UCC Sales: Lawrence Problems and Answers

UCC Sales Problems



Problems on Goods to be Severed From the Land


1.  Seller (S) owned a building which she orally contracted to sell to Buyer (B), who was to remove it from its concrete foundation, put it on skids, and drag it away.  Before removal, S repudiated.  S defends her action by asserting the statute or frauds.  (The statutes of frauds provisions specify which contracts must be in writing in order to be enforceable).  Does the statute of frauds section of Article 2 apply to this contract?


In order for the statute of frauds provisions to apply, article 2 of the UCC must apply to this transaction.  Therefore, it is necessary to figure out whether the UCC applies to this type of transaction or not.


§2-105 states that, “Goods” also includes…growing crops and other identified things attached to realty as described in the section on goods to be severed from realty (§ 2-107).


§ 2-107(1) states that, A contract for the sale of minerals or the like (including oil and gas) or a structure or its materials to be removed from realty is a contract for the sale of goods within this Article if they are to be severed by the seller but until severance a purported present sale thereof which is not effective as a transfer or an interest in land is effective only as a contract to sell.


Buyer was to remove the edifice, so this subsection does not apply.  In order for the UCC to apply, the seller must remove the good from the land.  The Statute of Frauds for article 2 of the UCC does not apply, however the SOF for land transactions does apply.  Since the buyer is to sever, this transaction is a contract is a contract effecting land and all problems of the Statute of Frauds and of the recording of land rights apply to them.


2.  Seller (S) agreed to sell Buyer (B) timber to be severed by S.  S severed half of the timber.  Before B could haul it away, a fire destroyed all of the timber that B agreed to buy, standing and severed.  Do the Article 2 provisions on the risk of loss apply?


Yes.  § 2-107(2) if the wheat can be severed from the land without material harm thereto, § 2-107(2) states that Article 2 governs the transaction.  The timber is a growing crop.  With this type of agreement, it is irrelevant whether or not the seller or the  buyer severs the crop from the land.   It doesn’t matter if the buyer of the seller cuts the timber, it will be a sale of goods, not real estate.


What if instead of timber, it was gallons of oil, under the property, but you had to drill it.  Contract if the seller does the drilling,


3.  Farmer (F) agrees to sell his wheat crop, yet to be harvested, to Buyer (B) for $55,000 or $60 a bushel, whichever is higher.  Shortly before the harvesting is to begin, B repudiates.  Does Article 2 govern F’s remedial rights?


Does article 2 govern the buyer’s remedial rights?  2-107(2).  This is a scope questions.  Will the remedial rights be found in article 2, or the common law.  Article 2 will govern this transaction if it is for the sale of goods.


Yes.  § 2-107(2) if the wheat can be severed from the land without material harm thereto, § 2-107(2) states that Article 2 governs the transaction.  The wheat is a growing crop.   It does not matter who harvests the crop.


Made explicit within the statute, you have parsed the statute, but you left out a very important part of the requirement, it doesn’t stop where you stop.  BUT NOT DESCRIBED IN SUBSECTION I. 


Questions on Offer and Acceptance



§2-204 Formation in General

§2-205 Firm Offers

§2-206 Offer and Acceptance in Formation of Contract

§2-207 (Some aspects involve contract formation.)


2.  Why so little?  There is a lot of law in the common law.  It would be tough to codify all the holdings of contract law and reduce it to several provisions.


3.  How is a contract for the sale of goods formed?  Are offer and acceptance required?


According to §2-204 of the UCC, a contract for the sale of goods may be made in any manner sufficient to show agreement.  On its face the UCC does not require offer and acceptance per se, as long as there is an agreement.


4.  If S sends a telegram to B offering to sell B specified goods, does B have to respond by telegram in order to accept?  By a means of transmission at least as fast as telegram service?


No, according to UCC § 2-206(1)(a), “an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances.”


As long as the medium which the buyer chooses is deemed as ‘reasonable’ then there is offer and acceptance.


5.  If an offeror indicates that an acceptance must be by a return promise by telephone to the offeror in two days, can the offeree nevertheless create a contract by other means?


If the terms of the contract are unambiguously indicated by the language of the circumstances, then no, offeree cannot create a contract by other means.  §2-206(1)


Offeror has unambiguously indicated.  What if these two parties have dealt with each other in the past and the buyer never complies and never pays any attention to the two day limitation and the seller always goes along with it.  The circumstances do not suggest that this is an unambiguous demand. 


