Contracts: Performance

Question 1

UCC Article 2:

Right of Assurance

Answer 1

If reasonable grounds to believe other party will not perform, may demand in writing that other party give adequate assurance of performance.

• Once demanded, can suspend own performance until reassurance given
• Reasonable grounds depends on facts
• Action of assurance depends on facts

Question 2

UCC Article 2:
Rights of parties in non-performance:
Goods not Delivered

Answer 2

1. Anticipatory Repudiation: type of nonperformance where either buyer or seller repudiates the contract prior to required date of performance
2. Non-breaching party can:
   - await performance for reasonable period OR
   - treat breach as final and resort to remedies AND
   - suspend their own performance without liability for breach
3. Unless non-breaching party has canceled (notice of breach and intent for remedies), materially changed their position, or given notice that anticipatory breach is final, breaching party can retract, which restores to original position.

Question 3

UCC Article 2:
Delivery of Goods:
Inspection & Right of Rejections

Answer 3

Inspection:
- buyer has a right to inspect before paying
- need not be immediate
- open boxes, conduct tests, examine goods
Right of Rejection:
- seller has obligation to deliver goods that conform to the contract
- if the seller delivers goods that fall short:
- reject entire shipment
- accept entire shipment
- accept any commercial unit and reject the rest

Question 4

UCC Article 2:
Delivery of Goods:
Buyer’s Responsibilities

Answer 4

Buyer’s Responsibilities:

• reject in reasonable time
• rejection not effective until known
• specific reasons given
• if buyer has possession, act as bailee. and if merchant, follow seller’s reasonable instruction for disposition of goods
• if goods are perishable, make reasonable effort to sell
• if no instructions, store for seller at reasonable expense

Question 5

UCC Article 2:
Delivery of Goods:
Seller’s Rights

Answer 5

Seller’s Rights:

• opportunity to fix or “cure”
• “Cure” seller has until time contract is due to get conforming goods to the buyer
• Can tender new conforming goods
• can substitute goods (commercially reasonable substitute)

Question 6

UCC Article 2:
Delivery of Goods:
Acceptance

Answer 6

When does acceptance occur?
- after opportunity to inspect and notifies seller of conformance
- buyer fails to reject after a reasonable time
- buyer engages in any act inconsistent with seller’s performance
When can a buyer revoke acceptance?
- buyer was given reasonable assurance seller would cure, and cure has not taken place.
- seller assured buyer of conformance, but then proven they are not conforming
- nonconformity was difficult to detect
* must take place in reasonable time period*