Sales Hobbs

1. Develop ability to interpret and construe statutory provisions 2. Apply legal principles 3. Learn legal rules Issues as you assist client in negotiation and documenting Choice of law? Must use UCC in Mississippi Arbitration Provision? Attorneys fees? Some states say none are recoverable if not included Choice of forum? How to determine the assessment of risk? Implied warranties for seller What goods? What organizational development Third Parties Applicable legal principals Clients business Business risk are they aware of Trade practice and customs Ask client Clients counter parties Transactional lawyer Non-merchantable goods, reject, revoke, remedies What will the law permit Articulate the risk to the client and provide options then let client make business judgment Revised Art. 1 including AR, non-uniform provisions Art. 2 (unamended) Sales Art. 2A Leases of personal property (limited interest) Revised Art. 7 Warehouse Receipts, Bills of Lading and Other Documents of Title UCC & other law UCC addresses elements of a transaction Often there is a conflict between articles 4-102 conflicts of law provision

B__goods (2)__> S -wire transfer (4) -check -promissory note (3) -buy collateral (9)

What is the purpose of the UCC, and its relationship to common law? 1-103-unless displaced by the particular provisions of this Act, the common law should apply o Two competing views to displacement 1. Explicit displacement-if UCC provision applies to facts, or the UCC grants remedial relief, then displacement occurs. 2. Implicit displacement-courts look at existence of a particular provision of UCC, 1-102 policies and objectives to see if common law and equitable principles should be displaced. 1-102-the purpose of the rules is to promote uniformity, (the court is obligated to supplement the UCC with common law, unless otherwise displaced), [the judge has an obligation to supplement with common law, before he has an obligation to promote uniformity.] The obligation to supplement with CL, must be balanced with competing goals of uniformity. What supersedes the UCC? CISG So what should a lawyer consider in deciding what law governs? p. 20 1. The type of property or other subject matter of the transaction 2. The nature or extent of the rights being transferred 3. The location of the parties to the transaction: CISG is rather the more applicable law 4. What, if anything the parties agreement says about governing law: Choice of law provision opt out of CISG. Domestic transaction cant opt out b/c of some mandatory provision GOODS What does the UCC Article 2 apply to? 2-102-"this article applies to transactions in goods" What is a good? 2-105(1)-"a thing which is movable at the time of the identification to the contract for sale" 2-105(2)- Contract to sale good must be both existing and identified before interest in them can pass Future goods cannot be designated. Future Goodsif not existing or identified already. Identification means the process or event in which an individual item or items become designated as the particular goods to be sold under the contract Default Rule of Identification: 1. When the K is made 2. When seller designates the thing o Identification for crops occurs, when the crops are planted, as long as the K is for the crops to be harvested within 12 months after Ktracting or the next normal harvesting season, whichever is longer.

Identification for the unborn young of animals occurs when the young are conceived, As long as the K is for the animals to be born within 12 months of Ktracting, o When the seller identifies or designates raw material, identification occurs when the raw materials are moved, when the goods are identifiable, o When identification occurs the buyer incurs a special property interest and an insurable interest in the goods. o When a manufacturer takes raw materials to make a good, identification occurs when the raw materials are actively chosen to satisfy performance, o Air conditioner example-buyer buys a/c from Sears, seller will check to see if they have that model in stock, if so, seller sets aside one of that model and the a/c unit is identified at the time of K, (even if the unit is not at this store, Sears designates that particular unit to satisfy their obligation) if it is not in stock and seller has to order from the manufacturer, the goods will not be identified until the manufacturer ships. o Hotel may enter into agreement w/ bake shop. Identification: H 10 cakes every week call every week about types of cake o Good need not be in a deliverable state when identification is made. Fungible good no insurable interest. Nonconforming buyer has a right to accept or reject. Electricity doesnt apply to Art. 2 except in a consumer sense

WHAT IS A K? 2-106 Sale present (accomplished at the making of a K: Title passes) and to sale good a future time No interest can pass unless existing and identified K to sale at a future time for future or existing Crops are identified when planted o June 15 crops are currently growing, sale occurs on Aug. 25th. Title did not pass when K was made. Seller must complete performance for title to pass. Future sale of future goods o Order book not yet published but have paid for the good Problem 1-1 A: 1. Yes 2. Yes 3. Has to be sale to consumer, yes. This example is not a good, service is being provided B: 1. Yes, commodity 2. Yes 3. 4a transfer of value, under amended there is a difference 4. Article 8 applies, 2-105 excludes money in invested security C: 1. Good. Who is going to severe, if its the seller then yes its a good. 2. Some jurisdictions put timber w/in subsection 1. Yes, a sale of goods. 3. No, buyer will extract