6.  Does a contract for the sale of goods fail if the parties do not specify the price to be paid for the goods?


No, not necessarily.  §2-204(3) states that “Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make contract and there is a reasonably certain basis for giving and appropriate remedy.”


Did the parties intend to make a contract?


Is there a reasonably certain basis for giving an appropriate remedy?  


Used to be that a contract failed if any material terms were left open, and this lead to considerable litigation to what is considered a material term.  A lot of courts literalize this and have become more willing to find a contract formed even though certain basic terms are missing.  The drafting here is horrible according to the professor.  You must convince the court that the parties intended to make a contract.  The court must have an appropriate bases for determining what that term is.  Code drafts a number of default provisions. 


Indicate a way in which the standard may be easily satisfied or fail.  Parties have the intent and agree on many of the terms over the sale of a painting but can’t come to an agreement on a price.  They agree to designate an art appraiser, both pay the fee and that is the contract price.  Before he appraises the painting the identified appraiser dies.  Why did the parties pick this particular appraiser?    Can the court select another appraiser, or did the parties want him for his specific judgment, this contract will fail for indefiniteness.


Questions on Firm Offers


1. The offeror is a book salesman offering to buy an electric range.


This is not a firm offer since the book salesman is not a merchant in the strict sense of the term because he does not regularly deal with electric ranges, he regularly deals with books.  See §2-104 for the definition of “merchant.”


A person who is engaged in selling goods of that kind.  Is a book salesman a merchant, yes, in respect to books, but not in the selling of an electric range. 


2.  The offer is oral.


According to §2-205, a firm offer must be a signed writing. 


What is a writing?  1-201, no this is not a writing.


3.  The offeror illegibly initials his written offer.


This is unclear, however §1-201(39) states that “signed” includes any symbol executed or adopted by a party with present intention to authenticate a writing.  This sounds like it will be a firm offer because it is assumed that the offeror had present intent to authenticate the writing if he was signing it, regardless of whether it was legible or not.


You can use any symbol, even if you can read or write. 


4.  The offer provides assurances that it will be kept open for seven months.


This is not a valid firm offer because it exceeds 3 months.  According to §2-205 a firm offer is not valid if it exceeds 3 months.


Potentially would be valid for three months, but not beyond.  Advise you client to use additional consideration, or use multiple promises.  With multiple promises, you have no legal recourse if the offeror does not renew the promise.  Therefore, use an option contract to bind this via consideration.


5.  The offeror signs a form drafted by the offeree.


§2-205 states, “any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.”  The offeror is signing a form drafted by the offeree, so this seems like it is a valid firm offer. 


Problem on Contract Formation


(a)  Yes, a contract is formed, §2-206(a) telephone is a reasonable medium.


(b)  Yes, a contract is formed, §2-206(a) telephone is a reasonable medium.


(c)  Yes, a contract is formed, §2-206(a) telephone is a reasonable medium.


1(b) medium by which they respond would appear to be reasonable.  Acceptance made.


(d) Yes, a contract is formed, §2-206 (b) –prompt shipment of conforming goods.


(e) Yes, a contract is formed, §2-206 (b) –prompt shipment of conforming goods.


Is the acknowledgment form going to be construed as a promise?  Not enough facts to make a final determination.  [44 minutes]


(f)  Yes, a contract is formed by the current shipment of nonbinding goods with no accommodation.  (see recording) 


Ask professor about this.  A contract is formed, but for what?  The 23 inch TV’s, the 21 inch TV’s?


(g)  No contract.  Under §2-206 (b) a shipment of non-conforming goods would be an acceptance, but they saved it from being an acceptance by sending a seasonable notice that the goods shipped are an accommodation.  This notice is basically a counter-offer. 


It seems like an unambiguous statement as to the terms of the contract, so the contract would not fall under the guidelines established by §2-206.



Unless otherwise unambiguously indicated by the circumstances.  It depends, on all the surrounding circumstances of the case.


Problem on U.C.C. §2-201


(a)  There is no contract under the statute of frauds provision of the UCC §2-201.  This contract is worth more than $500 and no writing pertaining to the contract was ever made.


Is there any possibility that Adams could turn to in subsection 3 that may help their case?  As of now, we don’t have anything that is sufficient.  Is there anything else we should ought to at least consider doing?    Go through a discovery and push for an admission.  Take the deposition of whoever it was at Southern Furniture company.  We don’t know if this will be successful.  They may be willing to lie under perjury, but this is the only recourse available.   


