Restatement Of Contracts

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14
Infants

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Unless a statute provides otherwise, a natural person has the capacity to incur only voidable contractual duties until the beginning of the day before the person’s 18th birthday.

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15
Mental Illness or Defect

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1. A person incurs only voidable contractual duties by entering into a transaction if by reason of mental illness or defect
a. He is unable to understand in a reasonable manner the nature and consequences of the transaction, or
b. He is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of his condition.
2.Where the contract is made on fair terms and the other party is without knowledge of the mental illness or defect, the power of avoidance under Subsection (1) terminates to the extent that the contract has been so performed in whole or in part or the circumstances have so changed that avoidance would be unjust. In such a case a court may grant relief as justice requires.

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152
When Mistake of Both Parties Makes a Contract Voidable

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1.Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake under the rule stated in §154.
2.In determining whether the mistake has a material effect on the agreed exchange of the performances, account is taken of any relief by way of reformation, restitution, or otherwise.

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153
When Mistake of One Party Makes a Contract Voidable

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Where a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract has a material effect on the agreed exchange of performances that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake under the rule stated in §154, and
(a)the effect of the mistake is such that enforcement of the contract would be unconscionable, or
(b)the other party had reason to know of the mistake or his fault caused the mistake.

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154
When a Party Bears the Risk of Mistake

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A party bears the risk of a mistake when
a.the risk is allocated to him by the agreement of the parties or
b.he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or
c.the risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so

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157
Effect of Fault of Party Seeking Relief

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A mistaken party’s fault in failing to know or discover the facts before making the contract does not bar him from avoidance or reformation under the rules stated in this Chapter, unless his fault amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing.

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161
When Non-disclosure is Equivalent to an Assertion

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1.A person’s non-disclosure of a fact known to him is equivalent to an assertion that the fact does not exist in the following cases only:
a.Where he knows that disclosure of the fact is necessary to prevent some previous assertion from being a misrepresentation or from being fraudulent or material.
b.Where he knows that disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party is making the contract and if non-disclosure of the fact amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing.
c.Where he knows that disclosure of the fact would correct a mistake of the other party as to the contents or effect of a writing, evidencing or embodying an agreement in whole or in part.
d.Where the other person is entitled to know the fact because of a relation of trust and confidence between them.

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162
When Misrepresentation is Fraudulent or Material

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1.A misrepresentation is fraudulent if the maker intends his assertion to induce a party to manifest his assent and the maker
a.Knows or believes that the assertion is not in accord with the facts, or
b.Does not have the confidence that he states or implies in the truth of the assertion, or
c.Knows that he does not have the basis that he states or implies for the assertion.
2.A misrepresentation is material if it would be likely to induce a reasonable person to manifest his assent, or if the maker knows that it would be likely to induce the recipient to do so.

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164
When a Misrepresentation Makes a Contract Voidable

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1.If a party’s manifestation of assent is induced by either a fraudulent or a material misrepresentation by the other party upon which the recipient is justified in relying, the contract is voidable by the recipient.
2.If a party’s manifestation of assent is induced by either a fraudulent or a material misrepresentation by one who is not a party to the transaction upon which the recipient is justified in relying, the contract is voidable by the recipient, unless the other party to the transaction in good faith and without reason to know of the misrepresentation either gives value or relies materially on the transaction.

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168
Reliance on Assertions of Opinion

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1.An assertion is one of opinion if it expresses only a belief, without certainty, as to the existence of a fact or expresses only a judgment as to quality, value, authenticity, or similar matters.
2.If it is reasonable to do so, the recipient of an assertion of a person’s opinion as to facts not disclosed and not otherwise known to the recipient may properly interpret it as an assertion
a.That the facts known to that person are not incompatible with his opinion, or
b.That he knows facts sufficient to justify him in forming it.

