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Assignment of Week 4
Contract of performance
Under the Article 2 of the Uniform Commercial Code, there is constructive
condition of performance requiring both parties to perform their duties as required
by the contract.
Assignment of Week 4
Delivery of Goods
In a typical sales contract, the seller has a duty to deliver the goods and the buyer
has a duty to accept and pay for the goods.
The seller must do any resale of the goods in a "commercially reasonable" manner. If the
seller is entitled to damages, it is computed by subcontracting the contract price from the market
Assignment of Week 4
price at the time and place the goods were to be delivered plus any incidental costs, minus
expenses saved by the breach.
In unusual circumstances, the seller would be able to sue the buyer for the full contract
price. This is normally only if the goods were specially manufactured and could not be resold
after a reasonable effort. The seller will usually need to take reasonable steps to resell the goods
and then go after the buyer for lost profit and damages.
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consequential damages. This gives the buyer an incentive to obtain the best available substitute
goods at the best available price promptly after the buyer learns of a breach.
If the buyer elects to accept defective goods, the seller is still liable for breach of warranty.
The damages for such a breach of warranty are the difference in value of the goods accepted and
the value of the goods that should have been delivered as warranted. The buyer is still entitled to
incidental and consequential damages.
A buyer is rarely entitled to "specific performance" of a contract for delivery of goods. Only
if goods are truly unique and unavailable elsewhere and monetary damages would not adequately
compensate the seller, is it possible for a buyer to force the seller to perform and deliver the
contract goods.
If a buyer rightfully rejects defective goods, the buyer will have a security interest in the
goods for the reasonable cost of handling the goods. If the buyer rightfully rejects goods and the
seller gives the buyer instructions on how to handle or resell the goods, the buyer can demand
reimbursement for the expenses of such steps.
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References:
http://www.businessdictionary.com/definition/contract.html
http://legal-dictionary.thefreedictionary.com/breach+of+contract
http://www.advocatekhoj.com/library/lawareas/saleofgoods/index.php?Title=Sale of Goods
http://www.law.cornell.edu/ucc/2/2-711
http://www.law.cornell.edu/ucc/2/2-703
http://www.law.cornell.edu/ucc/2/2-702