(b)  This is not a valid contract.  There is a writing, and the writing is signed.  §2-201(1) and §2-201(2). 


There were 7 elements in subsection 2 and 1 is real problematic.  Is it sufficient against the sender?  Built on what is good for the goose is what is a good for the gander.  This is lacking a quantity, if the roles were reversed and the sender was the plaintiff, could we successfully use this writing to counter the SOF?  No, without a quantity term, it is not enforceable beyond the quantity stated.  There is no indication of quantity beyond 2, since there is “skillets” which is plural.  This writing is not sufficient and it doesn’t state the quantity.


(c)  §2-201(3)(a), this contract is probably enforceable. 


This is not an admission under oath, it is not a pleading, or admission in court.  Subsection a, there are a lot of elements that are satisfied.  Who knows, he has had one other order for a glass Christmas tree.  Must examine the market and the nature of his business.  The big hammer, circumstances that reasonably indicate that these are goods for the buyer. 


(d)  Dependent on whether or not a contract can be found…this contract is probably enforceable under §2-201(2).  In the case at hand Adams must give written notice of repudiation within 10 days of the receipt of the National Corporation letter.


Did not send an objection within 10 days.  No contract, should they be concerned about that.   It is not a good idea to waive this defense.  It is just too easy to send a protest. 




Problems on Good Faith:


Won’t be successful, is he under an obligation under good faith?  No, good faith does not apply to the negotiation, only to its enforcement and performance.  Only 13 substantive provisions in article II that state that you have to act in good faith. 


Is there anyplace else that we should consider?  Common law, 1-103.  This is at best a case of bare nondisclosure.


2 different components, honest in fact.


Is the honesty in fact, a purely subjective standard been breached in this case?  No.  They are not lying, they need and want 300 tons a month.


This would be a good case for Ice, Inc. 


What about Sam McGee?  He says, I don’t like this answer. 


The car problem:  Start out with 1-304, does this standard apply?  Yes, it’s performance.  So you must perform in good faith.  Article I defines good faith.  What about the objective element?  It doesn’t pass the subjective standard. 


Article II provision that invokes the term good faith:  2-209 is the modification provision.  Modification needs no consideration to be binding.  2-209(1), no consideration, consideration is not an element involved with a modification.  You must be very careful to refer to comment 2.  It says that modifications there under must use good faith.




Risk of Loss (ROL) Problems?:


2-509 and 2-510


2-510 if the buyer or seller has breached.  Doesn’t say if parties breach, says effect of breach on ROL.  If a party breaches it may or may not have a ROL impact. 


Allocate the risk of loss only as between two parties, the buyer and seller. 


First remedy provision in article II, 2-709.  Once risk of loss passes, the seller has fully performed and he is entitled to the return performance of payment. 


What are the legal consequences have not passed to the buyer?  I.e. an FOB destination contract. 


2-509 is a great, great provision. 


2-509 (a) is the shipment contract

2-509 (b) destination


Same results on ROL allocation under 2-319(1)(a)(b) as 2-509. 


Why do we have them both?  Because 2-319 is an Express Term and 2-509 is a gap filler.  Distinction is the source of the contract. 




2-504 is going to have relevance for 2-503(2), and also will have relevance for 2-509(1)(a).  Nothing real distinctive here. 


1 exception: 


Subsection 2, really tricky.  We will not press this.  Responsible for ways in which sellers try to distort what is in subsection 2.


Way in which the bailee becomes legally responsible for the goods.  Who is the party who is the most likely to insure those goods?




1.  The buyer carries the ROL here.  Shipment K, the seller has placed the goods in the hands of the carrier.  2-509(1)(a).  2-503(2).  2-504.  Why do we need 2-503 and 2-504?  Do agree that technically what is more accurate is 2-509(4), express term here.  Through 2-509(4). 2-319(1)(a).  FOB provision is an express term.  There really is no gap here. 


What result?  The buyer has to pay for the goods.  Tie all your answers into the Code criteria.  2-709.  What are the consequences of ROL?  If ROL has passed to the buyer, the buyer is obligated to pay the price of those goods.


2.  Under those terms  go to 2-319(1)(a) does look like a shipment contract, but note unless otherwise agreed.  Through the totality of the agreement of the parties they do not intend a shipment contract by carrier.  2-509(1), (2) not the applicable standard.  Seems like the seller has incurred the obligation, not only to deliver goods at sellers place of business.  Arguably we have an express provision that says that’s where the delivery will take place.  They never loaded these goods onto the buyer’s truck. 