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169
When Reliance on Assertion of Opinion is not Justified

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1.To the extent that an assertion is one of opinion only, the recipient is not justified in relying on it unless the recipient
a.Stands in such a relation of trust and confidence to the person whose opinion is asserted that the recipient is reasonable in relying on it, or (fiduciary relationship)
b.Reasonably believes that, as compared with himself, the person whose opinion is asserted has special skill, judgment, or objectivity with respect to the subject matter, or
c.Is for some other special reason particularly susceptible to a misrepresentation of the type involved.

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188
Ancillary Restraints on Competition

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1) A promise to refrain from competition that imposes a restraint that is ancillary to an otherwise valid transaction or relationship is unreasonably in restraint of trade if
a) The restraint is greater than is needed to protect the promisee’s legitimate interest, or
b) The promisee’s need is outweighed by the hardship to the promisor and the likely injury to the public.
2) Promises imposing restraints that are ancillary to a valid transaction or relationship include the following
a) A promise by a seller of a business not to compete with the buyer in such a way as to injure the value of the business sold.
b) A promise by an employee or other agent not to compete with his employer or other principal
c) A promise by a partner not to compete with the partnership

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191
Promise Affecting Custody

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A promise affecting the right of custody of a minor is unenforceable on the grounds of public policy unless the disposition as to custody is consistent with the best interest of the child.

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208
Unconscionable Contract or Term

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If a contract or term thereof is unconscionable at the time the contract is made a court may refuse to enforce the contract, or may enforce the remainder of the contract without the unconscionable term, or may so limit the application of any unconscionable term as to avoid any unconscionable result.

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227
of Preference with Regard to Conditions

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1. In resolving doubts as to whether an event is made a condition of an obligor’s duty, and as to the nature of such an event, an interpretation is preferred that will reduce the obligee’s risk of forfeiture, unless the event is within the obligee’s control or the circumstances indicate that he has assumed the risk.
2. Unless the contract is the type under which only one party generally undertakes duties, when it is doubtful whether
a. A duty is imposed on an obligee that an event occur, or
b. The event is made a condition of the obligor’s duty, or
c. The event is made a condition of the obligor’s duty and a duty is imposed on the obligee that the event occur, the first interpretation is preferred if the event is within the obligee’s control.
3. In case of doubt, an interpretation under which an event is a condition of an obligor’s duty is preferred over an interpretation under which the non-occurrence of the event is a ground for discharge of that duty after it became a duty to perform.

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228
Satisfaction of the Obligor as a Condition

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When it is a condition of an obligor’s duty that he be satisfied with respect to the obligee’s performance or with respect to something else, and it is practicable to determine whether a reasonable person in the position of the obligor would be satisfied, an interpretation is preferred under which the condition occurs if such a reasonable person in the position of the obligor would be satisfied.

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235
Effect of Performance as Discharge and of Non-Performance as Breach

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1. Full performance of a duty under a contract discharges the duty.
2. When performance of a duty under a contract is due any non-performance is a breach.

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237
Effect on Other Party’s Duties of a Failure to Render Performance

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Except as stated in §240, it is a condition of each party’s remaining duties to render performances to be exchanged under an exchange of promises that there be no uncured material failure by the other party to render any such performance due at an earlier time.

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241
Circumstances Significant in Determining Whether a Failure is Material

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In determining whether a failure to render or to offer performance is material, the following circumstances are significant:
a. The extent to which the injured party will be deprived of the benefit which he reasonably expected;
b. The extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;
c. The extent to which the party failing to perform or to offer to perform will suffer forfeiture;
d. The likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances;
e. The extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.

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242
Circumstances Significant in Determining When Remaining Duties are Discharged

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In determining the time after which a party’s uncured material failure to render or to offer performance discharges the other party’s remaining duties to render performance under the rules stated in §§237 and 238, the following circumstances are significant:
a. those stated in §241
b. the extent to which it reasonably appears to the injured party that delay may prevent or hinder him in making reasonable substitute arrangements;
c. the extent to which the agreement provides for performance without delay, but a material failure to perform or to offer to perform on a stated day does not of itself discharge the other party’s remaining duties unless the circumstances, including the language of the agreement, indicate that performance or an offer to peform by that day is important.

