Business Law Chapter 18 Book notes

Two Responses from Anticipatory Repudiation

1. Treat the repudiation as a final breach by pursuing a remedy 2. Wait to see if the repudiating party will decide to honor the contract despite the avowed.

Agreed-on manner of delivery

May become impracticable or unavailable through no fault of either party

Good Faith

Means honesty in fact. For a merchant, it means honest in fact and the observance of reasonable commercial standards of fair dealing in the trade

Tender

Must occur at a reasonable hour and in a reasonable manner

Remedies to pursue

1. Cancel the contract 2. Withhold the delivery of the goods 3. Resell or dispose of the goods and sue to recover damages 4. Sue to recover the purchase price or lease payments dues 5. Sue to recover damages for the buyer's nonacceptance

Following are true to attempt a cure

1. Delivery is rejected because goods were nonconforming 2. Time for performance has not yet expired 3. Seller or lessor provides timely notice to the buyer or lessee of the intention to cure 4. Cure can be made within the contract time for performance

What seller must do under the shipment contract

1. Put the goods into the hands of the carrier 2. Make a contract for their transportation that is reasonable according to the nature of the goods and their value 3. Obtain and promptly deliver or tender to the buyer any documents necessary to enable the buyer to obtain possession of the goods from the carrier 4. Promptly notify the buyer that shipment has been made

Cover

A remedy that allows the buyer or lessee, on the seller's or lessor's breach, to obtain substitute goods from another seller or lessor.

Tender of Delivery

A seller's or lessor's act of placing conforming goods at the disposal of the buyer or lessee and providing whatever notification is reasonably necessary to enable the buyer or lessee to take delivery

Express Warranty

A seller's or lessor's promise as to the quality, condition, description, or performance of the goods being sold or leased.

Installment Contract

A single contract that requires or authorizes delivery in two or more separate lots to be accepted and paid for separately.

Implied Warranty

A warranty that arises by law because of the circumstances of a sale and not from the seller's express promise.

Single Delivery

All goods normally called for by a contract must be tendered in this way

Statute of Limitations

An action for a breach of contract under the UCC must be commenced within four years after the cause of action accrues.

Replevin

An action that can be used by a buyer or lessee to recover identified goods from a third party, such as a bailee, who is wrongfully withholding them

Liens

An encumbrance on a property to satisfy a debt or protect a claim for payment of a debt

Right of Inspection

Buyer or lessee has an absolute right to inspect the goods before making payment. Right allows the buyer or lessee to verify.

Acceptance

Can be demonstrated by: 1. Buyer or lessee indicates to the seller or lessor that the goods are conforming or that he or she will retain them in spite of their nonconformity. 2. Buyer or lessee fails to reject the goods within a reasonable period of time 3. In sales contract, buyer performs any act inconsistent with the seller's ownership.

Inspection

Can take place at any reasonable place and time and in any reasonable manner.

Doctrine of Commercial Impracticability

Does not extend to problems that could have been foreseen, such as an increase in cost resulting from inflation

Three types of title warranties

Good title, no liens, no infringements.

Conforming Goods

Goods that conform to contract specifications

Right of Assurance

If one party to a contract has "reasonable grounds" to believe that the other party will not perform as contracted, he or she may "demand adequate assurance of due performance" from the other party.

Payment

In the absence of any specific agreement, the buyer or lessee must make _______ at the time and place the goods are received. Can be made by any means agreed on by the parties.

Exceptions to the perfect tender rule

May be established by agreement

Unforeseen event

Only partially affects the capacity of the seller or lessor to perform. If this occurs, parties are normally excused from performance.

Cooperation of one party

Performance of one party depends on _________

UCC

Permits the breaching party to retract his or her repudiation.

UCC

Preserves the perfect tender doctrine by stating that if the goods or tender of delivery fail in any respect to conform to the contract, the buyer or lessee has the right to accept the goods, reject the entire shipment, or accept part and reject part.

UCC

Provides for the place of delivery under a contract only if the contract does not indicate the place where the buyer or lessee will take possession.

Cure

Refers to the right of the seller or lessor to repair, adjust, or replace defective or nonconforming goods.

Shipment Contract

Requires or authorizes the seller to ship goods by a carrier, rather than to deliver them at a particular destination.

Treated as repudiation

Results after the failure to respond based on assurances that are not forthcoming within a reasonable time.

Partial acceptance

Results if some of the goods delivered do not conform to the contract and the seller or lessor has failed to cure.

Carrier Contracts

Seller fulfills the obligation to deliver the goods through either a shipment contract or a destination contract

Consequential Damages

Special Damages that compensate for indirect losses resulting from a breach of contract that were reasonably foreseeable.

Right to cure

Substantially restricts the right of the buyer or lessee to reject goods.

When cooperation is not forthcoming

The other party can suspend her or his own performance without liability and hold the uncooperative party in breach or proceed to to perform the contract in any reasonable manner.

Destination Contract

The seller agrees to deliver conforming goods to the buyer at a particular destination. Seller must give the buyer appropriate notice about the delivery and hold the goods at the buyer's disposal

Main Obligation of the buyer or Lesee

Under a sales or lease contract is to pay for the goods tendered in accordance with the contract.

Every Sales and Lease Contract

Underlies the obligations of good faith and commercial reasonableness

Implied Warranty of merchantability

Warranty that goods being sold or leased are reasonably fit for the general purpose for which they are sold or leased, are properly packaged and labeled, and are of proper quality

Implied Warranty of fitness for a particular purpose

Warranty that goods sold or leased are fit for the particular purpose for which the buyer or lessee will use the goods

Remedies

When one party fails to carry out the performance promised in a contract, a breach occurs.