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55 Cards in this Set
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Performance of Goods Article 2 Sale of Goods Rules |
1. Perfect Tender Rule 2. Option to Cure 3. Installment Contracts 4. Buyer's Acceptance of Goods 5. Buyer's Revocation of Acceptance of Goods 6. Consequences of Rejection/Revocation 7. Buyer's Obligation to Pay |
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Article 2 Perfect Tender Rule |
Perfect Tender Rule:
If tender is not perfect, buyer may reject the goods (or may keep them)
Does NOT apply to installment contracts. |
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Article 2 Option to Cure |
A seller who fails to make perfect tender may have an option to cure the defects.
Depends on whether the time for performance has expired. |
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Option to Cure-Time For Performance Has Not Expired |
Seller has option to cure when early arrival.
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Option to Cure-Time For Performance Has Expired |
Seller has has no option to cure UNLESS
prior dealing suggests otherwise |
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Installment Contract |
Requires or authorizes delivery in separate installments. |
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Article 2 Installment Contract- Perfect Tender Rule |
Does not apply.
Buyer may only reject if there is a substantial impairment. |
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Article 2 Buyer's Acceptance of Goods- Implied Acceptance |
When buyer keeps goods after having an opportunity to inspect them.
If there is a long delay between receipt/complaint, look for implied acceptance. |
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Article 2 Consequence of Buyer Acceptance of Goods |
with immplied or express consent means that buyer may no longer reject the goods.
still may get damages through loss in value damages (value promised - value delivered if buyer keeps nonconforming goods) |
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General Rule (Article 2): Buyer's Revocation of Acceptance of Goods |
A buyer cannot revoke acceptance of goods. |
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Exception (Article 2): Buyer's Revocation of Acceptance of Goods |
If the nonconformity substantially impairs the value of the goods AND
difficult to discover (latent defect) |
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Article 2 Consequences of rejection/revocation of acceptance |
Return- return goods at seller's expense Refund- get back money paid Damages- damages for breach |
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Article 2 Buyer's Obligation to Pay |
A check is permissible form of payment, but seller may refuse it.
Buyer has a reasonable time to obtain cash if denied. |
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Common Law Performance Rule |
Performance does NOT have to be perfect.
Substantial performance is all that is required to avoid a material breach. |
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Excuses for Non-Performance |
1. Other Party's Breach 2. Anticipatory Reudiation 3. Failure to Give Adequate Assurance 4. Later Agreement 5. Impossibilty 6. Frustration of Buyer's Primary Purpose 7. Failure of an Express Condition |
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Article 2 Other Party's Breach as an Excuse |
Other party's breach may provide an excuse for non-performance, if seller's performance is not perfect in every respect [Perfect Tender Rule],
buyer can accept, reject all, reject some and still obtain damages |
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Breach |
Time of performance has come due and party does not perform. |
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Common Law Other Party's Breach as an Excuse |
Other party's breach may provide an excuse for non-performance, where a material breach occurs.
HOWEVER, an injured party can recover damages for any breach of contract, material or not. |
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If a party commits a material breach, what rights do they have? |
Seek restitution for reasonable value of services performed. |
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Under common law, if a party finishes a contract later, what result? |
Not a material breach unless contract indicates "time is of the essence" |
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Under common law, if a party states price/unit in contract, what result? |
Likely a divisible contract where payment is to be made on a per unit basis.
Buyer must still pay contract price for unit and is not excused from payment despite breach of contract. |
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Jake hires Marth to decorate house. She does all except one bathroom.
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Not a material breach, Martha substantially performed.
Damages only. Not excused from paying. |
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Jake hires Marth to decorate house. She only does one bathroom.
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Material breach, Martha did not substantially perform.
Jake is excused from paying contract price. Martha may seek restitution for the work she did complete. |
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Jake hires Marth to decorate house. Martha finishes one week late.
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Not a material breach, Jake did not specifiy "time is of the essence"
Damages only.
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Jake hires Marth to decorate house. Marth does one room. Contract states $25,000 for each room decorated.
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Material breach, but divisible contract.
Not excused, Martha must pay $25,000 |
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Anticipatory Repudiation |
promisor, prior to time for performance, indicates he will not perform when time comes.
executory bilateral contract required repudiation must be unequivocal
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Anticipatory Repudiation Effect |
stop and sue for damages if ready, willing, and able to perform |
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Revocation of Anticipatory Repudiation |
May be retracted long as promisee has not relied on the repudiation. |
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Article 2- Fialure to Give Adequate Assurance |
A party with reasonable grounds for being insecure about the other party's performance may request in writing adequate assurance that the other party will perform in accordance with contract. |
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Later Agreement Types |
1. Recission (cancellation) 2. Modification (replacement) 3. Accord (future performance) 4. Satisfaction (performance of accord) 5. Novation (substitution) |
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Recission |
An agreement ot cancel the contract.
