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Chapter 25
OBLIGATIONS AND PERFORMANCE
RESTATEMENT
Under Article 2, both buyer and seller have particular duties imposed to satisfy performance requirements. Both
parties to a contract have an obligation of good faith in their performance. Timely performance is necessary
because its lack is seen as a repudiation of contract. In the event one party is concerned that the other ’s
performance will not be forthcoming, there is a right to demand adequate assurance of performance. Assurance
can be made in different ways, but the failure to provide adequate assurances is considered a repudiation of
contract.
There are various rights and duties given to and imposed on the parties in a sales contract. The seller has the
duty to deliver goods that conform to the contract. The buyer has the right of inspection of the goods and the
duty to accept conforming goods or the right to reject nonconforming goods. The buyer has the duty to pay with
the time and method of payment dependent upon contract terms.
STUDENT LEARNING OUTCOMES
LO.1: List the steps that can be taken when a party to a sales contract feels insecure about the other party's
performance.
LO.2: Explain the obligations of the seller and the buyer in a sales contract.
LO.3: Identify the types of actions and conduct that constitute acceptance.
LO.4: Explain the excuses that exist for nonperformance by one party.
INSTRUCTOR’S INSIGHTS
Break the chapter down into two components – related Learning Outcomes are indicated in ( ):
1. What are the general principles and obligations for performance?
Discuss the obligation of good faith
2. What are the duties of the parties in performance of contract obligations?
Explain the seller’s duty to deliver the goods (LO.2)
Cover the buyer’s duty to accept the goods (LO.3)
CHAPTER OUTLINE
I. What are the General Principles and Obligations for Performance?
A. Obligation of good faith: “honesty in the fact or transaction”
B. Time requirements of obligations
C. Repudiation of the contract
1. An anticipatory repudiation is a breach before the time for performances
2. Make certain that your students read UCC § 2-610, dealing with anticipatory repudiation, and §
D. Adequate assurance of performance
1. Respond to concerns; e.g., buyer’s ability to pay, response is current credit report
2. Form of assurance
3. Failure to give assurance
CASE BRIEF: Advanced Bodycare Solutions, LLC v. Thione International, Inc.
615 F. 3d 1352 (11th Cir. 2010)
FACTS: On April 1, 2004, Advanced Body Care Solutions, LLC (“Advanced”), and Thione International,
Inc. (“Thione”), entered into an agreement that required Advanced to make minimum purchases
of “Thione Antioxidant Complex,” which reduces free radical damage to the body, and Thione's
“Free Radical Monitor Test Kit,” which is a test kit for at-home use to monitor the body's free
radicals. Ampoules are small glass tubes containing a clear liquid reagent, which tests for the
presence of free radicals in a urine sample.
In exchange, Advanced received “the license and authority” “to advertise, promote, market, sell
and otherwise distribute” the Dietary Supplement and the Test Kit on an exclusive basis. The
agreement was to remain in effect for a minimum of five years: April 1, 2004 to March 31, 2009.
On May 26, 2004, Advanced placed an order for 25,000 ampoules, for which it paid $41,250. It
received about 20,000 ampoules on September 1. It was immediately apparent that 200–300 of
the 20,000 were broken, and about 1,000 were pink, indicating that they were defective. The
following day, Dr. Stephen Perry, Advanced's liaison with Thione, sent an email to Dr. Mark
Hersh, the CEO and chief scientist of Thione, stating that, “Carl [Pradelli, Advanced's managing
member,] received some vials that are pink,” and inquiring, “Do we have a production issue?”.
As of March 2005, Thione had not yet identified the source of the problem with the first shipment
of 20,000 ampoules, and Advanced had placed no subsequent orders. On March 18, Pradelli
sent Hersh a summary of Advanced’s marketing efforts. Following five pages on that subject
was a section of the letter entitled, “The Lingering Black Cloud,” that stressed that Advanced's
“biggest concern” was the defective ampoules and that it could not launch any additional
marketing initiatives until satisfied that the problem was permanently solved.
During the summer of 2006, Advanced and Thione attempted to renegotiate the Licensing
Agreement. The renegotiation efforts failed.
