Contracts Under the UCC

Question 1

Which rule governs the failure of a condition under the UCC?

Answer 1

• The perfect tender rule: terms of a K for sale of goods are enforced exactly, and every K term treated as an express condition

Question 2

When has the seller breached a contract for the sale of goods under the perfect tender rule?

Answer 2

• The seller is in breach if the goods fail in any respect to conform to the K.

Question 3

What three courses of action are available to the buyer if the seller of goods fails to make perfect tender?

Answer 3

• Reject the goods
• Accept the goods
• Accept part and reject part

Question 4

What must the buyer do if they choose to reject a seller’s imperfect tender?

Answer 4

• Must reject within reasonable time + notify seller.

Question 5

What kind of remedies are available to a buyer who reject’s a seller’s imperfect tender?

Answer 5

• Buyer may then sue for damages unless cure applies.

Question 6

What happens if the buyer fails to reject a seller within a reasonable time and/or notify the seller of rejection?

Answer 6

• If buyer fails to reject in manner specified above, then it is deemed an acceptance of the goods by the buyer.

Question 7

How do we know when a buyer has accepted a seller’s imperfect tender?

Answer 7

• Occurs when buyer had reasonable time to inspect + signifies acceptance by:
  o stating that goods conform to the K;
  o taking the goods despite non-conformance;
  o failing to make effective rejection; OR
  o taking any action inconsistent with seller’s ownership of goods (like putting goods on the showroom floor).

Question 8

What must a buyer do if they accept a seller’s imperfect tender?

Answer 8

• Buyer must pay K price.

Question 9

What kind of remedies may the buyer get if they accept a seller’s imperfect tender?

Answer 9

• Buyer may seek damages for any non-conformity if seller has been seasonably notified.

Question 10

Could the buyer revoke their acceptance of an imperfect tender?

Answer 10

• Buyer can revoke acceptance if non-conformity substantially impairs value of the goods AND IF:
  o (a) buyer accepted because unaware of non-conformity, OR
  o (b) seller assured cure but failed to cure.

Question 11

When is the buyer allowed to accept part of an imperfect tender but reject another part?

Answer 11

• Buyer can only do so in terms of commercial units of that good (can’t accept half a loaf of bread only).

Question 12

What options are available to a breaching seller who fails to make perfect tender?

Answer 12

• Seller has a right to cure EITHER:
  o before contract deadline, OR
  o after contract deadline when there are reasonable grounds to believe delivery was acceptable

Question 13

What is a seller’s general right to cure?

Answer 13

• If seller makes non-conforming tender but time for performance has not passed, then the seller may substitute conforming goods.

Question 14

What must seller do to assert their right to cure imperfect tender?

Answer 14

• seller must give buyer reasonable notice of intent to cure; AND
• seller must make conforming delivery by K deadline.

Question 15

When may the seller be allowed to assert their right to cure an imperfect tender after the contract deadline has expired?

Answer 15

• Seller must have reasonable grounds to believe that the delivery was acceptable.
• Belief must be based on:
  o buyer’s express assurances,
  o trade usage,
  o course of dealing, or
  o course of performance.

Question 16

What must seller do to assert their right to cure imperfect tender upon reasonable belief after contract deadline?

Answer 16

• seller must give buyer reasonable notice of intent to cure; and
• seller must make conforming delivery within reasonable time.

Question 17

What are installment contracts?

Answer 17

• Under UCC, installment contracts are contracts that contemplate delivery of goods in separate lots to be separately accepted by the buyer.

Question 18

Does the perfect tender rule apply to installment contracts?

Answer 18

• Perfect tender rule DOES NOT apply to installment Ks. Buyer must generally give the seller an opportunity to cure any defects in the installment deliveries, unless the seller “substantially impairs” the value of the entire K.