15. Perfect Tender Rule (Art 2)

Question 1

What are the parties’ obligations towards any sale of goods contracts?

Answer 1

Act in good faith

1) Honesty in fact
2) Observe reasonable commercial standards of fair dealing

Question 2

Can you waive the duty to act in good faith?

Answer 2

No

Question 3

What is the Perfect Tender Rule (Art 2)?

Answer 3

Goods must conform to contract requirements

• Otherwise breach
• UNLESS instalment contracts

Question 4

What are Buyer’s remedies for Seller’s breach of PTR?

Answer 4

Acceptance

Rejection

Revoke acceptance

Question 5

How may Buyer accept goods?

Answer 5

Buyer makes reasonable inspection + notifies Seller (NOT awareness of non-conforming nature)

• Goods conform with contract
• Intent to keep goods

Buyer fails to reject/notify rejection within reasonable time after tender/delivery

Buyer acts inconsistently with Seller’s ownership

Question 6

What are Buyer’s obligations if he rejects the goods?

Answer 6

If Seller gave instructions => Buyer must follow Seller’s reasonable instructions (if any)

• Hold goods in reasonable care at Seller’s disposition
• Obey any reasonable instructions regarding goods (e.g. reshipping)

If Seller gave NO instructions => Buyer may;

• Reship goods
• Store goods (for Seller’s account)
• Resell goods (for Seller’s account) + recover expenses and reasonable commission

Question 7

What is required for Buyer revoking his acceptance?

Answer 7

1) Defect substantially impairs value of goods

2) Buyer accepted due to;
- Reasonable belief that defect would be cured
- Difficulty discovering defect/Seller’s assurance of conformity

3) Revocation after B discovered/should have discovered defect
4) Revocation before substantial change in goods not due to defect

Question 8

What are Buyer’s rights if he revokes his acceptance?

Answer 8

Reject all

Reject some; Accept some

Question 9

What are Buyer’s rights if Seller ships non-conforming goods as accommodation?

Answer 9

Acceptance

Rejection
- Counteroffer (NO contract => NO damages)

Question 10

What are Buyer’s rights if Seller causes defect in instalments?

Answer 10

Defect substantially impairs single instalment;

• If curable => Buyer must accept
• If NOT curable => Buyer may reject (single instalment, not entire contract)

Defect substantially impairs entire contract;
- Buyer may reject (entire contract)

Question 11

What are Buyer’s rights if Seller makes single delivery of non-conforming goods?

Answer 11

If Seller does NOT deliver cured goods => Buyer may reject

If Seller delivers cured goods => Buyer must accept

Question 12

How can Seller cure non-conforming goods in single delivery?

Answer 12

Curable within time for performance

1) Seller notifies Buyer of intent to cure
2) Seller tenders conforming goods to Buyer

Curable beyond time for performance

1) Seller notifies Buyer of intent to cure
2) Seller has reasonable cause to believe non-conforming goods would be acceptable
- Based on trade/Seller + Buyer’s previous dealings
- Based on Seller’s lack of ability to discover defect

Question 13

What are Buyer’s rights if Seller ships non-conforming goods/not all of the goods?

Answer 13

Accept ALL/some + Sue for damages

Reject ALL/some + Sue for damages