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243
Effect of a Breach by Non-Performance as Giving Rise to a Claim for Damages for Total Breach

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1. With respect to performances to be exchanged under an exchange of promises, a breach by non-performance gives rise to a claim for damages for total breach only if it discharges the injured party’s remaining duties to render such performance, other than a duty to render an agreed equivalent under §240.
2. Except as stated in Subsection (3), a breach by non-performance accompanied or followed by a repudiation gives rise to a claim for damages for total breach.
3. Where at the time of the breach the only remaining duties of performance are those of the party in breach and are for the payment of money in installments not related to one another, his breach by non-performance as to less than the whole, whether or not accompanied or followed by a repudiation, does not give rise to a claim for damages for total breach.
4. In any case other than those stated in the preceding subsections, a breach by non-performance gives rise to a claim for total breach only if it so substantially impairs the value of the contract to the injured party at the time of the breach that it is just in the circumstances to allow him to recover the damages based on all his remaining rights to performance.

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250
When a Statement or an Act is a Repudiation

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A repudiation is
a. a statement by the obligor to the obligee indicating that the obligor will commit a breach that would of itself give the obligee a claim for damages for total breach under §243, or
b. a voluntary affirmative act which renders the obligor unable or apparently unable to perform without such breach.

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251
When a Failure to Give Assurance May Be Treated as a Repudiation

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1. Where reasonable grounds arise to believe that the obligor will commit a breach by non-performance that would itself give the obligee a claim for damages for total breach under §243, the obligee may demand adequate assurance of due performance and may, if reasonable, suspend any performance for which he has not already received the agreed exchange until he receives such assurance.
2. The obligee may treat as repudiation the obligor’s failure to provide within a reasonable time such assurance of due performance as is adequate in the circumstances of the particular case.

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253
Effect of a Repudiation as a Breach and on Other Party’s Duties

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1. Where an obligor repudiates a duty before he has committed a breach by non-performance and before he has received all of the agreed exchange for it, his repudiation alone gives rise to a claim for damages for total breach.
2. Where performances are to be exchanged under an exchange of promises, one party’s repudiation of a duty to render performance discharges the other party’s remaining duties to render performance.

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256
Nullification of Repudiation or Basis for Repudiation

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1. The effect of a statement as constituting a repudiation under §250 or the basis for a repudiation under §251 is nullified by a retraction of the statement if notification of the retraction comes to the attention of the injured party before he materially changes his position in reliance on the repudiation or indicates to the other party that he considers the repudiation to be final.
2. The effect of events other than a statement as constituting a repudiation under §250 or the basis for a repudiation under §251 is nullified if, to the knowledge of the injured party, those events have ceased to exist before he materially changes his position in reliance on the repudiation or indicates to the other party that he considers the repudiation to be final.

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261
Discharge by Supervening Impracticality

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Where, after a contract is made, a party’s performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged, unless the language or circumstances indicate the contrary.

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262
Death or Incapacity of Person Necessary for Performance

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If the existence of a particular person is necessary for the performance of a duty, his death or incapacity as makes performance impracticable is an event the non-occurrence of which was a basic assumption on which the contract was made.

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263
Destruction, Deterioration or Failure to Come into Existence of Thing Necessary for Performance

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If the existence of a specific thing is necessary for the performance of a duty, its failure to come into existence, destruction, or such deterioration as makes performance impracticable is an even the non-occurrence of which was a basic assumption on which the contract was made.

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264
Prevention by Governmental Regulation or Order

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If the performance of a duty is made impracticable by having to comply with a domestic or foreign governmental regulation or order, that regulation or order is an event the non-occurrence of which was a basic assumption on which the contract was made.

