Ch. 17: Performance and Breach of Sales and Lease Contracts – No. 1
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
Every party to every contract for the sale or lease of goods
owes every other party a duty of good faith.
of UCC Article 1 define “good faith” to require a non-
merchant to behave honestly in fact and observe
Ch. 17: Performance and Breach of Sales and Lease Contracts – No. 2
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
TENDERING DELIVERY
Tender requires that the seller/lessor
(1) have and hold conforming goods at the disposal of the
buyer/lessee, and
(2) give the buyer/lessee reasonable notice to enable the
reasonable period of time for the buyer/lessee to take
possession; and
(3) the seller/lessor must tender all goods called for by the
contract in a single delivery, unless the circumstances
are such that either party can rightfully request delivery
Ch. 17: Performance and Breach of Sales and Lease Contracts – No. 3
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
PLACE OF DELIVERY:
NONCARRIER CONTRACT
If the contract does not designate the place of delivery and
(1) the buyer/lessee is to pick them up from the
seller/lessor, the place of delivery is the seller’s/lessor’s
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
PLACE OF DELIVERY:
SHIPMENT CONTRACT
buyer/lessee needs to take possession of the goods from
the carrier; and
(4) promptly notify the buyer/lessee that the goods are en
route.
Ch. 17: Performance and Breach of Sales and Lease Contracts – No. 5
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
PLACE OF DELIVERY:
DESTINATION CONTRACT
If the contract requires the seller/lessor to deliver or arrange
for the delivery of the goods to a particular destination, the
seller/lessor must
(1) tender the goods at a reasonable hour;
(2) keep the goods available for a reasonable period of
Ch. 17: Performance and Breach of Sales and Lease Contracts – No. 6
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
PERFECT TENDER RULE
Ch. 17: Performance and Breach of Sales and Lease Contracts – No. 7
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
PERFECT TENDER: EXCEPTIONS
performance has not yet expired, the seller/lessor can
(1) notify the buyer/lessee of the seller’s/lessor’s intention
to cure and then
(2) repair, adjust, or replace the nonconforming goods
within the time for performance specified in the contract.
Substitute Carrier: When the agreed manner of delivery is
unavailable or impracticable through no fault of either party,
(1) the seller/lessor may, at his own expense, use a
commercially reasonable substitute,
(2) the use of which will constitute sufficient tender.
Ch. 17: Performance and Breach of Sales and Lease Contracts – No. 8
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
INSTALLMENT CONTRACTS
If a contract requires or authorizes delivery in two or more
separate lots, to be accepted and paid for separately,
(1) the buyer/lessee may reject tender only if the
nonconformity substantially impairs the value of the
installment and cannot be cured;
Ch. 17: Performance and Breach of Sales and Lease Contracts – No. 9
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
COMMERCIAL IMPRACTICABILITY
not a breach of contract, provided that
(3) the seller/lessor notify the buyer/lessee as soon as
practicable of the delay or nondelivery; but
(4) in the event that the seller/lessor is able to at least
partially perform, it is obligated to
Ch. 17: Performance and Breach of Sales and Lease Contracts – No. 10
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
DESTRUCTION OF GOODS
If the goods are only partially destroyed, the
buyer/lessee may inspect them and either
(a) cancel the contract, or
(b) accept the damaged goods at a reduced price.
Ch. 17: Performance and Breach of Sales and Lease Contracts – No. 2
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
TENDERING DELIVERY
Tender requires that the seller/lessor
(1) have and hold conforming goods at the disposal of the
buyer/lessee, and
(2) give the buyer/lessee reasonable notice to enable the
reasonable period of time for the buyer/lessee to take
possession; and
(3) the seller/lessor must tender all goods called for by the
contract in a single delivery, unless the circumstances
are such that either party can rightfully request delivery
Ch. 17: Performance and Breach of Sales and Lease Contracts – No. 3
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
PLACE OF DELIVERY:
NONCARRIER CONTRACT
If the contract does not designate the place of delivery and
(1) the buyer/lessee is to pick them up from the
seller/lessor, the place of delivery is the seller’s/lessor’s
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
PLACE OF DELIVERY:
SHIPMENT CONTRACT
buyer/lessee needs to take possession of the goods from
the carrier; and
(4) promptly notify the buyer/lessee that the goods are en
route.
Ch. 17: Performance and Breach of Sales and Lease Contracts – No. 5
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
PLACE OF DELIVERY:
DESTINATION CONTRACT
If the contract requires the seller/lessor to deliver or arrange
for the delivery of the goods to a particular destination, the
seller/lessor must
(1) tender the goods at a reasonable hour;
(2) keep the goods available for a reasonable period of
Ch. 17: Performance and Breach of Sales and Lease Contracts – No. 6
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
PERFECT TENDER RULE
Ch. 17: Performance and Breach of Sales and Lease Contracts – No. 7
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
PERFECT TENDER: EXCEPTIONS
performance has not yet expired, the seller/lessor can
(1) notify the buyer/lessee of the seller’s/lessor’s intention
to cure and then
(2) repair, adjust, or replace the nonconforming goods
within the time for performance specified in the contract.
Substitute Carrier: When the agreed manner of delivery is
unavailable or impracticable through no fault of either party,
(1) the seller/lessor may, at his own expense, use a
commercially reasonable substitute,
(2) the use of which will constitute sufficient tender.
Ch. 17: Performance and Breach of Sales and Lease Contracts – No. 8
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
INSTALLMENT CONTRACTS
If a contract requires or authorizes delivery in two or more
separate lots, to be accepted and paid for separately,
(1) the buyer/lessee may reject tender only if the
nonconformity substantially impairs the value of the
installment and cannot be cured;
Ch. 17: Performance and Breach of Sales and Lease Contracts – No. 9
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
COMMERCIAL IMPRACTICABILITY
not a breach of contract, provided that
(3) the seller/lessor notify the buyer/lessee as soon as
practicable of the delay or nondelivery; but
(4) in the event that the seller/lessor is able to at least
partially perform, it is obligated to
Ch. 17: Performance and Breach of Sales and Lease Contracts – No. 10
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
DESTRUCTION OF GOODS
If the goods are only partially destroyed, the
buyer/lessee may inspect them and either
(a) cancel the contract, or
(b) accept the damaged goods at a reduced price.