Contracts - PERFORMANCE OF CONTRACT Flashcards
Performance of Contracts for the Sale of Goods (Article 2)
PERFECT TENDER RULE
the delivery and condition of the goods must be exactly as promised in the contract (i.e. if tender is not perfect, buyer may reject the goods),
if not, you’ve breached
When does a seller have an “Option to Cure” ?
performance of contracts for sale of goods, art 2
A seller who fails to make perfect tender may have an option to cure. It usually depends on whether the time for performance has expired
if TIME FOR PERFORMANCE HAS NOT EXPIRED - the Seller has an OPTION TO CURE by the deadline for performance
if TIME HAS EXPIRED Seller has no option to cure UNLESS - based on prior dealings, seller reasonably believed the goods would be acceptable to Buyer. Seller then has a REASONABLE TIME BEYOND THE CONTRACT TIME within which to make a conforming tender
Installment Contracts
performance of contracts for sale of goods, art 2
a contract that requires or authorizes delivery in separate installments
the PERFECT TENDER RULE - DOES NOT APPLY to installment contracts (harder to reject). Buyer may reject only for SUBSTANTIAL IMPAIRMENT of the value of the contract (akin to the common law “substantial performance” doctrine)
(MBE Book - can only reject an installment if the nonconformity “substantially impairs” the value of that installment, and the whole contract is only breached if the nonconformity “substantially impairs” the value of the entire contract)
e.g. H&H contracts to deliver 300 bagels daily, but only brings 275 today, not SUBSTANTIAL IMPAIRMENT so you cannot reject this installment OR the entire contract
BUYER’s ACCEPTANCE OF GOODS
performance of contracts for sale of goods, art 2
IMPLIED ACCEPTANCE - when Buyer keeps the goods after having an OPPORTUNITY to inspect them
e.g. Sue buys adidas track suit and paid before track suit arrived at her home. She HASNT impliedly accepted yet bc no opportunity to inspect
BUT if track suit arrived 2 months ago, she has impliedly accepted bc had plenty of time to inspect (whether she did in fact, or not)
BAR TIP** If there’s a long delay between receipt/complaint, look for IMPLIED ACCEPTANCE
**CONSEQUENCES OF ACCEPTANCE: too late for buyer to REJECT them, BUT a buyer who accepts can STILL GET DAMAGES
Buyer’s Revocation of Acceptance of Goods
performance of contracts for sale of goods, art 2
General rule: Buyer CANNOT revoke acceptance of goods
EXCEPTION** - If the non-conformity (1) SUBSTANTIALLY IMPAIRS THE VALUE of the goods and was (2) DIFFICULT TO DISCOVER (ie it was a LATENT defect)
e.g. Monk buys mobile home and lives there for 2 months without incident. Then it rains and Monk discovers hairline crack in the roof - even though he IMPLIEDLY ACCEPTED, Monk CAN REVOKE his acceptance bc the hairline crack (1) substantially impairs the value and (2) it was difficult to discover - so let Monk revoke his acceptance for a reasonable time after he discovers the crack
CONSEQUENCES of rejection/revocation of acceptance
(1) buyer can RETURN the goods to seller at seller’s expense
(2) buyer can get REFUND for money B paid for goods
(3) buyer can get DAMAGES from S for breach of contract
BUYER’s OBLIGATION TO PAY
performance of contracts for sale of goods, art 2
A check is okay, but Seller can refuse it. If S refuses, Buyer will still have a reasonable time within which to get cash, even though deadline has passed (as long as tendered check within deadline)
For COMMON LAW CONTRACTS - What is the General Rule for performance?
Performance does NOT have to be perfect. SUBSTANTIAL PERFORMANCE is all that is required (i.e. party cannot commit a MATERIAL BREACH)
e. g. I hire Martha Stewart to decorate my house. She does the whole thing except for one bathroom - This is SUBSTANTIAL PERFORMANCE
- e.g. 2 if she decorates only the foyer, she has materially breached (not substantial performance)
e,g3 - she finishes a week late? FINISHING LATE IS NOT A MATERIAL BREACH unless contract or circumstances indicate that time is of the essence