On September 26, 2006, Advanced filed suit against Thione for damages, claiming that Thione
had breached the Licensing Agreement and an implied warranty by providing Advanced with
defective ampoules. Thione counterclaimed for breach of the Agreement by Advanced of its
minimum purchase obligations and claiming lost profits.
The jury found in favor of Thione on all of Advanced's claims and awarded it $2.5 million on its
breach of contract counterclaim. Advanced appealed.
ISSUE: Was there a breach of contract by the buyer or was there an ignored demand for
assurances made by the buyer to the seller?
HOLDING AND
REASONING: Affirmed. The district court entered judgment for the supplier for $2.5 million and denied the
(1) sufficient evidence supported jury's finding that supplier did not breach installment contract
as a whole; (2) reasonable jury could have concluded that purchaser's e-mail inquiry to supplier
II. What are the Duties of the Parties in Performance of Contract Obligations?
A. Seller’s duty to deliver
1. The seller has a duty to make goods available to the buyer
2. Place, time, and manner of delivery
3. Quantity delivered – all at once unless installment sale
B. Buyer's duty upon receipt of goods
1. Right to inspect
2. Right to reject
f. Buyer's responsibilities upon rejection
i. No exercise of ownership rights
3. Cure of defective tender or delivery
a. Students will probably have some confusion with regard to curing, as this seems to be the
opposite of perfect performance required under a contract, which they learned in the chapters
on contracts. Have your students read UCC § 2-508, noting how curing would take place if there
b. If time remains to perform, the seller must give notice to the buyer of intent to perform
c. If time has expired, the seller may have additional reasonable time
C. Buyer’s duty to accept goods
1. Expand on the buyer’s right to examine the goods prior to acceptance. This topic is covered in UCC
§ 2-513. The inspection must be made at a reasonable time after receipt of the goods by the buyer
2. Standard for installment shipments is higher
3. Note that the buyer has the right to make a partial acceptance. This means that the buyer can
accept those commercial units that conform to the terms of the contract and reject those that do not
(UCC § 2-601). Students will recall, from your having them read UCC § 2-105 in Chapter 24, that
4. What constitutes acceptance of goods
CASE BRIEF: Viking Packaging Technologies, Inc. v. Vassallo Foods, Inc.
804 N.W. 2d 507 (Wis. App. 2011)
FACTS: Country Pasta, located in Polson, Montana, makes noodles. Viking manufactures, fabricates,
and services industrial packaging equipment. In 2006, Gary Ivory, the production manager at
Country Pasta, contacted Robb Leonhard, one of the owners of Viking, to discuss a quotation
for a more automatic pasta bagging system. Country Pasta wanted a system in which the pasta
bags would be weighed more accurately and in which the bags would be closed or tied more
automatically. Ivory provided Leonhard with a sample of Country Pasta's product in the bag it
was using at the time and indicated what he wanted the product to look like. Leonhard then sent
Ivory photographs of a bag of Country Pasta's product with a tin-tie on it and stated “this is
basically what your look is going to be.” Viking included the photographs on the second page of
the quotation.
On July 13, 2007, Country Pasta accepted Viking's quotation to purchase a pasta packaging
system. The quotation shows photos of the equipment and of Country Pasta bags closed with a
tin-tie. The items related to the tin-tie applicator were priced at $47,173. The total purchase
price for the product packaging system was $178,074.
The quotation called for a “checkout,” or a pre-shipment inspection, by Country Pasta “prior to
shipment.” In April 2008, Ivory and Scott Knutson went to Viking's facility to perform the checkout
of the packaging system. The tin-ties on the finished bags did not regularly close up during this
demonstration; however, Viking worked on the packaging system, and told Country Pasta that
the system was “working better.” Country Pasta approved the shipment and the packaging
system was delivered to Country Pasta before June 17, 2008. Ivory helped unpack and set up
the equipment; he did not notice any defects.
The contract provided that “if requested by the customer, [Viking] will provide a service
technician for installation of the quoted equipment.” The contract did not include free
installation, but estimated that two days of installation and training for Country Pasta employees
would cost $3373. The contract also provided that “[a]n installation will be considered complete
when all systems purchased from [Viking] perform per the Product Performance Specifications.”
