B-1
ALTERNATE CASE PROBLEM ANSWERS
CHAPTER 22
PERFORMANCE AND BREACH
OF SALES AND LEASE CONTRACTS
22-1A. Right to cure
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 short one—to cure the breach if it can.” The court
22-2A. Limitation of remedies
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
B-2 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 22
22-3A. Acceptance
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
22-4A. Remedies of the buyer or lessee
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 Circuit. The court held in part that MCC provided adequate notice of the
22-5A. Acceptance
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
APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 22 B-3
22–6A. Perfect tender
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 intermediate appellate court, which also ruled against SAVA on this point.
22–7A . Remedies of the buyer
The court ruled that the Waddells reasonably revoked their acceptance of the RV. Wheeler’s
appealed to the Nevada Supreme Court, which affirmed this part of the lower court’s judgment.
Under UCC 2–608, a buyer can revoke acceptance if a good has a “nonconformity [that]
substantially impairs its value” and the buyer accepted the good on the understanding that the
seller would cure the nonconformity or the buyer was unaware of the nonconformity, which was
B-4 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 22
22–8A. Breach and damages
Yes, there was a contract as the dirt was not a gift. Utility saved resources by not having to haul
the dirt a greater distance, so it received something of value in the bargain. General damages
were in order. DeRosier did not have to accept Utility’s offer to do the job for $9,500 since he did
22–9A. Right of inspection
Yes, Scoggins-Dickey had the right and—to reject the goods—the obligation to inspect the
vehicles when it did. Unless the parties agree otherwise, a buyer has a right to inspect goods
22–10A. A QUESTION OF ETHICS
1. 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
the buyer; (2) the buyer revokes within a reasonable time based on difficulty in discovering
defects or because the seller provided assurances; and (3) the buyer revokes before any
APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 22 B-5
substantial change in the goods not caused by their own defects.” Scotwood filed a motion for
summary judgment on Miller’s counterclaim.
On the question of substantial impairment, the court cited Miller’s claim that “only 30–
2. One possible ethical basis for a buyer’s right of revocation is the “fairness” of allowing
the buyer to recover for defects in goods that could not have been reasonably discovered before
the goods were accepted. It would be unjust to enforce a deal in which a seller would have
otherwise been held in breach.