Remedies

Question 1

1-305: Seller’s Remedies to be Liberally Administered

Answer 1

sets down two principles that are significant for a seller’s remedies:

1. that the goal of all the remedy provisions in the Code is “that the aggrieved party may be put in as good a position as if the other party had fully performed,” (Benefit of the Bargain) and
2. That consequential damages are not allowed unless there is specific provision made for them in the Code.

Question 2

2-703: Seller is Entitled to the Benefit of the Bargain: (Buyer may breach by (4)

Answer 2

1.Wrongfully rejecting goods
2.Wrongfully revoking acceptance of goods
3.Failing “to make payment due on or before delivery”
4.Wrongful repudiation (backing out) of the contract

Question 3

2-703: Seller’s Specific Remedies (7)

Answer 3

1. Withhold delivery
2. Stop Delivery by carrier or other bailee 2-705
3. Identify goods to contract 2-704
4. Resell and recover damages 2-706
5. Recover contract-market damages for non-acceptance 2-708
6. In proper case, sue for price 2-709
7. Cancel the contract

Question 4

STEP BY STEP ANALYSIS for Seller’s Remedies

Answer 4

1.Buyer Breaches = 2-701 remedies available
2.Goods in Transit = Withhold (2-703) Or stop delivery 2-705
3.Resale Viable = Resell and Recover 2-206
4.Resale not possible or not whole recovery = Damages 2-708(1)
5.Lost Volume Situation = 2-708(2)
6.Buyer Accepted or goods non-sellable = Sue for Price 2-709
7.Unfinished goods = Decide to finish goods 2-704
8.Goods lost after breach = Buyer may bear risk 2-510(3)
9.At All Times Apply 1-305 Liberal Remedy Rule

Question 5

2-705: Seller’s Stoppage of Delivery in Transit or Otherwise (3)

Answer 5

Remedy if goods are already with carrier (in transit)

1. If Buyer breaches, Seller can stop delivery
2. In Buyer cant pay, Seller can stop delivery of any size shipment
3. If the Buyer just repudiates or breaches, the Seller can only stop large shipments

Question 6

2-706: Seller’s Resale Including Contract for Resale (4)

Answer 6

1. Gives Non-breaching Seller the right to Resell goods if the Buyer breaches
2. The Seller must make the resale in good faith and in a commercially reasonable manner
3. Seller gives Buyer notice of Resale
4. The Seller can then recover the difference between the contract price and the resale price, plus any incidental damages

Question 7

What is the Formula under 2-206: Seller’s Resale?

Answer 7

KP-RP+ID-ES
Contract Price - Resale Price + Incidental Damages - Expenses saved from Buyer’s breach

Question 8

2-208(1): Seller’s Damages for Non-Acceptance or Repudiation

Answer 8

1. This is a backup remedy when resale doesn’t happen (or fails to meet 2-706’s requirements)
2. Seller gets the difference between the contract price and market price at time/place of tender, plus incidental damages, minus expenses saved
   Formula: KP (Contract Price) – Mkt Price (Market Price) + ID (Incidental Damages) - ES (Expenses saved)
3. If above is inadequate, Seller can instead recover lost profits

Question 9

2-208(2): The Lost Volume Seller:

Answer 9

1. Occurs if the measure of damages “is inadequate to put the seller in as good a position as performance would have done”. It provides for seller’s lost-profit damages
2. Damages = The profit (including reasonable overhead) which the seller would have made from full performance by the buyer, together with any incidental

Question 10

Lost Volume Seller: Burden of Proof is on the Seller, who must prove:

Answer 10

1. That its ultimate sale to a third party of the goods as to which the buyer breached would have occurred even if the buyer had not breached, and
2. That the seller’s ability to sell these goods was greater than the current buyer demand for them (e.g., but for buyer’s breach, seller would have made one more sale

Question 11

Lost Volume Seller Formula

Answer 11

Formula = KP (contract price) – DC (direct costs) + ID (incidental damages)

Question 12

2-709: Action for Price: Buyer Accepted Goods or Goods Non-Sellable

Answer 12

Allows Seller to sue for the full contract price in specific situations:
1. If the Buyer accepted the goods and then refuses to pay

2. If the goods were lost or damaged after risk of loss passed to the Buyer, and the Buyer still hasn’t paid
3. Requires showing a contract with a buyer who accepted the goods but failed to pay for them and Seller made reasonable efforts to resell the goods to other Buyers

Question 13

2-204: Seller’s Stoppage of Delivery in Transit or Otherwise

Answer 13

Goods are not finished or identified:
1. Seller may identify goods to the contract after breach
2. Seller may complete or stop manufacturing - which is commercially reasonable

Question 15

Buyer’s Remedies: Step by Step Analysis

Answer 15

1. Sellers Breaches = Go to 2-711
2. Buyer Decides whether to:
   - Cover 2-712: Get price difference
   -Or sue for market damages = 2-713
   -Or claim warranty warranty damages 2-714 if goods were accepted
3. Add on:
   a. 2-715: for extra costs and harm
   b. 2-716: If Buyer wants the actual goods
   c. 2-717: If Buyer wants to reduce payment
   d. Check for 2-718 Clause if damages were pre-agreed

Question 16

2-711: Buyer’s Remedies in General: Buyer’s security interest rejected goods: When Can the Buyer Act? (3)

Answer 16

1. Failing to Deliver
2. Repudiating (backing out)
3. The buyer rightfully rejects or justifiably revokes acceptance of the goods

Question 17

2-711: What Can the Buyer Do? (3)

Answer 17

1. Cancel the Contract
2. Cover (buy replacement goods) and recover the difference in cost (2-712) OR
3. Recover damages for non-delivery (2-713)