4. Yes

HYBRID TRANSACTION A mixed/hybrid transaction is one which is a combination of both goods and services o UCC or Common Law or K? Service K substantial performance contract can sue for damage [Kprice value of the breach] To determine whether Article 2 will apply to the transaction, use one of the following tests: Predominant Factor Test (the majority test) 1. Look to the language of the K and 2. The nature of the K, 3. Look at the nature of the business of the supplier, (what is the general business, and under specific K) 4. The intrinsic worth of the goods involved, what are the allocations Principle Object Test or Essence of the Agreement (Arkansas's Test) Robertson v. Sieola, a homeowner sued a tile setter the breach of an oral K for the installation of tile, Facts: $15000 goods, $12 an hour + 15% of 15000($2250) o Even where goods are a substantial part of the K, b/c the predominate object of the agreement was to hire the tile setter, it was treated as a service K, No right of recovery for right of workmanship Would be able to under implied warranty of merchantability Same as the UCC Common Law test 1. look to number of hours worked 2. who installed-the person who sold the goods? 3. nature of business-is the seller a true seller or an installer, etc. o

Gravamen of the Action Test Gravamen-From the Latin word Gravis, meaning "heavy" Whether the weight of the accusation is more like that reflecting dissatisfaction with goods aspect, or dissatisfaction with the services aspect o When injury results from defective in K that is primarily service, injury caused by defective diving board, Maryland is the only state that uses this test Case: swimming pool, agree for contractor to supply diving board, which was an optional item. Agreed to install. Surface of the board was faulty. Owner slipped and was hurt. Board = $150 inserted metal frame. Predominant Purpose- service K, merchantability is not available Must have all Yes then UCC can be applied (example above, all yes) 1. Is the good supplied for commercial transaction? 2. Do the goods retain their essential character? (Do they attach to realty, etc.) 3. Can the price be apportioned? o o

4. Does the monetary loss, or personal injury result from a defect in the good supplied (Limits this to a consumer context), would not apply to a doctor, dentist, etc. for a service and goods, (if the good is applied to a professional service it would not apply),

Mixed transaction/software/smart goods/etc. Software is a good unless it is custom-made (service). Digital art exlude digital art form its scope. Online games say it is not w/in scope. . . Really? Is it a lease? Problem 1-2 A: Yes B: Yes C: Speck v. Netscape D: Jurisdiction will decide

Problem 1-3 A: Need to know cost? Customary practice? AR: What motivated the buyer? B: Yes, compare manufacturing and designing/installation. 2-105 - Value of robot? If neutral language

Opting out of Article 2, focus on service, work backward. Problem 1-4 Non-uniform amendments to Article 2. UCC 2-316 A: No B: No CISG (Vienna Convention for the International Sale of Goods) The CISG was prepared by the United Nations Commission on International Trade law, and issued for signature through a United Nations Diplomatic Conference in Vienna in 1980. Article 1(a)-the CISG applies to international sales of goods, when both parties are Ktracting states. o Iceland is not a member of CISG (so conflict of laws would apply between the countries, if the conflict of laws point to a contracting state, then conflicts of law would require the CISG to apply, under conflict of law the UCC would apply, b/c the US opted out of the K), o parties in a transaction can agree what law will apply, Article 10-when parties have places of business in more than one contracting state, the place of business is which has the closest relationship to the K and its performance, having regard to the circumstances known to or contemplated by the parties at any time before or at the conclusion of the K, or habitual reference,

Under the CISG, there is no definition of goods, only certain exclusions, what about timber? The good status of timber depends on who severs, (look to precedent in international law, ("law merchant" conventions before looking at domestic law in help defining a good) Article 3.2 (this convention does not apply to contracts in which the preponderant part of the obligations of the party who furnishes the goods is LABOR or services, o (like the UCC predominant factor test, go back to legislative conventions, and prior drafts to determine the definition and applicability of the predominant factor test) Art. 3-Contracts for the supply of goods to be manufactured or produced are to be considered sales unless the party who orders the goods undertakes to supply a substantial parts of the materials necessary for production, Art. 11., there is no statute of frauds requirement under the CISG, b/c the U.S., Note that the United States did not make the declaration authorized under Art. 96 that is implemented in Art. 12. CISG does not apply to leases, There is no interaction between CISG and Article 2A, go back to rules of private international law to determine which law will apply to the lease law, o However The parties could, by agreement, make 2A applicable, CISG does not apply to software unless goods are the predominant part of the transaction, CISG pre-empts UCC Article 2, However Under CISG article 6, parties may exclude the application of the CISG