(b)  How about the bailment situation?  What is the significance of driving the goods back and leaving them there overnight?  What does that do in respect to 2-509


What is the relationship between the nature of the parties?  This is an independent bailment contract.  Seller has done everything he has to do under the sales contract.  He has fully performed.  Now when those goods come back to him, he agrees that he can leave them there overnight while he gets his truck fixed.  This is a separate agreement.  The seller has now taken on the role of a gratuitous bailment.  2-509 doesn’t apply to the bailment relationship.




1.  Section 2-510(1).  Risk of loss remained on the seller.  The buyer actually does reject the goods, but that is not required under 2-510.  It just says that he has the right to exercise rejection and risk remains on the seller from the start.  By rejecting he basically precludes right of revocation (see recording).  Risk of loss is on the seller.


2.  Jenkins can sue for 2/3 2-510(2).  It’s going to pass 2/3 of the loss over to the seller.  Doesn’t tell us what result the court is going to tell the seller who is suing for full purchase prince.  Sues for the price of the goods, what result?  What are the consequences of the buyer having risk of loss or the seller having risk of loss.  What is the bottom line?  The impact of passing the risk of the loss to the buyer is


2-709--  what are the circumstances in which he can collect the price?  3 types of cases, the second one in subsection a. 


2-510(2) is the risk of loss allocation.  This is a partial allocation.  If the seller sues for total purchase price, he is going to lose in part.  He will have a good cause of action but it will be reduced to 1/3, the amount paid by the buyer’s insurance.  The ROL does not reside with the buyer at the time the loss occurred.   The ROL with the 1/3 stays on the buyer, and you have a good cause of action. 


There can be no good cause of action even with respect for the 1/3 ROL.  Read the conforming goods requirement out. 


The better way to approach the problem like this is to start with the question asked. 


Impact if any that the breach will have on the general risk of loss rules found in 2-319, when he tendered non-conforming goods, it tendered risk on the seller.  Consider the impact of the revocation, if any.  Does that pass the ROL back to the seller?  Yes, but only to the extent to a deficiency in the buyer’s insurance.  Since that is the extent of ROL on the buyer, that is the extent of the purchase price recovery on 209?  What is the test on correct ROL allocation?


3. What is missing?  We have to know when the fire occurred.  Under subsection (3) ROL is on the buyer for a commercially reasonable time.  The repudiation came late in the afternoon, and that night, the fire struck.  Have we satisfied the other elements at that point?  Appropriate goods.  Assume goods are conforming, time frame is short, we have identified goods, now 2-510 will apply, but it will still pass ROL to the extent that insurance doesn’t cover loss.  Anti subrogation provision.


(a)  ROL passes to the buyer, meets all elements of 2-503, 2-709(1)(a).


(b) No ROL pushed over, you have no cause of action under ROL provision, your COA will totally fail and you will not recover anything.


(c)  He can recover up to 2/3 which represents the deficiency of the goods. 


(d)  SUBROGATION CLAUSE:  To what extent can the insurance company recover from Jenkins, the breaching party?  2-510(3) this is exactly how it is going to work, to the extent that the insured has a good legal claim, that is what right you get through the subrogation clause, but that is all you get.  The code drafters are saying that to the extent you pay it, we are denying any claim to the aggrieved party, so you have nothing you can subrogate to.  You pay the claim, that’s it. 


¾ of the loss covered by insurance.  Insurance pays ¾ of the loss.  Insurance can’t recover this from a breaching buyer under 2-510(3). 


With respect to the remaining ¼, the buyer will have to pay the seller. 





(1)  This is a model.  There was an express warranty created.  The question is whether or not the ease of operation became a factor from that model as to create an express warranty as to the windows not conforming.  There are a lot of ways in which the windows delivered did conform.  No sense if the buyer complained that the windows were heavier. 


The problem here that the compliant is around is that the windows stick.  It is impossible to open or close the windows.


Attorney representing the buyer, what factor do you stress to the jury that ease of operation was a factor that fits into the scope of the warranty based on the model?  It was an operating model and the ease of operation of the model is what made him buy the real life counterparts.  They buyer gets the idea of ease of operation from the model. 


