Contract Law Learning Questions - Set 8 Flashcards
Under the UCC, in the case of a single delivery contract, if the buyer finds that the goods are defective at the time of delivery:
A
The buyer must accept the defective goods, but must allow the seller to cure the defects within the original time for performance of the contract
B
The buyer can reject the goods, but the seller then has a right to cure within the original time for performance of the contract
C
The buyer must accept the defective goods, but may recover from the seller whatever damages she has suffered as a result of the defects
D
The buyer can reject the goods outright, thus placing the seller in immediate breach with no right to cure
B
In a single delivery contract, a buyer can reject defective goods, but the UCC grants the seller the right to cure the defective shipment within the original time for performance of the contract. A seller cures by giving reasonable notice of his intention to do so and making a new tender of conforming goods within the time originally provided for performance in the contract.
A buyer is not required to accept the defective goods. But if the seller properly cures the defect, the buyer must accept the cure or will be in breach of contract.
Under the UCC, in a single delivery contract, a seller may always cure a shipment that the buyer has rejected because of defects by delivering conforming goods within:
A
Ten days after the notice of rejection is sent
B
The time originally provided for performance
C
Ten days after the notice of rejection is received
D
A reasonable time beyond the original contract time
B
If the buyer has rejected goods because of defects, the seller may, within the time originally provided for performance, “cure” by giving reasonable notice of her intention to do so and making a new tender of conforming goods which the buyer must then accept.
Ordinarily, the seller has no right to cure beyond the original contract time. However, in cases where the buyer rejects a tender of nonconforming goods that the seller reasonably believed would be acceptable “with or without money allowance,” the seller, on reasonable notification to the buyer, has a further reasonable time beyond the original contract time within which to make a conforming tender. A seller will probably be found to have had reasonable cause to believe that the tender would be acceptable if the seller can show that trade practices or prior dealings with the buyer led the seller to believe that the goods would be acceptable, or the seller could not have known of the defect despite proper business conduct.
There is no set time period, such as 10 days after the notice of rejection is sent or received, in which the seller always has a right to cure. As stated above, the length of time to cure depends on the specifics of the contract and the circumstances surrounding the defective delivery.
In a single delivery contract, when a buyer rejects goods due to defects, the seller may cure within the time originally provided for performance in the contract:
A if the seller reasonably believed the goods would be acceptable with or without money allowance.
B by giving reasonable notice to the buyer and making a new tender of conforming goods, which the buyer must then accept.
C if the nonconforming goods did not substantially impair the value of the entire contract.
D by giving reasonable notice to the buyer and making a new tender of conforming goods, which the buyer then has the option to accept or reject.
B
In a single delivery contract, if the buyer has rejected goods because of defects, the seller may, within the time originally provided for performance, cure by giving reasonable notice of her intention to do so and making a new tender of conforming goods, which the buyer must then accept. If the new tender of conforming goods is made within the time originally provided for performance, the buyer does not have the option to accept or reject the goods. The buyer must accept the conforming goods. Whether the seller reasonably believed the goods would be acceptable with or without money allowance is the standard used in determining whether the seller should be granted time to cure beyond the original time provided for performance. It has no bearing on the seller’s right to cure within the original time provided. Whether the nonconforming goods substantially impair the value of the entire contract is the standard for canceling an installment contract. It does not apply to a seller’s right to cure.
The UCC gives a seller the right to cure a defective shipment within a reasonable time beyond the original time for performance in the contract if:
A
The buyer would suffer no damages by allowing the seller to cure
B
Prior dealings with the buyer led the seller to reasonably believe that the defective shipment would be acceptable
C
The buyer agrees to extend the terms of the contract to allow for late delivery without additional consideration
D
The seller notifies the buyer of his desire to cure before the time for performance in the original contract
B
The UCC provides that in cases where a buyer rejects a tender of nonconforming goods that the seller reasonably believed would be acceptable “with or without money allowance,” the seller, upon a reasonable notification to the buyer, has a further reasonable time beyond the original contract time within which to make a conforming tender. A seller will probably be found to have had reasonable cause to believe that the tender would be acceptable if the seller can show that trade practices or prior dealings with the buyer led the seller to believe that the goods would be acceptable, or the seller could not have known of the defect despite proper business conduct.
Although notification of the desire to cure is required before the seller can cure the defective delivery, it is not enough that the seller notifies the buyer of his desire to cure before the time for performance in the original contract. To extend the right to cure beyond the original time of performance, the seller must show that he mistakenly, but reasonably, believed that the nonconforming goods would be acceptable to the buyer.
