Contracts - UCC Art 2 - Performance

Question 1

List the rights and duties of a seller or buyer upon either party’s failure to perform.

Answer 1

1. Right of assurance to performance;

2. Duty of cooperation.

Question 2

Define “substituted performance.”

Answer 2

If without fault of the seller the agreed facilities or type of contract carrier is not available or delivery impractical, but a commercially reasonable substitute carrier is available, seller must use substitute carrier and buyer must accept delivery and pay.

Question 3

What actions should occur to ensure a proper rejection of nonconforming goods?

Answer 3

1. Must do so within reasonable time after tender;
2. Must be known by Seller - generally with specific reasons for rejection;
3. If Buyer in possession - Buyer needs to exercise reasonable care of goods;
4. If goods need to be sold (e.g., perishable) - Buyer must make reasonable effort to do so; Buyer to receive reimbursement for cost plus 10% sales commission.

Question 4

What option does the buyer have for tender of payment?

Answer 4

1. Can be by any customary means;

2. Seller could demand cash.

Question 5

List the options that a buyer has when a seller tenders goods that fail to confirm to the contract (i.e., the perfect tender rule).

Answer 5

1. Reject the entire shipment;
2. Accept the entire shipment;
3. Accept any commercial unit and reject the rest.

Question 6

List the conditions that must exist to revoke a previous acceptance of goods.

Answer 6

1. Buyer was given reasonable assurance of cure and cure has not occurred;
2. Buyer was assured goods were conforming and later discovered they were not;
3. Buyer’s discovery of the nonconforming was difficult to detect.

Question 7

Describe the perfect tender rule.

Answer 7

Seller must deliver goods to buyer that conform in every respect; no standard of material breach here but, rather, any breach.

Question 8

Define “anticipatory breach.”

Answer 8

Occurs when either the seller or the buyer repudiates the contract prior to the required contract date of performance.

Question 9

List the possible actions of a non-breaching party if an anticipatory breach has occurred.

Answer 9

1. For a commercially reasonable time await performance;
2. Treat breach as final and resort to remedies;
3. Suspend their own performance without liability for breach.

Question 10

Describe the general rules of performance for a seller and a buyer.

Answer 10

1. Seller obligated to ship or tender delivery of conforming goods;
2. Buyer a duty to accept and pay for conforming goods.

Question 11

Define “cure.”

Answer 11

If a seller tenders delivery of nonconforming goods prior to the contract date, and buyer rejects the goods, the seller can with notice indicate the intent to cure, and the seller is not in breach if the seller tenders conforming goods within the contract time period.

Question 12

List the rights of a buyer upon delivery of the goods.

Answer 12

1. Right of inspection unless agreed to the contrary;

2. Right to reject any nonconforming tender.

Question 13

Describe the concept of “right to demand assurances.”

Answer 13

Right of one party to demand additional guarantees of performance under the contract when none has taken place or cannot take place.

Question 14

What actions constitute the acceptance of a product by the buyer?

Answer 14

1. After opportunity to inspect signifies goods are conforming or will accept anyway;
2. Fails to reject after inspection or reasonable opportunity to do so;
3. Does act inconsistent with seller’s ownership of product.

Question 15

Describe a buyer’s right of inspection.

Answer 15

Available to buyer for reasonable time; right to open packages, examine goods and conduct tests.