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64 Cards in this Set

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Once the goods have been accepted.... the seller can???? the buyer can????
The seller sues for the price

The buyer sues for damages
If the goods have not been accepted, the seller can??? The buyer can???
the seller can resell the goods

the buyer can "cover" by making a substitute purchase
IF the seller has good reason to believe that he will not be paid, he can
1) withhold delivery

2) demand cash payment
Circumstances authorizing demand of cash
If the buyer becomes insolvent and seller learns of this. Seller may demand cash. This includes for goods previously delivered and goods delivered thereafter. Seller may also withhold future deliviries until receipt of cash payment
Circumstances authorizing withholding of delivery
an unpaid seller who is still in possession of the goods may withhold delivery when the buyer 1) wrongfully rejects, 2) rescinds, 3) fails to make a payment when due, or 4) anticipatorily breaches the contract
When can seller reclaim the goods from buyer?
1) when buyer pays by check at the time of delivery, but the check is returned for insufficient funds
2) when after delivery of the goods to the buyer, the seller discovers that the buyer is insolvent
What if the seller successfully reclaims the goods?
all other remedies are terminated. He can no longer sue for any damages
Once goods have been delivered to a carrier for shipment the seller cannot withhold delivery, but they can?
Stop the goods while they are in transit and resume possession of the them
What are the grounds for exercising the "stop in transit" right
1) buyer's insolvency is discovered after shipment

2) buyer's repudiation of a large order
For the seller to exercise this right, the goods must be in?
Situations when transit ends
1) buyers receipt of goods

2) bailee's acknonwledgment

3) when carrier becomes an agent of buyer (if buyer contacts carrier and orders goods rerouted)
The seller's primary relitigation remedy is?
to resell the goods
Before the seller can resell the goods they must?
be identified to the contract
What does identification consist of?
1) contracting with reference to specific goods; Or
2) designating (by sellers action) certain goods as being those to be delivered in performance of the contract
What if buyer breaches and the seller still has possession of conforming goods not yet identified to the contract?
the seller may identify the goods to the contract regardless of their resalability
If the buyer breaches and the goods are in the process of manufacture but are not complete at the time the seller learns of the buyers breach, the seller may??
1) stop the manufacture

2) complete the manufacture

3)resell the unfinished goods for scrap or salvage value
If seller stops the manufacture, he may
identify the goods in their incomplete state as those intended under the contract and therefore subject to the right of resale if the goods are demonstrably intended for the particular contract
if the seller completes manufacture, he must
identify the completed goods to contract if he exercises reasonable commercial judgment and do so for the purpose of avoiding loss
If completion of the goods caused the buyer increased damages, the seller may recover only if
the completion of manufacture was done in the exercise of reasonable commercial judgment
IF the goods are unfinished and seller sells them as scrap, he must
use reasonable commercial judgment
IF buyer has refused to accept the goods and the seller resells them, the seller may recover?
the difference between the resale price and the contract price minus expenses saved as a consequence of buyers breach
IF seller plans to resell the goods in a public sale he must?
Give notice to the buyer and advise him of hte time and place of sale unless the goods are perishable or threaten to decline speedily in value in which case notice is waived
What if the seller fails to give proper notice?
the seller is denied any further damages
How may goods be sold in resale?
as one unit, or in parcels. The method, manner, time, and terms may be chosen by the seller
Must notice be given for a private resale?
If the resale is public, the goods must
1) be in view of those attending or if not, the advance notice of sale must state the place where the goods are located and provide for their reasonable inspection by prospective bidders
Must the resale be reasonably identified as refering to the broken contract?
yes, this is true whether the sale is public or private
Is the seller permitted to purchase at the resale?
the seller is permitted to buy at a public sale but not a private sale
What kind of title does the person whom purchases the goods get at the resale?
gets valid title against the original buyer
What if seller doesn't comply with resale requirements
it does not affect the 3rd parties title as against the original buyer, but the seller may be liable for damages sustained buy original buyer
The seller's last prelitigation rememdy is
cancellation of the contract for reason of breach
Sellers prelitigation remedies
demand cash payment
withhold delivery
reclaim goods
stop transit of goods
identify conforming or unfinished goods
resell goods
cancel contract
IF a buyer has prepaid all or part fo the purchase price and has received goods that do not conform to the contract then??
the UCC gives the buyer a security interest in the goods for the amount of the prepayment and provides that if the buyer appropriately offers to restore the seller's goods and demands repayment of the price paid, and the seller refuses, the buyer may sell the goods
Does the sale of goods to recover prepayments exists accepted the goods or rejected them?
If the buyer sells the goods to recover prepayments and gains proceeds from the resale, then
the buyer must give the proceeds to the seller less any costs incurred in handling, storing, and reselling the goods
What is cover?
allows the buyer to go out into the market and purchase substituted goods
IF the buyer chooses to "cover", what can the buyer recover from the seller?
If the buyer acts reasonably and in good faith, the recovery will be the difference between the cost of the substitute and the contract price -- even if it was not the cheapest or most effective substitute that could have been used
When must cover be made?
without unreasonable delay
Is the buyer required to cover?
No, but if the buyer fails to cover when reasonable, they may not recover consequential damages that were preventable by reasonable cover attempts
May the buyer deduct from payments to the seller any damages incurred through a nonconformity in the seller's preformance?
yes, but the buyer must give seller notice of the nonconformity
Can a buyer subtract for damages relating to another contract?
no, deductions for damages must relate to the same contract
3 situtations where the seller may sue for the contract price
1) if buyer has made an acceptance of the goods (buyer can avoid this buy revoking acceptance)
2) if the goods are harmed or destroyed after the risk of loss has passed to the buyer
3)specially manufactured goods still in the possession of seller but are of such a nature that they can't be resold after reasonble attempts to do so have failed
3 measures of damages available to the seller when the buyer has refused to accept the goods
1) the difference between the contract and resale price