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265
Discharge by Supervening Frustration

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Where, after a contract is made, a party’s principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary.

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271
Impracticability as Excuse for Non-Occurrence of a Condition

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Impracticability excuses the non-occurrence of a condition if the occurrence of the condition is not a material part of the agreed exchange and forfeiture would otherwise result.

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302
Intended and Incidental Beneficiaries

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1. Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either beneficiary is appropriate to effectuate the intention of the parties and either
a. The performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or
b. The circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.
2. An incidental beneficiary is a beneficiary who is not an intended beneficiary.

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313
Government Contracts

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1. The rules stated in this chapter apply to contracts with a government or governmental agency except to the extent that application would contravene the policy of the law authorizing the contract or prescribing remedies for its breach.
2. In particular, a promisor who contracts with a government or governmental agency to do an act for or render a service to the public is not subject to contractual liability to a member of the public for consequential damages resulting from performance or failure to perform unless
a. The terms of the promise provide for such liability; or
b. The promisee is subject to liability to the member of the public for the damages and a direct action against the promisor is consistent with the terms of the contract and with the policy of the law authorizing the contract and prescribing remedies for its breach.

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317
Assignment of a Right

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1. An assignment of a right is a manifestation of the assignor’s intention to transfer it by virtue of which the assignor’s right to performance by the obligor is extinguished in whole or in party and the assignee acquires a right to such performance.
2. A contractual right can be assigned unless
a. The substitution of a right of the assignee for the right of the assignor would materially change the duty of the obligor, or materially increase the burden or risk imposed on him by his contract, or materially impair his chance of obtaining return performance, or materially reduce its value to him, or
b. The assignment is forbidden by statute or is otherwise inoperative on grounds of public policy, or
c. Assignment is validly precluded by contract.

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318
Delegation of Performance of Duty

Back 35

1. An obligor can properly delegate the performance of his duty to another unless the delegation is contrary to public policy or the terms of his promise.
2. Unless otherwise agreed, a promise requires performance by a particular person only to the extent that the oblige has a substantial interest in having that person perform or control the acts provided.
3. Unless the oblige agrees otherwise, neither delegation of performance nor a contract to assume the duty made with the obligor by the person delegated discharges any duty or liability of the delegating obligor.

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322
Contractual Prohibition of Assignment

Back 36

1. Unless the circumstances indicate the contrary, a contract term prohibiting assignment of “the contract” bars only the delegation to an assignee of the performance by the assignor of a duty or condition.
2. A contract term prohibiting assignment of rights under the contract, unless a different intention is manifested
a. Does not forbid assignment of a right to damages for breach of the whole contract or a right arising out of the assignor’s due performance of his entire obligation;
b. Gives the obligor a right to damages for breach of the terms forbidding assignment but does not render the assignment ineffective
c. Is for the benefit of the obligor, and does not prevent the assignee from acquiring rights against the assignor or the obligor from discharging his duty as if there were no such prohibition.

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326
Partial Assignment

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1. Except as stated in Subsection (2), an assignment of a part of a right, whether the part is specified as a fraction, as an amount, or otherwise, is operative as to that part to the same extent and in the same manner as if the part had been a separate right.
2. If the obligor has not contracted to perform separately the assigned part of a right, no legal proceeding can be maintained by the assignor or assignee against the obligor over his objection, unless all the persons entitled to the promised performance are joined in the proceeding, or unless joinder is not feasible and it is equitable to proceed without joinder.

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328
Interpretation of Words of Assignment; Effect of Acceptance of Assignment

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1. Unless the language or the circumstances indicate the contrary, as in an assignment for security, an assignment of “the contract” or of “all my rights under the contract” on an assignment in similar general terms is an assignment of the assignor’s rights and a delegation of his unperformed duties under the contract.
2. Unless the language or the circumstances indicate the contrary, the acceptance by an assignee of such an assignment operates as a promise to the assignor to perform the assignor’s unperformed duties, and the obligor of the assigned rights is an intended beneficiary of the promise.