Problem 1-5 A: CISG seller is given the benefit of the doubt her B: CISG Drafting guidelines: 1. Clients business, trade usage, course of dealings and performance cannot understand the bargain of the parties until 2. Applicable legal rules how do you opt out/in if possible some provision are mandatory default rules 3. Avoid ambiguity look at syntax 4. Consistent language use the language of the test. 5. ? 6. Logical structure parties, purpose, consideration, warranties 7. Generally clarify and distinguish general rule and exceptions 8. Avoid legalese 9. Active voice Seller will deliver the goods. We agree, not the parties agree. Forum selection clauses location of court Choice of law clauses location of law

Electronic Contracting and Assent The bridge from electronic K is effective as writings signatures as well. Clarifies human intent. Prefatory Note: establishes writing that may be needed for state law 7 Electronic Records, Signatures, Ks *removal of barrier+ 5 Does not have to K electronically consent can be implied from conduct 9 Agency law in operation held responsible for human or electronic agent 14 click through process and automated transactions ESIGN is pre-empted if state codifies UETA (7001: Federal Law) Problem 2-7 A: Yes, intent of both parties. 2 (7) and (8), 9 Comment 5 B: Yes, Browse-wrap 9(a) and (b). Common law duty to read. Browse-wrap argument deceptive trade practice or unconsionability. Adequate notice of the existence of the terms.

Problem 2-8 (from 2-5) A. CISG Art. 14 offer terms CISG Art. 19 Altered terms, yes was material B: Not directed to specific person- Ad is general not an offer. Telephone call is an offer had intent to be bound. CISG applicable law? Consumer* we dont know. Settle of dispute = counter offer. 20 days notice no remedy. Buyer has a contract -->accepts goods (18)(1) [counter-offer is the governing document] C & D: have terms, additional arbitration clause. Condition: must be consent to the terms. After shipment: acknowledgement, conduct can be consent. UCC 2-207: Acceptance = assent to dickered for terms (listed below). Additional terms = still functions as an acceptance. Counter-offer (unless/subject to. . . not good enough) 2-207(3) conduct by both parties = shipment +payment

Another point CISG 19 v. 2-207 2-207 abrogate the last shot rule: definite acceptance. Will act as an acceptance, even if there is a material change. Assent to the Dickered or Bargained terms. CISG: Material = counter offer Immaterial okay if not objected to Bargain for/Dickered Subject matter Price Quantity Delivery

Unconscionability 2-302(1)-if the court (not the jury) as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may o refuse to enforce the K o it may enforce the remainder of the K w/o the unconscionable clause o or it may so limit the application of any unconscionable clause as to avoid any unconscionable result, 2-302(2)-when it is claimed or appears to the court that the K or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the court in making its determination. Comment 1-"the basic test, is whether, in the light of the general commercial background and the commercial needs of the particular trade or case, the clauses involved are so one-sided as to be unconscionable under the circumstances existing as the time of the making of the contract. o The principle is one of unfair oppression and unfair surprise, o and not one of allocation of risks b/c of superior bargaining power. Unconscionability is measured at the time a K is entered into, and not in light of later events. Two important types of Unconscionability: o Procedural (did the person knowingly and willingly assent to all the terms) 1. Look at the character of person asserting the unfairness-does he need protection? 2. Did he read and understand the terms? 3. Are the terms complex? (Was the provision buried in the K), were the terms in small print? Was there an opportunity to read and understand the terms? 4. Was there duress in the bargaining process? Unequal Bargaining Power, and bargaining strength (must be a gross inequity that violates meaningful choice), 5. Was there opposition from circumstance, i.e., extreme need? o Substantive (look at the term itself) 1. The terms are so one-sided as to be unduly favorable to one party. 2. Are the terms harsh or unduly favorable to one party? 3. Do the terms violate public policy? (is the term consistent with the public policy of the state, has this type of term been upheld by that state's courts before?) 4. Is operation of the term oppressive, even if the term itself would not be oppressive-require business investment that would be unproductive and result in financial loss if enforced, was there a loss of investment, or forfeiture, o To be found unconscionable you must find both procedural and substantive unconscionability Unconscionability is primarily limited to consumer contexts 2-309(3)-termination of a K by one party except on the happening of an agreed event requires that reasonable notification be received by the other party and an agreement dispensing with notification is invalid if its operation would be unconscionable,

