UCC Remedies for Sellers

Question 1

Remedies for Sellers

Seller’s Right to Withhold Delivery

Advance Payment; Insolvent Buyer

Answer 1

Under the UCC, if the contract calls for advance payment and payment is not produced, then seller may refuse delivery of the goods.

Under the UCC, if seller learns that buyer is insolvent, then seller may withold delivery UNLESS buyer pays seller in cash.

Question 2

Remedies for Sellers

Seller’s Right to Recapture Goods

Answer 2

1. Insolvent

Under the UCC, if buyer has received goods and and seller learns he is insolvent, then seller may reclaim the goods following a demand made within 10 days of delivery.

* Misrepresentation - if misreprestation of solvency provided by buyer within past 3 months, then 10 day limitation will not apply

2. Pays w/ Check

Under the UCC, if buyer has received goods and pays with check that is subsequently dishonored, then seller may reclaim the goods.

3. Stoppage in Transit

Under the UCC, if goods are in transit and seller learns that the buyer is insolvent or in breach of contract, then seller may stop their delivery.

4. When Cannot Stop Goods

Delivery of goods cannot be stopped after receipt of the goods by buyer, and others.

Question 3

Remedies for Sellers

Seller’s Monetary Damages

Answer 3

Under the UCC, seller may have a claim for damages in the form of:

1. Full K Price

… full contract price if i) the buyer has accepted the goods, ii) conforming goods have been lost/damages after risk of loss passed to the buyer, or iii) the goods cannot be resold by the seller.

* Extraordinary remedy

2. K Price v. Market Price

… contract price minus the market price if buyer breaches or repudiates.

Ex: Sally Seller and Billy Buyer enter into a contract for the sale of a camera for $500. Billy subsequently repudiates the contract. If the market price for the camera at the time and place of delivery is $400, then Sally may recover $100, as well as any incidental damages she suffered, minus any expenses she saved as a result of Billy’s repudiation of the contract.

3. K Price v. Resale Price

… contract price minus the resale price if buyer does so in good faith and notifies buyer of private sale.

4. Lost Profits

… lost profits if seller is a lost volume seller.

Ex: Acme Computers, a high-volume maker of personal computers, contracts with Beverly Buyer to sell 100 computers for $100,000, their list price. Beverly subsequently repudiates the contract, and Acme resells the computers to another customer. Acme can recover from Beverly its lost profit, i.e., the contract price of $100,000 minus its manufacturing cost, as well as any incidental damages.

5. Incidental Damages

… and incidental damages in the form of reasonable charges, expenses, or comissions incurred.