The seller’s right to cure under the UCC is not determined by whether the buyer would suffer damages by allowing the seller to cure; and the buyer need not agree to extend the terms of the contract to allow for late delivery without additional consideration for the seller to exercise the right to cure under the UCC.
On August 1, the owner of a hardware store noticed that he was running low on half-inch carriage bolts and their corresponding nuts. He called a screw manufacturer and ordered 1,000 half-inch carriage bolts and nuts to be delivered by August 15. The screw manufacturer e-mailed the store owner a confirmation of the order that same day. On August 15, the 1,000 bolts were delivered, but the nuts were missing. The store owner called the manufacturer and was told that they had been temporarily out of nuts when they had filled his order, and had reduced the amount he owed to reflect this, as they had done in the past with him in similar circumstances. The store owner protested and the manufacturer offered to send the nuts by overnight carrier so that he would get them the next day.
May the store owner cancel the contract?
A Yes, because he was entitled to a perfect tender.
B Yes, because the time for performance has passed.
C No, because the one-day delay is not material.
D No, because the manufacturer has a reasonable amount of time within which to cure.
D
The store owner may not cancel the contract, because the manufacturer has a reasonable amount of time within which to cure. The general rule in contracts for the sale of goods under the UCC is that the buyer is entitled to a perfect tender, which means that the goods and their delivery must conform exactly to the contract. A few exceptions to this rule exist, including where the seller has reason to think that nonconforming goods will be acceptable to the buyer, which reason can arise from the parties’ past dealings. In such a case, upon notification of its intention to cure, the seller must be given a reasonable time within which to cure, which may extend beyond the original time for performance. Here, the manufacturer had reason to think the bolt-only delivery would be acceptable based on the parties’ past dealings. Thus, the manufacturer had a reasonable time to cure, and its offer to send the store owner the nuts by overnight carrier is a reasonable offer to cure, negating the store owner’s right to cancel the contract. Thus, (A) and (B) are wrong. (C) is wrong because, but for the above exception, the perfect tender rule would apply and the day’s delay would be fatal.
The owner of an exclusive clothing salon entered into a written agreement with a customer to sell the customer a certain full-length fake fur coat for $12,000, with delivery by December 7. On December 6, the customer went to the salon at 5:30 p.m., and the salon owner told her that her coat was ready and she could take it home with her. The customer inspected the coat and discovered that a button was missing. She told the salon owner that she would not accept the coat without the missing button. He informed her that the tailor had gone home for the day at 5 p.m. and would not be back at the salon until 8:30 a.m. on December 8, because Congress had enacted a law declaring December 7 to be Pearl Harbor Day, a new federal holiday, and the tailor had the day off. The salon owner assured the customer that the coat could be ready with the button sewn on by 9:15 a.m. on December 8.
Which of the following best states the customer’s position?
A The customer may reject the coat, because the salon owner failed to provide perfect tender.
B The customer may reject the coat, but she must give the salon owner an opportunity to cure.
C The customer must accept the coat, because its value is not substantially impaired by the missing button.
D The customer must accept the coat, because the defect can be easily cured.
B
Although the customer is entitled to reject the coat for even a minor defect such as one button being missing, she is required to give the seller an opportunity to cure this defect. Because this is a contract for the sale of goods, the Uniform Commercial Code applies. Pursuant to the UCC, if goods or any tender fail in any respect to conform to the contract, the buyer may reject the goods. This rule of perfect tender allows rejection for any defect, and does not require material breach. However, the perfect tender rule is softened by the rules allowing the seller to cure the defect by giving reasonable notice of an intention to cure and making a new tender of conforming goods within the time originally provided for performance. Also, where the buyer rejects a tender that the seller reasonably believed would be acceptable with or without money allowance, the seller, upon reasonable notification to the buyer, has a further reasonable time beyond the original contract time within which to make a conforming tender. Here, one button missing on a $12,000 coat is a very minor defect. However, pursuant to the perfect tender rule, the customer has the right to reject the coat even for this defect. In turn, the salon owner is entitled to cure the defect by notifying the customer of his intention to do so and by making a conforming tender. The salon owner has told the customer that the tailor will sew on the button, which will result in the coat’s conforming to the contract. Although the tailor, due to the holiday, will not be able to sew on the button by the agreed-upon date of delivery, being able to do so early in the morning of the day after falls within a further reasonable time beyond the original contract time within which to make a conforming tender. In any event, at this point the customer must give the salon owner an opportunity to cure. (A) is incorrect because it fails to add that the salon owner must be allowed an opportunity to cure, as discussed above. (C) and (D) are incorrect because with the failure of perfect tender, the customer is not required to accept the coat. This right of rejection is not affected by the minor nature of the defect, as (C) suggests. Similarly, the buyer’s right of rejection is not impaired by the fact that the defect is easily curable, as (D) states.
