Performance of Article 2 Contracts Flashcards
What are the general rules regarding perfect tender?
First, “perfect tender” only applies to sales of goods. Second, “perfect tender” does not mean that the seller’s performance must be perfect; rather, the goods and the delivery must conform to the contract terms. Third, a less than “perfect tender” by the seller generally gives the buyer the option of rejection of the delivered goods, so long as the buyer acts in good faith.
What are the general rules regarding the rejection of goods?
First, you need to be able to distinguish rejection of an offer from rejection of the goods.
Second, if the seller does not meet the perfect tender standard, the buyer has the option to retain and sue for damages or reject “all or any commercial unit” and sue for damages.
Third, the buyer must take reasonable care of the rejected goods and should not continue to use rejected goods.
Fourth, this rejection alternative is limited by cure, installment contracts and acceptance.
In regards to perfect tender, what is the genernal rule regarding “curing” tender? ?
In some instances, a seller who fails to make a perfect tender will be given a “second chance,” an option of curing. Note that a seller does not always have the opportunity to “cure,” and that the buyer cannot compel the seller to cure.
When may a seller cure?
(1) Seller’s reasonable ground to believe would be acceptable, perhaps with a money allowance
In very limited situations, a seller has the option of curing even after the contract delivery date. “Reasonable grounds” is the statutory test. Look for information in the question about prior deals between that buyer and seller.
(2) Time for performance has not yet expired.
What is an installment contract?
An installment contract REQUIRES or AUTHORIIZES (i) delivery of the goods in separate lots (ii) to be separately accepted. The buyer has the right to reject an installment only where there is a substantial impairment in that installment that can't be cured.
Be sure that you see the differences between (1) entering into an installment sales contract that provided for multiple deliveries and acceptances and (2) buying something on credit and paying for it in monthly installments.
What are the general rules regarding the accpetance of goods?
Importance of acceptance: If the buyer accepts the goods, it cannot later reject them.
Payment and acceptance: Payment without opportunity for inspection is not acceptance.
Failing to reject: Rejection must be timely. Failure to reject after the buyer had reasonable time to reject is acceptance.
Retention as acceptance: Effect of buyer’s keeping goods is implied acceptance – LOOK FOR THE
BUYER’S KEEPING THE GOODS WITHOUT OBJECTION: more specifically look for a fact pattern that states when buyer first received goods and when buyer first complained to seller.
What is the effect of revocation of acceptance?
Same as rejection of the goods: buyer returns the goods and the seller returns payments made. Remember that if a buyer accepts the goods, it can NOT later reject the goods. In limited circumstances, a buyer can effect a cancellation of the contract by revoking its acceptance of the goods.
What are the requirements for revocation of acceptance?
The requirements for revocation are as follows:
(1) nonconformity substantially impairs the value of the goods, and
(2) excusable ignorance of grounds for revocation or reasonable reliance on seller’s assurance of satisfaction, and
(3) revocation within a reasonable time after discovery of nonconformity.
Briefly compare the difference between rejection and revocation in terms of timing, the standard, other requirements, and consequences.
Comparison of rejection of the goods and revocation of the goods (two different ways of buyer’s returning the goods and recovering any payment):
(a) Timing: Rejection - Early, before acceptance; Revocation - Later, after acceptance;
(b) Standard: Rejection - Generally, perfect tender; Revocation- Substantial impairment;
(c) Other Requirements: (i) seasonably notify seller; (ii) hold the goods for seller; (iii) follow reasonable seller instructions.
(d) Consequences: (i) goods back to seller; (ii) No buyer payment obligation.
