UCC Performance Issues

Question 1

Perfect Tender & Rejection of Goods

Answer 1

Under UCC Ks, seller’s performance must be perfect with respect to the goods delivered and the manner of delivery
* Imperfect tender = seller sends defective / noncomforming goods

Buyer’s options upon seller’s imperfect tender - buyer can either:
a.) Keep - retain goods delivered and sue for damages, or
b.) Reject - reject some or all goods and sue for damages
- Requirements - buyer who rejects goods must:
1.) Notify seller of rejection in a reasonable time
2.) Hold the rejected good using reasonable care, and
3.) Give seller reasonable time to arrange for removal of goods
- If seller gives no information regarding removal, buyer can return goods to seller, store goods for seller, or resell goods on behalf of seller (i.e., for seller’s profit)

Installment K - where delivery of goods occurs in separate lots
* Rejection - buyer can only reject a delivery/installment if:
1.) Defect substantially impairs the installment; and
2.) Defect cannot be cured
* Rejection is limited to the defective installment, not the entire K
- Buyer can only cancel entire K due to a defective installment if the installment substantially impairs the entire K’s value

Note - seller of imperfect goods may be able to cure

Question 2

Perfect Tender & Acceptance of Goods

Answer 2

Under UCC K’s, buyer does not officially accept until goods are delivered and she has an opportunity to inspect and/or notify seller

Acceptance of goods occurs if either:
1. Buyer confirms acceptance - buyer, after a reasonable opportunity to inspect the goods, indicates to seller that goods conform or that she will keep them despite noncompliance
* * 2. Payment without an opportunity to inspect is not acceptance
* * * If buyer accepts goods, she cannot later reject them
2. Buyer is silent - buyer fails to reject or notify seller of rejection without a reasonable time (no more than one month)

Revoking acceptance - buyer cannot reject after acceptance unless she discovers a defect
* Requirements - buyer can revoke acceptance within a reasonable time after discover a defect if:
1. * * Defect substantially impairs the goods’ value and either:
* * 2. Buyer was excusably ignorant of defect or reasonably relied on seler’s assurance that goods conformed

Question 3

Perfect Tender & Seller’s Ability to Cure

Answer 3

If buyer has notified seller of imperfect tender (i.e., delivery of nonconforming goods) seller may have an opportunity to cure

Requirements - seller can cure if:
1) Seller gives buyer notice of intent to cure and time for performance has not yet expired
- Seller must give buyer reasonable notice and deliver conforming goods
2) Seller had reasonable grounds to believe nonconforming goods sent would be acceptable
- Reasonableness is usually based on seller’s prior dealings with buyer
- Seller will have additional reasonable time period to tender conforming goods

Note - Buyer cannot compel seller to cure