GBUS 362 Ch 22

Shipment contract

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

Exceptions

agreement by the parties- parties may agree that defective goods or parts that are defective will still be accepted if the seller or lessor is able to repair them within a reasonable time

Conforming goods

goods that conform to the contract description in every way

Place of Delivery

if contract does not specify where the goods are to be delivered then they will be sent to one of the following: sellers place of business, sellers residence, and the location of the goods.

Basic obligation of the buyer or lessee

is to accept and pay for conforming goods in accordance with the contract

Basic obligation of the seller or lessor

is to deliver conforming goods

Tender of delivery

occurs when the seller or lessor makes conforming goods available and gives the buyer or lessee whatever notification is reasonably necessary to enable the buyer or lessee to take delivery. MUST occur at a reasonable hour and in a reasonable manner. Must be available for a reasonable amount of time to allow the buyer to be able to pick them up.

Destination contract

seller agrees to deliver conforming goods to the buyer at a particular destination. Must give buyer any necessary documents needed to obtain the delivery from the buyer

Cure

seller or lessor may repair, adjust, or replace the nonconforming goods within the contract time for performance

To reject nonconforming goods

the buyer or lessor must inform the seller or lessor of the specific defect. If defect is not disclosed the buyer or lessee cannot later assert the defect as a defense if the defect is one that the seller or lessor could have cured.

Right and Inspection

the lessee has an absolute right to inspect the goods before making payment. An opportunity for inspection is therefore a condition precedent to the right of the seller or lessor to enforce payment

a contract is only breached when

the nonconformity substantially impairs the value of the whole contract

Delivery via carrier

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

The Perfect tender rule

the seller is obligated to deliver goods that conform with the terms of the contract in every detail. If the goods are perfectly conforming, then the buyer or lessee does not have the right to reject them. If the goods are not perfectly conforming in every respect the buyer may accept the goods, reject the entire shipment, or reject part

Substitution of Carriers

when an agreed upon manner of delivery becomes impractical through no fault of either party. The seller is then required to arrange for a substitute carrier and normally is responsible for any additional shipping costs.

Assurance and Cooperation

If one party has "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.

Payment

In the absence of any specific agreements, the buyer or lessee must make payment at the time and place the goods are received

Acceptance

Indicates with words, Fails to reject goods within reasonable time period, and performs act consistent with ownership

The seller must...

Place the goods into the hands of the carrier, Make a contract for their transportation that is reasonable according to the type of goods, obtain and promptly deliver or tender to the buyer any documents necessary to enable possession, promptly notify the buyer that shipment has Benn made.

Destruction of identified goods

Sometimes an unexpected event, such as a fire, totally destroys goods through no fault of either party before risk passes to the buyer or lessee. In such a situation, if the goods were identified at the time the contract was formed, the parties are excused from performance.

Commercial Impracticability and Partial Performance

Sometimes, the unforeseen event only partially affect the capacity of the seller or lessor to perform. Therefore, the seller or lessor can partially fulfill the contract but cannot tender total performance.

Installment contracts

a single contract that requires or authorizes delivery in two or more separate lots to be accepted and paid for separately. A buyer or lessee can reject an installment only if the nonconformity substantially impairs the value of the installment and cannot be cured.