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in whole or in part.
2 UNIT FOUR: DOMESTIC SALES AND LEASE CONTRACTS
in whole or in part.
reject the entire shipment, or accept part and reject part [UCC 2–601, 2A–509].
2A. According to the UCC, what are a buyer’s options if the goods do not conform to
the contract? Does a buyer have those same options if the goods conform in every
respect? Explain. As noted in the answer to the previous question, if goods or their tender of
delivery fails in any respect to conform to a contract, the buyer has the right to accept the goods,
reject the entire shipment, or accept part and reject part [UCC 2–601].
3A. In this case, what provision in the parties’ contract was at the heart of their
dispute? The provision in the contract between Wilson Sporting Goods Co. and U.S. Golf &
Tennis Centers, Inc., that was at the heart of their dispute was the price term. Arthur Bell, one of
the owners of U.S. Golf, sought confirmation that his company was paying the “lowest price” for
an order of 96,000 “second-hand” golf balls. In response, Wilson confirmed that U.S. Golf was
filed in a Tennessee state court against U.S. Golf to recover the price for the 96,000 second-
hand golf balls, the court entered a judgment in favor of Wilson and awarded the seller
$33,099.28, including interest, attorney's fees, and other expenses. On U.S. Golf’s appeal, a
state intermediate appellate court affirmed the judgment and award.
The defendant argued that the goods in this case failed to conform to the contract
balls that U.S. Golf received conformed to the contract in “quantity and quality.” The contract
stated an agreed price of $20,000, and that this was “the lowest price for the specific goods
ordered and received was confirmed” by Wilson. “There is nothing in the record to contradict
Wilson's confirmations to Mr. Bell that the defendants did receive the lowest price offered to
anyone for the goods received.”
in whole or in part.
in whole or in part.
extremely difficult due to an unexpected occurrence, a party may invoke this doctrine to release
The contract between GFI and Egan is an installment contract. Under the UCC, a buyer or
lessee can reject an installment only if the nonconformity substantially impairs the value of the
installment and cannot be cured. Given the general circumstances described in this problem, a
court would most likely determine that the fourth shipment, which is only 5 percent short in
quantity and upgraded in quality, does not constitute a substantial nonconformity.
to a specific carrier for the goods, then of course, if there is a substitution of carriers, the seller is
in breach and buyer can not only refuse the shipment but sue for damages. That’s why we call
such pieces of paper agreements—both parties agreed to the terms in the contract.
To impose such a hard-and-fast rule about never being able to substitute carriers would
impose an undue burden on all sellers of goods that have to be transported. If there are no
1A. Country Fruit Stand orders eighty cases of peaches from Downey Farms. Without
stating a reason, Downey delivers thirty cases instead of eighty at the wrong time. Does
Country have the right to reject the shipment? Explain. Yes. A seller is obligated to deliver
goods in conformity with a contract in every detail. This is the perfect tender rule. The exception
of the seller’s right to cure does not apply here, because the seller delivered too little too late to
in whole or in part.
why not? Yes. When anticipatory repudiation occurs, a buyer (or lessee) can resort to any
18-1A. Anticipatory repudiation
(Chapter 18—Pages 348–350)
Hammer is correct. Moore’s refusal to deliver the car to Hammer on Friday, when Hammer
tendered the $8,500 to Moore, constituted a breach of their contract. Moore could have
canceled the contract on Hammer’s anticipatory breach [UCC 2–610] but did not do so and did
18-2A. Remedies of the buyer or lessee
(Chapter 18—Page 350)
Lehor can use any of three remedies to get the parts from Beem:
(a) Because the parts are scarce, Lehor can seek, through an action in equity, specific
performance requiring Beem to transfer the parts to Lehor as contracted [UCC 2–716(1)].
Beem [UCC 2–502].
Lehor is definitely entitled to get the parts from Beem. Practically speaking, however, Beem will
have already sold the parts at the higher price to the other buyer.
