The seller will have to honor the contract unless he

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: r; she can demand that the seller live up to their original contract under which she paid a small premium over the cost of gasoline at the time of entering into the contract in exchange for a guaranteed fixed price for a full two years. The seller will have to honor the contract, unless he can claim commercial impracticability or impossibility of performance as we previously discussed, neither of which would be likely here since a change in market price was foreseeable at the time that the contract was formed, and gasoline is still available for delivery under the facts given. If the buyer does agree to the new terms, however, she will be bound by them. Thus the parties to the contract, whether buyer or seller, should be careful what changes they agree to! If a modification is made to a contract that needs to be in writing in order to be enforceable under the statute of frauds, then the modification must also be in writing. If the sales contract need not be in writing to be enforceable (e.g., in a contract for the sale of goods for $499.99 or less), then an oral modification would be binding. 7.4 Modification by Operation of Law I n addition to the ability of parties to voluntarily modify sales contracts without additional consideration, there are some circumstances under which a sales contract is modified by operation of law. Casualty to Identified Goods (§ 2-613) If the buyer has an agreement to buy all her gasoline needs for the upcoming year from Mobil at $3.53 per gallon, the parties have made a requirements contract. The destruction of goods identified in the contract that occurs without the fault of the buyer or seller will result age fotostock/SuperStock in a modification of the sales contract by operation of law. If the destruction to identified goods is total, the contract is voided and both parties are excused from having to perform. If the destruction or damage is only partial, the buyer has the option of treating the contract as voided or accepting the goods with a reduction in price to allow for the damage. (The measure of the price reduction that can be taken would be measured by the market price of the damaged goods.) If the buyer elects to accept the damaged goods at a reduced price, he will not be able to seek any additional damages from the seller. Example 7.23. Tomas agrees to buy Tiffany’s computer for $1,000. Before she can ship it to him, it is damaged in a fire when her house is struck by lightning. If the computer is destroyed, the contract is voided and performance rog80328_07_c07_134-156.indd 147 10/26/12 5:52 PM CHAPTER 7 Section 7.4 Modification by Operation of Law by both parties is excused. If the computer suffers some smoke damage but is still functional, Tomas will have the option of voiding the contract or buying the computer at a reduced price (the market price of the damaged computer). Substituted Performance (§ 2-614) When the agreed-upon method of delivery becomes either commercially impracticable or impossible, seller must offer and buyer accept a commercially reasonable subs...
View Full Document

This test prep was uploaded on 04/09/2014 for the course BUS 311 taught by Professor Parker during the Spring '10 term at Ashford University.

Ask a homework question - tutors are online