Blaw Chapter 22
Letter Credit relationship between (issuer, seller, buyer)
(seller)--> bill of landing--> (bank)--> letter credit & bill of landing -- >(buyer) (Buyer) ---> $payment --> (bank)-->$payment --> (seller) (buyer) letter credit ---> (seller) seller ---> goods ---> carrier --> buyer buyer--> bill of land --> carrier---> seller
perfect tender rule exception
1. agreement of the parties 2. cure 3. substitution of carries 4. installment contract 5. commercial impracticability 6. destruction of identified goods 7. assurance and cooperation
when seller refuses to delivery the goods (Remedies of buyer)
1. cancel (rescind) the contract 2. obtain goods that have been paid for if the seller is insolvent 3. sue to obtain specific performance if the goods are unique or if damages are an inadequate remedy 4. buy other goods (obtain cover) and recover damages from seller 5. sue to obtain identified goods held by a third party (replevy goods) 6. sue to obtain damages
shipment contract
1. place the goods into the hand of the carrier 2. make a delivery contract base on the value of goods 3. promptly delivery or trend to buyer and document necessary to enable the buyer to pick goods from the carrier 4. notify the buyer the shipment is made if the seller don't make transportation contract or notify the buyer of the shipment then buyer can reject the item only if the good are material loss or delay
the amount of damage that a buyer can recover after accepting nonconforming goods
1. warranted minus goods at time of acceptance value 2. buyer entitled to incidental and condquential damage when apprpriate 3. with proper notice to the seller, the buyer can deduct all or any part of the damage from the price still due under the contract
the right to replevy goods (when seller refuses to delivery the goods Remedies of buyer)
GR: buyer have right to replevy goods identified a contract if sellers has repudiates/ breach contract replevin--> an action to recover specific goods in the hand of party who is wrongfully withholding them from the other party --> to maintain an action to replevy goods, buyer must usually show that they were unable to cover for the goods after making a reasonable effort
payment
GR: buyer must make payment at the time and place the goods are received on credit, --> pay on specific credit term, not when the goods are received for leases--> payment base on a specific time in contract can use cash or other methods that are generally acceptable in the commercial word. seller demand cash--> must need to give the buyer a reasonable time to ready the cash payment
place to delivery 3 case
GR: contract usually specific which location to pick up if contract not indicate: 1. the seller's place of business 2. the seller's residence, if seller has no business location 3. the location of goods, if both parties know at the time of contract (common know place by both parties)
the right to withhold delivery (remedies of sellers when Goods in buyer)
GR: seller can withhold the delivery and discount performance when the following is true: 1. buyer has wrongful reject or revoked acceptance of contract goods 2. buyer has failed to make payment 3. buyer has repudiated the contract 4. buyer is insolvent unless the buyer pay in cash
the right to obtain specific performance (when seller refuses to delivery the goods Remedies of buyer)
GR: the award of damages is sufficient to place a buyer in the position she or he would have occupied own if the seller fully performance however the buyer can obtain specific performance if either: 1. the goods are unique (ex: a particular work of art) 2. the remedy at law (monetary damages) is inadequates
A repudiation may be retracted
UCC will permit the breach party to retracted the repudiation when retracted is made: contract still reinstated when there is no retracted( the other party breach) 1. cancel or make a materially change position 2. indicated repudiation as final
Installment contract (perfect tender rule exception)
UCC--> contract requires or authorizes to be delivered in two or more separate delivery to be accepted and paid separately too. buyer can reject an installment contract when: the nonconformity value is not the same value, and there is no way to cure it. but if the buyer fail to notify the seller rejection, then this contract it's still reinstated to breach installment contract is when only one or more nonconforming installment substantially impair (defect) the value of whole contract
The right to recover the purchase price or lease payment due (remedies of sellers when Goods in buyer)
UCC--> unpaid seller can bring an action to recover the purchase price/ payment due under the lease contract plus incidental damages if seller is unable to resell or dispose of the goods and sue for the contract price, the goods must be held for the buyer until resale becomes possible. the seller can resell the goods at any time before collecting the judgement from the buyer --> goods resold, net proceed (net gain) from the sale must be credited to the buyer
commercial unit (single whole)
a machine, a suite of furniture, a bale
letter credit
a written instrument, issued by bank, which issuer promise to honor drafts or other demand for payment by third parties in accordance with the term of the instrument it protect both seller and buyer --> base principle behind letter of credit is that payment is made against document presented by the beneficiary and not against the fact that the document purport reflect