From June 17, 2008, through June 25, 2008, Viking technician Tim Parrish worked on installing
the equipment and training Country Pasta's employees in Montana. During this visit, Parrish
discovered that Country Pasta workers would drop or tap bags full of pasta on a table in order
to settle the noodles to allow for a twist tie to be applied to the bag. Parrish made adjustments
to the machinery, including adding a shelf to assist in the settling of the noodles. Despite these
efforts, the tin-tie applicator was not functioning properly at the time he left. Viking and Country
Pasta agreed to split the cost of a second visit by Parrish.
Parrish returned to Country Pasta in July 2008 with Steve Almberg, a representative from Weigh
Right, the manufacturer of the scale. Parrish and Almberg improved the operation of the scale
and bagger by making modifications to Country Pasta's equipment feeding the scale and
bagger.
A Country Pasta memorandum regarding a meeting with Parrish on July 10, 2008, notes the
improvements with the scale and bagger, but states that “[t]here is no way the current tin-tie
system will work with our product.” Parrish left Montana and was not asked to return to Montana
to continue working on the applicator.
On December 4, 2008, five months after delivery of the packaging system, and four months
after Parrish's final visit, Kellogg sent an email to Viking stating that Country Pasta wanted a
refund for the tin-tie applicator and the associated conveyor in the amount of $47,173. At that
time, Country Pasta had outstanding invoices due to Viking in the amount of $34,110.22. Viking
brought suit against Country Pasta, seeking the outstanding amount. Country Pasta
counterclaimed, alleging breach of contract.
After a trial to the court, judgment for money damages was entered in favor of Viking. Country
Pasta's counterclaim alleging breach of contract by Viking, and alleging Country Pasta's
revocation of acceptance of the tin-tie applicator and conveyor were dismissed. Country Pasta
appealed.
ISSUES: 1. Was there a breach of the contract?
2. Was there a proper rejection of the equipment?
3. What is a commercial unit in this situation?
4. Was there a proper revocation of acceptance?
HOLDING AND
REASONING: Country Pasta knew the machine was not going to work when it came to getting the ties on the
pasta bags as it wanted them to look. However, for five months after that, Country Pasta took
no action other than to ask for a refund on the tying portion of the equipment, not for damages
The court held the following:
(1) system did not fail to meet any identifiable product performance specifications;
(2) entire integrated system was commercial unit;
Affirmed.
5. Revocation of acceptance
DISCUSSION POINTS: E-Commerce & Cyberlaw
Rejection in Cyberspace
Online retailers set their own terms of returns and time frames. By so doing, they eliminate the UCC rights.
CASE BRIEF: Bev Smith, Inc. v. Atwell
836 N.W. 2d 872 (Mich. App. 2013)
FACTS: This case arises from the sale of a rare 1965 Dodge altered-wheelbase racecar specially
manufactured by Chrysler Corporation for drag racing and used as a promotional vehicle.
Legendary drag racer Dave Strickler raced the Dodge during the 1965 season. The Dodge was
then sold to another racecar driver, Chuck McJury, who made substantial alterations to the
vehicle. Among other things, McJury replaced the vehicle's original 1965 Dodge Coronet body
with a 1966/1967 Dodge Charger body. McJury sold the car to Melvin Smith. Melvin Smith then
sold the Dodge to David Fengel in 1979 or 1980. By that time, the vehicle was in poor condition,
described it as a “body shell on wheels” with “[n]o engine” and “no transmission.”
Atwell (Defendant) purchased the Dodge from Fengel in the early 1990s for $35,000.
Fengel provided Atwell with documentation concerning the vehicle's history, alterations, and
chain of title, including the vehicle's original 1965 certificate of title, bearing Dave Strickler's
name and address.
Atwell gathered parts and spent more than 10 years restoring the vehicle. Atwell then
worked with Edward Strzelecki to sell the Dodge after he had finished restoring it. In February
2007, Strzelecki sent letters to potential buyers offering the vehicle for sale and providing
certain information concerning the vehicle's history, restoration, and chain of title. In one of
those letters, dated February 4, 2007, Strzelecki wrote to Nicholas Smith describing the vehicle
as “Dave Strickler's 65 Dodge ‘FACTORY’ Altered Wheel–Base.” Strzelecki explained that the
Dodge was on loan to the Chrysler Museum in Auburn Hills, Michigan, where it was on
“semi-permanent display.” Strzelecki claimed in his letter that the Chrysler Museum had
appraised the vehicle and had insured it for more than $2 million.
