Performance of Sales Contract

1
Performance of Sales Contract
2
Basic Obligations of Seller and Buyer

• Seller Deliver Conforming Goods to Buyer
• Buyer Accept and Pay for Goods
• Both Parties Duty of Good Faith

3
Sellers Delivery Obligation

• Manner of Delivery
• Put and Hold Conforming Goods at Buyers
  Disposition
• Give Buyer Notice Reasonably Necessary for Buyer
  to Take Possession
• Time for Delivery
• Reasonable Time
• Place of Delivery
• Sellers Place of Business

4
Sellers Delivery Obligation Under Shipment
Contract

• Put Conforming Goods in Hands of Carrier
• Make Reasonable Contract of Carriage
• Obtain and Deliver Documents Necessary for Buyer
  to Take Possession
• Promptly Notify Buyer of Shipment

5
Sellers Delivery Obligation Under Destination
Contract

• Put and Hold Conforming Goods at Destination for
  the Buyers Disposition
• Give Buyer Notice Reasonably Necessary to Enable
  Buyer to Take Possession
• Tender Any Documents in Correct Form

6
Perfect Tender Rule

• Buyer Has Right to Reject Goods if Goods or
  Tender Fail In Any Respect to Conform to Contract
  
• Exceptions
• Contract Provides Otherwise
• Special Rule for Installment Sales

7
REJECTION RULES

• Buyer Can Reject All Goods or Any Commercial Unit
  of Goods
• After Reasonable Opportunity to Inspect, Buyer
  Must Notify Seller of Rejection and Specify
  Defects
• Effect of Rejection
• Seller Liable for Breach Unless Cure
• Burden on Seller to Prove Goods Conform

8
Cure

• Sellers Right to Cure
• When time for performance has not expired or
• When seller had reasonable grounds to believe
  buyer would accept nonconforming tender
• Affecting Cure
• Seller must make curative tender e.g., send
  shipment of conforming goods, make repairs
• Cure must be made within time limit of contract
  or within additional reasonable time

9
Acceptance of Goods

• Express
• Buyer signifies to seller that he is accepting
  goods after reasonable opportunity to inspect
  them
• Implied
• Buyer fails to make an effective rejection after
  reasonable opportunity to inspect
• Buyer takes any act inconsistent with the
  sellers ownership of goods

10
Effect of Acceptance

• Acceptance precludes Rejection
• Buyer has obligation to pay for goods
• Burden on buyer (1) to notify seller within
  reasonable time as to any defects and (2) to
  prove any nonconformity

11
Revocation of Acceptance

• Acceptance of goods because of difficulty of
  discovering defects or sellers assurance of cure
• Substantial impairment of goods
• Notice of revocation within reasonable time after
  buyer should have discovered defects

12
Excuses for Nonperformance

• Casualty to Identified Goods (impossibility)
• Total loss prior to passage of risk of loss
• Partial loss/buyers options
• Commercial impracticability
• Unforeseeable supervening events
• Excessive/unreasonable costs
• Force Majeure Clauses

13
Anticipatory Repudiation

• Options of Nonbreaching Party
• Treat contract at end and immediately sue for
  breach
• Await commercially reasonable time
• Suspend performance
• Retraction of repudiation by breaching party
• Unless other party has cancelled contract or
  changed position relying on repudiation

14
Adequate Assurance of Performance

• Reasonable grounds for insecurity
• Demand adequate assurance of performance
• Failure of other party to give adequate assurance
  within reasonable time (not exceeding 30 days)
  constitutes anticipatory repudiation