Lecture Dynamic business law - Chapter 23: Performance and obligations under sales and leases

After reading this chapter, you will be able to answer the following questions: What is the perfect tender rule? What is the difference between conforming and nonconforming goods? What is the right to cure? What is a revocation of the contract as compared to rejection of nonconforming goods? What is commercial impracticability?

Chapter 23 Performance and  Obligations Under  Sales and Leases Copyright © 2015 McGraw­Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw­Hill Education The Basic UCC Performance Obligation  Sellers and lessors are obligated to transfer and deliver  conforming goods  Buyers and lessees are obligated to accept and pay for  conforming goods in accordance with terms of contract  “Good faith” required in performance and enforcement of  every contract 23­2 “Good Faith”  Definition:  Honesty in fact  In transaction between merchants, UCC also imposes  obligation of reasonable commercial standards of fair dealing  (“commercial reasonableness”) 23­3 “Perfect Tender” Rule    States that if goods or tender of delivery fail in any respect to  conform to contract, buyer/lessee has right to:   1) accept the goods;   2) reject entire shipment; or    3) accept part and reject part 23­4 Exceptions to “Perfect Tender” Rule  Industry standards  Past dealings between parties  Agreement between parties  Seller’s/lessor’s right to cure  Excuse from performance when identified goods destroyed through no fault  of parties  “Substantial impairment” (as it relates to revocation of acceptance and  installment contracts)  Commercial Impracticability 23­5 “Commercial Impracticability”  Doctrine Delay in delivery or non­delivery may not, in  court’s discretion, constitute breach if  performance made impracticable because  contingency has occurred that was not  contemplated when parties reached agreement 23­6 Inspection, Rejection and Revocation of Acceptance  Seller/lessor must provide buyer opportunity to inspect goods  “Reasonableness” governs inspection process  Post­inspection, buyer has option to accept, partially accept, reject, or  revoke acceptance   UCC guidelines govern right to exercise particular options post­ inspection Buyers/lessees must give reasonable notice upon exercising right of  rejection/revocation of acceptance 23­7 ...The Basic UCC Performance Obligation  Sellers and lessors are obligated to transfer and deliver  conforming goods  Buyers and lessees are obligated to accept and pay for  conforming goods in accordance with terms of contract... “Good faith” required in performance and enforcement of  every contract 23­2 “Good Faith”  Definition:  Honesty in fact  In transaction between merchants, UCC also imposes  obligation of reasonable commercial standards of fair dealing ...   3) accept part and reject part 23­4 Exceptions to “Perfect Tender” Rule  Industry standards  Past dealings between parties  Agreement between parties  Seller’s/lessor’s right to cure  Excuse from performance when identified goods destroyed through no fault