Ucc Sale Of Goods - Remedies

Front 1

When does a buyer breach the contract?

Back 1

A buyer breaches a contract for the sale of goods by 1. repudiating 2. Rejecting Or 3. Failing to pay the contract price

Front 2

When are buyers and sellers always precluding from recovering damages on a sale of goods contract?

Back 2

Buyers and sellers are precluded from recovering damages that they could have avoided.

Front 3

Code gives the seller the following remedies against the breaching Buyer:

SPARKLE

The S in SPARKLE

Back 3

Stopping goods in transit.

Front 4

What is the Seller's Remedy When Goods Are Still in the Seller's Possession.

Back 4

When a buyer wrongfully repudiates the contract, fails to make a timely required payment, or the seller has properly demanded assurances of performance, then the seller can refuse further delivery of goods in the seller's possession.

Front 5

Seller's remedy when goods already shipped.

Back 5

If the seller has already shipped the goods to the buyer and the shipment is in bulk, then the seller can stop that shipment in transit (buyer pays expense?)

Front 6

Seller's remedy if buyer is insolvent.

Back 6

If the breaching buyer is insolvent, then any goods in transit can be stopped, regardless of the size of the shipment.

Front 7

When is the seller's remedy of stopping delivery lost?

Back 7

This seller's remedy is lost once the carrier acknowledges the buyers right to those goods

Front 8

Does buyer's insolvency always mean seller can refuse delivery?

Back 8

Whenever a breaching buyer is insolvent, the seller may refuse delivery unless the insolvent buyer pays for the goods, and any prior deliveries in cash.

Front 9

Assuming buyers's repudiation while still in transit, what are the two scenarios in which seller can stop delivery.

Back 9

Buyer is insolvent OR shipment is in bulk.

Front 10

Seller's Remedy

The P in Sparkle

Back 10

Sue for the entire contract PRICE.

Front 11

In which three situations can the seller can sue the buyer for entire contract price:

Back 11

1. When the buyer accepts conforming goods on credit, but fails to pay for those goods.

2. When conforming goods are destroyed after risk of loss passed to the buyer.

3. Buyer fails to accept conforming goods and the seller cannot resell them (e.g. obsolete items no longer usable by anyone accept the buyer.)

Front 12

The A in SPARKLE

Demanding adequate assurances of perfomance.

Back 12

If reasonable grounds exist for the sellers insecuroty - that is the buyer may be financially unstable, then, if commerically reasonable, the seller can suspend any further performance, and in writing, demand adequate assurances of the buyer's future performance, requiring the buyer to tender proof that the buyer can and will pay the contract.

Front 13

Reasonable grounds for demanding assurances include:

Back 13

1. Good faith rumors of the buyer's inability or unwillingness to pay.

2. The buyer's poor payment history.

3. A buyer's anticipatory repudiation that was retracted.

Front 14

What would be adequate assurances of performance?

Back 14

1. A surety.
2. A bond.
3. A bank line of credit.
4. An audited Financial Report that clearly shows the buyers solvency.
5. A credit report prepared by the buyer's bank.

Front 15

What if adequate assurances are not given?

Back 15

If adequate assurances are not given by the buyer within a reasonable time (not to exceed thirty days) from the seller's written demand, then the seller can treat the contract as repudiated, even though the buyer was not insolvent.

Front 16

What if seller was in the middle of producing the product when the buyer breaches?

Back 16

When a buyer repudiates and a seller has not complete production, then the seller can, in good faith,
1. complete the goods and resell them.

This differs from standard contract law, where you have to stop production after repudiaton, otherwise these expenses are seen as expenses you could have avoided.

2. Cease production and sell the goods for scrap.

3.

Front 17

R in SPARKLE

Back 17

REslling goods to another buyer

When a buyer breaches a contract on goods not yet delivered, or on goods that the seller has stopped in transit, the seller can then resell those goods and sue the buyer for the resulting damages, which generally is the difference between 1. The buyer's contract price, and 2. The lower resale price.

Plus any incidental damages suffered by the seller.

Front 18

Rules for resale of the goods to another buyer.

Back 18

The resale must be performed in a commercially reasonable manner (good faith), at a public or private sale, and it should be with notice to the breaching buyer.