18–3A. SPOTLIGHT ON REVOCATION OF ACCEPTANCE—Remedies of the buyer
The state supreme court set out a two-part test for determining whether a nonconformity
substantially affects a good's value to the buyer. First, the value of conforming goods to the
6 UNIT FOUR: DOMESTIC SALES AND LEASE CONTRACTS
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
buyer must be determined. Second, it must be determined whether the nonconformity
substantially impairs this value. Here, “the RV's subjective value to the Waddells was based on
their ability to spend two or three years driving the RV around the country.” As a result of the
RV's defects, the Waddells were unable to enjoy it as they had intended. This “demonstrate[d]
an objective, substantial impairment of value.” Revocation must occur within a reasonable time
“after the buyer discovers or should have discovered the ground for it” and the seller must be
notified and be given an opportunity to cure. Here, the Waddells took the RV to Wheeler’s
whenever they noticed a defect. The dealer was unable to successfully repair the RV within
eighteen months. At that point, “the Waddells were entitled to say ‘that's all’ and revoke their
performance. Until the assurance is received, the demanding party may suspend its own
performance. If assurance is not provided within less than thirty days, this may be considered a
repudiation of the contract, and the contract may be canceled. What constitutes “reasonable
grounds” is determined by commercial standards. Concerned about the source of JAG’s
product, Flint Hills asked for evidence of title and suspended payment until this “lack of
provide the documents that it promised to forward—or any other substantiating proof of the
chain of title to its product—was sufficient to support Flint Hills’s suspension of payments and,
after several weeks, its cancelation of the deal.
18–5A. Breach and damages
did not have to work with it as Utility was proposing a new contract. $22,829 in general damages
represents the fair market value paid to move 5,000 cubic yards of fill. The remainder of
DeRosier’s costs were for other expenses related to building the house, so those are not
damages. There are no compensatory damages. Those are special damages that flow from the
breach such as lost profits. That did not occur here. DeRosier cannot point to losses not
in whole or in part.
in whole or in part.
giving it the right to reject the goods. To revoke acceptance, Padma would have to show that (1)
18-9A. A QUESTION OF ETHICS—Revocation of acceptance
(a) Revocation of acceptance is the buyer’s refusal to keep delivered goods after they
have been accepted and the time for their rejection has expired. Under UCC 2–608, “a buyer
may revoke acceptance when (1) nonconformity substantially impairs the value of the goods to
50%” of the processed flake delivered in a different quantity was usable. Miller “also alleges that
Scotwood knew that it required a much higher purity level of flake than it received.”
On the reasonableness of the timing of the revocation, “Scotwood cannot demonstrate,
as a matter of law, that Miller and Sons delayed its revocation for an unreasonable amount of
time.” The court emphasized that Miller began to complain about the flake in August and
using it without exposing it to chunking.
As for the third element of revocation, the court reiterated that Miller “early on attempted
to arrange for Scotwood [to] remove the goods from Miller and Sons' possession, but Scotwood
apparently declined. * * * At the very least, it is a disputed issue of fact whether Miller and Sons
revoked its acceptance before a substantial deterioration in the goods occurred, particularly
It would be comparably unfair to permit the buyer to exercise the option of revocation
without limits, however. The requirements of the right reinforce this view by restricting its use to
situations in which a defect substantially impairs the value of the goods and the seller has not
CHAPTER 18: PERFORMANCE AND BREACH OF SALES AND LEASE CONTRACTS 9
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
cured the defect, as the buyer reasonably assumed the seller would, or the buyer did not
discover the defect before acceptance because it was difficult to discover or because the seller
assured the buyer that the goods were conforming. Of course, it is only fair that the seller be
notified within a reasonable time after the defect is discovered, or should have been discovered,
and that the goods have not spoiled or undergone any other substantial change.
18–10A. LEGAL REASONING GROUP ACTIVITY—Performance obligations
(a) Kodiak has the right to deliver the goods in five lots. Normally, goods must be ten-
delivery is not a breach. Of course, Kodiak must notify Lin of the delay as soon as practicable.
