Performance of the Contract Flashcards
When may a buyer reject goods under Article 2?
Article 2 uses a perfect tender rule, meaning that the buyer may reject ANY goods that do not perfectly conform.
Example: A seller deliver 50 of the wrong color shirt 2 weeks before the contract date. What happens?
Buyer may accept or reject the goods.
If buyer rejects, seller has an option to cure before the end of the contract date.
If the contract date has passed, general rule is that seller has no option to cure. EXCEPTION: If the buyer has accepted the wrong color goods in the past, the seller may get a reasonable time to cure.
(Look at the prior dealings for flexibility).
Installment contracts are different, it is harder to reject goods. Uses the substantial impairment test.
When does a seller have a right to cure in a sale of goods?
If the buyer rejects the goods, and the date of performance has not passed.
If in the prior dealings of the parties the buyer has accepted similar imperfect goods (may get a reasonable time to cure).
Installation K: Buyer can only reject an installment if the imperfection substantially impairs the installment, and can only reject the whole K if the imperfection substantially impairs the whole K (less likely).
When may a buyer on an installment contract of goods reject goods?
Buyer can reject the installment only if the imperfection substantially impairs the installment. (so generally not).
Can reject whole K if imperfection somehow substantially impairs the whole K.
When is a buyer deemed to have accepted goods?
1) Implied Acceptance: When buyer keeps the goods after having an opportunity to inspect them. (Didn’t have to actually inspect them). **
^Look for this if there is a long time after receipt before the complaint.
(Consequences of acceptance are that buyer cannot reject goods (unless a latent defect), but can still get damages).
Can a buyer reject goods he already accepted?
No, unless there was a latent defect.
What can a buyer do when when there is a latent defect in goods he already accepted?
If the non-conformity substantially impairs the value of the goods and was difficult to discover, he can revoke his acceptance and reject the goods.
What happens when a buyer rejects goods or revokes his acceptance of them (latent defect style)?
1) Return: Buyer can return the goods to the Seller at the Seller’s expense.
2) Refund: Buyer can get back any money buyer has paid for the goods.
3) Damages: Buyer can get damages from seller for breach of contract.
What are the consequences of paying for goods by check?
A seller can ALWAYS choose to reject a check.
BUT, if Seller rejects a check, buyer will always get reasonable time to get cash to pay in cash.
*Always tested*
How do we evaluate performance of common law (non-UCC) contracts?
Very easy.
Performance does NOT have to be perfect (there is no perfect tender rule).
Substantial performance is all that is required (same as saying a party cannot commit a material breach - these are flipsides of the same coin).
What a material breach/not substantial performance?
a) K to decorate house, Martha only decorates foyer. Mat breach.
b) She decorates all but one bathroom. NOT material breach.
c) Finishing late is NOT a material breach, UNLESS time is of the essence.
When do we care about substantial performance?
How is it evaluated?
Substantial performance is the test of whether a party has performed a COMMON LAW contract in a way that does not give the other party an excuse of performance.
It is evaluated by whether the performing party has committed a MATERIAL BREACH [if so, no substantial performance].
