Study guide
UCC Warranties and Risk of Loss
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California Bar Exam Blueprint: Subjects, Components, and Recent Changes Exam Format, Scoring, and the 1390 Passing Score Essay Strategy: Issue Spotting and IRAC Core Written Skills and Timing Strategy
2 Civil Procedure
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4 Contracts
Applicable Law: Common Law vs. UCC Article 2 and Mixed Contracts Mutual Assent: Offer, Acceptance, Mailbox Rule, and UCC 2-207 Consideration, Bargained-for Exchange, and Promissory Estoppel Defenses to Formation: Capacity, Mistake, Misrepresentation, Duress, Unconscionability The Statute of Frauds Parol Evidence Rule and Contract Interpretation Conditions and Performance: Express, Constructive, and Substantial Performance Breach, Anticipatory Repudiation, and the Perfect Tender Rule Excuse of Performance: Impossibility, Impracticability, and Frustration UCC Warranties and Risk of Loss Third-Party Beneficiaries, Assignment, and Delegation Contract Remedies and UCC Buyer/Seller Remedies
5 Criminal Law and Procedure
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6 Evidence
Relevance: Logical and Legal, Rule 403, and California Proposition 8 Policy-Based Exclusions: Subsequent Remedial Measures, Settlements, Insurance, Pleas Authentication and the Best Evidence Rule Witness Competency, Personal Knowledge, and Examination Impeachment of Witnesses Lay and Expert Opinion Testimony (Daubert and California Kelly/Sargon) Character Evidence and Other Acts (MIMIC) Habit and Methods of Proving Character Hearsay: Definition, Non-Hearsay, and Exemptions Hearsay Exceptions: Availability Immaterial (FRE 803) Hearsay Exceptions Requiring Unavailability (FRE 804) and the Confrontation Clause Privileges, Judicial Notice, and Presumptions (Federal and California)
7 Real Property
1.1 Estates in Land 1.2 Future Interests 1.3 Rule Against Perpetuities 1.4 Concurrent Ownership 1.5 Landlord-Tenant Law 1.6 Easements and Servitudes 1.7 Covenants Running with Land 1.8 Recording Acts and Title 1.9 Mortgages 1.10 Land Use Regulation Adverse Possession and Rights Incident to Ownership Land Sale Contracts, Marketable Title, and Risk of Loss Deeds, Delivery, Warranties of Title, and Fixtures
8 Torts
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9 Business Associations
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10 Community Property
General Principles, the Community Estate, and Marital Economic Community Characterization: Separate vs. Community Property and Presumptions Tracing and Commingling (Exhaustion and Direct Tracing) Transmutation and Premarital/Marital Agreements Special Assets: Businesses (Pereira/Van Camp), Goodwill, Education, Pensions, Disability Management, Control, and Spousal Fiduciary Duties Debts and Creditors' Rights Distribution at Dissolution and Death; Quasi-Community Property
11 Professional Responsibility
Regulation of the Profession, Admission, and Discipline (California Rules vs. ABA Model Rules) Competence, Diligence, Communication, and Scope of Representation Confidentiality and Its Exceptions (California vs. ABA) Conflicts of Interest: Current Clients Conflicts: Former Clients, Imputation, and Business Transactions Fees, Client Trust Accounts (IOLTA), and Safekeeping Property Duties to the Court and Third Parties: Candor, Advocacy, and Fairness Forming, Declining, and Terminating the Attorney-Client Relationship Advertising, Solicitation, and the Unauthorized Practice of Law Judicial Ethics, Reporting Misconduct, and Special Prosecutor Duties
12 Remedies
Compensatory Damages: Causation, Foreseeability, Certainty, and Mitigation Punitive, Nominal, and Liquidated Damages Restitution and Unjust Enrichment Constructive Trust and Equitable Lien Injunctions: Temporary Restraining Orders, Preliminary, and Permanent Specific Performance Reformation, Rescission, and Cancellation Equitable Defenses, Declaratory Relief, and Remedy Selection
13 Trusts
Trust Creation, Required Elements, and Types of Trusts Charitable Trusts, Cy Pres, and the Rule Against Perpetuities in Trusts Trustee Powers and Trust Administration Trustee Duties: Loyalty, Prudent Investor, and Impartiality Beneficiary Rights and Principal/Income Allocation Spendthrift, Discretionary, and Support Trusts; Creditors' Rights Modification and Termination of Trusts Breach of Trust, Remedies, and Will Substitutes (Totten, POD, Revocable Trusts)
14 Wills and Succession
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15 Performance Test
The Performance Test: Task Memo, File, and Library Objective PT Products: Memos, Briefs, and Client Letters Persuasive PT Products and 90-Minute Execution
UCC Warranties and Risk of Loss
Key Takeaways Explain This Topic AI
The IMPLIED WARRANTY OF MERCHANTABILITY (UCC 2-314) arises automatically when the seller is a MERCHANT in goods of that kind and guarantees the goods are fit for their ordinary purpose, adequately packaged, and pass without objection in the trade; it is the most frequently litigated warranty.
The IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE (UCC 2-315) arises (merchant status not required) when the seller has reason to know the buyer's particular purpose AND that the buyer is relying on the seller's skill/judgment to select suitable goods.
