ch27 - Chapter 27 REMEDIES FOR BREACH OF SALES CONTRACTS...

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Unformatted text preview: Chapter 27 REMEDIES FOR BREACH OF SALES CONTRACTS Statute of Limitations The law provides a number of remedies for the breach of a sales contract. Remedies based on UCC theories are subject to a four-year statute of limitations. If the remedy sought is based on a non-UCC theory, a tort or contract statute of limitations established by state statute will apply. 2 Remedies of the Seller Remedies of the seller may include: (1) a lien on the goods until the seller is paid, (2) the right to resell the goods, (3) the right to cancel the sales contract, and (4) the right to bring an action for damages (including lost profits) or, in some cases, for the full purchase price. The seller may also recover reasonable incidental damages. In secured transactions, the buyer may have pledged some other property to the seller in case of default by the buyer. 3 Remedies of the Seller Breach/ Actio n of Buyer Buyer has not paid for goods. Buyer wro ngfully re jects goods, wrongfu lly revokes accep tance, fa ils to p ay, or repud iates contract. Buyer wro ngfully re jects goods, wrongfu lly revokes accep tance, or rep udiates contracts. Buyer wro ngfully re jects goods or rep udiates contract. Buyer acc epts goods and does not rightf ully revoke ac ceptanc e; add it iona lly, conform ing goods damaged or destroyed after risk of loss passed to buyer; or after buyer's breach, goods not rese llab le. Buyer fa ils to p ay amo unt owed und er sec ured transac tion. Rem edy/R eac tion of Seller S eller's Lien Resa le by S eller Canc ellation by Seller S eller's Action for Dam ages S eller's Action for the P urchase Pric e (Unusu al Re medy) S eller Takes Possess ion of Goods 4 Seller's Remedies under Article 2 Name of Remedy Section Number When Available Stop Delivery Resale Price Market Price Action for Price 2-709 2-708 Special manufactured goods Lost Profit 2-702 2-709 2-710 Buyer fails to take goods 2-709 2-710 Buyer fails to take goods 2-708(2) Insolvency* Anticp. Repud. Nature of Remedy Advance breach by buyer Stop delivery K price K price of any size resale price + Market price + shipment or inciden. Inciden. recover goods Damages Damages if solvent; stop expense expense delivery of saved saved large shipments for other reasons *Misrepresentation of insolvency K price + Inciden. Damages Expense saved Profits + Inciden. Damages Salvage value (3 mos/10 day rules) 5 Remedies of the Buyer Remedies of the buyer may include: (1) rejection of nonconforming goods; (2) revocation of acceptance; (3) an action for damages for non-delivery -- both incidental and consequential damages; 6 Remedies of the Buyer (cont'd) (4) an action for breach of warranty; (5) cancellation of the sales contract; (6) the right to resell the goods; (7) the right to bring an action for conversion, recovery of goods, or specific performance; and (8) the right to sue for damages and cancel if the seller has been negligent or fraudulent. 7 Remedies of the Buyer Bre ach Te nder or goods do not conform to the contract. Te nder or goods do not conform to the contract to s uch an extent that the ir value to buyer is s ubstantia lly impaired. Se ller fails to deliv er goods or goods deliv ered are nonconforming Accepted goods do not conform. Se ller fails to deliv er goods or repud iates co ntrac t; or buyer rig htfully re jects goods or rig htfully revokes accep ta nce. Buyer rightfully re jects goods or rig htfully revokes accep ta nce of goods. Remedy R ejection of Improp er Tender or Delivery R evocation of Accepta nce C ancel Contract Ins ist o n deliv ery of co nforming goods Buyer's Action for Damages for nond elivery Action for Damages for Bre ach of Warranty (after giv ing notice of breac h) C ance llation by Buyer R es ale of Goods 8 Buyer's Remedies Under Article 2 Name of Remedy Specific Performance (Replevin) (Identification) Cover Market Section Number 2-711 When Available rare, unique goods Nature of Remedy buyer gets goods (incidentals) 2-712 2-715 seller fails to deliver cover price - K price + incidentals + consequential damages expenses saved 2-713 2-715 seller fails to deliver market price K price + incidentals + consequential damages expenses saved 9 Other Types of Damages Occurs when the parties agree on remedies through a contractual provision: Liquidated Damages. Exclusion of Damages. Limitations on statutory remedies, or Waiver of defenses. 10 Remedies Under CISG Under the CISG, if the buyer fails to perform any obligation, the seller may require the buyer to pay the price, take delivery, and perform other obligations under the contract. Under the CISG, a buyer may reject goods only if there is a fundamental breach of contract. The buyer may reduce the price of nonconforming goods. 11 ...
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This note was uploaded on 05/12/2010 for the course BUS 2241 taught by Professor Mcguinnes during the Spring '10 term at Valencia.

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