BLaw Ch20 Remedies for Breach of Sales and Lease Contracts

right to replevy goods

A buyer or lessee has the right to replevy (recover) goods from a seller or lessor who is wrongfully withholding the goods. The buyer or lessee must show that he or she was unable to cover or that attempts at cover will be unavailing. Thus, the goods must be SCARCE but not unique. Replevin财务的发还actions are available only as to goods identified in a sales or lease contract.

right to recover damages for accepted nonconforming goods

A buyer or lessee may accept nonconforming goods from a seller or lessor. Even with acceptance, the buyer or lessee still has the right to recover damages for accepted nonconforming goods and any loss resulting from the seller's or lessor's breach. Incidental and consequential damages may also be recovered. The buyer or lessee must notify the seller or lessor of the nonconformity within a reasonable time after the breach was or should have been discovered.

buyer's or lessee's cancellation

A buyer's or lessee's right to cancel a sales or lease contract if the seller or lessor fails to deliver conforming goods or repudiates the contract or if the buyer or lessee rightfully rejects the goods or justifiably revokes acceptance of the goods.

specific performance

A decree of the court that orders a seller or lessor to perform his or her obligations under the contract; this usually occurs when the goods in question are unique, such as art or antiques古董. e.g. A buyer enters into a sales contract to purchase a specific Rembrandt painting from a seller for $25 million. When the buyer tenders payment, the seller refuses to sell the painting to the buyer. The buyer may bring an equity action to obtain a decree of specific performance from the court, which orders the seller to sell the painting to the buyer.

UCC statute of limitations

A rule that provides that an action for breach of any written or oral sales or lease contract must commence within four years after the cause of action accrues. The parties may agree to reduce the limitations period to one year.

perfect tender rule

A rule that says if the goods or tender of a delivery fail in any respect to conform the contract, the buyer may opt 1. to reject the whole shipment 2. to accept the whole shipment 3. to reject part and accept part of the shipment If a buyer accepts nonconforming goods, the buyer may seek remedies against the seller.

right to cancel a contract

A seller or lessor has the right to cancel a contract if 1)the buyer or lessee breaches the contract by rejecting or 2)revoking acceptance of the goods, failing to pay for the goods, or3) repudiating all or any part of the contract. The cancellation may refer only to the affected goods or to the entire contract if the breach is material.

lost volume seller

A seller who can recover lost profits from a defaulting buyer even though the seller sold the item to another buyer, where the seller has other similar items and would have made two sales had the original buyer not defaulted. e.g. Carpet Store purchases hundreds of oriental rugs from manufacturers that it sells to customers in its store. Mary contracts to purchase an oriental rug for $3,000 from Carpet Store. This rug cost Carpet Store $1,200. Mary defaults and does not take possession of the rug. Carpet Store sells the rug to another buyer for $3,000. Here, Carpet Store can recover lost profits from Mary because the buyer of the rug that Mary did not buy might have pur- chased a different rug from Carpet Store, and, therefore, Carpet Store would have had two sales if Mary had not breached the sales contract. Therefore, Carpet Store can recover $1,800 of lost profits from Mary.

reasonableness

A term used throughout the UCC to establish the duties of performance by the parties to sales and lease contracts.

adequate assurance of performance

Adequate assurance of performance from the other party if there is an indication that a contract will be breached by that party.

obligation

An action a party to a sales or lease contract is required by law to carry out.

replevin

An action by a buyer or lessor to recover scarce goods wrongfully withheld by a seller or lessor.

installment contracts 分期付款契约

An installment contracts is a contract that requires or authorizes goods to be delivered and accepted in separate lots. Such a contract must contain a clause that states "each delivery in a separate lot" or equivalent language. The UCC alters the perfect tender rule with regard to installment contracts. The buyer or lessee may reject the entire contract only if the nonconformity or default with respect to any installment or installments substantially impairs the value of the entire contract.