2 UNIT FOUR: DOMESTIC SALES AND LEASE CONTRACTS
in whole or in part.
reject the entire shipment, or accept part and reject part [UCC 2–601, 2A–509].
2A. According to the UCC, what are a buyer’s options if the goods do not conform to
the contract? Does a buyer have those same options if the goods conform in every
respect? Explain. As noted in the answer to the previous question, if goods or their tender of
delivery fails in any respect to conform to a contract, the buyer has the right to accept the goods,
reject the entire shipment, or accept part and reject part [UCC 2–601].
3A. In this case, what provision in the parties’ contract was at the heart of their
dispute? The provision in the contract between Wilson Sporting Goods Co. and U.S. Golf &
Tennis Centers, Inc., that was at the heart of their dispute was the price term. Arthur Bell, one of
the owners of U.S. Golf, sought confirmation that his company was paying the “lowest price” for
an order of 96,000 “second-hand” golf balls. In response, Wilson confirmed that U.S. Golf was
filed in a Tennessee state court against U.S. Golf to recover the price for the 96,000 second-
hand golf balls, the court entered a judgment in favor of Wilson and awarded the seller
$33,099.28, including interest, attorney's fees, and other expenses. On U.S. Golf’s appeal, a
state intermediate appellate court affirmed the judgment and award.
The defendant argued that the goods in this case failed to conform to the contract
balls that U.S. Golf received conformed to the contract in “quantity and quality.” The contract
stated an agreed price of $20,000, and that this was “the lowest price for the specific goods
ordered and received was confirmed” by Wilson. “There is nothing in the record to contradict
Wilson's confirmations to Mr. Bell that the defendants did receive the lowest price offered to
anyone for the goods received.”
in whole or in part.
in whole or in part.
extremely difficult due to an unexpected occurrence, a party may invoke this doctrine to release
The contract between GFI and Egan is an installment contract. Under the UCC, a buyer or
lessee can reject an installment only if the nonconformity substantially impairs the value of the
installment and cannot be cured. Given the general circumstances described in this problem, a
court would most likely determine that the fourth shipment, which is only 5 percent short in
quantity and upgraded in quality, does not constitute a substantial nonconformity.
to a specific carrier for the goods, then of course, if there is a substitution of carriers, the seller is
in breach and buyer can not only refuse the shipment but sue for damages. That’s why we call
such pieces of paper agreements—both parties agreed to the terms in the contract.
To impose such a hard-and-fast rule about never being able to substitute carriers would
impose an undue burden on all sellers of goods that have to be transported. If there are no
1A. Country Fruit Stand orders eighty cases of peaches from Downey Farms. Without
stating a reason, Downey delivers thirty cases instead of eighty at the wrong time. Does
Country have the right to reject the shipment? Explain. Yes. A seller is obligated to deliver
goods in conformity with a contract in every detail. This is the perfect tender rule. The exception
of the seller’s right to cure does not apply here, because the seller delivered too little too late to
in whole or in part.
why not? Yes. When anticipatory repudiation occurs, a buyer (or lessee) can resort to any
18-1A. Anticipatory repudiation
(Chapter 18—Pages 348–350)
Hammer is correct. Moore’s refusal to deliver the car to Hammer on Friday, when Hammer
tendered the $8,500 to Moore, constituted a breach of their contract. Moore could have
canceled the contract on Hammer’s anticipatory breach [UCC 2–610] but did not do so and did
18-2A. Remedies of the buyer or lessee
(Chapter 18—Page 350)
Lehor can use any of three remedies to get the parts from Beem:
(a) Because the parts are scarce, Lehor can seek, through an action in equity, specific
performance requiring Beem to transfer the parts to Lehor as contracted [UCC 2–716(1)].
Beem [UCC 2–502].
Lehor is definitely entitled to get the parts from Beem. Practically speaking, however, Beem will
have already sold the parts at the higher price to the other buyer.
