Performance and Breach of Sales and Lease Contracts

1
Chapter 17

• Performance and Breach of Sales and Lease
  Contracts

2
Tender of Delivery

• Sellers obligation to get the goods ready to
  transfer to the buyer

3
Perfect Tender Rule

• Favors Buyer
• If any nonconformity, buyer can
• Reject all goods
• Accept all goods
• Anything in between, even if illogical
• Sellers often modify by contract

4
Perfect Tender Rule-Common Modifications

• Parties can agree to almost anything, but often
  they
• Limit rejections to defective goods
• Give seller a right to repair or cure
• Provide compensation (e.g. a price concession)
  for defective goods
• New car (and other) warranties

5
Right to Cure

• Seller can make right but only up until
  deadline of original delivery unless
• Seller reasonably believed that buyer would
  accept nonconforming goods
• Better quality
• Past acceptance of nonconforming
• Seller must still cure, but has reasonable
  (usually additional) time

6
Installment Contracts

• Must state that installment contract or that each
  shipment is a separate contract
• If it does, then each is separate for perfect
  tender rule purposes

7
Acceptance of Goods

• Buyers inspection right, except C.O.D.
• Can still inspect and reject, but must pay first
• Acceptance occurs if
• Buyer signals that ok
• Words
• Conduct
• Fails to reject within reasonable time

8
Revoking Acceptance of Goods (p. 463-64)

• Goods must be nonconforming
• That substantially impairs value to buyer
• And one of the following three
• Sellers promise to cure not met
• Accepted before discovering a hard to detect
  nonconformity or
• Seller had assured buyer that conforming
• Thus, can revoke in only some situations, though
  could have rejected in any.

9
Anticipatory Repudiation

• One party clearly indicates that it wont perform
• Other party can suspend and
• Await performance
• Treat as breached
• This usually based on partys conduct

10
Remedies

• Based on benefit of the bargain
• Broad choice to nonbreacher
• Can get multiple remedies, though cannot recover
  more than loss
• Buyer breach nonpayment
• Seller breach nonconforming goods or no goods
  delivered

11
Seller Remedies

• Withhold delivery, stop if in transit
• Reclaim goods from buyer
• 10 days after buyers receipt if becomes
  insolvent
• Any time for solvency misrepresentation
• Right to dispose of goods
• If partially made, can
• Sell at this point
• Finish and sell

12
Seller Remedies

• Recover Purchase price if
• Buyer has accepted goods
• Buyer breaches after identification and goods
  cannot be resold
• Lost after risk of loss is on buyer
• Recover Damages
• Cancel Contract

13
Buyers Remedies

• Reject goods
• Recover goods from seller becoming insolvent
  w/in 10 days of receiving payment
• Specific performanceunique goods
• Cover (note that a buyer remedy only)
• Cancel the contract

14
Buyer Remedies

• Replevy (Scarce but not unique)
• Replevy simply means to recover goods wrongfully
  held by another.
• Usually must show that tried cover, but could not
  find substitute goods
• Recover Damages
• Nondelivery
• Nonconforming

15
Remedies Limitations

• Exclusive Remedies
• Contract can limit to one form
• Limit on consequential damages
• Usually unconscionable for consumer buyer
• Statute of limitations
• 4 years from when cause accrues
• Can shorten, but not under 1 year