Acceptance
after inspection buyer can demonstrate acceptance by: 1. buyer by word or conduct(action) to the seller that the goods are conforming or still keep the nonconformity 2. buyer fail to reject within the reasonable period of time 3. buyer use or resale the goods (act of inconsistent with sell's ownership)
(remedies of sellers) when Goods in buyer
before delivery the seller has the right to pursue: 1. cancel (rescind) the contract 2. withhold delivery of the goods 3. resell to recover the purchase price due 4. sue to recover the purchase price due 5. sue to recover damage for the buyer's nonacceptance of goods
tender delivery
before the seller disposal goods need to give a reasonable time to the buyer to take the delivery(pick the goods) 1. tendered at a reasonable hour 2. kept available for a reasonable time to enable the buyer to take possession 3. tendered in a single delivery rather than in serval lots or installments
anticipatory repudiation
breach contract one party clearly communicates to the other party as intention not to perform
remedies of sellers
buyer breach remedies is base on circumstance existing at the time of breach the most pertinent consideration are: 1. which party has the goods 2. whether goods is in transit 3. do the buyer has reject/accept the goods
the right to cover (when seller refuses to delivery the goods Remedies of buyer)
buyer can protect themselves by obtain cover the cover is buyer purchase on the open marketplace of goods to substitute for those promised but never delivered by the seller. UCC--. if the cost exceed the cost of contract goods, buyer will be recover plus incidental and consequential damages obtain cover is available when: 1. the seller repudiates the contract/ fail to delivery goods 2. buyer has rightfully reject goods/ revoked acceptance
Revocation of acceptance (when the seller deliver nonconforming goods Remedies of buyer)
buyer is permitted to revoke acceptance of the goods acceptance of a lot/commercial unit can be revoked if: 1. acceptance was based on reasonable assumption that the nonconformity would be cured, has not cured within reasonable periods of time 2. failure if buyer discover nonconformity has reasonable induced either by difficult to discovery before acceptance/ assurance make by seller is not effective until notice is given to the seller notice must occur: 1. within a reasonable time after the buyer either discover or should have discovered the ground for revocation 2. before goods have undergone any substantial change not cause by their own defect (spoilage) once acceptance is revoke ==buyer can pursue remedied just treat as the goods is reject
Statutes of limitation (UCC)
buyer must file a lawsuit for breach of contract within 4 yrs after the breach occurs buyer has 4 years from delivery date to file suit for breach of warrant --> parties can agree in their contract to reduce this period more than a year and less than 4 years buyer has accept nonconformity goods that party has reasonable time to notify the seller of breach --> failure to provide notice, will bar/stop buyer from pursue any remedy
how to reject cure
buyer must inform the seller particular defect(缺点) if the buyer fail to defect, which later the buyer can't use this to against
the right to recover damages for acceptance goods (when the seller deliver nonconforming goods Remedies of buyer)
buyer who accept nonconforming goods may keep goods and recover damages 1. buyer must notify the seller of breach with a reasonable time after the defect was or should have been discovered --> failure to give notice of defects to the seller, seller normally bars/stop the buyer from pursuing any remedy
the right to resell or disposes of the goods (remedies of sellers when Goods in buyer) lease
can lease to other party and recover damage from original lease damage is all unpaid lease payment up to the new lease begin lessor need to cover any different between original lease and new lease price, along with incidental damage
right to inspection
collect on delivery --> the buyer had the right to inspect the goods before making payment. --> not as what buyer order, buyer have not duty to pay --> inspection can take place at any reasonable place and time in any reasonable manner --> any inspection cost is on the buyer, but if the goods is not conform, buyer can ask seller to recover the cost and reject the goods
perfect tender rule
common law--> need to deliver the conforming good otherwise is breach contract UCC--> if goods or trended of delivery fails then the buyer may either: 1. accept the goods 2. reject the entire shipment 3. accept part or reject part but if the goods is conform in every respect as the contract then the buyer have no right to reject the goods
obligation of the seller or lessor
deliver the goods (exact same under contract) to buyer or lessess must be conforming goods delivery or tender delivery
Destruction of identified goods (exception to perfect tender rule)
if an unexpected event happens (fire) before the risk pass to the buyer and the good has already been identified, the contract is excused/ended. but when is partially destroyed the buyer can treat as: 1. contract as void 2. accept the goods at a reduction in `the contract price.
