ALTERNATE CASE PROBLEM ANSWERS
CHAPTER 21
PERFORMANCE AND BREACH OF SALES
AND LEASE CONTRACTS
21-1A. Right to cure
(Chapter 21—Pages 402–403)
The court granted Metro-North’s motion for summary judgment, awarding Metro-North the difference
between the Sinco contract price and the Surety contract price. The court acknowledged that “a
material breach justifies the injured party in exercising a right to self–help by suspending performance,”
but “it does not necessarily justify the injured party in exercising such a right by terminating the
contract. Fairness ordinarily dictates that the party in breach be allowed a period of time—even if only a
tender.” This Sinco did not do.
21-2A. Assurances
(Chapter 21—Pages 405–406)
The federal district court ruled in favor of Falco. BAII appealed. The U.S. Court of Appeals for the
Second Circuit held that Falco did not have reasonable grounds on which to demand assurances under
UCC 2–609. The court reversed the judgment of the lower court and remanded the case for further
B-88 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 21
negates Falco’s claim that as of 4:00 P.M. on January 23, it had reason to feel insecure as to whether Will
would perform the * * * [a]greement. Falco cannot rely upon its own conduct in not permitting the
21-3A. Limited remedies
(Chapter 21—Pages 415–416)
The court enforced the limitation–of-liability clause. The court pointed out that UCC 2–719 allows
contracting parties, “especially sophisticated, commercial entities,” to agree to the limitation of
21-4A. Limitation of remedies
(Chapter 21—Pages 415–416)
Figgie filed a motion for summary judgment, which the court granted, and Seralles appealed. The U.S.
Court of Appeals for the Fourth Circuit affirmed the judgment of the lower court. The appellate court
explained that there was a dispute over the wording of the contract but concluded that in the absence
of language to the contrary, the usage of trade in the industry in which these parties were involved
dictated a term limiting Seralles’s remedy to repair, replacement, or refund. Did this term, as Seralles
contended, fail in its essential purpose? The court acknowledged that if the provision had failed in its
2–719(1)(a)] and contemplated by the agreement. Serralles’ contention that a seller eliminates the
remedy of “refund” simply by electing to attempt repair or replacement is unpersuasive. On the
21-5A. Commercial impracticability
(Chapter 21—Pages 403–404)
The court pointed out that UCC 2–615 addresses the doctrine of commercial impracticability in the
context of a sale of goods. The court stated that, for the failure of a sole source to excuse performance
under this doctrine, the source must have been “mutually contemplated by the parties as the sole
source of supply [and] the failure must not have been foreseeable at the time of the contracting.” It was
clear that both parties knew GFI was Manley–Regan’s sole source for the antimony oxide. The court
21-6A. Acceptance
(Chapter 21—Page 407)
The court concluded that “by reselling frogs from the 14 containers, S.A.M. accepted them as ‘keepers’
under the contract.” UCC 2–607(1) states that “the buyer must pay at the contract rate for any goods
accepted by it.” Under UCC 2–606(1), “[a]cceptance of goods occurs when the buyer . . . (b) fails to
21-7A. Limitation of remedies
B-90 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 21
court’s award, the Supreme Court of Vermont held, among other things, that the limitation clause was
21-8A. Remedies of the buyer or lessee
(Chapter 21—Pages 414–415)
A jury awarded MCC damages in the amount of $4,422,876.92 for lost profits during the different
periods when the train was malfunctioning. Dresser appealed to the U.S. Court of Appeals for the Fifth
21-9A. Acceptance
(Chapter 21—Page 407)
Acceptance occurs if, after a reasonable opportunity to inspect goods, a buyer signifies agreement that
the goods are conforming, or otherwise acceptable, or fails to reject the goods, or if the buyer performs
any act inconsistent with the seller’s ownership, such as reselling the goods. In this case, Excalibur
apparently manifested acceptance by paying Walker’s invoices and reselling the goods. Despite these
21-10A. Perfect tender
(Chapter 21—Pages 405–406)
The court, among other things, awarded damages to Advanced Polymer Sciences, Inc. (APS) against
SAVA gumarska in kemijska industria d.d. (SAVA) for breach of contract. SAVA appealed to a state