For a recission to be effective, each paty must have some performance remaining. |
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Modification |
An agreement to replace an existing contract with a new one. A modification takes effect immediately. |
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Accord and Satisfication |
An accord is an agreement to accept performance in FUTURE satisifaction of an existing duty.
A satisifaction is performance of the accord.
Exisitng duty extingusihed only when accord is satisfied. |
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Opie borrows $500 from Helen. helen agrees to discharge debt now if Opie promises to mow lawn. Opie makes promise. What are Heln's rights if Opie does not mow lawn as promised? |
Modification occured.
Can only sue Opie on lawn mowing deal which was effective immediately and thus modified prior existing duty. |
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Opie borrows $500 from Helen. Helen agrees to discharge if Opie mows lawn for a year. Opie makes promise. What are Heln's rights if Opie does not mow lawn as promised? |
Accord occured.
can sue Opien on $500 and lawn mowing deals. Existing debt not excused until accord satisfied. Here it was not. |
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Novation |
An agreement to substitutue a new party for an existing one. |
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Opie contract to mow Helen's law.
Later, Opie, Goober, and Helen agree that Goober will mow instead.
Goober does not do it. What result? |
Novation occured.
Helen can only sue Goober, not Opie.
Helen agreed to substitutue Goober, thus gave up her rights against Opie.
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Opie contract to mow Helen's law.
Later, Opie and Goober agree that Goober will mow instead. Helen does not consent.
Goober does not do it. What result? |
Depends.
Contractual duties may be delegated without consent UNLESS
1. contract langauge prohibits delegation. 2. special skill or reputation |
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Common Law Impossiblity
Article 2 Impracticability |
A later unforseen event that makes performance impossibly may provide seller with an excuse.
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Common Law Impossiblity |
Destruction provides an excuse for non-performance |
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Article 2 Impracticability |
Destruction provides an excuse for non-performance:
1. Seller bearing ROL when goods damaged or destroyed is excused by impracticability.
2. Seller excused only if goods damaged or destroyed were "identified to the contract" |
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Impossibility |
1. Destruction of Subject Matter 2. Death/Incapacity 3. Supervening Governmental Regulation 4. Increase in Cost to Seller |
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Article 2 Impracticability "identified to the contract" |
goods must have been identified to the particular contract
(e.g. tagged with the buyer's name, roped off and aside) |
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Death/Incapacity of an essential person |
Death/Incapacity of an essential person may excuse performance. Only a person with special talent or special skill is excused by death or incapacity.
Estate of buyer-decedent liable for payment. |
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Supervening Governmental Regulation |
A statute may excuse performance where it prevents performance. |
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General Rule- Increase in Cost of Seller's Performance |
Almost never an excuse. |
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New York Rule- Increase in Cost of Seller's Performance |
A seller MAY be excused due to increase in cost of seller's performance. Must consider:
1. dollar amount in the increase and then 2. percentage increase. |
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Frustration |
Buyer will have an excuse of frustartion if the other party to the contract knew the other party's purpose at the time they entered into the contract. |
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Failure of an Express Condition |
Limits obligations created by other contract language (not an independent obligaiton)
(e.g. so long as, whe, if, provided that, on condition that, unless) |
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Failure of an Express Condition Considerations |
1. Strict Compliance Required 2. Satisifaction Clauses 3. Types of Express Conditions (precedent/subsewuent) 4. Excusing Condition (failure to cooperate/waiver) |
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Rihanna agrees to buy house provided it appraises for $2 million. The house is appraised for $1.99 million.
What result? |
Condition unsatisifed.
Rihanna is excused. Rihanna cannot, however, sue Seller because not an independent obligation. |
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Determining Satisifation |
Satisifaction is measured by a reasonable person standard unless the contract deals with art or matters of personal taste. |
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Express Conditions |
Condition Precedent - must occur before perofrmance is due
Condition Subsequent - cuts off an existing duty |
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Excusing Conditions |
Occurence of condition may be excused by the later action or inaction of the person who is protected by the condition. |
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What types of action/inaction result in loss of protection by conditions? |
Failure to cooperate- if party does not take action required to fulfill condition
Waiver- Protected party may waive and retract waiver (to extent the other party hasn't relied) |