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344
Purposes of Remedies:

Back 39

Judicial remedies under the rules stated in this Restatement serve to protect one or more of the following interests of a promisee:
a. His “expectation interest,” which is his interest in having the benefit of his bargain by being put in as good a position as he would have been in had the contract been performed.
b. His “reliance interest,” which is his interest in being reimbursed for loss caused by reliance on the contract by being put in as good a position as he would have been in had the contract not been made, or
c. His “restitution interest,” which is his interest in having restored to him any benefit that he has conferred on the other party.

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347
Measure of Damages in General

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Subject to the limitations stated in §§350-353, the injured party has a right to damages based on his expectation interest as measured by
a. The loss in the value to him of the other party’s performance caused by its failure or deficiency, plus
b. Any other loss, including incidental or consequential loss, caused by the breach, less
c. Any cost or other loss that he has avoided by not having to perform.

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348
Alternatives to Loss in Value of Performance

Back 41

1. If a breach delays the use of the property and the loss in value to the injured party is not proved with reasonably certainty, he may recover damages based on the rental value of the property or on interest on the value of the property.
2. If a breach results in defective or unfinished construction and the loss in value to the injured party is not proved with sufficient certainty, he may recover damages based on
a. The diminution in the market price of the property caused by the breach, or
b. The reasonable cost of completing performance or of remedying the defects if that cost is not clearly disproportionate to the probable loss in value to him.
3. If a breach is of a promise conditioned on a fortuitous event and it is uncertain whether the event would have occurred had there been no breach, the injured party may recover damages based on the value of the conditional right at the time of the breach.

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349
Damages Based on Reliance Interest

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As an alternative to the measure of damages stated in §347, the injured party has a right to damages based on his reliance interest, including expenditures made in preparation for performance or in performance, less any loss that the party in breach can prove with reasonably certainty the injured party would have suffered had the contract been performed.

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351
Unforeseeability and Related Limitations on Damages

Back 43

1. Damages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made.
2. Loss may be foreseeable as a probable result of a breach because it follows from the breach
a. In the ordinary course of events, or
b. As a result of special circumstances, beyond the ordinary course of events, and the party in breach had reason to know.
3. A court may limit damages for foreseeable loss by excluding recovery for loss of profits, by allowing recovery only for loss incurred in reliance, or otherwise if it concludes that in the circumstances justice so requires in order to avoid disproportionate compensation.

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352
Uncertainty as a Limitation on Damages

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Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty.

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360
Factors Affecting Adequacy of Damages

Back 45

1. In determining whether the remedy in damages would be adequate, the following circumstances are significant:
a. The difficulty of proving damages with reasonably certainty,
b. The difficulty of procuring a suitable substitute performance by means of money awarded as damages, and
c. The likelihood that an award of damages could not be collected.

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362
Effect of Uncertainty of Terms

Back 46

Specific performance or an injunction will not be granted unless the terms of the contract are sufficiently certain to provide a basis for an appropriate order.

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364
Effect of Unfairness

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1. Specific performance or an injunction will be refused if such relief would be unfair because
a. The contract was induced by mistake or by unfair practices
b. The relief would cause unreasonable hardship or loss to the party in breach or in third persons, or
c. The exchange is grossly inadequate or the terms of the contract are otherwise unfair.
2. Specific performance or an injunction will be granted in spite of a term of the agreement if denial of such relief would be unfair because it would cause unreasonable hardship or loss to the party seeking relief or to third persons.

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373
Restitution When Other Party Is in Breach

Back 48

1. Subject to the rule stated in Subsection (2), on a breach by non-performance that gives rise to a claim for damages for total breach or on a repudiation, the injured party is entitled to restitution for any benefit that he has conferred on the other party by way of party performance or reliance.
2. The injured party has no right to restitution if he has performed all of his duties under the contract and no performance by the other party remains due other than payment of a definite sum of money for that performance.