Nicholas Smith, an officer of Bev Smith (plaintiff), considered Strzelecki to be a friend.
Strzelecki gave him a binder containing extensive information and documentation pertaining to
the Dodge. Nicholas Smith confirmed that he had reviewed the contents of the binder before
agreeing to purchase the Dodge from Atwell.
Nicholas Smith traveled to Michigan and went to the Chrysler Museum with Strzelecki
to personally inspect the vehicle. He walked around the vehicle at the Chrysler Museum but
remained “outside of the rails that protected the car from visitors.”
Smith ultimately agreed to give defendant $600,000 in cash, plus two other classic
automobiles in exchange: (1) a 1964 Dodge Coronet Hemi Super Stock valued at $278,000, and
(2) a 1964 Ford Thunderbolt valued at $250,000. The bill of sale contained the following:
Steve Atwell hereby agrees to sell and Bev Smith Ford agrees to purchase the Dave
Strickler 1965 Dodge AWB (“AWB” means “altered wheelbase.”) drag car, VIN
W151191681. Seller represents this vehicle to be the real and authentic Strickler car,
that he (Atwell) is the true owner of the car, and further that no liens or encumbrances
exist against the vehicle.
After the sale, and while at a classic car event in Ohio in July 2008, a car historian
informed Nicholas Smith that the Dodge had a “donor body” and was not the “real” Strickler car.
On April 20, 2010, plaintiff's attorneys in Florida sent a letter to defendant that stated in
pertinent part:
[Plaintiff] has learned that the Strickler Car it purchased from you is in fact not the “real
and authentic” vehicle driven by Dave Strickler in the 1960s, as you expressly
represented and warranted during the sale and in the Contract. [Plaintiff] now knows that
the vehicle was re-bodied and otherwise restored using predominantly non-original and
reproduction parts. [Plaintiff] would never have purchased the Strickler Car if it knew the
vehicle was not the “real and authentic” vehicle as promised.
As a result of your material misrepresentations regarding the authenticity and restoration
of the Strickler Car, [plaintiff] has suffered and continues to suffer substantial
damages.... Stated simply, you exploited the authenticity and restoration of the Strickler
Car to fraudulently gain a profit from [plaintiff].
Your false misrepresentations and warranties regarding the restoration and authenticity
of the Strickler Car are all actionable under the law....
On September 28, 2010, Smith commenced this action. The trial court granted
summary judgment for Atwell.
ISSUE: Could Smith revoke his acceptance of the car?
REASONING: The court found that the buyer waited too long to revoke acceptance. He was aware of the
problem for two years before taking any action and that was not timely revocation. The defects
were discoverable and he was given time to inspect.
DISCUSSION POINTS: Thinking Things Through
When a Court Does Not Allow Performance
The situation created by the federal court decision that halted the immigrant program presents an interesting
contracts issue. There is impossibility of performance because the court order does not permit the government to
perform. A good question is whether the government should have know of the legal difficulties that the program
would create − in other words, should the government be held responsible for contracting when the suit was
already pending and there was a risk? Should the government be required to pay damages to the affected
vendors and suppliers? Commercial impracticability applies in situations where the events could not have been
anticipated. However, as noted, the legal action was ongoing even as the contracts were made. The government
could argue that it wants to perform, but is prohibited because of the court's order and cannot perform until the
case is resolved.
D. Buyer’s duty to pay
Emphasize that unless the parties have agreed otherwise, payment is due at the time and place at which
the buyer is to receive the goods, even though the place of shipment is the seller ’s place of business. In
this light, it may be advisable to cover UCC § 2-310, using examples that will illustrate the importance of
a buyer negotiating for a credit sale. Of additional interest will be § 2 -511, which discusses tender of
payment.
DISCUSSION POINTS: Ethics & the Law
The Return Season
The return of a dress purchased in a store is not rejection but revocation of acceptance. Revocation of
acceptance must be for something that substantially impairs the value. It would be difficult to establish that level
of breach given that the women tried the dresses on. However, stores use a goodwill policy that is based on
good faith. The women who wear the dress once and return it have breached the obligation of good faith. Their
conduct is unfair to the merchants.