(2)  Is the seller likely to have breached and express warranty?  Was this display that the seller referred the buyer to a sample or a model?  We don’t know.  The seller will argue that the only features are encompassed by the express warranty are the general features.  If you are the buyer, what are you going to emphasize and stress here?  That he wouldn’t buy if it was not red.  Seller, he never said anything about the color of the handles?  Buyer—if the buyer said he wanted them with red handles, (c) is in there for something less than (b).


If you are representing the seller, give me a scenario in which the seller’s attorney could make an extremely strong showing?  Expectations of the buyer was too narrow.  Nobody cares whether or not the handles are painted, they don’t care. 


(3)  What are the prospects of the buyer being able to establish a breach.  You too if you have at least normal manual dexterity will have the same results.  Performance warranty to achieve these results.  [recording @ 1 hour].


1(a) does not say that the promise has to be the benefit of the bargain.  Part of the basis of the bargain.  A, b, and c, all say that part of the basis of the bargain.  If it was the basis of the bargain (not part) then it would be reliance.  Basis of the bargain, we are not talking about contract formation. 


Additional Problem on Creating Express Warranties:


Can’t answer anything definitively here…


(f) probably a warranty, there is adequate precision.  Also (h), proving it, if it is not new brake lines, you have a problem.  Mileage is mandatory government testing.  How are you going to prove that you didn’t get 16 mpg per town?  If the brakes have been replaced…those are the types of things that a mechanic can testify to.  There is another reason for it, emphasize with the jury, imagine each juror that they are the buyer.  Catastrophic failure with the brakes, this could have very dire consequences.  You are dealing with a psychological factor. 


Which one if you are going to represent the plaintiff would likely be a bad case on contingency?  (a)


What about (b)?  What is the scope, how much is covered?  I.e. what if the car works fine, but the radio is on the fritz?  This would be a hard case, whereas if the transmission failed, it would be a much easier case. 


(c)—you can’t drive this car ‘anywhere.’  These are totally dependent on the surrounding circumstances. 


Extremely difficult to disclaim an express warranty (more on this later).



Problems on Standards of Mechantability


(a)  (Aside from c)  (a) and (d).  (a) should apply, see recording for (d).  For (a), the first standard is what was the contract description used?  Second standards is pass without objection in the trade.  What would the reasonable average business person do?  If most reasonable buyers would reject to that delivery under the contract terms, the warranty is breached. 


(b)  2-314(e)  ‘as the agreement may require’  does there have to be express language requiring packaging?  Most courts have held that it is too restrictive to say that there has to be something explicit about actual packaging.  There is nothing definitive with respect to that.  Some support in comment 10.  If you are the seller, what kind of responding argument might be available here?  This product is intended to be sold to people who know about rocker panels.  The reasonable part is on the buyer.  In other words pass the liability to somebody else. 


(c)  (a) is a possibility here.  Also, look carefully on (f).  It all comes down to what fish fillet means. 


(d)  Issue whether or not the chain was fit for its ordinary purposes.  What did the defendant contend?  We have to affirmatively prove our case.  What do we need to come up with?  What are we going to do in respect to proving a breach of warranty.  If you are going to prove a breach of 2(c) on these facts, what are we going to have to do in trial court.  Come in with witnesses who use logging chains for our purposes.  Need to get people who use logging chains.  Is this going to get us home free?  Must show seller is a merchant of that kind, also YOU must prove on a factual basis that those goods were not fit for their ordinary purpose.


Problem on Applicability of Implied Warranty of Merchantability


Is applicable under 2-314, the first question is has there been a sale of goods?  No, there has not been a sale of goods.  All he has done is put the item into his cart. 


They said that the sale occurred when the buyer put the item in the cart when the seller intended to purchase it.  Clearly what the courts are doing, or were doing was playing games, they had to find a sale to get a recovery here.  Why would the courts engage in such a legal fiction?  The courts felt as a policy matter that the buyer should recover against the store and the manufacturer.  The most logical way to handle the problem is strict tort theory.  402A. 


Why did so many courts not go that route?  402A is not law, 402A was a concept that evolved from some of justice Traynor’s decisions, this was more of a prestatement rather than a restatement.  I.e. this is the way the law ought to go. 


How does 402A become law?  It is not enacted through statute, it is enacted by common law. 


Would not plead 2-314, it is clearly not a sale.  The easy result is strict tort. 


2-315, implied warranty for a particular purpose.  3 elements:


At the time of selling, the seller must have a reasonable purpose to know of the goods are required.


