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Ch17-SG-BLTS-8e

Ch17-SG-BLTS-8e

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Published by: Holli Smith Boyd-White on Jun 29, 2010
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12/09/2012

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Chapter 17: 
Performance and Breach of Salesand Lease Contracts
115
 
W
HAT
 
THIS
C
HAPTER
I
S
A
BOUT
This chapter examines the basic obligations of a seller and a buyer under a sales contract, and a lessor and alessee under a lease contract, and the remedies each party has if the contract is breached. The general purpose of theremedies is to put a nonbreaching party “in as good a position as if the other party had fully performed.”
C
HAPTER
O
UTLINE
I. PERFORMANCE OBLIGATIONS
The obligations of good faith and commercial reasonableness underlie every contract within the UCC [UCC1–203]. The obligation of the seller or lessor is to tender and deliver conforming goods. The obligation of the buyer or lessee is to accept and pay for the goods [UCC 2–301, 2A–516(1)].
II. OBLIGATIONS OF THE SELLER OR LESSOR
A seller or lessor must have and hold conforming goods at the disposal of the buyer or lessee and givewhatever notice is reasonably necessary to enable the buyer or lessee to take delivery [UCC 2–503(1), 2A–508(1)].
A. T
ENDER
 
OF
D
ELIVERY
At a reasonable hour, in a reasonable manner, and the goods must be kept available for a reasonable time[UCC 2–503(1)(a)]. Goods must be tendered in a single delivery unless parties agree otherwise [UCC 2–612, 2A–510] or, under the circumstances, a party can request delivery in lots [UCC 2–307].
B. P
LACE
 
OF
D
ELIVERY
Parties may agree on a particular destination, or the contract or the circumstances may indicate a place.
1. Noncarrier Casesa. Seller’s Place of Business
If the contract does not designate a place of delivery, and the buyer is to pick up the goods, theplace is the seller’s place of business or if none, the seller’s residence [UCC 2–308].
b. Identified Goods That Are Not at the Seller’s Place of Business
Wherever they are is the place of delivery [UCC 2–308].
2. Carrier Casesa. Shipment Contract
The seller must [UCC 2–504]—
1)
Put the goods into the hands of a carrier.
2)
Make a contract for the transport of the goods that is reasonable according to their natureand value.
3)
Tender to the buyer any documents necessary to obtain possession of the goods from thecarrier.
116
 
4)
Promptly notify the buyer that shipment has been made.
5)
If a seller fails to meet these requirements, and this causes a material loss or a delay, the buyer can reject the shipment.
b. Destination Contract
The seller must give the buyer appropriate notice and any necessary documents of title [UCC 2–503].
C. T
HE
P
ERFECT
T
ENDER
R
ULE
A seller or lessor must deliver goods in conformity with every detail of the contract. If goods or tenderfail in any respect, the buyer or lessee can accept the goods, reject them, or accept part and reject part[UCC 2–601, 2A–509].
D. E
XCEPTIONS
 
TO
 
THE
R
ULE
1. Agreement of the Parties
Parties can agree in their contract that, for example, the seller can repair or replace any defectivegoods within a reasonable time.
2. Curea. Within the Contract Time for Performance
If nonconforming goods are rejected, the seller or lessor can notify the buyer or lessee of anintention to repair, adjust, or replace the goods and can then do so within the contract time forperformance [UCC 2–508, 2A–513].
b. After the Time for Performance Expires
The seller or lessor can cure if there were reasonable grounds to believe the nonconformancewould be acceptable. (“Reasonable grounds” include nonconforming tender with a priceallowance.)
c. Substantially Restricts the Buyer’s Right to Reject
If the buyer or lessee refuses goods but does not disclose the nature of the defect, he or shecannot later assert the defect as a defense if it is one that could have been cured [UCC 2–605, 2A–514].
3. Substitution of Carriers
If, through no fault of either party an agreed manner of delivery is not available, a substitute issufficient [UCC 2–614(1)].
4. Installment Contractsa. Substantial Nonconformity
A buyer or lessee can reject an installment only if a nonconformity substantially impairs thevalue of the installment and cannot be cured [UCC 2–612(2), 2–307, 2A–510(1)].
b. Breach of the Entire Contract
A breach occurs if one or more nonconforming installments substantially impair the value of thewhole contract. If the buyer or lessee accepts a nonconforming installment, the contract isreinstated [UCC 2–612(3), 2A–510(2)]
5. Commercial Impracticability

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