EXPRESS WARRANTIES (UCC 2-313) are created by any affirmation of fact, promise, description, or sample/model that becomes part of the basis of the bargain — 'puffery' and opinion do not qualify; disclaimers (2-316) must conspicuously exclude implied warranties ('as is,' 'with all faults,' or conspicuous mention of 'merchantability').
RISK OF LOSS (no breach) turns on the shipping term: in a SHIPMENT contract (FOB seller / 'ship via carrier') risk passes when goods are duly delivered to the carrier (2-509(1)(a)); in a DESTINATION contract (FOB buyer's city) risk passes on tender at the destination; absent a carrier, a merchant seller holds risk until the buyer RECEIVES the goods.
When goods are NONCONFORMING, risk of loss generally stays on the SELLER until cure or acceptance (2-510), regardless of the shipping term — breach reallocates the risk.
Last updated: June 2026
The Three Warranties
Article 2 gives buyers three sources of quality protection:
Express warranty (2-313): Created by (a) any affirmation of fact or promise relating to the goods, (b) any description of the goods, or (c) any sample or model , that becomes part of the basis of the bargain . No magic words ('warrant,' 'guarantee') are needed, and the seller need not intend to warrant. BUT a statement of opinion, value, or 'puffery' ('this is a great truck,' 'best on the market') is NOT an express warranty. A sample drawn from the actual goods or a model shown creates a warranty that the bulk will conform.
Implied warranty of merchantability (2-314): Implied by law whenever the seller is a merchant with respect to goods of that kind . The goods must be fit for the ordinary purposes for which such goods are used, pass without objection in the trade, be of fair average quality, adequately contained and labeled, and conform to label promises. Food and drink served carry it too.
Implied warranty of fitness for a particular purpose (2-315): Arises (merchant status NOT required) when the seller, at the time of contracting, has reason to know the buyer's PARTICULAR purpose and that the buyer is relying on the seller's skill or judgment to select suitable goods, and the buyer in fact relies. 'Particular' means a specific, non-ordinary use.
Disclaimers and Limitations
Sellers may disclaim implied warranties, but 2-316 imposes form requirements:
- Warranty How to disclaim
- Merchantability Orally or in writing, but must MENTION 'merchantability'; if written, must be CONSPICUOUS
Fitness for a particular purpose Must be in WRITING and CONSPICUOUS (e.g., 'There are no warranties extending beyond the face hereof')
Both implied warranties Disclaimed by 'as is,' 'with all faults,' or similar language that calls attention to the exclusion
Express warranty Cannot be disclaimed inconsistently — a disclaimer that contradicts an express warranty is inoperative
Other disclaimer routes: the buyer's examination of the goods (or refusal to examine) excludes implied warranties as to defects an exam would reveal; and course of dealing, course of performance, or usage of trade can exclude or modify implied warranties.
Limitation of remedies (2-719): Parties may limit remedies (e.g., 'repair or replace only') and exclude consequential damages, BUT a limitation that fails of its essential purpose is unenforceable, and a clause limiting consequential damages for personal injury from consumer goods is prima facie unconscionable . Note also the Magnuson-Moss Warranty Act restricts disclaimers when a written warranty is given to a consumer.
Risk of Loss
Risk of loss determines who bears the loss when conforming goods are damaged or destroyed without the fault of either party after the contract is formed but before the buyer has them. Analyze in order:
Is there an agreement? The parties' contract controls (2-509(4)).
Is there a breach? Under 2-510 , if the goods are nonconforming and the buyer has a right to reject, risk stays on the seller until cure or acceptance — even on a shipment term. If the buyer rightfully revokes acceptance, risk shifts back to the seller to the extent of any deficiency in insurance coverage. A buyer's repudiation can shift risk to the buyer for a commercially reasonable time.
Carrier cases (2-509(1)):
Shipment contract (the default; 'FOB seller's plant,' or simply 'ship via carrier'): risk passes to the buyer when the seller duly delivers the goods to the carrier .
Destination contract ('FOB buyer's city'): risk passes when the goods are tendered at the destination so the buyer can take delivery.
No carrier (2-509(2)-(3)):
Merchant seller: risk passes when the buyer RECEIVES (takes physical possession of) the goods.
Non-merchant seller: risk passes on tender of delivery (when goods are made available to the buyer).
Mnemonic: Goods lost in transit on a SHIPMENT term → buyer bears the loss (and still must pay, then look to the carrier). Goods destroyed in a merchant seller's warehouse before the buyer picks them up → seller bears the loss. Title (2-401) generally does NOT control risk of loss under the modern UCC — do not confuse the two.
Shipping-term glossary: 'FOB [seller's location]' = shipment contract (risk passes at origin on delivery to carrier). 'FOB [buyer's/destination location]' = destination contract (risk passes on tender at destination). 'FAS vessel' (free alongside) is a maritime shipment term. 'CIF' (cost, insurance, freight) and 'C&F' are shipment terms in which the price includes carriage, so risk still passes at shipment. When a problem gives no shipping term but authorizes shipment by carrier, the default is a shipment contract — a frequent MBE trap, because students assume the seller must get the goods all the way to the buyer.
Sale on approval vs. sale or return: In a sale on approval (goods delivered primarily for the buyer's USE), risk and title stay with the seller until the buyer accepts. In a sale or return (goods delivered primarily for RESALE with a right to return unsold goods), risk and title pass to the buyer as in an ordinary sale, and returned-goods risk is on the buyer.