(This language implies that termination of a sales K w/o agreed cause is authorized by the code, provided notice is reasonably given.) Fiser v. Dell Computer Corp. Factors for procedural unconscionability: 1. Whether it was prepared entirely by one party for the acceptance of the other 2. Whether the party proffering the contract enjoyed superior bargaining power because the weaker party could not avoid doing business under the particular terms 3. Whether the contract was offered to the weaker party without an opportunity for bargaining on a take-it-or-leave-it basis Parties in general have a freedom of K, and can designate their choice of law Choice of law: TX, unless violates public policy Violates NM pp term therefore substantively unconscionable o Prohibits class action suit Two Attacks: 1. 2-207 look for course of dealings. Not overwhelming successful 2. Unconscionability The operation of the term is unconscionable --> franchisee invest lots of money, but termination term is enforced before investment term can be produced (forfeiture) Problem 2-13 Unilaterally select the arbitrator --> substantive unc. Fees: Buyer will always have to pay--> substantive unc. Also cant go to court because too costly. Procedural Unc: Absence of meaningful choice in the industry Problem 2-14 Can approach it by 2-207 Buyer could have objected to the term (choice-of-forum) Choice-of-forum are enforceable unless violates pp or seriously inconvenient Article 2 you need procedural and substantive unconscionability unless it violates a very strong pp [ 2A108(1)] -->unless consumer (procedural alone) lease -->per se substantive unconscionable. Show it isnt a lease but a sale. Test: Repair and Limitation Deprives party substantive remedy of the bargain CISG-Good Faith/Unconscionability Good Faith under the CISG o Art 7-In the interpretation of this convention, regard is to be had for the international character and the need to promote uniformity in this application and the observance of GOOD FAITH in international trade.

Art 29-A K may be modified or terminated by the mere agreement by the parties, but an agreement that this be in writing cannot be modified or changed by the parties, Unconscionability under the CISG o There is not an explicit claim for Unconscionability under the CISG, o Article 4(a)-this convention governs only the formation of the K of sale and the rights and obligations of the seller and the buyer arising from such a K, the convention is not concerned with the validity of the K or any of its provision or usage, or the effect the K has. o You could try to use, Article 7(2)-supplemented by general principles on which CISG is based, in conformity which the law applicable by virtue of the rules of private international law. However, you would still need to find some other provision to tie 7(2), to, so it is unlikely that you can get a claim for unconscionability under the CISG.

Problem 2-15 Unconscionable: gross over-pricing, whether the buyer has exercised meaningful choice is necessary. Not price alone (sub. Unc.) and not dealing w/ necessities Absence of meaningful choice | 3x Market Price GOOD FAITH Non-merchants honestly, empty head buy pure heart Revision: applies to Art. 1 or 2 whether consumer, non-merchant or merchant. Honest in fact and the observance of reasonable commercial standards of fair dealing. (Has nothing to do with negligence). Broader community standard. Bad Faith is an attempt to recapture a forgone opportunity Good faith is not a source of independent rights 1-201(b)(20)-"good faith means honesty in fact in the conduct or transaction concerned" 1-203-"every K or duty within this Act imposes an obligation of good faith in its performance and enforcement" 2-103(1)(b) Good faith for merchants is a little bit different: o Must meet honesty in fact in the conduct or transaction concerned, o [AND] the merchant must meet the "observance of reasonable commercial standards of fair dealing in the trade" 2-306-for requirements Ks, the buyer must set his or her outputs or requirements in good faith. o The quantity must also not be unreasonably disproportionate to any stated estimate to any normal or otherwise comparable prior output or requirements. o A shut down by a requirements buyer for lack for orders might be permissible while a shutdown order to curtail losses would not be permissible.

2-305(2)-when the buyer or seller gets to fix the price in the K, the price must be fixed in good faith.

Market Street v. Frey P sent letter to D, not mentioning important clause; good faith requires P to notify D? or should D be expected to know clause? SJ reversed, sent to trial to determine Ps intentions; difference between exploiting superior knowledge of market and taking deliberate advantage of your partner Terms of the Agreement: Trade Usage (T/U) typical implied terms of the trade (fact in trade) Course of Dealings (C/D) pervious transactions Course of Performance (C/P) particular transaction 1-201(3) Agreement (bargain of the parties in fact) o what did they agree to --> implied or expressed Express Warranties The whole idea behind warranties is to determine what it is that the seller in essence has agreed to sell. Context of EW . . . buyers expectation of the good is disappointed. Economic loss cannot sue in tort Must have an affirmation of fact 2-313(1)(a)-the seller makes an o Affirmation of fact or promise to the buyer sure footed seaworthiness seaworthy To describe boat, buyer wanted an ocean going vessel o Which relates to the goods o [AND] becomes part of the basis of the bargain o Creates an express warranty that the goods shall conform to that affirmation or promise. Affirmation of fact: o Are the statements affirmation vs. puffery o Look to the language that the seller employs, is it clear and unequivocal, does it show that the goods are experimental, Is the statement measurable? If so, probably an affirmation of fact o Buyer's expertise and knowledge And 3rd from whom buyer receives information o Seller's expertise and knowledge When a seller has a greater expertise and knowledge the scales should tip in the favor of the buyer, Royal Business Machines

