University of Georgia Terry College of Business LS 470 - Business Law I Dr. B-A's Word Outlines BREACH & REMEDIES S's duty-deliv or tender conforming gds at proper time & place tender is a cond to B's duty to perf B's duty to accept deliv & pay for gds pties may vary the remedies availbl by K Adequate Assurance available to both B & S if one pty has reasbl grnds for insecurity can demand in writing that other will offer proof that other will provide conforming performance demanding pty can suspend perf until assurance rec'd if no assurances w/i reasbl time can treat K as repud reasbl time can't exceed 30 days what const reasbl grnds for insec & adeq assurance left open between merchs, commercial stands applied B's rems S's rems cover resell gds & recov dam rej K cancel K recov dam for nondel recov dam for nonaccep specific perf or replevin sue for price of gds Ways to Breach anticipatory repud by B or S failure of perf by B or S rejectn by B (rtful or wrongful) revocatn of accep by B (rtful or wrongful) if revocatn or rejec is wrongful, B br K if revocatn or rejec is rtful S br K B's Rts/Rems BUYER'S RIGHTS Rt to Inspect B has rt to do so B4 pmt or accep must be reasbl time, place & manner K govs where inspectn to take place if S to send gds to B, may be done after gds arrive if COD, B must pay 1st if pmt agnst docs of title, must pay 1st if B must pay 1st, doesn't impair rts if defect later found B must pay expense of inspectn if gds nonforming, B can recov cost of inspect fr S Rt to reject B can do so if gds don't conform may rej whole accept whole accept any commer unit(s) & rej rest accept of pt of gds doesn't impair rts agnst S must notify S of br w/i seasbl time to pursue rem of dams if not so notified, rej is ineffective & consts accep if B conts possn of defec gds for unreasbl time, no rt to rej gen, may be gen notice w/o particulars as to defect if defect cd be remd if partics given to S, B may lose rts if betw merchs, can demand full written stmt of all defects if request not ans'd, B may lose rts if B in possn & rejs, must hold w/reasbl care for S to remove if merch B, must follow S's reasbl instrucs as to dispositn if no instruc, may make reasbl efforts to sell for S's acct if perishbl or threaten to decline in value quickly if sale not mandatory, B may store for S's acct reship to S resell for S B has sec int in gds for cost of sale or other dispositn must remit extra $ if any, to S Rt to revoke accep acceptance is failure to make effective rejectn indicating gds conform or will take in spite of nonconformty after reasbl opportunity to inspect any act inconsistent w/S's ownership may revoke accep if (2) * substantial impairmt as to B & defect not immed discovbl or B, or * B reasbly expected S to correct & S didn't must give S notice revocatn must be w/i reasbl time after B discov (or shd'v) defct after revocatn, B's in same positn as after rej Rt to cover arrange to purchase gds elsewhere as a substitute must act reasbly & in gf rental isn't reasbl substitute for purchase B can get fr S diff betw K price & cover price conseq dam must keep conseq dam to min by covering incidentl dam B need not purchase substitute gds at cheapest price gen B not required to cover (except 2 keep conseq dam to min) Rt to dam for nondelivery or repud diff betw K price & mkt price when B learned of br B also entitled to incidental & consequential dams if B buying for resale dam is diff betw K price & price gds 2B resold for if pmt still due under same K, B can deduct br amt fr amt due can't deduct this fr another K w/S, must be same K if S disputes amt deducted, ct will decide reasblness BUYER'S REMEDIES Rt to the gds availbl when gds unique not defined, but may incl output & reqmt Ks where gds not readily or practically availbl otherwise B must not've been able to cover B may also get replevin instead recovery of gds in hands of S who wrongfully w/holds fr B can only do if * B has specl prop in gds (i.e., gds identified to K) * S becomes insolvent w/i 10 days after rec 1st installmt pmt fr B B must tender unpd portion of the price S's Rts/Rems Rt to Cure if gds don't conform & relatively minor, S may correct S must notify B of intention to cure S must tender conforming gds w/i time for perf If time for perf expired, S may still tender if S had reasbl grnds to believe gds wd be accepted despite nonconform i.e., only 1 shirt of 1000 missing Rt to Reclaim fr Insolvent B insolvent ceases to or cannot pay debts as due (or) liabilities exceed assets when S discovers B's insolvency, can * refuse further delivs except for cash * demand pmt for all gds previously deliv under K * if gds enroute, can stop them * if gds in whse or other storage awaiting deliv to B, can stop deliv by bailee * if B rec'd gds on cred while insolvent, S can reclaim S must make demand w/i 10 days after receipt by B if B made written misrep of solvency w/i 3 mos before gds deliv & S justifiably relied on it S not lim to 10 day period for reclaiming reclaiming gds prevents them fr becoming pt of B's bankrupt estate Rt to Reclaim Gds fr Solvent B if B breaches, S can stop delivery by carrier S must give proper & timely notice to carrier must give carrier enough time to follow instrucs rt ends when gds deliv to B or bailee acks holdg gds for B not so if B insolvent must stop by carload, truckload, etc., or larger Rt to Resell Gds has claim agnst B for diff betw resale price & K price if gds not yet fully made, S can identify gds to K, then resell stop & sell unfinished gds must be able to show unfin gds were for the partic K sell unfinished gds for scrap or salvage must use reasbl commercl judgment for mitigating dams may be private or public sale (auction) if private S must give B resbl notice of intent to resell if public S must give B notice of time & place resale S can purchase at sale notice not req'd if gds threaten to decline in value or are perishble S not accbl to B for profit if higher amt realized at resale Rt to Collect Dams diff betw unpd K price & mkt price at time & place of tender + incidnt'dams if not enough, can recover profit S wd've made fr full perf by B + incidentl may include reasbl overhead Rt to Collect Purchase Price (3) * if B accepted gds * if resale isn't practical, i.e. specly manufd gds & no mkt * if gds destroyed after ROL passed to B must hold gds for B if S obtains j agnst B, may resell any time before collectn must apply proceeds to satisf of j pmt of bal due on j entitles B to any gds not resold