the right to recover damages from the buyer's nonacceptance (remedies of sellers when Goods in buyer)
if buyer repudiates a contract or wrongfully refuses to accept the goods --> seller can bring an action to recover the damage sustained GR: market price - contract price =damage damage is measure--> is lost profit, reasonable allowance for overhead, and other expense. benefit seller
the right to reject the goods (when the seller deliver nonconforming goods Remedies of buyer)
if either is goods or their trend fail to conform to the contract in any repsect, the buyer can reject all teh goods or any commerical unit of goods the buyer: 1.may obtain cover/cancel the contract when reject goods 2. may seek damages just as if seller had refused to delivery the goods 3. must reject the goods within reasonable time after delivery or trend of delivery (otherwise will be show as acceptance) 4. must seasonable notify the seller 5. must designate defect that are ascertained by reasonable inspection --> fail to defect, seller can use cure to defend contact still exist.
additional provisions affecting remedies
the parties to a sale or lease contract can vary their respective rights and obligation by contractual agreement the can expressly provide for remedies in addition to or in lineus of those provided of UCC
Assurance and cooperation
if one party believes "reasonable ground" the other party will not perform, then the party may write "demand adequate assurance of due performance" from the other party and stop/pause/suspend any further performance without liability until assurance is received when the performance is depend on other party/cooperation, and the other party/cooperation not forthcoming, the part can either: 1. can continue/proceed to perform the contract in any reasonable manner 2. stop/suspend performance with liability and hold the uncooperative party as a breach of contract.
effect of insolvency and breach (When the goods are in transit remedies of sellers)
if seller learn that buyer is insolvency, seller can stop delivery, no matter how much the goods were shipped if buyer breach but is not insolvent, the seller can stop the goods in transit only if is a larger shipment (carload, truckload, planeload)
the right to recover damages
if seller repudiates the contract/ fail to deliver the goods the buyer can sue for damages damages==> market price when buyer know the breach minus contract price market price --> is when seller supposed to delivery the goods lease damages==> lease payment could be obtain for goods at the time lessee learned the breach minus lease payment buyer can also recover incidental and consequential damages minus expense that were saves as a result of breach
the right to obtain goods upon insolvency (when seller refuses to delivery the goods Remedies of buyer)
if the buyer has partially or fully paid for goods that good are still in seller but seller become insolvent, the buyer can obtain goods to exercise this right: 1. seller must have become insolvent within 10 days after receiving first payment 2. the goods is identified to the contract 3. the buyer must pay the seller any unpaid balance of the purchase price
substitution of carries (perfect tender rule exception)
if the carrier is not available or impracticable, and there are commercially reasonable substitutes is available, then the buyer must be used and all the arrange to a substitution carriers, the seller cover all the additional cost (only if the contract say otherwise)
agreement of the parties (exception to perfect tender rule)
is an agreement in the contract state that the seller and buyer agree that the buyer can't reject the goods, when seller have a reasonable time to repair or replace the goods
Dealing with international contract
letter credit use to facilitate international contract
exclusive remedies
parties state remedies = sole remedy when circumstances cause an exclusive remedy to fail in its essential purpose, it is no longer exclusive and the buyer may pursue other remedies available under UCC
obligation of buyer
pay for the goods tender when seller has adequately tendered delivery, the buyers obligation is to accept the goods and pay for them on the condition in the contract
the right to reject the goods (when the seller deliver nonconforming goods Remedies of buyer) buyer is merchant
rightfully to reject goods--> and seller has no agent or business at place of rejection. the merchant buyer has good faith to follow any reasonable instruction received from the seller with respect to goods buyer entitle to be reimbursed for the cure and cost entailed in following instruction. if there is no instruction and goods are perishable and threaten decline value quicken, buyer can resell--> buyer can take appropriate reimbursement and selling commission (less than 10% of gross proceeds) if the goods is not perishable, the buy may either: 1. store them for the seller 2. reship them to seller
good is unfinished
seller can do: 1. cease manufacturing goods and resell them for scrap (raw material) or the salvage value 2. complete the manufacturing and resell or dispose of the good, and hold the buyer liable for any deficiency seller must exercise reasonable commercial judgment in order to mitigate(get) the loss and obtain the max value from unfinished goods