CASE BRIEF: Magic Valley Foods, Inc. v. Sun Valley Potatoes, Inc.
10 P. 3d 734 (Idaho 2000)
FACTS: Sun Valley Potatoes, Inc. (Sun Valley) is a fresh packer of potatoes. Magic Valley Foods, Inc.
(Magic Valley) is a processor of potatoes. Sun Valley and Magic Valley entered into three
written contracts wherein Sun Valley agreed to sell and deliver and Magic Valley agreed to
purchase potatoes. Sun Valley provided nine weekly invoices, but none of those invoices were
paid according to the following terms in all of the contracts: “net thirty (30) days on amounts
delivered on a weekly basis.” As of August 9, 1995, Sun Valley had delivered 108,169 cwt. (at
the contract price of $1.13 cwt.) of potatoes to Magic Valley. Magic Valley, on the other hand,
had withheld payments totaling $236,904.44. Sun Valley ceased its deliveries because it had
not been paid for a total of 24 invoices. Magic Valley had to shut down its plant for 14 days and
it filed suit against Sun Valley for breach of contract.
The district court concluded that because Sun Valley had not insisted on strict compliance with
the 30-day payment rule, it could not unilaterally repudiate the contract due to late payments.
The district court also ruled that Magic Valley was entitled to offset the $236,904.44 it owed Sun
Valley against the $231,660.60 it incurred as a result of its processing plant being down for 14
days and the loss of profits associated therewith. Sun Valley appealed.
ISSUES: Could Sun Valley halt shipment and repudiate the contract? Was Sun Valley required to take
other steps before halting shipments?
HOLDING AND
REASONING: The court held that Sun Valley did not waive its right to timely payment under the contract.
Because Magic Valley had made arrangements with other suppliers for delivery of potatoes, it
DISCUSSION POINTS: Have the students discuss what constitutes repudiation using the Magic Valley Foods,
Inc. v. Sun Valley Potatoes, Inc. case.
E. When duties are excused
CASE BRIEF: BRC Rubber & Plastics, Inc. v. Continental Carbon Co.
949 F. Supp. 2d 862 (N.D. Ind. 2013)
FACTS: Continental manufactures furnace-grade carbon black, a raw material filler used in tires and
other rubber and plastic products. BRC Rubber and Plastics (BRC) was a longtime customer of
Continental, purchasing carbon black for its rubber products it supplies to customers.
Continental was BRC’s exclusive supplier of carbon black at least back to 1997. From 2005 to
2008, Continental annually supplied BRC between 1.89 and 2.43 million pounds of carbon black.
Continental supplied about forty customers and its potential annual capacity for carbon black
was approximately 500 million pounds.
Thomas Nunley, a salesperson for Continental, handled the BRC account from 1997 to
May 2011. Continental had instructed its sales team “to negotiate as many long-term contracts
that we could convince our customer base to take” and to “get as much as we could committed
long term in volume[.]”
Nunley negotiated a five-year contract to sell approximately 1.8 million pounds of
carbon black to BRC, and BRC agreed to provide accurate forecasts of its needs to assist
Continental in meeting BRC requirements.
If BRC purchased between 1.5 and 2.1 million pounds of carbon black a year, the price
was two cents per pound. If BRC purchased more than 2.1 million pounds a year, it would
receive a half-cent rebate on each pound purchased that year, and if it purchased less than 1.5
million, it would pay an additional half-cent per pound penalty. The rebate or penalty increased
to one cent per pound if BRC purchased more than 2.2 million pounds or less than 1.4 million
pounds.
In late 2009, Continental internally classified BRC as a “Tier 1” customer who would get
its orders “filled first” if Continental faced a shortage of supply, and Continental and BRC clicked
along on their contract until 2011. The economy improved during late 2010 and early 2011, the
demand for carbon black increased, and its market price began to rise. Despite this high
demand, Continental was operating at a loss and had to choose between going out of business
or seeking price increases from its customers.