In reality 2-315 is a very narrow warranty.  Most of the claims under 2-315 fail.  The critical point to understand is that it has to be a particular purpose.  Why do we buy goods?  Most people purchase goods for an ordinary purpose, this is 2-314.  Particular means extraordinary.


Example, you want to buy heavy equipment, but you want to use it for arctic temperatures.  If a seller gives advice and you take it and use it, then you get the implied warranty. Most of the time this won’t work because the reason why we buy goods is for the ordinary argument. 



Problem on Horizontal Privity—


(a)  If it qualifies under A, it will qualify under all other alternatives.  They all suffered physical injury, they were family or household members.  Can they be expected to use or consume


(b)  neighbor is a guest in the home, even under the most reasonable reading, all of these injured parties are legitimate 3rd party beneficiaries. 


(c) He is not a member of the family or household, so it would not qualify under (a).  What if he was at the door delivering mail?  In litigation people try to stretch who qualifies as a guest.  Ascertain which alternative is applicable, look at all the cases that the courts have decided in this state, how many of them are out there dealing with interpretations being guests at home, then turn to cases coming out of other jurisdictions.


(d)  This is injury to property.  There is physical harm that has been caused to other property in the kitchen.  Who are you going to claim as your plaintiff?  Only Mr. Miller can sue.  Why clutter it up with 2-318, we don’t need it.  There is a possibly fact pattern in which Mr. Miller would not have a cause of action, if for some reason he doesn’t have a property interest in the home, if Mrs. Miller owns the home in her name only, Mr. Miller would have no personal claim for damage to the real estate.  If he purchased these applicances as gifts and were given to her and recognized exclusively as property to her marital estate and none to his, then he would have no personal interest to her.  (see recording).  Mrs.Miller has a claim, but we would not add her as an additional party, since we don’t want to clutter the jury with the outcome. 


(e)  Direct economic loss.  What claim that would be applicable, breach of warranty claim here.  This is the claim that is applicable.  Mr. Miller is going to have that claim.  If Mr. Miller does not have a claim, Mrs. Miller has no claim under c.  She is the beneficiary of any warranty that extends to him.  


When looking at harm to property, looking to damage to item other than itself.


Vertical privity, whom other than the immediate seller of goods is focused on the claim.  Most of the time for breach of warranty you are going to work with the immediate person you bought it from. 



Problem on Vertical Privity:


(1)-Injury to person, policy reason, it is the most compelling (this is the worst type of loss), and beyond that it is the simple political step for the court to go there.  Privity won’t work as a defense. 


(2)-Most courts will be sympathetic here because it is injury to property.  This the physical damage caused to his house.  Strict tort will extend to any physical harm to the consumer or his property.  Strict tort will always recognize his claim


(3) direct economic loss—totally the benefit of the bargain.  It doesn’t do anything, I am not getting any benefit from it, I’m not going to recover in strict tort here, because it is not covered in 402A.   Bought something that doesn’t work the way you thought it would be.  Implied warranty—more courts than not will not allow recovery here, but a number of courts have awarded privity and allowed this.  Western case is very illustrative of the kind of reasoning courts have referred to.  


(4)  Consequential economic damages.  Any court that doesn’t allow direct economic loss will not go the next step.  The rationale is almost like a ritual.  This is just too difficult for the poor remote seller/manufacturer.  The immediate seller is going to  get hammered for the installation.


(5)  Much more likely to be consequential as opposed to incidental.  You have to prove there is a factual causation.  To the extent that I can’t get past the limiting 3 factors, I can’t get past the damages.  Foreseeability, Hadley v. Baxendale.  If it is not reasonably foreseeable, buyer can’t recover.  CA-Song Beverly act, vertical privity eliminated. 


Perfect Tender Problem:


Cabinet maker:


A.  Potential responses, are there any rights to cure under 2-508, is there still time to render proper performance?  Even if the time has passed, then it basically comes down to making a determination of why seller was five units short.  Also give consideration to potential course of usage or trade dealing.  500 units probably mean 500, if it is the situation where 480 mean 500 and it is a term of art, maybe.  Could be a trade usage to allow right to cure, or what happened between both parties.  Pervading requirement of good faith.  Must use 2-601 only if it acts in good faith.  Given the fact that these are minor problems that could be easily corrected, it boils down to will a buyer who rejects under the circumstances, will they be able to establish a satisfactory explanation as to why they are rejecting.    If the price of cabinets has dropped and he can buy them cheaper elsewhere, then the burden on the buyer is even higher. 


