure document

A disclosure document a franchisor must provide to a prospective franchisee at least 14 days before signing the franchise agreement or paying any fee.

Per se violation

An antitrust restraint, such as horizontal price fixing or market allocation, that is conclusively illegal without inquiry into its actual effect on competition.

Rule of reason

An antitrust analysis weighing a restraint's procompetitive benefits against its anticompetitive effects, requiring proof of market power and harm to competition.

Monopoly power

The ability to control prices or exclude competition in a relevant market; a market share above 70 percent may support an inference of such power.

HSR premerger notification

A filing requirement under the Hart-Scott-Rodino Act for mergers and acquisitions above statutory size thresholds, followed by a 30-day waiting period.

CISG

The United Nations Convention on Contracts for the International Sale of Goods, governing international sales between parties in different contracting states unless the parties exclude it.

Incoterms

Standard international trade terms published by the ICC that allocate costs, risks, and obligations between buyer and seller for delivery of goods.

Letter of credit

A bank's irrevocable undertaking to pay a beneficiary against complying documents, governed by UCP 600, independent of the underlying sales contract.

Bill of lading

A document issued by a carrier acknowledging receipt of goods for shipment and serving as a document of title and evidence of the contract of carriage.

Cure (UCC 2-508)

The seller's right to replace nonconforming goods with conforming goods within the contract time, or beyond it if the buyer rejects goods the seller reasonably believed would be acceptable.

Control (deposit account)

A method of perfecting a security interest in a deposit account that requires the secured party to be the bank or to have an authenticated control agreement.

Notice of dishonor

Under UCC 3-503, notice that an instrument has been dishonored must be given by midnight of the next banking day after dishonor to hold secondary parties liable.

Means test

Under 11 U.S.C. 707(b), a Chapter 7 petition is presumed abusive if the debtor's current monthly income exceeds the state median and disposable income exceeds statutory thresholds.