Performance

Question 1

Sale of Goods (Art. 2): Perfect Tender Rule, Option to Cure, and Installment Land Ks

Answer 1

Perfect Tender Rule (PTR) = seller must deliver perfect goods in the right place at the right time; if not perfect, buyer has right to REJECT ALL the goods

Option to Cure = seller who fails to make perfect tender may have option to cure

• Time has NOT expired = seller has option to cure
• Time HAS expired = seller does NOT have option to cure unless seller had reason to believe, based on prior dealings/conduct, that buyer would take the “wrong” goods

Installment K: requires or authorizes delivery in separate installments

• PTR does NOT apply
• Seller must promptly notify buyer of shipment and put the goods in the hands of a reasonable carrier
• Buyer may REJECT only for nonconformity that substantially impairs the value of that particular installment and can’t be cured
• Buyer may CANCEL THE ENTIRE K for nonconformity that substantially impairs the value of the entire K and can’t be cured

Question 2

Buyer’s Acceptance of Goods

Answer 2

Implied Acceptance: buyer keeps goods after having an opportunity to inspect them

• Can be inferred from long delay b/t receipt/complaint
• Merely paying for goods is NOT acceptance without opportunity to inspect
• Once buyer accepts, it’s too late for buyer to reject them… but buyer can still get DAMAGES for seller’s breach
• Art. 2 = expenses of inspection must be borne by the buyer, but may be recovered from the seller if the goods do not conform and are rejected

Payment

• Check is OK… but seller can refuse it!
• Seller must give buyer reasonable time to get cash (even if past K deadline)

Question 3

Buyer’s Revocation of Acceptance of Goods

Answer 3

General Rule = buyer cannot revoke acceptance of goods

Exception = if the non-conformity substantially impairs the value of the goods AND was difficult to discover (i.e., latent defect like a leaky roof)

3 consequences:

• Buyer can RETURN the goods to seller at seller’s expense
• Buyer can get a REFUND for anything he’s paid for the goods
• Buyer can get DAMAGES from seller for breach of K

Question 4

CL Ks: Performance

Answer 4

Performance does NOT have to be perfect!

Substantial performance is all that is required (i.e., party cannot commit a MATERIAL breach)

Question 5

Art. 2: Seller’s Opportunity to Cure

Answer 5

• Under UCC, seller may “cure” a defective delivery by (1) giving reasonable notice of the intention to cure and (2) making a new tender of conforming goods within the time for performance
• If the seller follows this procedure, the buyer MUST then accept the new tender!
• Seller generally has no right to cure beyond the original K time… BUT, buyer rejects a tender of nonconforming goods that the seller reasonably believed (based on prior dealings or industry custom) would be acceptable “with or without money allowance,” the seller, on reasonable notification to the buyer, has a further reasonable time beyond the original contract time within which to make a conforming tender

Question 6

Satisfaction Clauses

Answer 6

“Satisfaction” is measured by a REASONABLE PERSON standard UNLESS the K deals with art or matters of personal taste (in which case it’s that party’s subjective satisfaction that matters)