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Chapter 22 Remedies for Breach of Sales and Lease Contracts . §1: Seller. §2: Buyer. Goods in Seller’s Possession. Goods in Seller’s Possession. Goods are in Transit. Seller delivers non-conforming goods. Goods in Buyer’s Possession. Proceed to Section 3. Remedies.

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chapter 22 remedies for breach of sales and lease contracts
Chapter 22

Remedies for Breach ofSales and Lease Contracts

remedies

§1:Seller

§2: Buyer

Goods in Seller’s Possession

Goods in Seller’s Possession

Goods are in Transit

Seller delivers non-conforming goods

Goods in Buyer’s Possession

Proceed to Section 3

Remedies

Click on the Links Below

3 contractual provisions affecting remedies
§3: Contractual Provisions Affecting Remedies
  • Parties to a contract can vary their rights and duties that preempt UCC provisions.
  • Parties can stipulate whether contractual provisions are “exclusive”. However, provisions limiting consumer rights may be unconscionable.
4 lemon laws
§4: Lemon Laws

Automobile under warranty possesses significant defect that affects vehicles use or value that cannot be fixed within statutory period. Buyer’s remedies include:

  • A new car;
  • Replacement of defective parts;
  • Or full refund.
5 remedies for breach of international sales
§5: Remedies for Breach of International Sales
  • CISG provides remedies similar to the UCC:
    • Monetary damages that are foreseeable, consequential damages.
    • Damages are difference between contract price and market price.
  • Parties can agree to what law they will use.
seller goods in seller s possession
Seller- Goods in Seller’s Possession
  • Seller may withhold delivery of the goods:
    • If material breach by Buyer, Seller can withhold delivery of all goods.
    • If non-material breach, Seller can withhold delivery of this installment.
  • Seller can withhold delivery of all goods if Buyer is insolvent.

Next

seller goods in seller s possession7
Seller- Goods in Seller’s Possession
  • Seller may rescind the contract.
  • Seller may identify the goods to the contract.
  • Seller may sell raw materials for scrap or finish production.

Next

seller goods in seller s possession8
Seller-Goods in Seller’s Possession
  • Seller may resell the goods; and
    • Recover damages: the difference between the contract price and the resale price + incidental damages+ damages = the market price at the time & place of tender + incidental damages - expenses saved.
    • If No Damages, Seller can sue for lost profits.
  • Case 22.1:Brandeis Machinery v. Capital Crane Rental (2002).

Next

seller goods in seller s possession9
Seller-Goods in Seller’s Possession
  • Seller may sue Buyer for breach of contract.
    • Recover Damages = the market price at the time & place of tender + incidental damages.
      • if there are no damages, Seller can sue for lost profits.

Return

seller goods in transit
Seller-Goods in Transit
  • Goods are “in transit” when Seller has tendered goods to Carrier.
  • Goods are in transit until:
    • Buyer is given negotiable document of title to goods.
    • Buyer is given non-negotiable document of title or Bailee has acknowledged Buyer’s right to have the goods.
    • Buyer has had a reasonable time to pick up the goods.

Next

seller goods in transit11
Seller-Goods in Transit
  • Seller has the right to stop the goods in transit if:
    • Buyer is insolvent - Seller can stop entire shipment of goods.
    • Buyer is in breach - Seller may stop a whole truckload or whole container.

Return

seller goods in buyer s possession
Seller-Goods in Buyer’s Possession
  • Seller may sue for the purchase price.
    • Seller may also sue Buyer if goods were “specially-made” which Seller cannot resell.
    • Seller may also sue for the purchase price if the goods were destroyed and the risk had already passed to the Buyer.
  • Seller can reclaim goods received by an insolvent Buyer if demand made within 10 days of receipt.

Return

buyer goods in seller s possession
Buyer-Goods in Seller’s Possession
  • Buyer Wants Goods
    • Specific performance or replevin
    • Recover goods from Seller if Seller becomes insolvent within 10 days after receiving first payment.
  • Buyer Does Not Want Goods
    • Rescind contract.
    • Cover or do not cover and sue for breach of contract. Case 22.2: KGM Harvesting v. Fresh Network (1995).

Return

buyer seller delivers nonconforming goods
Buyer-Seller Delivers Nonconforming Goods
  • If Seller does not make perfect tender Buyer has the right to reject all or part of goods.
    • Buyer must timely notify Seller of rejection and reasons and follow Seller’s directions.
    • Buyer is entitled to commission for selling perishable goods.
    • Buyer may store the goods and retain a security interest in the goods for his costs.

Next

buyer seller delivers nonconforming goods15
Buyer-Seller Delivers Nonconforming Goods
  • If Buyer has accepted non-conforming goods, she may:
    • Sue for breach of warranty.
    • Sue for ordinary damages.
    • Deduct damages from purchase price.
  • Case 22.3:China National Metal Products v. Apex Digital (2001).

Return

3 contractual provisions affecting remedies16
§ 3: Contractual Provisions Affecting Remedies
  • Limitation of Damages.
  • Limitation of Remedies.
  • Waiver of Defenses.
4 lemon laws17
§ 4: Lemon Laws
  • The majority of the states have enacted lemon laws in regard to automobile sales.
  • Seller’s limitations were too “good.”
  • Buyer must:
    • Give notice.
    • Seller gets four chances to fix.
    • Arbitration: decision binding on manufacturer, not on Buyer.
5 remedies for breach of international sales contracts
§ 5: Remedies for Breach of International Sales Contracts
  • CISG provides remedies similar to the UCC.
  • Article 74 provides for money damages, foreseeable consequential damages.
    • Damages are difference between contract price and market price.
  • Article 28 provides for specific performance where a country would normally grant it in their own law.
  • Parties can agree to what law they will use.
law on the web
Law on the Web
  • Discussion of Lemon Law basics.
  • Example of 3M Excusive Warranty Remedy.
  • Legal Research Exercises on the Web.