Performance

Question 1

Describe the general rules of performance for a seller and a buyer

Answer 1

1. )The seller is obligated to ship or tender delivery of conforming goods.
2. )The buyer has a duty to accept and pay for conforming goods

Question 2

Define “anticipatory breach.”

Answer 2

Occurs when either the seller or the buyer repudiates the contract prior to the contract date of performance

Question 3

What actions should occur to ensure a proper rejection of nonconforming goods?

Answer 3

1. )The buyer must do so within reasonable time after tender.
2. )The buyer must notify the seller, generally with specific reasons for the rejection.
3. )If the buyer is in possession: Buyer needs to exercise reasonable care of the goods.
4. )If goods need to be sold (e.g., perishable): The buyer must make a reasonable effort to do so. The buyer is to receive reimbursement for cost plus 10% sales commission

Question 4

Describe the concept of the right to demand assurances

Answer 4

The right of one party to demand additional guarantees of performance under the contract when none has taken place or the party has reason to believe the contract cannot take place

Question 5

What actions constitute the acceptance of a product by the buyer?

Answer 5

1. )Acceptance after opportunity to inspect. (Acceptance after inspection signifies goods are conforming or the buyer will accept anyway.)
2. )Failure to reject after inspection or a reasonable opportunity to do so
3. )Actions inconsistent with the seller’s ownership of the product

Question 6

Define “cure.”

Answer 6

If a seller tenders delivery of nonconforming goods prior to the contract date and the buyer rejects the goods, the seller can, with notice, indicate the intent to cure, and the seller is not in breach if the seller tenders conforming goods within the contract time period

Question 7

List the rights of a buyer upon delivery of the goods

Answer 7

1. )Right of inspection unless agreed to the contrary
2. )Right to reject any nonconforming goods
3. )Right to reject the full shipment

Question 8

List the possible actions of a non-breaching party if an anticipatory breach has occurred

Answer 8

1. )Await performance for a commercially reasonable time.
2. )Treat the breach as final and resort to remedies.
3. )Suspend the nonbreaching party’s own performance without liability for the breach

Question 9

What option does the buyer have for tender of payment?

Answer 9

1. )It can be by any customary means.

2. )The seller could demand cash

Question 10

List the conditions that must exist to revoke a previous acceptance of goods

Answer 10

1. )The buyer was given reasonable assurance of cure, and cure has not occurred.
2. )The buyer was assured goods were conforming and later discovered they were not.
3. )The buyer’s discovery of the nonconforming was difficult to detect

Question 11

Describe a buyer’s right of inspection

Answer 11

The right, available to the buyer for reasonable time, to open packages, examine goods, and conduct tests

Question 12

Describe the perfect tender rule

Answer 12

The seller must deliver goods to the buyer that conform in every respect; there is no standard of material breach here but, rather, any breach, regardless of how minor

Question 13

Define “substituted performance.”

Answer 13

If, without fault of the seller, the agreed facilities or type of contract carrier is not available or delivery is impractical, but a commercially reasonable substitute carrier is available, the seller must use the substitute carrier and the buyer must accept delivery and pay

Question 14

List the rights and duties of a seller or buyer upon either party’s failure to perform.

Answer 14

1. )Right of assurance of performance

2. )Duty of cooperation

Question 15

List the options that a buyer has when a seller tenders goods that fail to confirm to the contract (i.e., the perfect tender rule).

Answer 15

1. )Reject the entire shipment.
2. )Accept the entire shipment.
3. )Accept any commercial unit and reject the rest