2-313(1)(b)-the seller makes a o Description of the goods to the buyer o Which is made part of the basis of the bargain o Creates an express warranty that the goods shall conform to the description o 2-313(b) vs. CISG 35(1) -->only have to show a term of K o AR and prevailing approach is the description an inducement? Part of the basis of the K 2-313(1)(c)-the seller shows the buyer o Any sample or model o Which is made part of the basis of the bargain o Creates an express warranty that the whole of the goods shall conform to the sample or model. (comment 6-presumption that a sample or model acts as an affirmation and becomes part of the basis for the bargain, if sample is drawn from bulk, S has so acted to the sample that it represents the whole, (acts as an affirmation that the whole is in conformity with the sample) 2-313(2) o It is not necessary to the creation of any express warranty that the seller use formal language like "warrant" or "guarantee", o It is not necessary that the seller have the specific intention to make a warranty, o BUT an affirmation about the value of the goods, or a statement purporting to be merely one of the seller's opinion or commendation of the goods does not create an express warranty. puffery does not make an express warranty. E: fact unequivocal F: fact measurable G: opinion commendation H: fact I: mixed opinions based on other circumstances

Problem 3-5 A: opinion commendation B: opinion commendation C: fact specific, certain D: fact language and knowledge

Basis of the Bargain: o There is no need to show particular reliance by the buyer on the affirmations by the seller in order to show that they became part of the basis of the bargain. o Typically the seller can introduce evidence to show that the buyer did not rely on the bargain, ex. The buyer had specific knowledge that the representation was false at the time it was made by the seller. o Factors used to prove that the affirmation became part of the basis of the bargain: 1. Buyer's expertise 2. Buyer's Examination of the goods.

3. Buyer's knowledge of the nature of the defect, 4. Nature of the defect (is it clear that the defect existed), 5. Reliance on something other than the affirmation, (did he have another expert who examined the goods) 6. Price of the goods, (Get enough information into evidence to substantiate reliance on the part of the seller) Post affirmation modification o 2-209-no consideration is necessary to modify an express warranty, all that is needed is good faith, and assent, Some jx had held that there was no need for a post-affirmation modification for express warranty, and some have held that this is necessary, o Usually the post-formation express warranties arise in face-to-face transactions, where the buyer has second-thoughts, at the counter, and a statement is made to induce the buyer, Look to substantial assurances are made after the fact, to induce the seller to buy, o Can be considered a basis of the bargain as modified

Implied Warranties of Merchantability This implied warranty, unlike the express warranty, arises out of the seller's inaction, and arise as a matter of law. First Two requirements for merchantability o K of sale, o The sale of goods must have been made by "a merchant with respect to goods of that kind" 2-314(2)-goods to be merchantable must be at least: o pass w/o objection in the trade under the K description o in the case of fungible goods, are of fair average quality within the description. o Are fit for the ordinary purpose for which they are used, o Are adequately contained, packaged, and labeled as the agreement may require, and Comment 10-applies only where the nature of the goods and of the transaction requires a certain type of container, package, or label, o Conform to the promise or affirmations of fact made on the container or label if any, Implied warranties will arise if . . . 2-104 Group 1 professional, general business practices Group 2 goods of that kind (specialized knowledge of good) Group 3 specialized knowledge or knowledge of specialized practices (perishable goods) Any food sold must be merchantable, it must be fit for the ordinary purposes of which such food is used,

The courts are not in agreement as to what test should be used when someone suffers damages from some object in their food, Natural Substance-foreign substance test-there is no implied warranty of merchantability liability as a matter of law, if the injury causing substance is "natural" to the food, but there is liability when the foreign object is not natural, or foreign, to the offending food. Reasonable Consumer Expectation test-would a reasonable consumer expect to encounter this object in their food?

