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Unformatted text preview: Chapter 24 Remedies for Breach of a Sales Contract The goal of contract remedies is to give the parties the benefit of the bargain they struck, and nothing more The Statute of limitations to bring a breach of contract claim under the UCC is 4 years time from when the cause of action accrues (when the breach occurs) Remedies available to Sellers under the UCC The sellers remedies for a breach will answer 3 questions: What are the sellers further obligations under the contract? What happens to the goods? What monetary damages is the seller entitled to collect? What are the sellers further obligations under the contract? Where the buyer wrongfully rejects or revokes acceptance of the goods, fails to make a payment due on or before delivery, or repudiates the contract in whole or in part, the seller may cancel the contract with respect to the goods directly affected o The UCC defines cancellation as one partys putting an end to the contract because of a breach by the other party. In order to cancel, the seller must give notice of the cancellation to the buyer Once cancelled, the party who cancelled the contract does not have any future obligations under the contract. The cancelling party can still sue for monetary damages for breach without having to tender any further goods What happens to the goods? If the buyer breaches, repudiates, or fails to make a timely payment and the goods havent been shipped yet , then the seller doesnt have to ship them If the goods are already in transit (on their way to the buyer through a 3 rd party carrier like UPS), the seller can stop delivery of the goods If the seller learns the buyer is insolvent before the goods are shipped , the seller can refuse to deliver the goods unless the buyer agrees to pay in cash o Insolvent means that either the buyers total liabilities exceed the total value of all assets or the buyer is unable to pay its debts in the ordinary course of business or when they come due If the seller ships the goods, but then quickly learns that the buyer is insolvent , the seller may recover the goods. , the seller may recover the goods....
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This note was uploaded on 05/31/2010 for the course ACCT 1237 taught by Professor Hillman during the Spring '10 term at Drake University .
- Spring '10
- Financial Accounting