Week 5 Writing Assignment

adilboutahli

cheeseman_blaw10e_20.pptx

Home >Law homework help >Week 5 Writing Assignment

Business Law

Tenth Edition

Chapter 20

Remedies for Breach of Sales and Lease Contracts

Learning Objectives

20.1 Describe seller and lessor performance of sales and lease contracts.

20.2 Describe buyer and lessee performance of sales and lease contracts.

20.3 List and describe seller and lessor remedies for buyer and lessee breach of sales and lease contracts.

20.4 List and describe buyer and lessee remedies for seller and lessor breach of sales and lease contracts.

20.5 List and describe additional performance issues.

Introduction

Parties to a sales or lease contract owe a duty to perform the obligations specified in their agreement

Obligation: Action a party to a sales or lease contract is required by law to carry out

When one party breaches a sales or lease contract, the Uniform Commercial Code (UCC) provides the injured party with a variety of prelitigation and litigation remedies

Breach: Failure of a party to perform an obligation in a sales or lease contract

Seller and Lessor Performance (1 of 5)

Seller’s or lessor’s basic obligation is the tender of delivery

Tender of delivery: Obligation of a seller to transfer and deliver goods to the buyer or lessee in accordance with a sales or lease contract

Put and hold conforming goods at the buyer’s or lessee’s disposition

Give the buyer or lessee any notification reasonably necessary to enable delivery of goods

Seller and Lessor Performance (2 of 5)

Place of delivery

The UCC stipulates place of delivery based on the following rules:

Noncarrier cases

Carrier cases

Shipment contract

Destination contract

Seller and Lessor Performance (3 of 5)

Shipment contract: Sales contract that requires the seller to send the goods to the buyer but not to a specifically named destination

Destination contract: Sales contract that requires the seller to deliver the goods to the buyer’s place of business or another specified destination

Seller and Lessor Performance (4 of 5)

Perfect tender rule

If the goods or tender of a delivery fail in any respect to conform to the contract, the buyer may opt to:

Reject the entire shipment

Accept the whole shipment

Reject part and accept part of the shipment

Seller and Lessor Performance (5 of 5)

Installment contracts

Requires or authorizes goods to be delivered and accepted in separate lots

Entire contract can be rejected only if the default substantially impairs the value of the entire contract

Destruction of goods

If goods identified in a sales or lease contract are totally destroyed without fault of either party before the risk of loss passes to either party, the contract is void

Buyer and Lessee Performance (1 of 4)

Right of Inspection

Buyer has the right to inspect goods before paying for them

Buyer may reject nonconforming goods

Parties may agree to time, place, and manner of inspection

If a contract is silent, inspection must occur at reasonable time and place

Buyer and Lessee Performance (2 of 4)

Acceptance: Act that occurs when a buyer or lessee takes either of the following actions after a reasonable opportunity to inspect the goods that are the subject of a contract:

Signifies to the seller in words or by conduct that the goods are conforming or that the buyer will take or retain the goods despite their nonconformity OR

Fails to effectively reject the goods within a reasonable time after their delivery or tender by the seller

Buyer and Lessee Performance (3 of 4)

Payment

Due from buyer when and where goods delivered

Goods can be paid in any manner acceptable in ordinary course of business

If cash required, buyer must be given an extension to procure the cash

Case 20.1: Acceptance of Goods

Case

Accent Commercial Furniture, Inc. v. P. Schneider & Associates, PLLC

110 A.D.3d 1415 (2013)

Issue

Does Schneider owe Accent the remaining balance?

Buyer and Lessee Performance (4 of 4)

Revocation of acceptance: Buyer can revoke acceptance if:

Goods are nonconforming;

Nonconformity substantially impairs value of goods to the buyer, AND

One of the following:

Seller’s promise to timely cure are not met

Goods were accepted before nonconformity was discovered & nonconformity was difficult to discover

Goods were accepted before nonconformity discovered and sellers assured that goods were conforming

Seller and Lessor Remedies (1 of 4)

Right to withhold delivery

Right of a seller to refuse to deliver goods to a buyer on breach of a sales or lease contract by the buyer or the insolvency of the buyer or lessee

Right to stop delivery of goods in transit

Right of a seller to stop delivery of goods in transit if he or she learns of the buyer’s insolvency or if the buyer repudiates the contract, fails to make payment when due, or gives the seller some other right to withhold the goods

Seller and Lessor Remedies (2 of 4)

Right to reclaim goods

Right of a seller or lessor to demand the return of goods from the buyer or lessee under specified situations

Right to dispose of goods

Right of a seller to dispose of goods in a good faith and commercially reasonable manner

Unfinished Goods

Seller may choose to cease manufacturing OR complete manufacturing and resell, release, or otherwise dispose of them to another party

Seller and Lessor Remedies (3 of 4)

Right to recover the purchase price or rent

Right of a seller to recover the contracted-for purchase price or rent from the buyer

If the buyer fails to pay for accepted goods,

If the buyer breaches the contract and the seller cannot dispose of the goods

If the goods are damaged or lost after the risk of loss passes to the buyer

Right to recover damages for breach of contract

Right of a seller to recover damages measured as the difference between the contract price (or rent) and the market price (or rent) at the time and place the goods were to be delivered

Seller and Lessor Remedies (4 of 4)

Right to cancel a contract

If the buyer or lessee breaches the contract by rejecting or revoking acceptance of the goods, failing to pay for the goods, or repudiating all or any part of the contract

Buyer and Lessee Remedies (1 of 3)

Right to reject nonconforming goods or improperly tendered goods

Right of a buyer to reject goods that do not conform to a contract

Right to recover goods from an insolvent seller or lessor

Right of a buyer who has wholly or partially paid for goods before they are received to recover the goods from a seller who becomes insolvent within ten days after receiving the first payment

Buyer and Lessee Remedies (2 of 3)

Right to obtain specific performance

Specific performance: Decree of the court that orders a seller or lessor to perform his or her obligations under the contract

Right to replevy goods

Replevin: An action by a buyer or lessor to recover scarce goods wrongfully withheld by a seller or lessor

Buyer and Lessee Remedies (3 of 3)

Right to cancel a contract

If a seller fails to deliver conforming goods or repudiates the contract, the buyer may cancel the sales or lease contract

Right to recover damages for nondelivery or repudiation

If a seller or lessor fails to deliver the goods or repudiates the sales of lease contract, the buyer or lessee has the right to recover damages

Right to recover damages for accepted nonconforming goods

Must notify the seller within a reasonable time after discovery

Additional Performance Issues (1 of 3)

Assurance of performance

Party with grounds to believe that the other party will not perform may demand adequate assurance of performance

Adequate assurance of performance: Adequate assurance of performance from the other party if there is an indication that a contract will be breached by that party

Performance may be suspended until adequate assurance of due performance is received from the other party

Additional Performance Issues (2 of 3)

Statute of limitations: Rule that provides that an action for breach of any written or oral sales or lease contract must commence within four years after the cause of action accrues

Parties may reduce time to one year

Parties cannot extend the time beyond four years

Additional Performance Issues (3 of 3)

Agreements affecting remedies

Parties may agree to remedies in addition to those available under the UCC, or agree to limit remedies

Liquidated damages: Damages that will be paid upon a breach of the contract that are established in advance

Preestablished damages

Substitute for actual damages