Ch 23 Performance and Remedies

Question 1

Obligation on All Parties: Good Faith

Answer 1

-Conforming goods satisfy the contract terms. Non-conforming goods do not
-The UCC requires good faith in the performance and enforcement of every contract. Good faith means honesty in fact. Between merchants, it also means the use of reasonable commercial standards of fair dealing

Question 2

Seller’s Rights and Obligations
(Perfect Tender Rule, Restrictions on the Perfect Tender Rule)

Answer 2

-The seller must tender the goods, which means to make conforming goods available to the buyer

Regardless of where delivery is being made, however, the seller must
-make the goods available at a reasonable time,
-keep the goods available for a reasonable period, and
-deliver to the buyer any documents that it needs to take possession.

[Perfect Tender Rule]
-Under the Perfect Tender Rule, the buyer may reject the goods if they fail in any respect to conform to the contract.

(Usage of Trade, Course of Dealing, and Course of Performance.)
* Usage of trade: A practice or way of dealing that is expected in an industry
-Usage of trade means any practice that members of an industry expect to be part of their dealings.
* course of dealing: The conduct between the parties during previous transactions
-The term course of dealing refers to previous commercial transactions between the same parties.
* course of performance: The conduct between the parties to a particular transaction
-. The term course of performance refers to the history of dealings between the parties in a single contract, and thus assumes that it is the kind of contract demanding an ongoing relationship

(Parties’ Agreement.)

(Cure.)
-When the buyer rejects non-conforming goods, the seller has the** right to cure** by delivering conforming goods before the contract deadline.

The seller may even cure after the contract deadline if the seller:
1. reasonably believed the original goods were acceptable and
2. promptly notified the buyer of his intent to cure within a reasonable time.

(Substantial Impairment.)
substantially impair their value. This standard applies
1. if the buyer is revoking acceptance of goods or
2. if the buyer is rejecting an installment.

(Destruction of the Goods.)
-Is the broker required to accept the smaller crop? No. If identified goods are totally destroyed before risk passes to the buyer, the contract is void. If identified goods are partially destroyed, the buyer may choose whether to accept the goods at a reduced price or void the contract.

(Commercial Impracticability.)
-Commercial impracticability means that a supervening event excuses performance of a contract, if the event was not within the parties’ contemplation when they made the agreement.
* Commercial impracticability: The UCC may excuse contract performance when an unforeseen, external event disrupts the contract relationship

Question 3

Buyer’s Rights and Obligations
(Inspection and Acceptance)

Answer 3

The buyer must also- provide adequate facilities to receive the goods

[Inspection and Acceptance]
-The buyer generally has the right to inspect the goods before paying or accepting
-the buyer accepts goods if
1. after a reasonable opportunity to inspect, she indicates to the seller that the goods are conforming or that she will accept them in spite of non-conformity; or
2. she has had a reasonable opportunity to inspect the goods and has not rejected them; or
3. she performs some act indicating that she now owns the goods, such as altering or reselling them.

(Partial Acceptance)

(Revocation.)
-A buyer may revoke acceptance but only if the non-conformity substantially impairs the value of the goods and only if she had a legitimate reason for the initial acceptance

(Rejection.)
-The buyer may reject non-conforming goods by notifying the seller within a reasonable time.

• installment contract: Agreement in which performance is to be made in a series of separate payments or deliveries
  -. A buyer may reject a non-conforming installment but only if it substantially impairs the value of that installment and cannot be cured.

Question 4

Seller’s Remedies
(Stop Delivery, Identify Goods to the Contract, Resale, Damages for Non-Acceptance, Action for the Price)

Answer 4

-Stop delivery of the goods,
-Identify goods to the contract,
-Resell and recover damages,
-Obtain damages for non-acceptance, or
-Obtain the contract price.

[Seller’s Remedies]
-he seller may refuse to deliver the goods

[Identify Goods to the Contract]
-If the seller has not yet identified goods to the contract when the buyer breaches, he may do so as soon as he learns of the breach

[Resale]
-If the resale is commercially reasonable, the seller may recover the difference between the resale price and contract price, plus incidental damages, minus expenses saved
[Damages for Non-Acceptance]
-A seller who does not resell, or who resells unreasonably, may recover the difference between the original contract price and the market value of the goods at the time of delivery.

[Action for the Price]
-The seller may recover the contract price if
1. the buyer has already accepted the goods or
2. the seller’s goods are conforming and the seller is unable to resell after a reasonable effort.

Question 5

Buyer’s Remedies
(Incidental and Consequential Damages, Specific Performance, Cover, Non-Delivery, Acceptance of Non-Conforming Goods, Liquidated Damages)

Answer 5

• Direct damages: The natural result of the breach
  -s. Direct damages are those that necessarily result from the breach. In addition, he may be entitled to:

-Incidental and consequential damages,
-Specific performance,
-Cover,
-Damages for non-delivery,
-Accept the non-conforming goods and seek damages, or
-Liquidated damages.

[Incidental and Consequential Damages]
-An injured buyer is generally entitled to incidental and consequential damages

[Specific Performance]
-If the contract goods are rare or unique, the buyer may be allowed specific performance, which means a court order requiring the seller to deliver those particular goods

[Cover]
-If the seller breaches, the buyer may “cover” by reasonably obtaining substitute goods; it may then obtain the difference between the contract price and its cover price, plus incidental and consequential damages, minus expenses saved

[Non-Delivery]
-The measure of damages for non-delivery is the difference between the market price at the time the buyer learns of the breach and the contract price, plus incidental and consequential damages, minus expenses saved.

[Acceptance of Non-Conforming Goods]
-Where the buyer has accepted goods but notified the seller that they are non-conforming, he may recover damages for the difference between the goods as promised and as delivered, plus incidental and consequential damages.

[Liquidated Damages]
-Liquidated damages are those that the parties agree, at the time of contracting, will compensate the injured party. They are enforceable, but only in an amount that is reasonable in light of the harm, the difficulties of proving actual loss, and the absence of other remedies

Question 6

Chapter Conclusion

Answer 6

The drafters of the UCC intended the law to reflect contemporary commercial practices but also to require a satisfactory level of sensible, ethical behavior.