when goods are in buyer (remedies of sellers)
seller can sue and recover the purchase price plus incidental damages in some sitations, --> seller can reclaim the good from buyer 1. when buyer received goods on credit --> seller know buyer is insolvent --> seller can demand the return goods (must within 10 days of the buyer's receipts of goods) lease--> lesser fail to make payment, lessor may reclaim leased goods
When the goods are in transit (remedies of sellers)
seller give goods to --> carries and have not yet arrive in buyer
Cure (exception to perfect tender rule)
seller have the right to repair, adjust, or replace the nonconforming goods when: 1. a delivery is reject because the goods is nonconforming 2. time of performance has not yet expire 3. seller provides timely notice to the buyer of intention of cure 4. cure can be made within the contract time of performance
Right to Cancel the contract (remedies of sellers when Goods in buyer)
seller must notify buyer the cancellation and remaining obligation the seller discharge but buyer is not discharge from all the obligation: seller can still pursue remedies available
Requirement for stopping delivery (When the goods are in transit remedies of sellers)
seller must timely notify the carrier that the goods are to be return/ held for the seller --> carrier has sufficient time to stop delivery, and held and delivered back to seller --> any additional cost is on the seller seller has right to stop delivery of goods until the time when: 1. buyer received the goods 2. carrier acknowledge the rights of buyer in goods 3. a negotiable document of title covering the goods has been properly transferred to the buyer in a sale transaction, giving the buyer ownership rights in the goods. once the seller reclaim the goods in transit, they can purse remedies, they had the goods at the moment.
when the seller deliver nonconforming goods (Remedies of buyer)
seller--> nonconforming goods--> buyer --> remedies available 1. right to reject the goods 2. revocation of acceptance 3. right to recover damages for acceptance goods
Consequential damages
special damages that compensate for indirect loss (lost profit) the result from a breach of the contract that was reasonably foreseeable UCC--> parties to a contract can limit or exclude consequential damage, provide the limitation is not unconscionable
if time of performance is expired
the seller can still cure if they had reasonable ground to believe that the nonconforming tender would be acceptable to the buyer ex: price allowance (discount) reasonable ground
destination contract
the seller delivers good to a buyer-specific destination the goods must: 1. tendered at a reasonable hour 2. held the good for the buyer for reasonable length of time (before disposal) need be provide notice and necessary document about the good is in the carrier hand. (document can be tracking number)
delivery via carrier
the seller had the obligation/ responsibility shipment contract destination contract
the right to resell or disposes of the goods (remedies of sellers when Goods in buyer)
when a buyer breach a contract or repudiates, and goods are still in the seller the seller can resell the goods when: 1. resale must in good faith and a commercially reasonable manner 2. the seller must give a notification to the original buyer of resale, --> exception: if the goods are perishable or/and will rapidly decline in value 3. seller can retain any profit made as result, and hold the buyer liable for any loss
suspension of performance obligations
when anticipatory repudiation occurs: the party is non-breaching have two responses: 1. treat anticipatory as final breach by pursuing a remedy 2. wait to see the anticipatory party will change it's minds
partial acceptance
when goods is not conform and seller failed to cure, the buyer can make partial acceptance but can't accept less than single commercial unit
Remedies of buyer
when seller breach contract--> remedies is available to buyer depon on circumstance existing at the time of breach 1. whether the seller has refused to deliver conforming goods 2. whether the seller has delivered nonconforming goods
the right to cancel the contract (when seller refuses to delivery the goods Remedies of buyer)
when seller fail to make proper delivery or repudiates the contract, the buyer can cancel the contract buyer--> no further obligation seller--> has all right to give other remedies to buyer
commercial impracticability (expectation to perfect tender rule)
when there is unforeseen by either the parties when the contract was made commercial impracticability the seller must notify the buyer as soon practicable that there is delay or nondelivery if the problem is foreseen, then is not a commercial impracticability (ex: cost due to inflation) if unforeseen affect the partial seller, to tender total performance, the seller must distribute any remaining goods or deliveries fairly and reasonably among the parties. buyer must received notice of the allocation and has right to reject