Problem 3-8 A: No B: Yes, merchant Merchantability and Used Goods o The majority of jx, 2-314 is available for new and used goods, o Unless disclaimed the implied warranty of merchantability will arise, o When an implied warranty of merchantability has been breached for used goods, the issue will turn on what is the standard of quality for that individual transaction, and was that standard of quality breached. o Factors in determining the extent of the warranty for used goods: 1. Buyer's knowledge of use, 2. Price of goods, compared w/new goods, (most significant factor), 3. what the buyer could reasonably expect, (was there a substantial discount) 4. Buyer's own use of the goods, o Problem -a farmer bought a 1980 used vehicle, from S, a dealer, for $5,000, it had 80,000 miles, the seller did not make any express warranties, but did not disclaim any warranties, after 30 days the farmer drove the car for 10,000 miles and the engine failed due to an engine condition existing at the time of sale, B had the engine replaced for $2,500 and sued the S for breach of I.W.M., B had an expert come in who testified that the car in the same condition would have a fair market value of $750, on cross the expert conceded that this vehicle would pass w/o objection in the trade under the K description, What result? 1. Buyer had knowledge of the use, 2. Price of the goods, (was the buyer given a substantial discount?) 3. Did the buyer use the goods to the extent expected, he put 10,000 miles on the car in one month, 4. Yes an implied warranty of merchantability arose, but it was not breached, A breach of warranty would have occurred if the buyer put fewer miles on the car, Most courts have taken the position that warranties arise in the absence of disclaimer,

5. Assume that you have a client who has bought an innovative new product, which is complex, can he sue under an implied warranty of merchantability, (it would be difficult to show what the ordinary purpose of the machine was, must show course of dealings), A.C.A. 4-2-316, has a blood shield statute, it is considered a K for the sale of goods, (implied warranties are not applicable for blood taken from blood banks), 2-316 (2) and (3): must use language to exclaim to exclude warranty --> fails to examine ore could have discovered o Unless exclaimed or modified, warranties existed at the time of sale. Tender of delivery 2-725, unless there is a warranty of future performance. ASK: when was the good tendered and when is the SOL? 2-316 AR-w/respect to the sale of animals, there is no implied warranty that the animals are free from disease or sickness, unless the seller does so knowingly, In order for a buyer to prove that a warranty was breached, often the buyer must rely upon circumstantial evidence

Structure of 2-314 Expect seller to produce and sell good w/out defect [2(a)(b)(c)] HYPO: Goat Skin Bagdad goat skin dry salted --> express warranty o Implied warranty Trade standard: no more that to 3% defected (improper cured) This case 50%, breach of warranty -->parties have to define deviation of trade standard (e) chipped did not breach WofM in jurisdiction -->some courts say container was not the subject of the sale HYPO: Newspaper --> things packaged within ( like toothpaste that had glass in it) o No sale, but courts have held under IWM HYPO: Soup that is served free by a hotel, in the hotel lounge, should this be the subject of a 2314 breach of warranty? o Could be argued that this is done in contemplation of the sale of more soup, o Could also be argued that this is done in the contemplation of the sale of a room, which would be a service, and therefore not covered by the implied warranty of merchantability, HYPO: Patron in a casino is served a drink, and injured by a chip on the glass, does 2-314 apply? o The court said that an implied warranty arose, some courts require contemplated sale requirement, (comment 2, 2-313, the warranty sections of this article are not designed in any way to disturb those lines of case growth which have recognized that warranties need not be confined either to sales K or to the direct parties to such a K) HYPO: No cause of action, when a wine glass shattered in a patron's hand and a restaurant, Victoria's Station. (you would need to make an argument that the cost covered the incidents of the transaction

