Contracts > IV. Seller's Performance of Sale of Goods Contract Flashcards
After a buyer rejects a tender of nonconforming goods, the seller has a right to cure beyond the original contract time if the seller reasonably believed that _____.
the nonconforming goods would be acceptable to the buyer with or without a money allowance.
Note: The seller has no right to cure beyond the original contract time, unless the seller reasonably believed that the nonconforming goods would be acceptable with or without a money allowance. Only then does the seller, upon a reasonable notification to the buyer, have a further reasonable time beyond the original contract time within which to make a conforming tender.
In an installment contract situation, the contract can be canceled by the buyer if _________.
To cancel the entire installment contract due to breach, the buyer must show that the nonconformity substantially impairs the value of the entire contract and cannot be cured. If the nonconformity substantially impairs the value of only the installment and cannot be cured, only the single installment may be rejected.
Under Article 2, a buyer can accept goods by:
(1) affirmatively accepting the goods, (2) failing to reject the goods within a reasonable time, or (3) doing any act inconsistent with the seller’s ownership.
In a noncarrier case, for proper tender of delivery, the seller must:
Put and hold the goods at the buyer’s disposition for a time sufficient for the buyer to take possession and give the buyer reasonable notice to enable the buyer to take possession of the goods
A noncarrier case is a sale in which it appears that the parties did not intend that the goods be moved by carrier. In a proper tender of delivery, the seller must put and hold conforming goods at the buyer’s disposition for a time sufficient for the buyer to take possession. The seller must give the buyer notice reasonably necessary to enable her to take possession of the goods.
Absent a contrary agreement, a seller is not required to actually deliver the goods to the buyer. The seller need only tender (offer) the goods to the buyer at the seller’s place of business or residence.
Generally speaking, if a contract does not address the importance of timeliness of performance in its terms, a failure by the promisor to perform at the time stated in the contract will result in __________.
A minor breach of contract
If a contract does not address the importance of timeliness of performance in its terms, a failure by the promisor to perform at the stated time will result in a minor breach of the contract.
Unless the nature of the contract is such as to make performance on the exact day agreed upon of vital importance, or the contract by its terms provides that time is of the essence, failure by a promisor to perform at the stated time generally will not be considered material.
A failure to perform on time will always be some form of a breach of contract. It is not at the option of the nonbreaching party. The issue is the materiality of the breach. In mercantile contracts, timely performance is usually considered important. In contrast, more delay is generally permitted in land contracts.
Under the U.C.C., in a single delivery contract, if a seller delivers nonconforming goods to the buyer under the mistaken, but reasonable, belief that the goods would be acceptable to the buyer, and the buyer rejects the goods, the best characterization of the time the seller has to cure is:
Within a reasonable time beyond the time originally provided for performance
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, upon a reasonable notification to the buyer, has a further reasonable time beyond the time originally provided for performance 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.
In all cases, 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. The seller only has a right to cure beyond the original contract time when the seller knowingly tendered nonconforming goods that the seller reasonably, but mistakenly, believed would be acceptable to the buyer, as previously discussed.
Under U.C.C. Article 2, when a contract provides for payment C.O.D., the buyer:
Must pay for the goods on delivery, without inspecting the goods
If the contract between the parties provides for payment C.O.D., the buyer generally must pay for the goods on delivery, without inspecting the goods prior to payment.
In most cases, a buyer has a right to inspect the goods before accepting them and making payment, but in the case of a C.O.D., the buyer has promised to pay without inspecting the goods.
When payment is due before inspection, the fact that the goods are defective does not excuse nonpayment, unless an obvious defect appears without inspection or there is fraud in the transaction.
A buyer orders 600 widgets to be delivered on the 10th of each month in lots of 100. The second month’s shipment arrived on the 8th of the month and contains only 95 widgets.
The buyer may/may not reject the shipment?
The buyer may not reject the shipment. Under a single delivery sale of goods contract, a five-widget shortfall could be the basis for rejection under the perfect tender rule. However, this is an installment contract, and the buyer cannot reject the installment unless he can show that the shortfall substantially impairs the value of the installment and cannot be cured. A deficiency in quantity can always be cured, and there are still two days before performance is due.
Under the perfect tender rule, if goods or their delivery fail to conform to the contract in any way, the buyer may reject all, accept all, or accept any commercial units and reject the rest. However, in an installment contract, the right to reject an installment is limited to nonconformities that substantially impair the value of the installment and cannot be cured.
In an installment contract, a buyer may cancel the entire contract due to breach only if the buyer can show that the nonconformity substantially impairs the value of the entire contract. The five–widget deficiency is easily cured and is unlikely in any event to be found to impair the value of the entire 600-widget contract.