2) the difference between the contract and market price

3) lost profits
When is contract/resale measure of damages not effective?
when the seller's goods are standard-priced items in unlimited supply. In this case the resale price will be the same as teh contract price ending up with the seller recovering no damages
What if the seller resells for less then market value?
doesn' matter as long as resale was conducted in a commercially reasonable manner
Contract-Market differential measure of damages???
the seller may recover the difference between the contract price and the market price at the time and place that the goods were tendered
When is the contract-market differential not effective?
when the goods are unfinished and where standard priced goods in unlimited supply are involved
When should seller sue for lost profits?
When contract-resale and contract-market differential are inadequate to put the seller in as good a position as performance would have done
Types of seller who need to sue for lost profits?
1) lost volume seller - people who sell standard priced items in unlimited supply

2) overhead
What are incidental damages?
expenses or commissions incurred in stopping deliver, in the transportation, care and custody of goods after the buyers breach and in connection with return or resale
Buyer may seek replevin if?
There is an inability to cover; OR

in satisfaction of a security interest
The buyer may seek replevin for the inability to cover if?
1) the goods are identified to the contract; and
2) after a reasonable effort, the buyer is unable to procure substitute goods in the market or the circumstances indicate that such effort will be unavailing
The buyer can seek replevin for satisfaction of a security interest if?
the seller has shipped the goods under reservation and the buyer has made or tendered payment of the price but the seller, some carrier, or bailee has failed to release the goods to the buyer
When does the UCC allow the buyer to seek specific performance?
in any case wehre goods are unique; or in short supply; or where damages would simply be inadequate or too difficult to determine (requirement contracts)
Buyer's action for damages for nondeliery?
1) Contract-cover differential

2) Contract-market differential
Contract-cover differential?
If the buyer goes into the market to "cover" (purchase substitute goods) the buyer may recover the difference between the cover price and the contract price as long as the cover was chosen in good faith
Contract-market differential?
the buyer may recover against the seller the difference between the contract price and the market price at the time the buyer learned of the breach
In contract-market differential, how do you establish the market price if the seller refuses to deliver?
the market price is the place where the seller should have tendered the goods.
If the seller made a nonconforming tender, which the buyer rightfully rejects (or later revokes acceptance) how do you determine the market price?
the place of arrival
In addition to Contract-Cover and Contract-market, is the buyer permitted to recover consequential damages?
What are consequential damages?
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
Do consequential damages include lost profits?
yes. Lost profits are where a buyer cannot go out into the market to cover and is thus deprived of profits on resale (goodwill as well)
Do consequential requirements require an attempt to cover?
yes, unless attempting to cover would be unreasonable
does the UCC allow punitive damages?