Problem 3-8 C: Good, IWM should arise (avoid by making service K) D: Service, not a good Problem 3-9 A: Tender of delivery is when SofL begins to run and when you have IWM. Seller has a duty to tender goods merchantable. No breach. Buyer has to prove defect. Was the mower misused? Misuse is a defense. Did buyer fail to service? B: Two approaches natural vs. foreign test. Reasonably fit for human consumption. Foreign (nails, mice, unnatural objects). Bone is natural to fish. Reasonable expectation even if natural court said there must be a warning (oyster)--> argue negligent preparation. C: Look at trade usage (standard) unless there is an agreement under 2-314(d). Nothing in this case states. D: Reasonable expectation of average consumer: There is a breach. Does it meet the standard in the trade? May not be an expressed warranty here. E: What is the contract description? F: Used goods. 2-314 applies to used goods. Must show this good did not meet standard. Any disclaimers? Does buyer have knowledge of this purchase? Knowledge of prior use? Price, could be indication of quality? Length after sale? Not fit for ordinary purpose. G: Fraud and concealment of material fact. 2-314(com 3) Good faith obligation. H: Breach of IWM Implied Warranty of Fitness for a Particular Purpose 2-315-implied warranty of fitness for a particular purpose to arise o The seller must have reason to know of the buyers particular purpose o The buyer must have a particular purpose o The seller must have reason to know that the buyer is relying on the sellers skill or judgment to select or supply suitable goods; and o The buyer must in fact rely on the sellers skill or judgment 2-315 (com 2) o Could be used if seller is not a merchant o Or seller disclaimed IWM effectively HYPO: Buyer told seller wash gravel and rock --> buyer used clay and tipped truck over. o Buyer relied on seller to provide specific specs Washed gravel and rock Gives specs and must adhere to them Buyer told seller he relied on his skill o Would arise in above example? Breach? No, buyer use the goods for something other than the particular purpose Must prove actual reliance on the seller's skill or judgment o Ex of no reliance-show that the buyer relied on its own expert's representations,

When they have the same level of knowledge the question becomes whether there was actual reliance, Valley Iron-if you have a custom good, its ordinary purpose is also its particular purpose, o Buyer showed collar casting, buyer had a handle that he wanted a casting to connect to the two pieces used to plant trees on hillside to plant sapling in rocky soil. Ask seller if they could make this type of item. Yes, out of iron. Buyer return much of the items b;/c they broke on impact. Buyer wants his money back. Custom good Particular use is its ordinary use (only use) Court said buyer relied on sellers knowledge and skill to use the right materials. Circumstances in this case was implied WofaPP. o AR says that where a seller has good fit for a particular purpose, you must show that the particular purpose was also the ordinary use for what the goods are used, (if the buyer's particular purpose coincides with the ordinary purpose of the goods, the purposes merge) Easier to prove, no actual reliance needed. Privity: from the seller where buyer purchased goods, some reference that buyer can recover from a manufacturer. Privity would not be a bar if req. were met in AR.

Problem 3-10 B: 1. Buyer communicated this 2. Particular types of roads 3. Yes 4. Buyer in fact did Defeats her purpose of having that car. Likely a breach. Warranties of Title and Noninfringement 2-401 Title: passes w/ completion of performance o Moving goods is not an obligation of performance Documents also under (3) Shelter Doctrine Seller delivers goods to buyer, K says seller will tender goods to a carrier, when carrier receives good all title shifts to the buyer. Whatever seller had buyer gets at a minimum. 2-403 absence an agreement (limitation of shelter) Expansion of Shelter. . .a person w/ voidable title has power to transfer a good title to a good faith purchase for value. Conduct a,b,c,d taker can covey good title Right to Avoidance fraud, partial-performance, infancy, incompetent (VOID). Mental defect (AVOIDANCE), alcohol, duress, undue influence 2-312 (Com 1) Good title: if someone has colorable claim (majority view, good enough to show breach of WofT) good title has not been given.

Minority view 0 P must demonstrate more than a cloud in the title to recover for breach of WofT Fraud = Voidable Theft = Void Only merchants make warranties regarding freedom of infringement

Tempur-Pedic International Package differently for donations Restrictions of Donation o Not to be resold o Must show donor o Give TP a chance to dispose o Not covered by warranties No showing that WTC was a sham operation, did acquire voidable title Problem 3-11 Was CSS a good faith purchases? Price was substantially below market value Terms of sale was suspicious, all tags removed Timing of the sale and the use of a building supplier Pres. Knew TP didnt authorize the sale Corporate charter of ADI had been revoked Pres. did a search on ADI that revealed information Entrustment 2-403(2)&(3) expansion of the shelter doctrine HYPO: Joe takes watch in Jewelry store to repair. Seller fixes and sells. Buyer sees, seller agrees to sale. Seller has not title o Seller Group 2 merchant, deals with goods of that kind o Who has title? 2-716 Replevin Problem 3-12 A. No entrustment here. Void title her. Buyer gets no title. Warranty of title has been breached. 2312(a) B: Void title, breach 2-403(2) C: Voidable title, good title to good faith purchaser. 1-204 value and 2-403(b) No breach, in light of the facts. A+ answer add cod 2-403, no longer an effective doctrine because of dishonorable check. Still gives good title. D: Right to possess --> no title. Warranty has been breached. Entrustment rules doesnt apply here E. Entrustment. 2-403(2)