Nunley notified BRC on April 14, 2011, that Continental was raising its two cents per
pound base price increase to BRC effective June 1, 2011. But BRC rejected Continental's
request for a price increase, first by e-mail and then by letter, and insisted that Continental
provide adequate assurance that it would fill BRC's orders under the Agreement and “hold up its
end of the bargain.” All of Continental's other customers, however, agreed to a price increase,
most ranging from four to five cents per pound.
Continental told BRC that the price was increased and “if they did not like it, they could
get their carbon black someplace else.” On April 29, 2011 Continental employees were
instructed not to ship to fourteen customers, including BRC, due to a “negative GP [gross
profit].” Continental internally downgraded BRC from a “Tier 1” to a “Tier 3” customer.
On April 26, 2011, BRC sent Continental a purchase order for black carbon and asked
that Continental confirm the order. When Continental failed to do so, BRC sent several
additional requests for confirmation, but Continental still did not confirm the order.
By May 2011, Continental could no longer keep up with the demand for carbon black.
One of Continental’s production facilities was down for scheduled maintenance during this
high-demand time. Because of the high demand for carbon black in the preceding months,
Continental had not built up inventories and began to allocate its available supply among
customers.
Continental never confirmed BRC's April 26, 2011, order and did not send BRC the
shipment. Continental then attempted to recall a shipment released to BRC in April, instructing
Continental's plant manager that “[w]e quickly want to arrange to have this car returned to
[Continental's plant] due to the failed negotiations regarding pricing increase and payment
terms.”
In reaction to Continental's failure to confirm orders and the missed shipment, BRC's
counsel on May 16, 2011, sent a letter to Continental, demanding that it provide adequate
assurance of performance under Section 2-609.
Continental responded that it had no black carbon available. But, its records showed
that it had supplied 1.8 million pounds of black carbon to its customers in May 2011.
Nevertheless, on the morning of May 20, Continental called BRC to tell them that the
two requested shipments would be available on May 25 and June 2 but with a two-cents per
pound price increase. BRC emailed Continental that the offer was “unacceptable” because it
was “not in accordance with the terms and conditions set forth in our agreement.”
Later that same day − May 20, 2011 − Continental's in-house counsel confirmed to
BRC's counsel that Continental would “continue producing and shipping timely at the contract
prices, and w[ould] not cut off supply to BRC,” and “We will continue to do our best to supply
BRC and I will advise when another car will be shipped.”
Continental sent a single shipment of carbon black to BRC. BRC then sent a letter to
Continental, asserting that Continental had failed to adequately respond to BRC's demand for
assurance, and that Continental was in breach of the Agreement. BRC informed Continental that
it was terminating the Agreement “effective immediately” and, in fact, had just filed this lawsuit.
In an effort to settle the dispute, Continental sold and delivered another six railcar
shipments of carbon black to BRC with the total amount of carbon black sold and delivered by
Continental to BRC in 2011 reaching 1.971 million pounds. The parties ultimately could not settle
the dispute, however, and BRC ceased ordering from Continental in September 2011.
BRC moved for summary judgment.
ISSUE: Was there a contract? Did someone breach the contract? Was there a demand for
assurances?
REASONING: Continental's failure to provide adequate assurance of performance to BRC was a repudiation
of the Agreement under UCC § 2–609. Accordingly, BRC was entitled to immediately terminate
the Agreement and seek damages.
Continental argues that even if it did breach the Agreement by failing to confirm and
ship BRC's order, its breach should be excused because, beginning in March 2011, demand for
carbon black began to exceed Continental's ability to produce it. In addition, one of the two
carbon black reactors that Continental used to produce [black carbon] was down for
maintenance for several weeks and Continental had been unable to build up inventories.
Continental contends that, as a result, it was forced to allocate its available supply among
customers in May 2011, including BRC.
But, commercial impracticability provides a defense to non-performance for “only the
kind of impossibility that the parties could not have anticipated.” Here, Continental bases its
defense, at least in significant part, on an alleged shortage of carbon black due to routine
annual maintenance, which rings the death knell for the defense.
Moreover, although [Continental] told BRC on May 18 that Continental did not have any
[carbon black] “available at the moment,” Continental supplied its customers with 1.8 million
pounds of [carbon black] in May 2011 and 2.4 million pounds in June.
For these reasons, no reasonable factfinder could excuse Continental's breach of the
Agreement based on its affirmative defense of commercial impracticability.