B.  No way to provide cure for a late tender.




See the problem if you start jumping into a or b here.  He cannot satisfy the preamble provision, there is simply no non-conformity.  It is a substantial impairment to Van Burns, but he first of all has to prove the squeak is a non-conformity.  If it is quiet to the average consumer, then it is quiet. 


Procedural requirement is basically the same, must revoke in a reasonable time, give seasonable notification.  One issue that has arisen and some courts have been horrible in deciding this issue, let’s say the buyers in Zabriske used the vehicle for 9 months and put a lot of miles on it.  Unjust enrichment for them to have the vehicle and use it fully for 9 months and then tell the seller that you eat the loss.  Well use common law unjust enrichment.  The amendments to the new article 2 do provide that.





Problem 1:


You agreed to those payment terms, you can’t unilaterally change because you are antsy about something.  What are we going to do in the letter?  You need to put teeth into the letter; you have to spell out assurances.  What are the sorts of things you can ask for?  Here is what an adequate assurance is: pay us today, give us a letter of credit, give us a guarantee of a bank.  Maybe we might get an assignment.


Problem 2:


Installment contract. 


(1) Not likely to be upheld


(2) No, this is not true because the code is not going to allow them to define it in a purely subject standard, has to be read in the context of commercial practice, sufficiently objective and measurable.


(3) This exactly the type of case where the clause applies.  In the absence of the clause they would have to invoke 2-609. 


There are wise clauses to include in contracts. 


Problem 3:


Definitely an anticipatory repudiation, but assurances are given.  Not much ground to go anywhere with 2-609 here. 


Section 2-610 on anticipatory repudiation comes into play.  Aggrieved buyer can resort to any remedy, but can do so only when performance not yet do will substantial impair the buyer’s expectation. 


Will ‘wreak havoc.’  Trivoli will be liable for damages for this delay.  The long term prospect looks really good. 





See hand notes.


2.  First requirement of cover price: must be reasonable and made in good faith, buyer behaves honestly and observes reasonable standards of good friend.  If it can be established that the motivation that induced them was punitive, the buyer must show a rational commercial reason to support this change.




1.  Obviously he must pay, the starting point is that he must pay the 15,000.  His solution starts at section 2-717.  15-11 would yield damages of 4,000.  Difference in value. 


2.  Cost to repair would establish the difference in value of the motorcycle as warranted and as delivered.


Second part, he entered into a bad bargain, agreed to pay 300 more than he should have.  Breach by the seller opened the opportunity to reject, he should have rejected.  He didn’t do that, he accepted, now he is limited to his measure under 2-714(2) and he is not entitled to recover the 300 based on the bad bargain.





My argument is prove those numbers. 


(d)  recoverable as consequential damages 2-715(2) but only if it is proximate causation, so find out the nature of the disease.  Maybe the problem is not the diseased pigs but the failure of the farmer to quarantine his stock. 


(a) Where did you come up with the 4,370 figure?  2-714(2).  Tracking manner of damages. 


Says in addition you are entitled to consequential damages. 




Televisions sets—don’t have a right of replevin because the seller never identified the goods to the contract.  Cannot cover and therefore as a result I should be entitled to specific performance and make them deliver 300 sets to me at the K price. 


Pretty much it for the buyer’s remedies.  The only other alternative for alternative damages is 2-713.


The buyer who accepts the goods must use section 2-714,


Seller does have corollary monetary damage provisions, 2-706—if the buyer breaches, go out and sell the goods to somebody else. 


Additional useful aspect here


2-708(2)—sometimes measure of damages would be inadequate to put seller in position as if performance has occurred.


Lost volume seller and the special manufacturer.



1.  Just in one context of the sale/resale it doesn’t work.  Any dealer in this country can get as many Fords from the manufacturer as they can sell.  2-708(2)? <see recording>


2.  800 dollars, back out the contract price (-600) which means that there is a 200 dollars gain which would have been realized per bicycle.  Must back out salvage price that was received, (-150) gives us 50 per unit, times 25 units is 1250.  We must add back in the costs, what were the costs that had been incurred by the seller in acquiring the materials and how much labor had they already expended?  


Undesirable to force goods on the buyer that he no longer wants or has need for. 


Incidental damages, commercially reasonable damages.  No consequential damages for sellers.