Business Law Chapter 22

Business Law Chapter 22 - Business Law Chapter 22...

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Business Law Chapter 22 Performance and Remedies Good Faith - Conforming goods satisfy the contract terms, non conforming goods do not. - The UCC requires good faith in the performance and enforcement of every contract. - Good Faith means honesty in the fact. Between merchants, it also means the use of reasonable commercial standards of fair dealing. Seller Obligations of Good Faith - The seller’s primary obligation is to deliver conforming goods to the buyer – but because buyer might not be willing or able to accept delivery, UCC demands only that the seller make reasonable ATTEMPT at delivery. - The seller must tender the goods, which means to make conforming goods available to buyer o The contract usually states where and when seller is obligated to tender delivery o Ie: if seller is to bring goods to warehouse on July 3 rd , then buyer is obligated to pick up goods there and if they fail to do so, buyer is in breach of contract. - Although a seller must always tender delivery, it does not mean a seller always transports goods. Sometimes contracts require buyer to pick up goods. - Regardless, seller must make goods available at reasonable time AND keep goods available for a reasonable period AND deliver to buyer any documents they may need to take possession. - The seller is also obligated to deliver conforming goods. Perfect Tender Rule - Under the perfect tender rule, the buyer may reject goods if they fail in ANY RESPECT to conform to contract. o Under common law, before UCC was established, perfect tender rule required goods to conform absolutely to contract specifications – buyer could reject them even if they had minor deviations. The UCC retained this rule.
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Restrictions on Perfect Tender Rule - UCC has sections that limit the tender rule effects. - Usage of trade, course of dealing, and course of performance o Code takes a commonsense view that a contract for sale of goods does not exist in a vacuum – “Usage of trade” means any practice that members of an industry expect to be part of their dealings – courts consider trade usage when they interpret contracts – means that perfect tender rule may NOT permit a buyer to reject goods with minor flaws. Minor non conformity ie: 5 mistakes out of 1000 perfect goods, IS perfect tender. o “Course of Dealing” – refers to previous commercial transactions between same parties – UCC requires that current contract be interpreted in light of past dealings that have created reasonable expectations. Ie: if company order 20,000 feet of highest grade pine wood, if 1% or 2 % are not highest grade, and in the past the buyer has accepted the minor deficiencies, the court WILL regard it as perfect tender. o
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Business Law Chapter 22 - Business Law Chapter 22...

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