BRC Rubber & Plastics, Inc.'s Motion for Summary Judgment is GRANTED.
ANSWERS TO QUESTIONS AND CASE PROBLEMS
1. Revocation. No. The gender of an emu is not discernible by mere external observation. The only certain
way to tell, apart from internal examination, is to observe them in mating. Smith, upon observing both
Rachel and Andrew, her two male breeders, grunting, concluded that she had two male emus and not a male
2. Right to care. Under Missouri’s enactment of UCC § 2-508, Hal-Tuc was not given seasonable notification by
CDA of its intention to cure the nonconforming tender. Also, there were no reasonable grounds for CDA to
believe that a used VCR or its use on a temporary basis would be acceptable since there was no prior
This dispute also can be seen to be a question of a lack of good faith dealing by CDA. The obligation of
good faith imposed by UCC § 1-106 is the basic principle running through the entire UCC but it is most easily
evident in sections like § 2-508. However, even if one does not use § 2-508, the same result can be reached
through the obligation of good faith. CDA, acting in good faith, would have brought to Hal-Tuc’s attention
Note that CDA’s repeated denials that used equipment was installed worked against CDA’s contention that it
made a seasonable notification of its intention to cure. Whether or not CDA was simply stalling in hopes that
3. Foreseeability. The lower court found for the board, and Bobby Murray appealed. The lower court’s
judgment was affirmed. In order to be excused under § 2-615, a seller of goods must establish that
unforeseeable events not under its control prevented it from performing its contract duties. No clause in the
Foreseeability under § 2-615 is an objective standard; it matters not whether the seller thought a certain
event would or would not occur but rather what contingencies were reasonably foreseeable at the time the
Bobby Murray also argues that it should be excused because of intervening governmental regulations.
Generally, governmental regulations do not excuse performance under a contract where a party has
assumed the risk of such regulations. Bobby Murray, by terms of the parties’ agreement, accepted
4. Revocation of acceptance. The court held that the shopping club had given the seller enough time to try and
fix the defects, that the fixes were not forthcoming and that the buyer certainly had the right of revocation of
5. Acceptance; failure to timely reject. Ms. Trivigno should not have used the decorations if she was rejecting.
6.Commercial impracticability. In the Westinghouse case, the court ruled that there was some commercial
impracticability – that is, the price of gas, the war, the energy markets, the embargo were all events that
came together than changed the uranium market fundamentally and in ways that the parties did not
7. Commercial impracticability. Interlink would have to show that there was an understanding that the contract
was exclusive delivery from the Russian mill, and not just delivery of steel in general. If it was general, no
8. Revocation of acceptance. The buyer had accepted the goods but could revoke acceptance if (1) the defects
9. Refusal to pay; change in circumstances. The court held that an attempt to raise the price was a proposal for
modification but was not, in itself, a repudiation of the contract. Something more, a statement or refusal to
10. What constitutes acceptance of goods. Yes. The use of the concrete-forming equipment for more than six
11. Adequate assurances of performance. Because Hornell had reasonable grounds for doubting performance, it
could demand adequate assurances of performance. If those assurances were not forthcoming, Hornell had
the right to terminate the contract. The ability of Spry to perform under the contract was in doubt from the
12. Rejection. There was no proper rejection of goods and the Weils were entitled to collect the price of the
painting. Not only did Murray have a reasonable time to inspect the goods, but also it is undisputed that he
13. Revocation. Yes. Supply Commission can recover. Section 2-609 provides that "[w]hen reasonable grounds
for insecurity arise with respect to the performance of either party the other may in writing demand adequate
Applying section 2-609, the Bankruptcy Court held that Trefalcon's failure to make escalation payments for
any of the twenty six residual fuel cargoes it had received by May 12, 1975, provided "reasonable grounds
N.Y.)]
14. Good faith in performance. Yes. There is an assumption that if the car is in similar condition, the dealer
would honor the original estimate. The $300 to $400 Acey offered was probably acceptable but the $50 was
15. Revocation of acceptance. The Speakses breached the contract when they failed to pay for the garments
that had been sent to them and that they had accepted for resale. They could not revoke acceptance after so
management system for classroom use.