On June 1, a jeweler placed an order for 10 classic yellow gold ring settings with a goldsmith. The jeweler’s order called for delivery by July 1. On June 2, the goldsmith shipped 10 white gold ring settings that arrived at the jeweler’s place of business on June 3. The jeweler immediately faxed the goldsmith rejecting the shipment because the rings were white gold instead of the classic yellow gold he had requested. The goldsmith replied by fax: “Will deliver proper ring settings before July 1.” The jeweler received this fax on June 4 but did not reply to it.
On June 30, the goldsmith tendered 10 classic yellow gold ring settings, but the jeweler refused to accept them.
Did the jeweler properly reject the ring settings tendered on June 30?
A Yes, because the goldsmith’s shipping the white gold settings on June 1 was a present breach of contract.
B Yes, because the goldsmith’s shipping the white gold settings on June 1 was an anticipatory repudiation.
C No, because the goldsmith cured the June 1 defective delivery by his tender of conforming goods on June 30.
D No, because a contract for the sale of goods can be modified without consideration.
C
The jeweler did not properly reject the ring settings. When a buyer has rejected goods because of defects, the seller may, within the time originally provided for performance, cure by giving reasonable notice of intention to do so and making a new tender of conforming goods, which the buyer must then accept. The goldsmith took all of the steps necessary to cure. Consequently, the jeweler’s rejection of the ring settings tendered on June 30 was improper. It follows that (A) is incorrect. (B) is incorrect because the goldsmith’s prompt sending of a fax on June 4, indicating his intention to cure the defect, does not indicate a clear unwillingness or inability to perform, as is required for anticipatory repudiation. (D) is incorrect because modification of the contract is not at issue here. By curing the defective delivery, the goldsmith is simply performing according to the terms of the contract.
A bakery owner entered into a one-year written contract with a chocolate chip manufacturer whereby the manufacturer agreed to ship to the bakery owner 5,000 pounds of premium chocolate chips on the first day of each month for $12,500 per shipment. When the bakery owner opened the first shipment of chips, he found that 60% of them had melted together. He immediately called the manufacturer and reported the breach. The manufacturer offered to send replacements, but the bakery owner refused the offer and canceled the entire contract.
Will the manufacturer prevail in an action against the bakery owner seeking contract damages?
A No, because the bakery owner was entitled to a perfect tender, and the manufacturer’s failure to provide a perfect tender resulted in a breach of contract.
B No, because damages are speculative.
C Yes, because the bakery owner’s notice of the manufacturer’s breach was not in writing.
D Yes, because the manufacturer had a right to cure.
D
The manufacturer will prevail in an action for damages, because the manufacturer had the right to cure the defect and was prevented from doing so. In an installment contract, an installment can be rejected only if the nonconformity substantially impairs the value of that installment. Moreover, the installment contract as a whole is deemed to be breached only if the nonconformity substantially impairs the value of the entire contract. Here, the contract is an installment contract because the deliveries are to be made in separate lots at different times. The delivery of melted chocolate chips was the first of 12 deliveries that were to be made, and there is nothing in the facts to indicate that the manufacturer could not cure the problem with this delivery and with the rest of the deliveries for the year. Thus, the nonconformity did not substantially impair the value of the entire contract. As to this installment, the bakery owner must afford the chocolate chip manufacturer the right to cure, i.e., to send replacement chips as the manufacturer had offered to do, and his failure to allow the manufacturer to do so will result in the bakery owner’s breach of contract. Thus, the manufacturer would prevail in an action for damages resulting from the breach. (A) is wrong because the “perfect tender” rule, which allows a buyer to reject goods if either the goods or the delivery fail to conform to the contract in any way, is not the rule for installment contracts. In installment contracts, a defective shipment cannot be rejected if the defect can be cured. (B) is wrong because damages are not speculative. Under the expectation measure, the damages are whatever it would take to put the manufacturer in the place it would have been in had the bakery owner performed under the contract. In this case, the recovery would likely include lost profits because a manufacturer of this type is typically a lost volume seller. (C) is wrong because a notification of rejection need not be in writing.
