Exercise of Reserved Discretion Flashcards
UCC – Output, requirements & exclusive dealings
Quantity based on seller’s output or buyer’s needs must be reasonable and in good faith, not significantly more or less than estimated.
In exclusive deals, seller must provide goods and buyer must purchase in good faith.
UCC – Cure by Seller of Improper Tender or Delivery; replacement
If goods are non-conforming but the deadline isn’t passed, the seller can notify the buyer and fix the issue within the contract’s time frame.
If the buyer rejects non-conforming goods, the seller can notify the buyer and get more time to deliver the correct goods, if they believed the goods were acceptable.
PERFECT TENDER RULE
If the goods delivered don’t meet the terms of the contract (unless there’s a specific agreement or limitation), the buyer has three options:
1. Reject everything: The buyer can refuse all the goods.
2. Accept everything: The buyer can accept all the goods as they are.
3. Accept part and reject the rest: The buyer can choose to accept only part of the goods (a “commercial unit”) and reject the rest.
Does a merchant buyer act in bad faith when it rejects a nonconforming tender because the market for the resale of the goods has declined?
A merchant buyer does not necessarily act in bad faith when it rejects a nonconforming tender because the market for the resale of the goods has declined.
Does an output contract for the sale of goods require that the seller continue producing the goods until the end of the contract unconditionally?
In an output contract for the sale of goods, the quantity of output is such actual output as occurs in good faith based on the seller’s best efforts to supply the goods.