right to cure

An opportunity to repair or replace defective or nonconforming goods. A cure may be attempted if the time for performance has not expired and the seller or lessor notifies the buyer or lessee of his or her intention to make a conforming delivery within the contract time. A cure may also be attempted if the seller or lessor had reasonable grounds to believe the nonconforming delivery would be accepted. The seller or lessor may have further reasonable time to substitute a conforming tender.

damages

Damages a buyer or lessee recovers from a seller or lessor who fails to deliver the goods or repudiates a contract. Damages are measured as the difference between the contract price (or original rent) and the market price (or rent) at the time the buyer or lessee learned of the breach.

liquidated damages

Damages that will be paid on a breach of contract that are established in advance. In a sales or lease contract, liquidated damages are valid if they are reasonable in light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy

breach

Failure of a party perform an obligation in a sales or lease contract.

right to cancel a contract

If a seller or lessor fails to deliver conforming goods repudiates the contract, the buyer or lessee may cancel the sales or lease contract (buyer's or lessee's cancellation). The buyer or lessee can also cancel a sales or lease contract (buyer's or lessee's cancellation). The contract may be canceled with respect to the affected goods, or if there is a material breach, the whole contract may be canceled. A buyer or lessee who rightfully cancels a contract is discharged from any further obligations on the contract and retains his or her rights to other remedies against the seller or lessor

right to recover damages for nondelivery or repudiation

If a seller or lessor fails to deliver the goods or repudiates the sales or lease contract, the buyer or lessee has the right to recover damages for nondelivery or repudiation.

destruction of goods

The UCC provides that if goods identified in a sales or lease contract are totally destroyed without fault of either party before the risk of loss passes to the buyer or the lessee, the contract is void. Both parties are then excused from performing the contract. If the goods are partially destroyed, the buyer or lessee may inspect the goods and then choose either to treat the contract as void or accept the goods, the purchase price or rent will be reduced to compensate for damages.

tender of delivery 提供交付

The obligation of a seller to transfer and deliver goods to the buyer or lessee in accordance with a sales or lease contract. Tender of delivery requires the seller or lessor to 1. put and hold conforming goods at the buyer's or lessee's disposition and 2. give the buyer or lessee any notification reasonably necessary to enable delivery of goods. The parties may agree as the time, place, and manner of delivery. If there is no special agreement, tender must be made at a reasonable hour, and the goods must be kept available for a reasonable period of time.

Agreements Affecting Remedies

The parties to a sales or lease contract may agree on remedies in addition to or in substitution for the remedies provided by the UCC. The parties may limit the buyer's or lessee's remedies to repair and replacement of defective goods or parts or to the return of the goods and repayment (refund) of the purchase price or rent. The remedies agreed on by the parties are in addition to the remedies provided by the UCC unless the parties expressly provide that they are exclusive. If an exclusive remedy fails in its essential purpose (e.g., there is an exclusive remedy of repair, but there are no repair parts available), any remedy may be had, as provided in the UCC.

right to reject nonconforming goods or improperly tendered goods

The right of a buyer or lessee to reject goods that do not conform to a contract. If the goods or the seller's or lessor's tender of delivery fails to conform to the contract, the buyer or lessee may (1) reject the whole, (2) accept the whole, or (3) accept any commercial unit and reject the rest. Nonconforming or improperly tendered goods must be rejected within a reasonable time after their delivery or tender. The seller or lessor must be notified of the rejection. The buyer or lessee must hold any rightfully rejected goods with reasonable care for a reasonable time. If the buyer or lessee chooses to reject the goods, he or she must identify defects that are ascertainable(可确定的）by reasonable inspection. Any buyer or lessee who rightfully rejects goods is entitled to reimbursement退还 from the seller or lessor for reasonable expenses incurred in holding, storing, reselling, shipping, and otherwise caring for the rejected goods.

