Chapter 16: UCC Remedies Flashcards
anticipatory repudiation
one party or the other indicating an intention to not perform with regard to performance not yet due
if the forth coming breach would result in substantial impairment in value of the contract… (anticipatory repudiation)
-do nothing and wait (to see if breach actually occurs)
OR
-sue the other co. immediately for breach of contract
*co. that is getting screwed also has right to stop their own performance of the contract
can a breaching party of an earlier anticipatory repudiation retract?
generally yes (breaching party can change their mind)
when can a breaching party not take back their anticipatory repudiation?
- the other party gave notice that the repudiation sent was final
- the other party changed position in reliance on repudiation (they’ve purchased the goods elsewhere)
when can the seller withhold delivery and demand cash?
- only when the buyer is insolvent
- this can be done even if credit was extended to the buyer in the og contract
- determining the buyer is insolvent (fact v. fiction) can be quite tricky though
when can the seller stop delivery of the goods?
- if the buyer is insolvent (w/ respect to any size shipment)
- as to other breaches by the buyer (failing to make prepayment, etc) (only available w/ respect to large shipments
improper stoppage by a seller is…
a breach of contract if delayed delivery results
if the delivery of goods has been stopped can the seller also sue the buyer?
yes! seller can still sue buyer for breach regardless of whether shipment could be stopped
when does seller have right to re-sell the goods?
- upon any breach by the buyer, but must be accomplished in good faith and in a commercially reasonable manner
- can be sold at public sale (auction) or private (negotiated) sale
what can the seller recover if they resell the goods?
the contract price less the resale price plus incidental damages
what does the seller have to do before reselling the goods?
- give notice to the go buyer
- general notice for negotiated sale
- specific notice (time and place) for auction sale
when can the buyer reject the goods?
- if the goods or tender of delivery fail to conform in any respect to the contract
- title transfers back to seller whether or not rejection was rightful
what clause might eliminate the buyer’s right to reject the goods because of defects?
“as is” clause or other effective disclaimer
who does the risk of loss go to when goods are rejected?
remains on seller until the breach is cured or the goods are accepted by the buyer notwithstanding the breach
how does a buyer have to reject goods?
- must occur w/in reasonable time
- buyer must give seasonable notice to seller
- buyer must thereafter hold the rejected goods with reasonable care
how are things different for merchant buyers when they reject goods?
- a greater burden is imposed on merchant buyers who reject goods
- merchant buyer must follow reasonable instructions from seller
- if goods are perishable or threaten to decline in value speedily-a merchant buyer must attempt to sell goods for breaching seller if reasonable instructions are not received from seller regarding their disposition
what can the buyer do if the seller does nothing with respect to the rejected goods?
- buyer can store the goods, ship the goods back to the breaching seller, or resell the goods (all at seller’s expense)
- if resold the buyer cannot keep profit (belongs to seller)
when can the buyer revoke their acceptance of goods (previously accepted, now rejected)
-nonconformity must be substantial
AND one of the following:
-buyer accepted goods believing seller would cure and seller has not
-buyer accepted goods not knowing of the nonconformity because of difficulty of discovery
-buyer was assured by seller that nothing was wrong (And buyer let his guard down and accepted the goods)
when can a buyer not revoke acceptance?
if acceptance was made with knowledge of nonconformity (unless buyer reasonable assumed nonconformity would be cured)
what are some general rules about revocation?
- it must occur within a reasonable time after buyer discovers (or ought to) of nonconformity
- revocation is not effective until notice is given to seller
- upon rightful (but not wrongful) revocation, title transfers back to seller
who bears the risk of loss when revocation occurs?
the breaching seller (when revocation is rightful) to extent buyer lacks insurance to cover the loss that occurs
how can the buyer recover from nonconforming goods?
- purchasing sub. goods
- damages - cover price less the contract price plus incidental and consequential damages
- cover must occur in good faith and be reasonable
what can the seller recover as litigation remedies?
full purchase price plus incidental damages
when can the seller recover purchase price/damages?
- if the buyer has accepted goods and fails to pay
- the goods destroyed after risk of loss has passed to buyer (and seller hasn’t been paid)
- of identified goods still int he sellers possession, if seller cannot resell
what are the sellers litigation remedies for buyer’s non acceptance of conforming goods or other breach?
- if goods are resold, seller recovers contract price less the resale price differential plus incidentals
- if not resold, seller recovers contract price less mkt price plus incidentals
- lost profits- the subsequent sale of the goods in the ordinary course by a merchant results in a lost sale when the goods are off the shelf
- seller’s incidental damages
replevin
court orders seller to deliver goods - this is technically different than specific performance but probs gets buyer to the same place
buyer’s litigation remedies for seller’s non-delivery of goods:
- if sub. goods have been purchased, buyer recovers cover price less contract price plus incidentals plus consequential damages
- if sub. goods have not been purchased, buyer recovers mkt. price less contract price plus incidentals plus consequential damages
If buyer has accepted the goods despite sellers breach:
- buyer must give timely notice to seller to preserve remedies
- buyer may recover loss determined in any manner reasonable
buyer’s remedy for breach of an express or implied warranty:
entitled to measure of damages for breach of warranty - the difference at the time/place of acceptance btw the value of the goods accepted and the value they would’ve had if the had been warranted
two types of consequential damages:
- foreseeable losses
- breach of warranty losses
foreseeable losses
those losses suffered by the buyer that the seller ought to have realized would result from the seller’s breach
warranty losses
personal injury or property damage resulting from breach of warranty
importance of buyer attempting to cover
buyer will not be able to recover consequential damages if they could have been prevented by cover and buyer failed to cover
contractual limitation of remedies or right to recover consequential damages
- language in the contract limits remedies available to the buyer- not valid if the limited remedy fails its essential purpose
- language in the contract that limits the buyer’s right to recover consequential damages