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374
Restitution in Favor of Party in Breach

Back 49

1. Subject to the rule stated in Subsection (2), if a party justifiably refuses to perform on the ground that his remaining duties of performance have been discharged by the other party’s breach, the party in breach is entitled to restitution for any benefit that he has conferred by way of part performance or reliance in excess of the loss that he has caused by his own breach.
2. To the extent that, under the manifested assent of the parties, a party’s performance is to be retained in the case of breach, that party is not entitled to restitution if the value of the performance as liquidated damages is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss.

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2-313
Express Warranties by Affirmation, Promise, Description, Sample

Back 50

1. Express warranties by the seller are created as follows:
• Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.
• Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.
• Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.
2. It is not necessary to the creation of an express warranty that the seller use formal words such as “warrant” or “guarantee” or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller’s opinion or commendation of the goods does not create a warranty.

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2-314
Implied Warranty; Merchantability; Usage of Trade

Back 51

1. Unless excluded or modified (§2-316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale.

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2-315
Implied Warranty: Fitness for Particular Purpose

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Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose.

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2-209
Modification; Rescission and Waiver

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1. An agreement is modifying a contract within this Article needs no consideration to be binding.
2. An agreement in a signed record which excludes modification or rescission except by a signed record may not be otherwise modified or rescinded, but except as between merchants such a requirement in a form supplied by the merchant must be separately signed by the other party.
3. The requirements of §2-201 must be satisfied if the contract as modified is within its provisions.
4. Although an attempt at modification or rescission does not satisfy the requirements of subsection (2) or (3), it may operate as a waiver.
5. A party that has made a waiver affecting an executory portion of a contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.

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2-210
Delegation of Performance; Assignment of Rights

Back 54

1. A party may perform his duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his original promisor perform or control the acts required by the contract. No delegation of performance relieves the party delegating of any duty to perform or any liability for breach.
2. Except as otherwise provided in §9-406, unless otherwise agreed, all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on him by his contract, or impair materially his chance of obtaining return performance. A right to damages for breach of the whole contract or a right arising out of the assignor’s due performance of his entire obligation can be assigned despite agreement otherwise.

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2-302
Unconscionable Contact or Clause:

Back 55

1. If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.
2. When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.

Front 56

2-609
Right to Adequate Assurance of Performance

Back 56

1. A contract for sale imposes an obligation on each party that the other's expectation of receiving due performance will not be impaired. When reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return.
2. Between merchants the reasonableness of grounds for insecurity and the adequacy of any assurance offered shall be determined according to commercial standards.
3. Acceptance of any improper delivery or payment does not prejudice the aggrieved party's right to demand adequate assurance of future performance.
4. After receipt of a justified demand failure to provide within a reasonable time not exceeding thirty days such assurance of due performance as is adequate under the circumstances of the particular case is a repudiation of the contract.

Front 57

2-610
Anticipatory Repudiation

Back 57

When either party repudiates the contract with respect to a performance not yet due the loss of which will substantially impair the value of the contract to the other, the aggrieved party may
a. for a commercially reasonable time await performance by the repudiating party; or
b. resort to any remedy for breach (Section 2-703 or Section 2-711), even though he has notified the repudiating party that he would await the latter's performance and has urged retraction; and
c. in either case suspend his own performance or proceed in accordance with the provisions of this Article on the seller's right to identify goods to the contract notwithstanding breach or to salvage unfinished goods (§2-704).

Front 58

2-611
Retraction of Anticipatory Repudiation

Back 58

1. Until the repudiating party's next performance is due he can retract his repudiation unless the aggrieved party has since the repudiation cancelled or materially changed his position or otherwise indicated that he considers the repudiation final.
2. Retraction may be by any method which clearly indicates to the aggrieved party that the repudiating party intends to perform, but must include any assurance justifiably demanded under the provisions of this Article (Section 2-609).
3. Retraction reinstates the repudiating party's rights under the contract with due excuse and allowance to the aggrieved party for any delay occasioned by the repudiation.