right to recover goods from an insolvent seller or lessor/capture

The right of a buyer or lessee who has wholly or partially paid for goods before they are received to recover the goods from a seller or lessor who becomes insolvent within 10 days after receiving the first payment; the buyer or lessee must tender the remaining purchase price or rent due under the contract. Only conforming goods that are identified in the contract may be recovered. This remedy is often referred to as capture.

right to withhold delivery

The right of seller or lessor to 1)refuse to deliver goods to a buyer or 2)lessee on breach of a sales or lease contract by he buyer or lessee or 3) the insolvency of the buyer or lessee.

right to reclaim goods

The right of seller or lessor to demand the return of goods from the buyer or lessee under specified situations. If the goods are delivered in a credit sale and the seller then discovers that the buyer was insolvent, the seller has 10 days to demand that the goods be returned. If the buyer misrepresented his or her solvency in writing within three months before delivery or paid for goods in a cash sale with a check that bounces, the seller may reclaim the goods at any time. A lessor may reclaim goods in the possession of the lessee if the lessee is in default of the contract.

commercial reasonableness

The term that establishes certain duties of merchants under the UCC.

UCC Doctrine of Unconscionability

UCC Article 2 (Sales) and Article 2A (Leases) have adopted the equity doctrine of unconscionability. Under this doctrine, a court may determine as a matter of law that a contract is an unconscionable contract. To prove unconscionability, there must be proof that the parties had substantially unequal bargaining power, that the dominant party misused its power in contracting, and that it would be manifestly unfair or oppressive to enforce the contract. This sometimes happens where a dominant party uses a preprinted form contract and the terms of the contract are unfair or oppressive If a court finds that a contract or any clause in a contract is unconscionable, the court may refuse to enforce the contract, it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result

Buyer's and Lessee's Right to Cover

a buyer or lessee has the right to cover by purchasing or renting substitute goods if the seller or lessor fails to make delivery of goods or repudiates the contract if the buyer or lessee rightfully rejects the goods or justifiably revokes their acceptance. The buyer's or lessee's cover must be made in good faith and without unreasonable delay. A buyer or lessee who rightfully covers may sue the seller or lessor to recover as damages the difference between the cost of cover and the contract price or rent. The buyer or lessee may also recover incidental and consequential damages, less expenses saved (such as delivery costs) e.g. University contracts to purchase 1,000 electronic tablets from Orange Store for $300 each to be used by its faculty members. Orange Store breaches the contract and does not deliver the tablets to University. University covers and contracts with Apple Store to purchase 1,000 tablets at the price of $400 per tablet. Here, University may recover $100,000 from Orange Store ($400 cover price − $300 contract price = $100 × 1,000 tablets).

Revocation of Acceptance

a buyer or lessee who has accepted good may subsequently revoke his or her acceptance if 1) the goods are nonconforming 2) the nonconformity substantially impairs the value of the goods to the buyer or lessee 3) the seller's or lessor's promise to timely cure of the nonconformity is not met/the goods were accepted before the nonconformity was discovered and nonconformity was difficult to discover/ the goods were accepted before nonconformity was discovered and the seller or lessor assured the buyer or lessee that the goods were conforming. Revocation of acceptance is not effective until the seller or lessor is so notified. Revocation must occur within a reasonable time after the buyer or lessee discover or should have discovered the grounds for the revocation. The revocation, which must be of a lot or commercial unit, must occur before there is any substantial change in the condition of the goods.

unfinished goods

a sales or lease contract is breached or repudiated before the goods are finished. the seller or lessor may choose either (1) to cease manufacturing the goods and resell them for scrap or salvage value or (2) to complete the manufacture of the goods and resell, release, or otherwise dispose of them to another party. The seller or lessor may recover damages from the breaching buyer or lessee.

