Lecture Dynamic business law - Chapter 24: Remedies for breach of sales and lease contracts

Chapter 24: Remedies for breach of sales and lease contracts. After reading this chapter, you will be able to answer the following questions: What constitutes a breach of a sales contract? What is resale? What money damages are available for breach? What are liquidated damages? What is cover? When is specific performance of the contract a remedy?

Chapter 24 Remedies for Breach of  Sales and Lease  Contracts Copyright © 2015 McGraw­Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw­Hill Education Goal of Contract Remedies Fulfill expectations and intentions of  parties to agreement; give them “benefit of  the bargain” negotiated 24­2 Remedies Available to Sellers and Lessors Under  UCC When buyer/lessee in breach, seller/lessor can:  Cancel contract  Withhold delivery  Sell or otherwise dispose of goods  Sue to recover purchase price, lease payments due, or some  other measure of damages that give seller/lessor “benefit of  bargain” 24­3 Liquidated Damages  Definition:  Damages specified in contract before breach  occurs  General Rule:  Parties free to negotiate, as part of contract, a  liquidated damages clause  Courts will enforce liquidated damages clause, provided it is  “reasonable” and “non­punitive”  UCC Section 2­718:  Allows non­breaching seller to claim  against breaching buyer twenty percent of purchase price or  $500, whichever is less, as liquidated damages 24­4 Remedies Available to Buyers/Lessees Under UCC When seller/lessor in breach, buyer/lessee can:  Cancel contract  Obtain “cover” (Substitute goods)  Sue to recover damages  Recover goods  Obtain specific performance  Reject nonconforming goods  Revoke acceptance of nonconforming goods  Accept nonconforming goods and seek damages 24­5 Elements Necessary to Obtain Legal “Cover”    Buyer must:  Demonstrate “good faith” in obtaining substitute goods  Pay reasonable amount for substitute goods  Act without “unreasonable delay” in purchasing substitute  goods  Purchase goods that are reasonable substitutes 24­6 Modification of/Limitations to Remedies Otherwise  Provided by UCC  Parties to sales and lease contracts are allowed to modify/limit  remedies  Courts uphold modifications/limitations to remedies, unless  remedies fail in their “essential purpose” 24­7 ...Goal of Contract Remedies Fulfill expectations and intentions of parties to agreement; give them “benefit of the bargain” negotiated 24­2 Remedies Available to Sellers and Lessors Under ... Modification of/ Limitations to Remedies Otherwise  Provided by UCC  Parties to sales and lease contracts are allowed to modify/limit  remedies  Courts uphold modifications/limitations to remedies,  unless  remedies fail in their “essential purpose”... Sue to recover damages  Recover goods  Obtain specific performance  Reject nonconforming goods  Revoke acceptance of nonconforming goods  Accept nonconforming goods and seek damages 24­5 Elements Necessary to Obtain Legal “Cover”