Contracts V—Breach Flashcards

Question

What is a 'commercial unit'?

Answer 1

A 'commercial unit' is treated as a single whole for the purpose of sale, and division of which materially impairs its value (e.g., place setting of dishes). May be a single article (e.g., a machine) or a set of articles (e.g., a suite of furniture), a quantity (e.g., a bale, a gross), or any other unit treated in use or in the relevant market as a single whole. The test: 'not only what unit has been the basis of contract, but also whether the partial acceptance produces so materially an adverse effect upon the remainder as to constitute bad faith.' Example: Widgets are always sold in units of 100. Buyer orders 500 widgets. They arrive but are found to be defective. Buyer keeps 25 and rejects 475. Buyer is probably required to reject in units of 100 and the rejection of the 75 above 400 is probably wrongful. Contracts V—Breach Contracts>Perfect Tender Rule-Sale of Goods (C.1.) .

Answer 2

A buyer’s right to reject under the perfect tender doctrine generally is cut off by acceptance. Under Article 2, a buyer accepts when: (i) After a reasonable opportunity to inspect the goods, she indicates to the seller that they conform to requirements or that she will keep them even though they fail to conform; (ii) She fails to reject within a reasonable time after tender or delivery of the goods or fails to seasonably notify the seller of her rejection; or (iii) She does any act inconsistent with the seller’s ownership. Contracts V—Breach Contracts>Perfect Tender Rule-Sale of Goods (C.2.) .

Answer 3

If the buyer fails to state that the goods have a particular defect that is ascertainable by reasonable inspection, she cannot rely on that defect to justify rejection or to show seller’s breach if: (i) The seller could have cured the defect if he had been told about it; or (ii) Between merchants when the seller has, after rejection, made a request in writing for a full and final written statement of all defects upon which the buyer proposes to rely. Example: Buyer has ordered blue widgets. Buyer rejects because the shipment did not contain the widget wrench that, under the contract, went with each widget. Buyer does not give the reason for rejection. If Seller had known the reason, he could have had the necessary number of widget wrenches at Buyer’s business within hours. That probably would have constituted an adequate cure. If so, Buyer’s rejection is unjustified; she will not be able to rely on the absence of the wrenches as a reason for rejection or as the basis for a claim for damages. Contracts V—Breach Contracts>Perfect Tender Rule-Sale of Goods (C.2.a.) .

Answer 4

(i) Hold Goods with Reasonable Care The buyer has an obligation to hold them with reasonable care at the seller’s disposition for a time sufficient to permit the seller to remove them. If the seller has no agent or place of business within the market area where the goods are rejected, a merchant buyer has an obligation to obey any reasonable instructions as to the rejected goods (i.e., she must arrange to reship the goods to a destination designated by the seller or resell on request of the seller, if reasonable). (ii) If Seller Gives No Instructions on Disposal of Goods The buyer may reship the goods to the seller, store them for the seller’s account, or resell them for the seller’s account. The buyer has a security interest in rejected goods in her possession for any part of the price already paid and for expenses reasonably incurred in connection with handling them after rejection. Contracts V—Breach Contracts>Perfect Tender Rule-Sale of Goods (C.3.a.)(C.3.b.) .

Answer 5

As an immediate breach of contract Contracts V—Breach Contracts>Anticipatory Repudiation (V.D) .

Answer 6

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. Contracts V—Breach Contracts>Seller's Right to Cure (V.C.5.b) .

Answer 7

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 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 (i) trade practices or prior dealings with the buyer led the seller to believe that the goods would be acceptable, or (ii) the seller could not have known of the defect despite proper business conduct (e.g., packaged goods purchased from a supplier). Contracts V—Breach Contracts>Seller's Right to Cure (V.C.5.b) .

Answer 8

Article 2 provides that a defective shipment in an installment contract cannot be rejected if the defect can be cured. Ordinarily, defects in the particular goods themselves cannot be cured, so the buyer can reject them, but then might be required to accept substitute goods under the provisions discussed above. Note that a deficiency in quantity may be cured by an additional delivery, and a delivery of too much may be cured by acceptance or return of a part. Contracts V—Breach Contracts>Seller's Right to Cure (V.C.5.b) .

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Contracts V—Breach Flashcards

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