Contracts - Performance of Article 2 Contracts - 6 concepts Flashcards Preview

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Flashcards in Contracts - Performance of Article 2 Contracts - 6 concepts Deck (15)
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1

What are the six performance of article 2 contracts concepts?

(1) Perfect Tender

(2) Rejection of Goods

(3) Cure

(4) Installment Contracts

(5) Acceptance of Goods

(6) Revocation of Acceptance of the Goods

2

What are the three important things to know about "perfect tender"?

(1) Perfect tender only applies to sales of goods

(2) Perfect tender does not mean that the seller's performance must be perfect rather the goods and delivery must conform to the contract terms.

(3) A less than "perfect tender" by the seller generally gives the buyer the option of rejection of the deliver goods, so long as the buyer acts in good faith.

3

Four things to know about rejection of goods.

(1) Distinguish rejection of an offer from rejection of goods.

(2) If the seller does not meet the perfect tender standard, the buyer has the option to retain and sue for damages or reject "all of any commercial unit" and sue for damages.

(3) Buyer must take reasonable care of the rejected goods and should not continue to use reject goods.

(4) Rejection alternative is limited by cure, installment contracts, and acceptance.

4

When a seller fails to make perfect tender, when do they have an opportunity to cure?

(1) Seller's has reasonable grounds to believe delivery would be acceptable, perhaps with money allowance.

*[Limited situation] Look for information about prior deals. (i.e. in the past accepted alternative colored widgets]

(2) Time for performance has not yet expired.

5

What is an installment contract and when can a buyer reject an installment?

An installment contract requires or authorizes

(i) delivery of goods in separate lots (ii) to be separately accepted.

The buyer has the right to reject an installment only where there is a substantial impairment in that installment that can't be cured.

6

What is the importance of acceptance of the goods?

If the buyer accepts the goods, it cannot later reject them.

7

Do you need to have an opportunity to inspect?

Payment without opportunity for inspection is no acceptance.

8

When must a buyer reject goods?

Rejection must be timely. Failure to reject after the buyer had reasonable time to reject is acceptance of goods.

9

What is the effect of the buyer keeping the goods?

Its an implied acceptance if they are kept without objection.

10

What is the effect of a revocation of the acceptance of goods?

Same a rejection of the goods: Buyer returns the goods and the seller returns payments made.

11

Requirements for revocation of acceptance:

(1) Nonconformity substantially impairs the value of the goods; and

(2) excusable ignorance of grounds for revocation or reasonable reliance on seller's assurance of satisfaction; and

(3) revocation within a reasonable time after discovery of nonconformity.

12

Rejection vs. Revocation - Timing

Rejection - Early, before acceptance of goods

Revocation - Later after acceptance

13

Rejection vs. Revocation - Standard

Rejection: Generally, perfect tender

Revocation: Substantial impairment

14

Three additional requirements for Rejection and Revocation (common)

(1) Seasonably notify seller

(2) holds the good for seller

(3) Follow reasonable seller instructions

15

Consequences for Rejection and Revocation (Common)

(1) Goods back to seller

(2) No buyer payment obligation.