Front 59

2-706
Seller’s Resale Including Contract for Resale

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1. Under the conditions in §2-703 on seller’s remedies, the seller may resell the goods concerned or the undelivered balance thereof. Where the resale is made in good faith and in a commercially reasonable manner the seller may recover the difference between the resale price and the contract price together with any incidental damages allowed under the provisions of this article, but less expenses saved in consequence of the buyer’s breach.

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2-708
Seller’s Damages for Non-Acceptance or Repudiation

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1. Subject to subsection (2) and to the provisions of this article with respect to proof of market price, the measure of damages for non-acceptance or repudiation by the buyer is the difference between the market price at the time and place for tender and the unpaid contract price together with any incidental damages provided in this article, but less expenses saved in consequence of the buyer’s breach.

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2-712
“Cover”; Buyer’s Procurement of Substitute Goods

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1. After a breach within the preceding section the buyer may “cover” by making in good faith and without reasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller.
2. The buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or consequential damages as hereinafter defined, but less expenses saved in consequence of the seller’s breach.
3. Failure of the buyer to effect cover within this section does not bar him from any other remedy.

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2-713
Buyer’s Damages for Non-Delivery or Repudiation

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1. Subject to the provisions of this Article with respect to proof of market price, the measure of damages for non-delivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages provided in this Article, but less expenses saved in consequence of the seller’s breach.
2. Market price is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.

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2-715
Buyer’s Incidental and Consequential Damages

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1. Incidental damages resulting from seller’s breach include expenses reasonably incurred in inspection, receipt, transportation, and care and custody of good rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach.
2. Consequential damages resulting from the seller’s breach include
a. Any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and
b. Injury to person or property proximately resulting from any breach of warranty.

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2-711
Buyers’ Remedies in General; Buyer’s Security Interest in Rejected Goods

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1. Where the seller fails to make delivery or repudiates or the buyer rightfully rejects or justifiably revokes acceptance then with respect to any goods involved, and with respect to the whole if the breach goes to the whole contract (§2-612), the buyer may cancel and whether or not he has done so may in addition to recovering so much of the price as has been paid
a. “cover” and have damages under the next section as to all the goods affected whether or not they have been identified in the contract; or
b. Recover damages for non-delivery as provided in §2-713.
2. Where the seller fails to deliver or repudiates the buyer may also
a. If the goods have been identified recover them as provided in §2-502; or
b. In a proper case obtain specific performance or replevy the goods as provided in §2-716.
3. On rightful rejection or justifiable revocation of acceptance a buyer has a security interest in goods in his possession or control for any payments made on their price and any expenses reasonably incurred in their inspection, receipt, transportation, care and custody and may hold such goods and resell them in like manner as an aggrieved seller (§2-706).

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2-507
Tender

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The seller’s duty to tender delivery and the buyer’s duty to pay the price are each a condition of the other’s duty to perform.

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2-601
Buyer’s Rights on Improper Delivery

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If the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may
1. reject the whole; or
2. accept the whole; or
3. accept any commercial unit or units and reject the rest.

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2-606
What Constitutes Acceptance of Goods

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1. Acceptance of goods occurs when the buyer
a. After a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that he will take or retain them in spite of their non-conformity; or
b. Fails to make an effective rejection (§2-602(1)), but such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them; or
c. Does any act inconsistent with the seller’s ownership; but if such act is wrongful as against the seller it is an acceptance only if ratified by him.
2. Acceptance of a part of any commercial unit is acceptance of that entire unit.

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2-608
Revocation of Acceptance in Whole or in Part

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1. The buyer may revoke his acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to him if he has accepted it
a. On the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or
b. Without discovery of such nonconformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller’s assurances.
2. Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. It is not effective until the buyer notifies the seller of it.
3. A buyer who so revokes has the same rights and duties with regard to the goods involved as if he had rejected them.

