Term
| what does it mean to Tender conforming goods? |
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Definition
| make goods available to buyer at seller's place of business, at a reasonable time and in a reasonable way |
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Term
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Definition
| goods conform in every respect to what contract says--otherwise buyer's obligation isn't triggered. |
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Term
| If perfect tender is specifically required in contract can any exceptions apply? |
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Definition
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Term
| What is the first exception to perfect tender? |
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Definition
| when parties can agree in contract from beginning to limit buyers remedies: ex/ defective goods/parts will not be rejected if the seller/lessor can repair/replace them w/in a reasonable period of time-->buyer gives up Rescission |
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Term
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Definition
| Even if parties don't agree to limit remedies, seller still repair/replace..the right of the seller to repair, adjust, replace nonconforming goods |
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Term
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Definition
| seller can cure up until delivery date, if buyer communicates. |
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Term
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Definition
| seller can still cure after delivery date if he gave a price allowance or if the buyer had accepted nonconforming goods in the past. |
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Term
| Buyer is never obligated to accept nonconforming goods, but seller may have the opportunity to cure |
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Definition
| BUYER MUST COMMUNICATE DISSATISFACTION WITH BREACH |
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Term
| 3rd exception to perfect tender: Destruction of Specified Goods |
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Definition
| if goods don't exist at the time of delivery, seller isn't penalized for inability to send them |
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Term
| 4th exception to perfect tender: commercial impracticability |
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Definition
| Not technically impossible, but essentially financially impossible (ex/ Delay and non-delivery) |
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Term
| For Delay or for non-delivery to justify commercial impracticability, what must be true? |
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Definition
| the event that caused the breach was unforeseeable to either party at FORMATION...doesn't include ordinary price fluctuations. |
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Term
| What is the basic buyer's obligations? |
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Definition
| to accept and pay for conforming goods. |
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Term
| Buyer's right to "inspect goods" |
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Definition
| a condition precedent to seller's demand for payment for goods. |
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Term
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Definition
| ...implies that seller has performed, and buyer now owns goods. |
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Term
| What is (1) way to show acceptance? |
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Definition
| expressly by words/conduct: buyer sees goods and says he'll take them or takes them. |
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Term
| What is (2) way to show acceptance? |
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Definition
| Failure to reject goods: after opportunity to inspect them. |
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Term
| What is (3) way to show acceptance? |
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Definition
| Action inconsistent with seller's ownership of goods (buyer acts as if buyer owns goods) exception: when you have to use part of a good to inspect it. |
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Term
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Definition
| either inability to deliver by seller, or buyer no longer wants to accept goods--non-breaching party has remedies. |
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Term
| If a seller delivers nonconforming goods (green trees instead of silver) before delivery date, what are the buyer's options? |
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Definition
A. ACCEPT substantial performance (might have incidental damages)
B. REJECT goods. |
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Term
| If the buyer rejects nonconforming goods before the delivery date what must he do? |
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Definition
| Must give seller a Notice of Breach: i.e. which breach is causing problem (anticipatory or nonconforming) and then seller is entitled to cure breach because the buyer communicated to the seller the problem. |
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Term
| If the seller delivers nonconforming goods on the delivery date, is the seller entitled to cure AFTER the deliver date? |
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Definition
| Yes, if the seller reasonably believes that nonconforming goods are acceptable. |
