Performance

Question 1

On Delivery, Consumer Buyer has Two Options:

Answer 1

1. 2-606: Accept the goods
2. 2-601: Reject the goods (The Perfect Tender Rule)

Question 2

Closing with Sale: On Delivery of the goods, the Buyer always has a reasonable opportunity to inspect: (3)

Answer 2

1. Buyer may Reject the goods and put them back into Seller’s possession (2-601)
2. Buyer has second, limited opportunity to unravel the transaction, by revoking acceptance (2-608)
3. Even after time to revoke, the Buyer may have recourse against the Seller under warranties or under other contract terms (2-714)

Question 3

Step by Step Analysis of Closing the Sale with Sale of Goods:

Answer 3

1. Delivery Happens: if non-conforming goods, Buyer decides under 2-601 (reject, accept, or mix)
2. If Rejected:
   - Must follow 2-602 (how to reject properly
   -If a Merchant: 2-603
   -If No Seller response: 2-604
   -Seller may try to fix under 2-508
3. If Accepted:
   -Rules under 2-606 apply
   -Buyer can later revoke under 2-608
   -If Buyer keeps goods despite defects, they must seek damages under 2-714
4. Special Cases:
   -Installment Contracts, 2-612 decides breach rules
   -Once Accepted, 2-607 determines Buyer’s responsibilites

Question 4

The Perfect Tender Rule:

Answer 4

Concept in UCC 2-601 that gives Buyers strong rights when Sellers deliver nonconforming goods

Question 5

Exceptions to the 2-601 Perfect Tender Rule

Answer 5

1. Installment Contracts: delivery in installments cannot be rejected in whole unless non-conformity substantially impairs the value
2. Contractual Limitations: if parties agree in contract to limit Buyer’s rights to reject minor defect
3. Seller’s Right to Cure: Seller might have the right to fix the problem and deliver conforming goods
4. Commercial Leeway: arising from trade usage, course of performance, course of dealing

Question 6

2-601: Buyer’s Right on Improper Delivery (3)

Answer 6

Allows Buyer to:
1. Reject the whole shipment
2. Accept the whole shipment
3. Accept part and reject part

Question 7

2-602: Manner and Effect of Rightful Rejection

Answer 7

If Buyer rejects the goods:
1. They must hold them with reasonable care for short time

2. They cant use or sell them
3. They have no further duty after notifying the Seller

Question 8

2-603: Merchant buyer’s Duties for Rejected Goods: (2)

Answer 8

1. If the Buyer is a Merchant, they must follow reasonable instructions from the Seller about what to do with rejected goods
2. If no instructions are given, the Buyer should make efforts to resell them if the goods are perishable

Question 9

2-604: Buyer’s Options When Seller Gives No Instructions: (3)

Answer 9

If the Seller doesn’t respond to a rightful rejection, the Buyer may:

1. Store the goods
2. Ship them back
3. Resell them and recover expenses

Question 10

2-508: Seller’s Right to Cure (2)

Answer 10

If a Seller delivers non-conforming goods

1. They can fix the issue before the contract deadline
2. If they had a reasonable belief the goods would be accepted, they get extra time to substitute a proper delivery

Question 11

2-606: How does the buyer accept (rather than reject) the goods that have been delivered? (3)

Answer 11

1. Affirmative signification of acceptance despite any issues
2. Failure to reject following a reasonable opportunity to inspect
3. An act of the buyer that is inconsistent with the seller’s ownership

Question 12

2-608: Revocation of Acceptance in Whole or in Part (3)

Answer 12

A Buyer Can Revoke Acceptance If:

1. A defect substantially impairs the value of the goods
2. They accepted the goods thinking the issue would be fixed but it wasn’t
3. The defect was hard to discover initially

Question 13

2-714: Buyer’s Damages for Breach Regarding Accepted Goods (2)

Answer 13

If the Buyer keeps defective goods, they can claim damages based on

1. The difference in value between what was promised and what was received
2. Additional consequential damages (ex: lost profits)

Question 14

2-612: Installment Contracts Breach: (2)

Answer 14

For Installment Contracts (where goods are delivered in parts)

1. The Buyer can reject a single installment if it substantially impairs its value
2. The Buyer can cancel the entire contract if one bad installment ruins the value of the whole deal

Question 15

2-607: Effect of Acceptance: Notice of Breach

Answer 15

Once the Buyer Accepts the Goods:
1. They must pay for them
2. They can no longer reject them
3. They must notify the Seller if they later find a defect

Question 16

2A-209: Closing with Leases:

Answer 16

Deals with Leases rather than the Sale of Goods

Question 17

Step by Step for Closing a Lease Deal:

Answer 17

1. Lease Agreement includes terms
   -The Lessee’s rights under the Supplier Contract 2A-209
   -Any Implied Warranties (2A-212) or Exclusions (2A-215)
2. Lessee Takes Possession:
   -If its a finance lease, payments become irrevocable 2A-407

3.If Goods are Defective or Wrong
-Lessee can reject them 2A-516
-If rejected, Lessee may seek remedies 2A-517

4. Legal Remedies if there’s a dispute
   -Lessee can enforce warranties or take action against Supplier 2A-209
   -If the Lessor tries to enforce payment despite problems, (2A-407) might block defenses unless exceptions apply

Question 18

2A-209: Lessee Under Finance Lease as Beneficiary of Supply Contract (2)

Answer 18

1. In a finance lease, the lessee (user of the goods), benefits from the supplier’s promises to the lessor (financing entity)
2. If the Supplier breaches, the Lessee can enforce the Supplier’s contract as if they were the direct Buyer

Question 19

2A-212: Implied Warranty of Merchantability and Fitness for a Particular Purpose

Answer 19

Just like in sales, leased goods come with implied warranties:

1. Merchantability: Goods are of average quality and fit for normal use
2. Fitness for a Particular Purpose: If the Lessor knows the Lessee’s needs, the goods must meet them
3. Protects Lessee’s from getting defective or unsuitable goods

Question 20

2A-215: Exclusion or Modification of Warranties (3)

Answer 20

Allows Lessor’s to Exclude or Modify warranties, BUT:

1. Must be done clearly and conspicuously
2. “As-is” Clauses are allowed but must be explicit
3. Limits the Lessee’s ability to claim a breach based on implied warranties

Question 21

2A-407: High or Hell Water Clause (Lessee’s Irrevocable Promise to Pay) (3)

Answer 21

1. In a Finance Lease, once the Lessee accepts the goods, they must keep paying, even if the goods turn out to be defective
2. The Lessee’s only remedy is to sue the Supplier or claim warranties
3. Protects financing companies from non-payment

Question 22

2A-516: Procedure for Lessee’s Rejection

Answer 22

If leased goods don’t conform, the Lessee can reject them, but they must:
1. Notify the Lessor within a reasonable time
2. Care for the goods if they are in their possession

Question 23

2A-517: Lessee’s Remedies for Default by Lessor (3)

Answer 23

If the Lessor breaches (delivers defective goods) the Lessee can:

1. Cancel the lease
2. Recover damages
3. Seek substitute goods

If the Lessor wrongfully rejects return of the goods, the Lessee isn’t stuck with them

Question 24

Risk of Loss with Sale of Goods:

Answer 24

Defines which party, between the buyer and the seller, is responsible for the destruction of or damage to goods that occurs between the time that the contract is entered into and the time that the buyer receives possession of the goods

Question 25

Risk of Loss: Who Bears the Risk of Loss? (3)

Answer 25

1. if the parties specifically agree when risk of loss will pass, that agreement governs; 2. If one of the parties causes the loss in question, the negligent party assumes that loss; and 3. If one of the parties is in breach of its obligations under the contract, then the special rules of §2-510 will determine when risk of loss passes from seller to buyer.

Question 26

2-504: What is Shipment Contract (FOB Sellers Place)?

Answer 26

1. Seller completes delivery obligations when she gets goods to common carrier (third party in transportation system) 2. ROL passes to the Buyer when the Seller delivers to carrier

Question 27

In Shipping Contract, what is the Seller responsible for? (3)

Answer 27

1. Getting the goods to the carrier 2. Making a reasonable shipping contract (the mode of transport selected having regard to the nature of the goods) 3. Notifying the Buyer about the Shipment

Question 28

2-209: What is a Destination Contract (FOB Buyers Place)?

Answer 28

Risk during shipping remains with seller and does not shift to buyer until the goods are tendered to the buyer at the stated destination, and the seller is responsible for paying the cost of freight

Question 29

2-503 In Destination Contract, what is the Seller Responsible for? (4)

Answer 29

1. Put and hold the goods at the buyer’s disposition for the period necessary for the buyer to take possession 2. Tender must be at a reasonable hour 3. give the buyer notice of tender, and 4. give the buyer any documents that are needed for the buyer to take delivery

Question 30

2-510 Breach by Buyer or Seller

Answer 30

1. Breach By Seller (Before Acceptance): risk of loss falls on Seller until cure or acceptance 2. Breach By Buyer (After Accepting): risk of loss falls on Seller but only to extent Buyer's insurance doesn't cover 3. Breach By Buyer (Backing out): risk of loss falls on Buyer but only to extent Sellers insurance doesn't cover

Question 31

2-308: Place of Delivery Not Specified (2)

Answer 31

1. goods are considered to be delivered at Seller’s place of business 2. If place of delivery is not specified, the risk of loss will pass when the goods are delivered to the carrier, just like in a shipment contract