Breach Of K Flashcards
What is a lost volume seller?
UCC § 2-708(2) because the manufacturer sold many such machines each year, which means the manufacturer is a lost volume seller. Thus, a market differential formula will unlikely result in the recovery of any direct damages by the manufacturer with respect to what appears to be standard.
When may a seller recover the contact price?
(1) where the buyer has accepted the goods;
(2) where the goods are lost or damaged within a commercially reasonable time after the risk of loss has passed to the buyer;
(3) where the buyer has returned or rejected the goods and the seller is unable after reasonable efforts to resell the goods.
Analysis
UCC § 2-709. Here, (1) the buyer rejected the machine because he no longer needed it, (2) the machine was returned to the manufacturer and no facts suggest it was damaged, and (3) the facts suggest the manufacturer would not struggle to resell the goods because the manufacturer sold many such machines each year.
What may a seller recover when the buyer has wrongfully rejected the goods?
UCC § 2-708(1) gives a seller the right to recover the difference between the contract price and the market price of goods when a buyer has wrongfully rejected the goods.
What is a lost volume seller?
A lost volume seller is usually not operating at full capacity, which means the seller likely has an inventory of goods available for sale to multiple buyers.
UCC § 2-708(2) provides that a lost volume seller can recover any lost profits if the difference between the market price at the time and place for tender and the unpaid contract price will not adequately compensate the manufacturer for its actual damages.
Analysis
Here, because the manufacturer sold many such machines each year, even though the manufacturer could resell the machine that buyer rejected and returned, the manufacturer could have made two sales if the buyer fully performed the terms of the contract UCC § 2-708(2), because similar to above, the manufacturer sold many such machines each year, which means the manufacturer is a lost volume seller. Thus, it is unlikely that a resale would result in the recovery of any direct damages by the manufacturer with respect to what appears to be standard goods.
Is there a defense to an illegal K?
Yes. It depends on the purpose of the illegality. If it’s to raise taxes then possibly but not if it’s intended to protect the general welfare of the public.
Is there a defense to an illegal K?
Yes. It depends on the purpose of the illegality. If it’s to raise taxes then possibly but not if it’s intended to protect the general welfare of the public.
What is a mutual mistake?
A mutual mistake is when the contract is based upon a mistake made by both parties. There are three requirements that must be satisfied before the adversely-affected party may avoid the contract on the account of a mutual mistake: (i) the mistake must concern a basic assumption on which the contract was made; (ii) the mistake must have a material effect on the agreed exchange of performances; and (iii) the party seeking avoidance did not assume the risk of the mistake.
The test for the first element, whether the mutual mistake relates to a basic assumption on which the contract is founded, is if one party will get an unexpected, unbargained-for gain, and the other party will suffer an unexpected loss. Market conditions and financial ability are not considered assumptions that are basic to the contract, and a mutual mistake on those terms will NOT void the contract.
As to the second element, the person seeking to avoid the contract for mutual mistake must show that the mistake has a material effect on the agreed exchange of performances. This party must also show that the resulting imbalance in the agreed exchange is so severe that he cannot fairly be required to carry it out.
If the party seeking to avoid enforcement of the contract on the basis of mutual mistake is the one who originally took on the risk that there might be a mistake, he will not be able to raise a mutual mistake defense. This commonly occurs where one party is in a better position to know the risks than the other party (e.g., contractor vs. homeowner) or where the parties knew their assumption was doubtful (i.e., the parties were consciously aware of their ignorance). In other words, to be a defense, it must truly be a mistake, not uncertainty.
What are unilateral mistakes?
Unilateral mistakes arise most commonly when one party makes a mechanical error in computation. If only one of the parties is mistaken about facts relating to the agreement, the mistake will not prevent the formation of the contract. However, if the non-mistaken party knew or had reason to know of the mistake made by the other party, the contract is voidable by the mistaken party. As is the case with mutual mistake, for the contract to be voidable, the mistake must have a material effect on the agreed-upon exchange and the mistaken party must not have borne the risk of the mistake.