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Term
| What are the 2 conditions that allow the seller to cure after delivery date? |
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Definition
A. if the Seller gives a Price allowance (discount)that he reasonably believed the buyer would accept.
B. Buyer has accepted substitute/nonconforming goods in the past. |
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Term
| Is the buyer ever obligated to accept nonconforming goods? |
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Definition
| No!, but the seller may have opportunity to cur, if the buyer communicated dissatisfaction with the breach. |
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Term
| What are the the 4 material breaches of the buyer? |
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Definition
1. anticipatory breach- "don't ship goods"
2. rejection of conforming goods
3. revocation of acceptance (rescission after the fact)
4. Nonpayment--after acceptance |
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Term
| What is the Seller's remedies if the buyer has the goods (in event of buyer breach)? |
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Definition
| right to recover purchase price: seller can sue buyer for purchase price of goods (for material breaches). |
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Term
| What are seller's remedies if the seller has goods? |
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Definition
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Term
| What are the three rights the seller has for compensatory damages? |
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Definition
a. Right to Resell
B. Right to recover damage w/out resale
c. Right to recover purchase price |
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Term
| What does the right to resell (compensatory damages) entail? |
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Definition
| The seller is obligated to mitigate damages--seller gets cash and sells goods (collects damages). |
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Term
| What does the right to recover damages w/out resale entail? |
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Definition
| the seller keeps goods and gets cash for damages...if market value is high or expenses low, seller might be better off. |
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Term
| What does the right to recover purchase price entail? |
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Definition
| If the goods are buyer specific (thus: no market value) |
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Term
| If the goods are buyer specific, who holds the title? |
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Definition
| The buyer takes title, even if seller has possession of goods--can hold goods until buyer comes to get them--until cost of holding exceeds the amount that can be made by selling goods for scrap (proceeds go to buyer) |
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Term
| What must to the seller prove to collect consequential damages? |
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Definition
1. CAPACITY to make the additional goods had the buyer not breached.
2. existence of another buyer. |
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Term
| What is the equation to find consequential damages? |
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Definition
| Contract value (REV) - COGS |
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Term
| What are material breaches the seller can commit? |
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Definition
| Failure of delivery/delivery of part of goods. |
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Term
| If the seller commits a material breach and fails to deliver/delivers parts, what are the buyer's options? |
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Definition
| Buyer can cancel and get remedies (circumstantial)...CAN reject everything, CAN take part of goods. |
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Term
| What is the goal of compensatory damages for the buyer? |
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Definition
| to get buyer in same financial position at the end of the day--whether cash or cash+goods. |
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Term
| What is the right to cover? |
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Definition
| A buyer remedy, aka the buyer buys other goods. +Contract value ((performance value)) - Cost of cover - Incidental expenses + Storage avoided (i.e. cost avoided) = Damages. |
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Term
| What is the second buyer remedy for compensatory damages? |
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Definition
| Damages for non-delivery w/out cover: buyer chooses not to cover--aka not forced to buy other goods. |
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Term
| What are 2 necessary conditions for the buyer to collect consequential damages? |
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Definition
1. Must be FORESEEABLE by breaching seller
2. buyer must try to cover: attempt to purchase substitute goods (but is unable-->consequential damages)...if he does purchase substitute goods, he may still be entitled to consequential damage. |
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Term
| When is the buyer entitled to Equitable remedies? |
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Definition
1. Specific performance: money isn't adequate remedy.
2. Right of replevin/right to replevy goods: circumstances make goods specific when they might not have been otherwise (buyer has failed to cover goods at any price, $ not adequate compensation) |
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Term
| If a buyer receives nonconforming goods, why must he communicate to the seller to be entitled to remedies? |
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Definition
| b/c the buyer must communicate to the seller b/c seller may have right to cure, and if the buyer fails to reject after a reasonable time--deemed to have accepted nonconforming goods. |
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Term
| What is a nonmaterial breach when the buyer inspects, accepts, and THEN discovers that goods are nonconforming? |
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Definition
| nonconformity isn't material, b/c if buyer had discovered breach earlier, he would have accepted substantial performance (accept working goods, replacement/fixing of others) |
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Term
| What is a material nonconformity when the seller breaches? |
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Definition
| if the buyer would have rejected goods had he found nonconformity at inspection (wants rescission/revoke acceptance). |
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Term
| What must the buyer show in order to revoke, in light of material nonconformity? |
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Definition
1. Value of goods substantially impaired
2. EITHER (a) (both know breach) the seller leaves an Unfulfilled promise to cure or (b)buyer doesn't know about breach. |
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Term
| If the buyer doesn't know about the breach (material nonconformity), what must he show? |
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Definition
(A) nonconformity would have been difficult for buyer to discover
OR
(B) seller have buyer assurance of conformity. |
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