If notice is not given to the breaching buyer, then the seller can recover only the difference between

1. The buyer's contract price, and

2. The fair market price at the time and place of tender, which is not necessarily the seller's resale price.

Front 19

The L in Sparkle

Back 19

LOST PROFIT

When the UCC measure of damages in inadequate to put the seller as good position as performance by the buyer would have put him in, and the seller has an unlimited supply of good, the measure of damages is the seller's LOST profit on that contract.

E.G. if you have an unlimited supply, then the sellers can recover for entire value of the good, because, even if the resale value is close the the K price, he expected to sell two care.

Front 20

K in Sparkle

Back 20

Keeping part of the buyer's deposit.

If a breaching buyer paid a deposit on the contract, the seller can keep from the deposit 20% of the total purchase price, or 500$, whichever is less, plus any damages caused by the buyer's breach.

Therefore, essentially get a bonus, get the deposition addition to damages.

Front 21

E - Exercising the right to reclaim goods sold to an insolvent buyer

Back 21

Absent a perfected UCC article 9 security interest, a seller of goods on credit is merely a general unsecured creditor of the buyer.

If the seller has delivered goods on credit, and discovers that the buyer was insolvent at the time of delivery, the seller can commence an action for the entire contract price. However, executing the resulting judgment against an insolvent judgment debtor probably will result in the judgment being returned unsatisfied because of the buyers insolvency.

Alternatively, the seller can demand a return of the delivered goods within ten days after delivery, provided the buyer received those good on credit while insolvent. The same rule applies when an insolvent buyer is not given credit, but pays for the goods with a check that bounces.

Front 22

Remedy - Reclaiming goods vs. debtors other creditors

Back 22

UCC article 2 gives the seller priority to reclaim the goods over the buyer's other judgment or lien creditors, but the seller's right to reclaim is defeated by a good faith purchase of those goods, who purchased the goods in the ordinary course of business.

Front 23

IF reclaimed, what happens to otehr remedies?

Back 23

If the seller successfully reclaims his goods, then he is precluded from all other sparkle remedies on the breached contract.

Front 24

When the seller breaches the contract, either because the seller repudiates, fails to timely deliver, or where delivered good fail to conform to the contract, then the buyer has the following remedies:

CIDS WAR

The R

Back 24

Rejecting non confirming goods

If the seller deliver's non-conforming goods, the buyer can

1. Reject them.
2. Upon discovering a latent defect, revoke acceptance.
3. Accept them and sue for damages.

Front 25

What must the buyer when he rejects, or revokes base don, or accepts and sues based on non-conforming goods?

Back 25

Give timely notice to the seller within reasonable time.

Front 26

must reject whole shipment?

Back 26

WHen non-confomring goodsa re tendered, the buyer may reject the whole shipment, or it may accoet any commercial unit and reject the rest.

A single whole the division of which would materially impair its character or value.

Front 27

What happens if you accept part of a commercial unit?

Back 27

Acceptance of any part of a commercial unit is acceptance of the entire unit under the "broken box" rule.

Front 28

What constitutes a buyer's
acceptance of goods?

Back 28

1. Acceptance of goods with knowledge of defect.

2. Failure to timely and effectively reject when a latent non-conformity is first discovered. ( no timely and proper to the seller of the non conformity).

3. When a buyer continues to retain and use the goods after a rejection or revocation of acceptance.

Front 29

Can a buyer ever revoking after beginning to use the goods?

Back 29

After accepting the goods and starting to use the goods without discovering their latent non-conformity, the code allows a buyer to revoke acceptance within a reasonable time after discovering a defect, provided the non-conformity substantially impairs the worth of that good to the buyer.

Front 30

What if the buyer had knowledge of the non-conformity?

Back 30

Revoking acceptance is a self-help form of recission of contract, which accomplishes a forced exchange of the goods for a return of the buyer's purchase price. However if a buyer accpeted goods with knowledge of a non-conformity, then that buyer cannot later revoke acceptance UNLESS the buyer accepted those non-conforming goods on assurances from the seller that the defect would be cured.

Front 31

Can the buyer ever recover if he knowingly accepts non conforming goods, or if he fails to revoke after discovering the defect?

