WGU Business Law Ch 18
Replevin
An action to recover specific goods in the hands of a party who is wrongfully withholding them from the other party.
10. Describe remedies for breach of international sales contracts.
The United Nations Convention on Contracts for the International Sale of Goods (CISG) provides international sellers and buyers with remedies very similar to those available under the UCC Article 74 of the CISG provides for money damages, including foreseeable consequential damages, on a contract's breach. As under the UCC, the measure of damages normally is the difference between the contract price and the market price of the goods. Under Article 49, the buyer is permitted to avoid obligations under the contract if the seller breaches the contract or fails to deliver the goods during the time specified in the contract or later agreed on by the parties. Similarly, under Article 64, the seller can avoid obligations under the contract if the buyer breaches the contract, fails to accept delivery of the goods, or fails to pay for the goods under Article 28, which provides that "one party is entitled to require performance of any obligation by the other party." Nevertheless, a court may grant specific performance under Article 28 only if it would do so "under its own [national] law."
4. Describe the "Perfect Tender" rule, including possible exceptions to the rule.
A common law rule under which a seller was required to deliver to the buyer goods that conformed perfectly to the requirements stipulated in the sales contract. A tender of nonconforming goods would automatically constitute a breach of contract. Under the Uniform Commercial Code, the rule has been greatly modified. The UCC preserves the perfect tender doctrine. It states that if goods or tender of delivery fails in any respect to conform to the contract, the buyer or lessee may accept the goods, reject the entire shipment, or accept part and reject part The corollary to this rule is that if the goods conform in every respect, the buyer or lessee does not have a right to reject the goods Exceptions to rule: -. With an installment contract, a buyer or lessee can reject an installment only if the nonconformity substantially impairs the value of the installment and cannot be cured.If the buyer or lessee fails to notify the seller or lessor of the rejection, however, and subsequently accepts a nonconforming installment, the contract is reinstated. Unless the contract provides otherwise, the entire installment contract is breached only when one or more nonconforming installments substantially impair the value of the whole contract. -A discounted price can serve as the "reasonable grounds" to believe that the buyer or lessee will accept the nonconforming tender. -that defective goods or parts will not be rejected if the seller or lessor is able to repair or replace them within a reasonable period of time, the perfect tender rule does not apply or cure. -The seller or lessor has a right to attempt to "cure" a defect when the following are true: A delivery is rejected because the goods were nonconforming. The time for performance has not yet expired. The seller or lessor provides timely notice to the buyer or lessee of the intention to cure. The cure can be made within the contract time for performance. Once the time for performance under the contract has expired, the seller or lessor no longer has a right to cure -Commercial Impracticability Unless the contract provides otherwise, the entire installment contract is breached only when one or more nonconforming installments substantially impair the value of the whole contract. Partial Performance -the unforeseen event only partially affects the capacity of the seller or lessor to perform. Sellor/Lessor required to deliver goods it can...Buyer/Lessee can accept or reject it. Destruction of Identified Goods -Unexpected event(fire) if the goods were identified at the time the contract was formed, the parties are excused from performance. If the goods are only partially destroyed, however, the buyer or lessee can inspect them and either treat the contract as void or accept the damaged goods with a reduction in the contract price. Right of Assurance reasonable grounds" to believe that the other party will not perform, the first party may in writing "demand adequate assurance of due performance" from the other party. Until such assurance is received, the first party may "suspend" further performance without liability. Duty of Cooperation The UCC provides that when cooperation is not forthcoming, the other party can suspend performance without liability and hold the uncooperative party in breach or proceed to perform the contract in any reasonable manner
6. Explain the concept of "anticipatory repudiation."
An assertion or action by a party indicating that he or she will not perform an obligation that the party is contractually obligated to perform at a future time.
1. Describe the UCC's "Good Faith" provision.
Good faith means honesty in fact. For a merchant, it means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade merchants are held to a higher standard of performance or duty than are nonmerchants.
2. What are the seller's and buyer's obligations under the good faith provision?
In performing a sales or lease contract, the basic obligation of the seller or lessor is to transfer and deliver conforming goods. The basic obligation of the buyer or lessee is to accept and pay for conforming goods in accordance with the contract. When the contract is unclear and disputes arise, the courts look to the UCC and impose standards of good faith and commercial reasonableness.