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2-508
Cure by Seller of Improper Tender or Delivery; Replacement

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1. Where nay tender or delivery by the seller is rejected because non-conforming and the time for performance has not yet expired, the seller may seasonably notify the buyer of his intention to cure and may then within the contract time make a conforming delivery.
2. Where the buyer rejects a non-conforming tender which the seller had reasonable grounds to believe would be acceptable with or without money allowance the seller may if he seasonably notifies the buyer have a further reasonable time to substitute a conforming tender.

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2-612
Installment Contract; Breach

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1. An “installment contract” is one which requires or authorizes the delivery of goods in separate lots to be separately accepted, even though the contract contains a clause “each delivery is a separate contract” or its equivalent.
2. The buyer may reject any installment which is non-conforming if the non-conformity substantially impairs the value of that installment and cannot be cured or if the non-conformity is a defect in the required documents; but if the non-conformity does not fall within subsection (3) and the seller give adequate assurance of its cure the buyer must accept that installment.
3. Whenever non-conformity or default with respect to one or more installments substantially impairs the value of the whole contract if he accepts a non-conforming installment without seasonably notifying of cancellation or if he brings an action with respect only to past installments or demands performance as to future installments.

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2-712
Cover; Buyer’s Procurement of Substitute Goods

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1. After a breach within the preceding section the buyer may “cover” by making in good faith and without unreasonable delay any reasonably purchase of or contract to purchase goods in subsection for those due from the seller.
2. The buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or consequential damages as hereinafter defined (§2-715), but less expenses saved in consequence of the seller’s breach.
3. Failure of the buyer to effect cover within this section does not bar him from any other remedy.

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2-713
Buyer’s Damages for Non-Delivery or Repudiation

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1. Subject to the provisions of this Article with respect to proof of market price (§2-723), the measure of damage for non-delivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages provided in this Article (§2-715), but less expenses saved in consequence of the seller’s breach.
2. Market price is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.

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2-714
Buyer’s Damages for Non-Delivery or Repudiation

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1. Where the buyer has accepted goods and given notification (§2-607(3)) he may recover as damages for any non-conformity of tender the loss resulting in the ordinary course of events from the seller’s breach as determined in any manner which is reasonable.
2. The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been warranted, unless special circumstances show proximate damages of a different amount.
3. In a proper case any incidental and consequential damages under the next section may also be covered.

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2-715
Buyer’s Incidental and Consequential Damages

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1. Incidental damages resulting from the seller’s breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach.
2. Consequential damages resulting from the seller’s breach include
a. Any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by the cover or otherwise; and
b. Injury to the person or property proximately resulting from any breach of warranty.

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2-716
Buyer’s Right to Specific Performance or Replevin

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1. Specific performance may be decreed where the goods are unique or in other proper circumstances.
2. The decree for specific performance may include such terms and conditions as to payment of the price, damages, or other relief as the court may deem just.
3. The buyer has a right of replevin for goods identified to the contract if after reasonable effort he is unable to effect cover for such goods or the circumstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered. In the case of goods bough for personal, family, or household purposes, the buyer’s right of replevin vests upon acquisition of a special property even if the seller had not then repudiated or failed to deliver.

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2-703
Seller’s Remedies in General

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Where the buyer wrongfully rejects or revokes acceptance of goods or fails to make a payment due on or before delivery or repudiates with respect to a part or the whole, then with respect to any goods directly affected and, if the breach is of the whole contract (§2-612), then also with respect to the whole undelivered balance, the aggrieved seller may
a. withhold delivery of such goods;
b. stop delivery by any bailee as hereafter provided (§2-705);
c. proceed under the next section respecting goods still unidentified to the contract;
d. resell and recover damages as hereafter provided (§2-706);
e. recover damages for non-acceptance (§2-708) or in a proper case the price (§2-709);
f. cancel.