The UCC ARTICLE 2 APPLIES TO THE SALE OF GOODS, NOT REAL PROPERTY OR SERVICE CONTRACTS

The UCC ARTICLE 2 APPLIES TO THE SALE OF GOODS, NOT REAL PROPERTY OR SERVICE CONTRACTS

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Contracts Outline – Professor Kniffin The UCC ARTICLE 2 APPLIES TO THE SALE OF GOODS, NOT REAL PROPERTY OR SERVICE CONTRACTS I Three goals of contract damages – A) To compensate the aggrieved party rather than to punish the breaching party. Not punitive damages. B) To give substitutional relief rather than specific relief. We give money damages instead of the subject matter of the contract. (Specific performance) C) Expectation damages. “Expectancy” (with reliance, and restitution) We want to give the aggrieved party what it expected to get out of the deal. We want to put the aggrieved party into the position it would have been in if the contract had been performed. II Damages A) Remedies a. Punitive Damages – not awarded in contract law. Some cases will have tort elements in them (fraud, bad faith breach). One of the few rules in contract law is that punitive damages are not given for breach of contract. b. Compensatory – compensate rather than punish. 1. Specific Performance – [2-716] i. Goods are unique (Mona Lisa). ii. Buyer cannot cover with a reasonable effort. iii. Real estate or long term output contracts. iv. Substitute goods are scarce. v. Don’t think because the cover price is very high, the court will award substitute performance. vi. If the contract is specific enough or if it would not be troublesome for the court to supervise the specific performance, it will award it. vii. Courts will not force antagonistic parties to work together. 2. Money Damages i. Expectation – puts the person in the position they would be in if the contract had been honored. a. Buyer breach –Seller sells goods to an alternative buyer. Expectation damages equal the amount of money the buyer expected to pay had the original buyer honored the contract. (1) Cover – Buyer can make in good faith and without unreasonable delay a substitute purchase. a. Buyer can recover the difference between the cost of cover and the original contract price b. Plus incidental or consequential damages, c. Minus expenses saved as a consequence of the seller’s breach. d. “Reasonable purchase” refers to the same quality of goods. 1
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e. If you don’t meet one of these requirements, you will be compensated under the market price formula. (UCC §2-712 (1) (2)) f. §2-712 (1) Good faith – Honesty . What is an honest cover purchase? If you deliberately looked for substitute costs at a high price. This is not in good faith. g. “Without unreasonably delay”, because the market place could change a great deal. Reasonable may vary with the judge or court. This will depend on precedents and the particular good. (2) Market Price Formula (Laredo Hides) – (UCC §2-713 (1)) “the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages…” a. Incidental Damages [2-715(1)]- “include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions
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The UCC ARTICLE 2 APPLIES TO THE SALE OF GOODS, NOT REAL PROPERTY OR SERVICE CONTRACTS

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