9. Describe letter of credit transactions, as they pertain to international sales contracts.
Letters of Credit: A written instrument, usually issued by a bank on behalf of a customer or other person, in which the issuer promises to honor drafts or other demands for payment by third persons in accordance with the terms of the instrument. In a simple letter-of-credit transaction, the issuer (a bank or other financial institution) agrees to issue a letter of credit and to ascertain whether the beneficiary (seller or lessor) performs certain acts. In return, the account party (buyer or lessee) promises to reimburse the issuer for the amount paid to the beneficiary. The transaction may also involve an advising bank that transmits information and a paying bank that expedites payment under the letter of credit
5. Describe the buyer's obligations, as it pertains to payment, inspection, and acceptance
Payment: the buyer or lessee must make payment at the time and place the goods are received When a sale is made on credit, the buyer is obligated to pay according to the specified credit terms (for example, 60, 90, or 120 days), not when the goods are received. The credit period usually begins on the date of shipment If the seller demands cash, the seller must permit the buyer reasonable time to obtain it. Inspection: The buyer or lessee has an absolute right to inspect the goods before making payment. If the goods are not as ordered, the buyer or lessee has no duty to pay. An opportunity for inspection is therefore a condition precedent to the right of the seller or lessor to enforce payment.The buyer bears the costs of inspecting the goods but can recover the costs from the seller if the goods do not conform and are rejected. Acceptance if: -The buyer or lessee indicates (by words or conduct) to the seller or lessor that the goods are conforming or that he or she will retain them in spite of their nonconformity [UCC 2-606(1)(a), 2A-515(1)(a)]. -The buyer or lessee fails to reject the goods within a reasonable period of time [UCC 2-602(1), 2-606(1)(b), 2A-515(1)(b)]. -In sales contracts, the buyer will be deemed to have accepted the goods if he or she performs any act inconsistent with the seller's ownership. For instance, any use or resale of the goods—except for the limited purpose of testing or inspecting the goods—generally constitutes an acceptance
3. Define and describe the different types of delivery.
Tender of Delivery: Under the Uniform Commercial Code, a seller's or lessor's act of placing conforming goods at the disposal of the buyer or lessee and giving the buyer or lessee whatever notification is reasonably necessary to enable the buyer or lessee to take delivery. Reasonable hour and time. Place of Delivery: Will be at one of the following if not indicated in contract: -The seller's place of business. -The seller's residence, if the seller has no business location [UCC 2-308(a)]. -The location of the goods, if both parties know at the time of contracting that the goods are located somewhere other than the seller's business Delivery via Carrier Delivery is clear in contract In carrier contracts, the seller fulfills the obligation to deliver the goods through either a shipment contract or a destination contract. Seller must: -Place the goods into the hands of the carrier. -Make a contract for their transportation that is reasonable according to the nature of the goods and their value. (For example, certain types of goods need refrigeration in transit.) -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. -Promptly notify the buyer that shipment has been made. If the seller does not make a reasonable contract for transportation or notify the buyer of the shipment, the buyer can reject the goods, but only if a material loss or a significant delay results. Destination Contracts: In a destination contract, the seller agrees to deliver conforming goods to the buyer at a particular destination The goods must be tendered at a reasonable hour and held at the buyer's disposal for a reasonable length of time. The seller must also give the buyer appropriate notice and any necessary documents to enable the buyer to obtain delivery from the carrier
UCC Remedies
Unlike remedies under the common law, remedies under the UCC are cumulative
7. Describe the remedies a seller has when the buyer breaches.
When goods are in possession of the seller or lessor: Seller can: -Cancel (rescind) the contract. Can reject delivery -Resell the goods and sue to recover damages. -Sue to recover the purchase price or lease payments due. -Sue to recover damages for the buyer's nonacceptance of goods. When the goods are unfinished: Seller can: cease manufacturing complete manufacture and resell or dispose of the goods. -Hold lessee/buyer liable for deficiency. In sales transactions, the seller can recover any deficiency between the resale price and the contract price. The seller can also recover incidental damages, defined as the costs to the seller resulting from the breach While goods are in transit: If the seller or lessor learns that the buyer or lessee is insolvent, the seller or lessor can stop the delivery of the goods still in transit, regardless of the quantity of goods shipped.
8. Describe the remedies a buyer has when the seller breaches.
When seller refuses to deliver goods: Buyer/Lessee can: -Cancel (rescind) the contract. -Obtain goods that have been paid for if the seller or lessor is insolvent. -Sue to obtain specific performance if the goods are unique or if damages are an inadequate remedy. -Buy other goods (obtain cover) and recover damages from the seller. -Sue to obtain identified goods held by a third party (replevy goods). -Sue to obtain damages. When Seller/Lessor delivers nonconforming goods -right to reject goods -permitted to revoke his or her acceptance of the goods -Right to recover damages for accepted goods