18–3A. SPOTLIGHT ON REVOCATION OF ACCEPTANCE—Remedies of the buyer
The state supreme court set out a two-part test for determining whether a nonconformity
substantially affects a good's value to the buyer. First, the value of conforming goods to the
6 UNIT FOUR: DOMESTIC SALES AND LEASE CONTRACTS
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
buyer must be determined. Second, it must be determined whether the nonconformity
substantially impairs this value. Here, “the RV's subjective value to the Waddells was based on
their ability to spend two or three years driving the RV around the country.” As a result of the
RV's defects, the Waddells were unable to enjoy it as they had intended. This “demonstrate[d]
an objective, substantial impairment of value.” Revocation must occur within a reasonable time
“after the buyer discovers or should have discovered the ground for it” and the seller must be
notified and be given an opportunity to cure. Here, the Waddells took the RV to Wheeler’s
whenever they noticed a defect. The dealer was unable to successfully repair the RV within
eighteen months. At that point, “the Waddells were entitled to say ‘that's all’ and revoke their
performance. Until the assurance is received, the demanding party may suspend its own
performance. If assurance is not provided within less than thirty days, this may be considered a
repudiation of the contract, and the contract may be canceled. What constitutes “reasonable
grounds” is determined by commercial standards. Concerned about the source of JAG’s
product, Flint Hills asked for evidence of title and suspended payment until this “lack of
provide the documents that it promised to forward—or any other substantiating proof of the
chain of title to its product—was sufficient to support Flint Hills’s suspension of payments and,
after several weeks, its cancelation of the deal.
18–5A. Breach and damages
did not have to work with it as Utility was proposing a new contract. $22,829 in general damages
represents the fair market value paid to move 5,000 cubic yards of fill. The remainder of
DeRosier’s costs were for other expenses related to building the house, so those are not
damages. There are no compensatory damages. Those are special damages that flow from the
breach such as lost profits. That did not occur here. DeRosier cannot point to losses not
in whole or in part.
in whole or in part.
giving it the right to reject the goods. To revoke acceptance, Padma would have to show that (1)
18-9A. A QUESTION OF ETHICS—Revocation of acceptance
(a) Revocation of acceptance is the buyer’s refusal to keep delivered goods after they
have been accepted and the time for their rejection has expired. Under UCC 2–608, “a buyer
may revoke acceptance when (1) nonconformity substantially impairs the value of the goods to
50%” of the processed flake delivered in a different quantity was usable. Miller “also alleges that
Scotwood knew that it required a much higher purity level of flake than it received.”
On the reasonableness of the timing of the revocation, “Scotwood cannot demonstrate,
as a matter of law, that Miller and Sons delayed its revocation for an unreasonable amount of
time.” The court emphasized that Miller began to complain about the flake in August and
using it without exposing it to chunking.
As for the third element of revocation, the court reiterated that Miller “early on attempted
to arrange for Scotwood [to] remove the goods from Miller and Sons' possession, but Scotwood
apparently declined. * * * At the very least, it is a disputed issue of fact whether Miller and Sons
revoked its acceptance before a substantial deterioration in the goods occurred, particularly
It would be comparably unfair to permit the buyer to exercise the option of revocation
without limits, however. The requirements of the right reinforce this view by restricting its use to
situations in which a defect substantially impairs the value of the goods and the seller has not
CHAPTER 18: PERFORMANCE AND BREACH OF SALES AND LEASE CONTRACTS 9
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
cured the defect, as the buyer reasonably assumed the seller would, or the buyer did not
discover the defect before acceptance because it was difficult to discover or because the seller
assured the buyer that the goods were conforming. Of course, it is only fair that the seller be
notified within a reasonable time after the defect is discovered, or should have been discovered,
and that the goods have not spoiled or undergone any other substantial change.
18–10A. LEGAL REASONING GROUP ACTIVITY—Performance obligations
(a) Kodiak has the right to deliver the goods in five lots. Normally, goods must be ten-
delivery is not a breach. Of course, Kodiak must notify Lin of the delay as soon as practicable.