Back 31

A buyer who knowingly accepts defective goods, or who fails to timely revoke acceptance once the defect was discovered, BUT who gave the seller timely notice of the defect, can sue the seller for damages for the difference in value between 1. the difference between the value of the buyer should have received and what he 2. actually received.

Front 32

Does the buyer have any duties to the seller once he revokes or rejects?

Back 32

If, after rejecting non conforming goods, or revoking accpetance, the goods are in the buyers possession, the buyer must hold the goods for a reasonable time, and with reasonable care, because the buyer is now a bailee

Front 33

Buyer's duty to breaching seller affected by geographic location?

Back 33

If the buyer is a merchant and the breaching seller is not from his geographic area, then the buyer has a duty to follow any reasonable instructions received from the seller, but those instructions are not reasonable if expense money for their undertaking is not sent by the seller.

Front 34

What if the breaching seller doesn;t give unstructions?

Back 34

If the seller gives no instructions within a reasonable time, then the buyer can store, ship, or resell the goods, and that activity will not constitute either a conversion, or an acceptance of the goods.

Front 35

What if the non-conforming goods are perishable and the buyer gets no instructions?

Back 35

If non-confoming goods are perishable, or they threaten to rapidly decline in value, and the buyer has received no instructions from the seller, then the buyer MUST make a reasonable effort to sell the goods on the seller's behalf.

Front 36

Buyer's security interest in goods

Back 36

A buyer has a possessory security interest of the goods in his possession for any deposits paid to the seller, or for any incidental expenses reaosnably incurred in caring the non-confmring goods.

The buyer can sell the goods and recover these expenses from the price paid, where the buyer sell's the goods on the seller's behalf.

Front 37

C in CIDS WAR

Back 37

CoverCover enable the buyer to purchase similar goods without unreasonable delay in substitution for those goods due under the contract, and then sue the breaching seller for the difference in price. A buyer does not have to cover, but the buyer cannot recover consequential damages that could have been avoided by cover.

Front 38

Does a seller have toto prove market value after he buys simlilar goods?

Back 38

If a buyer covers without unreasonable delay, then, when the buyer sues the Seller for breach of contract, the buyer does not have to prove market value to establish damages, but can simply seek the difference between the higher cost of cover and the original contract price.

Front 39

D in sids war

Back 39

if the buyer does not cover, then if goods were not delivered, or non-conforming goods were delievered and rejected, then the buyer's measure of damages is the difference between

1. Th market price at the place of tender when the buyer first could have covered.

2. The contract price, plus any incidental damages

Front 40

I in CIDS WAR

Back 40

Incidental damages are any reasonable expenses by the buyer incident to the seller's breach, including costs incurred in covering, or in the inspection, care, and custody of goods rightfully rejected.

The code gives buyers the right to recover incidental damages for any commercially reasonable charges incurred in stopping delivery, transporting goods, or caring for goods, in connection with the return or resale of goods.

Front 41

What are consequential damages?

Back 41

Consequential losses are additional losses incurred by the buyer as a result of the sellers breach, the usually arise in the area of lost profits following the seller's failure to deleiver goods on time.

The buyer must show

1. Causation

2. Foreseeability at the time of contracting.

3. Reasonable certainty as to the amount of damages

and

4. The damages could not have been mitigated

Front 42

What must be prived to get consequential

Back 42

1. Foreseeability
2. Could have been avoided

Front 43

S in CIDS WAR

Specific Performance

Back 43

A right to replevy goods that is available to a buyer, where goods are unique, or where the buyer cannot cover. If substitute goods are available the buyer has an adequate remedy, and specific performance will not be awarded.

Front 44

W in CIDS WAR

Back 44

Warranty claims

Front 45

what if Seller limids buyer's remeidies but doesn't folow up on his promise

Back 45

Seller's limitations on damages.

A seller can limit the CIDS WAR remedies to any of three Rs:

Refund
Repair
or REplacement

Thus a seller can expressly preclude a buyer's right to recover consequential damages. If the seller warrants to repair or replace the defective good, but is unable to do so, then this limited remedy is said to "fail of its essential purpose", permitting the buyer to recover full breach on contract damages, including consequential damages caused by the defect.