Business Law Chapter 21
Amble Country Stables contracts to buy 1,000 horseshoes from Burleigh Blacksmith, Inc., for $1 per shoe. When the market price decreases to 50 cents per shoe, Amble refuses to go through with the deal. Burleigh can recover
$500.
Screen Perfect, Inc., and Vibrant View Stores enter into a contract for a sale of 3D HD TVs with certain specifications. Screen Perfect ships TVs that are not 3D but otherwise meet the specifications. Vibrant View
CAN reject the entire shipment.
Vehicle Leasing Agency (VLA) and West Coast Trucking Company enter into a contract for a lease of eight cargo vans. VLA delivers eight vans, but they are not cargo-sized. West Coast
CAN reject the entire shipment.
Fact Pattern 21-B1. First State Bank issues a letter of credit in favor of Oboe Company, an American firm, to facilitate an international sales contract to buy resources from Lapland Mining, Ltd., a Finnish company. Lapland is entitled to payment when it
COMPLIES WITH THE TERMS and conditions of the letter of credit.
Timber Products Corporation and Choice Lumberyards enter into a contract for a sale of plywood. Under a destination contract, the seller must
DELIVER the goods to a particular destination.
Clear Day Company, which is based in Delaware, agrees to sell fifty windows, currently stored in Florida, to Great Vu, Inc., which is based in Hawaii. Absent an agreement to the contrary, the place of delivery is in
Florida.
Gleaming Gem Corporation agrees to sell Jewelry Outlets, Inc. (JOI), fifty new diamonds, but the contract does not specify a place of delivery. JOI is expected to pick up the goods. The place of delivery is
Gleaming's place of business.
BBQ, Inc., makes and sells grills to Grill Mart, a retailer, which sells one of the grills to Hope, a consumer. Their contracts limit consequential damages for personal injuries arising from a breach of warranty. This is prima facie unconscionable with respect to
Hope.
Fact Pattern 21-B1. First State Bank issues a letter of credit in favor of Oboe Company, an American firm, to facilitate an international sales contract to buy resources from Lapland Mining, Ltd., a Finnish company. In this letter of credit, the beneficiary is
Lapland.
Coverall Paints agrees to sell Grade A-1 latex outdoor paint to Dropcloth Painters to be delivered May 8. On May 7, Coverall tenders Grade B-2 paint, which Dropcloth. rejects. Two days later, Coverall tenders Grade C-3 paint with an offer of a price allowance. Coverall has
NO more time to cure.
Nature's Foods, Inc., orders "Grade A" oil from Olive Grove Farms to process and sell to Pic 'N Pay Grocers. Olive Grove ships "Grade B" oil, which Nature's Foods accepts. To recover damages for the nonconformity, Nature's Foods must give notice of the breach within a reasonable time to
Olive Grove.
Elegant Carpets, Inc., and Fantastic Floors Stores enter into a contract for a sale of carpeting. Under a shipment contract, the seller must
PLACE the goods into the hands of a carrier.
Leather & Suede Stores, Inc., rejects a shipment of goods that does not conform to its contract with Genuine Cowhide Corporation, but is unable to obtain instructions from the seller. Leather & Suede can
RESHIP OR STORE the goods for the seller.
Fact Pattern 21-A1. Internet Cafés, Inc., contracts to buy all of its requirements for coffee, at a minimum of 1 million pounds per year, from Java Corporation for six years. After three years, Internet tells Java that it plans to sell its assets to Bagel Bistros, Inc. Bagel Bistros refuses to assure Java that it will continue Internet's contract. Java can
TERMINATE the contract and seek damages.
Bayou Boats, Inc., contracts for the sale of seven swamp boats to Tidal Flats Fishing Tours. Bayou repudiates the contract. Tidal Flats's recovery of damages is measured at the time
Tidal Flats LEARNED OF THE BREACH.
Mitch and Nadine enter into a contract for a sale of seventy-six specially made motion detectors. When Nadine does not deliver within a reasonable time after the agreed delivery date, Mitch files a suit for breach. Nadine asserts the doctrine of commercial impracticability. This doctrine extends only to problems that are
UNforeseen.
Text Publishers, Inc., contracts for a sale of textbooks to University Bookstores, Inc. Viable Shipping Corporation, the carrier, transports the books to Warehouse Storage Company. Text's right to stop delivery is lost when University's rights to the goods are acknowledged by
Warehouse Storage.
Rugged Boats, Inc., and Whitewater Rafting enter into a contract for a sale of six custom-made rubber rafts. Whitewater pays for the goods, but Rugged does not deliver. Whitewater can use replevin as a remedy if
Whitewater is unable to cover for the goods.
Fact Pattern 21-A1. Internet Cafés, Inc., contracts to buy all of its requirements for coffee, at a minimum of 1 million pounds per year, from Java Corporation for six years. After three years, Internet tells Java that it plans to sell its assets to Bagel Bistros, Inc. Bagel Bistros refuses to assure Java that it will continue Internet's contract. Bagel Bistros's refusal is
a REPUDIATION of the contract.