Acceptance

an act that occurs when a buyer or lessee takes either of the following actions after a reasonable opportunity to inspect the goods that are subject of a contract 1) signifies to the seller or lessor in words or by conduct that the goods are conforming or that the buyer or lessee will take or retain the goods despite their nonconformity 2) fails to effectively reject the goods within a reasonable time after they delivery or tender by the seller or lessor. Acceptance also occurs if a buyer acts inconsistently with the seller's ownership rights in the goods. Buyers and lessees may only accept delivery of a commercial unit-- a unit of goods that commercial usage deems is a single whole for purpose of sale. Acceptance of a part of any commercial unit is acceptance of the entire unit.

good faith

every contract or duty within this Act imposes an obligation of good faith in its performance or enforcement

payment

payment is due from a buyer when and where the goods are delivered, even if the place of delivery is the same as the place of shipment. the credit period begins to run from the time the goods are shipped. If the seller requires cash payment, the buyer must be given an extension of time necessary to procure the cash. If the buyer pays by check, payment is conditional on the check being honored (paid) when it is presented to the bank for payment

right to dispose of goods

the right of a seller or lessor to dispose of goods in a good faith and commercially reasonable manner. A seller or lessor who is in possession of goods at the time the buyer or lessee breaches or repudiates a contract may in good faith resell, release, or otherwise dispose of the goods in a commercially reasonable manner and recover damages, including incidental damages, from the buyer or lessee. Any profit made on the resale or release of the goods does not revert to the original buyer or lessee if the seller or lessor disposes of the goods at a higher price than the buyer or lessee contracted to pay. The seller or lessor may also recover any incidental damages (reasonable expenses incurred in stopping delivery, transportation charges, storage charges, sales commission, and the like) incurred on the disposition of the goods

right to recover damages for breach of contract

the right of a seller or lessor to recover damages measured as the difference between the contract price and the market price at the time and place the goods were to be delivered, plus incidental damages, from a buyer or lessee who repudiates the contract or wrongfully rejects tendered goods. If the preceding measure of damages will not put the seller or lessor in as good a position as performance of the contract would have, the seller or lessor has the right to recover any lost profit that would have resulted from the full performance of the contract plus an allowance for reasonable overhead and incidental damages.

right to recover the purchase price or rent

the right of a seller or lessor to recover the contracted-for purchase price or rent from the buyer or lessee 1) if the buyer or lessee fails to pay for accepted goods 2) if the buyer or lessee breaches the contract and the seller or lessor cannot dispose of the goods 3) if the goods are damaged or lost after the risk of loss passes to the buyer or lessee The seller or lessor may also recover incidental damages from the buyer or lessee.

right to stop delivery of goods in transit

the right of a seller or lessor to stop delivery of goods in transit if he or she learns of the buyer's or lessee's insolvency or if the buyer or lessee repudiates the contract, fails to make payment when due, or gives the seller or lessor some other right to withhold the goods. In theses circumstances, the delivery can be stopped only if it constitutes a carload, a truckload, a planeload, or a large express or freight shipment.

right of inspection

unless otherwise agreed, the buyer or lessee has the right to inspect goods that are tendered, delivered, or identified in a sales or lease contract prior to accepting or paying for them. If the goods are shipped, the inspection may take place after their arrival. If the inspected goods do not conform to the contract, the buyer or lessee may reject the goods and not pay for the goods. If the goods are rejected for nonconformance, the cost of inspection can be recovered from the seller. If the goods conform to the contract, the buyer pays for the inspection.

noncarrier cases

unless otherwise agreed, the place of delivery is the seller's or lessor's place of business. If the seller or lessor has no place of business, the place of delivery is the seller's or lessor's residence. If the parties have knowledge at the time of contracting that identified goods are located in some other place, that place is the place of delivery. e.g. If parties contract regarding the sale of wheat that is located in a silo, the silo is the place of delivery.

carrier cases

unless the parties have agreed otherwise, if delivery of goods to a buyer is to be made by carrier. shipment contract destination contract