Price-Cut Discount Stores are open to consumers. The UCC requirement of good faith imposes
a higher duty on PRICE-CUT than on consumers.
Nash buys a car under a warranty from Rough Ride Motors. Nash soon discovers that the car has a defect that significantly affects its value and use. In all states and the District of Columbia, Nash may have remedies under
a lemon law.
Hi-Tech Company contracts to sell fiber optic cable to Internet Services, Inc. Hi-Tech may bring an action to recover the purchase price and incidental damages if Internet
accepts the cable BUT DOES NOT pay for it.
Recycle Packaging, Inc., agrees to sell 50,000 6-ounce yogurt containers to Organic Dairy Company. Recycle can obtain only 20,000 of the 6-ounce contain¬ers, but also ships 30,000 more expensive 8-ounce containers for the same price. Organic rejects the 8-ounce containers. With time for performance not yet expired, Recycle can
attempt to cure the defect.
Relax-o Chair Company contracts to deliver 100 chairs to Stuffy Furnishings Store on May 1 for which Stuffy agrees to pay. Relax-o tells Stuffy on April 15 that delivery will be delayed until June 1. Stuffy may
await performance, sue Relax-o, or suspend its own performance.
Field Gardens and Gourmet Restaurant, Inc., enter into a contract for a sale of lettuce. When Field learns that Gourmet is insolvent, Field can stop delivery of the goods in transit
regardless of the quantity.
Hydraulic Leasing Corporation (HLC) and Dockside Offloading Company enter into a contract for a lease of ten hydraulic lifts. Under the perfect tender rule, HLC must ship or tender goods to the lessee that
conform to the contract description in EVERY way.
Natural Seed Company and Mill Valley Farmers Cooperative enter into a contract for a sale of hybrid seeds. Under the perfect tender rule, Natural must ship or tender seeds that
conform to the contract description in EVERY way.
Rocky and Slim enter into a contract for a sale of five rowboats. Circumstances make it difficult for Rocky to perform, and the contract is breached. Slim looks for remedies. Unlike the common law, under the UCC, remedies are
cumulative.
Double D Ranch and Esau enter into a contract on August 1 for the sale of 200 cattle. Esau cancels the contract ten days later. Double D is unable to sell the cattle to another buyer. Double D can
recover the contract price from Esau but must HOLD THE CATTLE FOR HIM.
Design Architects, Inc., and Office Supply Company contract for a sale of office furniture. Design Architects, which is insolvent, breaches the contract. Office Supply can stop delivery of the goods in transit
regardless of the quantity.
Fact Pattern 21-B1. First State Bank issues a letter of credit in favor of Oboe Company, an American firm, to facilitate an international sales contract to buy resources from Lapland Mining, Ltd., a Finnish company. First State Bank is bound to
make PAYMENT when Lapland presents the proper documents.
Raw Resources, Inc., sells unprocessed minerals to commercial processors in Texas. With regard to the UCC's good faith requirement, Raw can
not disclaim it.
Primo Pools Company and Aquatic Recreation, Inc., enter into a contract for a sale of prefabricated swimming pools. Under either a shipment contract or a destination contract, the seller must
provide the buyer with any necessary documents of title.
Cheesy Pizza Company contracts to sell 1,000 cases of frozen pizzas to Roller Rinks, Inc., but refuses to deliver. Due to a spice shortage, Roller Rinks cannot obtain pizza elsewhere. Roller Rinks's right to recover the goods from Cheesy is the right of
replevin.
On May 1, City Auto & Truck Sales agrees to sell a car to Dino. Five days later, Dino refuses delivery and cancels the contract. City is entitled to
resell the car AND recover any damages from Dino.
Richman Manufacturing Company contracts to sell sweaters to Sweet Sweaters store. Before the sweaters are delivered, Sweet Sweaters indicates that it will not be able to pay. Richman can
resell the sweaters and recover any damages from Sweet Sweaters.
Nu-Tec Company contracts to sell fiber optic cable to Online Services, Inc. Nu-Tec ships the cable, which Online accepts but does not pay for. Nu-Tec can
sue to recover the purchase price PLUS incidental damages.
Consuelo and Gabriela enter into a contract for a sale of saxophones and other brass instruments. Consuelo delivers, but Gabriela does not pay. Consuelo can normally recover as damages
the PURCHASE price plus incidental damages.
Owen and Pablo enter into a contract for a sale of fifty Western saddles. Owen does not deliver. Pablo can normally recover as damages the difference between
the contract price AND the market price.
Gunmakers Pride Corporation contracts for the sale of twelve hunting rifles to Hunters Supply store. Gunmakers delivers nonconforming goods. Acceptance will be presumed unless Hunters Supply rejects the goods
within a reasonable time after DELIVERY.