F: Colorable title. Paying in full. Obligation (2-401). Credit transaction and seller has obligation to deliver goods. Tricky part seller agrees to keep it. More like on entrustment. Breach? No. CISG Art. 4(b) S#1 vs. 3rd Party o Conversion: What does CISG 4 tell us? Not concern of property rights of third parties. Use forum courts choice of law provisions Art. 41? Seller obligation to deliver goods, protect normal expectation of the byer. 3rd party claim may involve claims under sellers place of business Art. 43? Must provide notice of right in a reasonable time. Art. 42? Patent, Trademark, Trade Usage. Seller must be aware of the property rights at the time of the sell. 2-312(com 3) Limited to group 2 merchants (specialized knowledge of the goods). Notice by 3rd party of his allege infringement. Get notice. Buyers right to recover. Warranty is broader than patent and trademark infringement . . . Trade secrets. Quantity Need to know the Qty o 2-712 right to damages o 2-713 Measure of damage between market Kprice = Damages Hard to use qty gap filler. o 2-306 requirements and outputs valid qty term SOF 2-201 o $500 or more w/ writing o K + states a qty term + signed very important o D = Cover price (Cvp) - Kp + Inc + Con o $75 - $50 + 0 --> still need a qty term 2-305 gap filler for price term 2-309 filler for termination No gap fillers for qty 2-306 defines qty terms. . . requirements or output o Requirement good faith output. At minimum you want an estimate in the K, gives seller an idea of buyers need Set a ceiling and a floor. It is allowed. 2-306 (com 3) o When there is a breach, you know. Good faith or unreasonably disproportionat Problem 4-1 A: Seller would breach. Reallocation, pareito superior, if one party breach.

Efficient Breach: D = Cvp ($3.50) Kp ($1)= $2.50 D= Cvp ($4.00) Kp ($1)= $1.50 2-713 Market Measure, seller would only breach if market price goes up. Buyer price goes down. Or, try to get the seller to modify K, need consent. Buy your way out of K. 2-615 Market shifts are always foreseeable Fixed priced K, assume risk of market shift, or tie price to index B: Annual requirements $/sq ft Exclusive terms? Actual req. in good faith, meaning exclusive. Comparable demand, $25K __30%__32.5K__7.6%__35K__71.4%__60K Look at Market Price to justify unreasonable disproportionate Factors to consider (for above question B) o Amount which D exceeds estimate (71.4%) o Could Seller foresee or anticpate from prior est. (no) o Change in business o Market Price exceed K price (350% o Valid business reason? o Timing? o Reason for increase? Facts to establish good faith Goal: motive o Expectation of the k given nature of business o Amount of increase and frequency o Timing o Statement by the buyers Fair Dealings Buyer in rising marked to use fixed k to speculate Unilateral change at sellers expense Using purchase product for a different us b/c of market changes Remedies 2-708 seller damages o Careful youre not the breaching party o Maybe ask to sell 30% increase (B problem) Demand Adequate Performances 2-609 71.4% impairs our performance, then dont answer to provide adequate performance

Proper Interpretation - 2-306 2-306(1) - A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any state stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded. Courts are split on whether unreasonably disproportionate applies to increases or increases and decreases. Majority Posner Unreasonably disproportionate only applies to increases (Empire Gas) 1-103 Preemption goal applied by the courts is to provide liberal construction and application to simplify; clarify; modernize; expand through commercial custom, usage, and agreement; and promote uniformity of the law. As a result, we see the Majority rule. Minority rule Obviously, unreasonably disproportionate applies to increases or decreases in estimates, outputs, or requirements. Mathis v. Exxon Corp. Price Discrimination different prices for different customers without justification (i.e. - $289 Large Businesses; $266 Government; $249 Homes owners/Small Businesses)

2-305 Open Price Term Code says okay to leave the price term open in the contract. Gap Filler Must be reasonable price at time of delivery. Must be fixed in good faith. 1. Comment 3 (Merchant specificity) Good faith includes observance of reasonable commercial standards of fair dealing in the trade if the party is a merchant. 2. Recall Good Faith: 1-201(20) honesty in fact and the observance of reasonable commercial standards of fair dealing. 3. Note: this must be codified in the state so may want to clarify with regard to the jurisdiction. (Article 5 (5-102(7))- defines good faith as simply honesty in fact in the conduct or transaction concerned.) 4. Arkansas has this standard (commercial standards of fair dealing) for everyone. 5. 2-103 if codified, Good faith in the case of a merchant means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade. 6. If a normal case, objective standard is used. 7. If not a normal case, subjective standard is used.

8. To argue a not a normal case, have to have evidence of the subjective bad faith in setting the price. 9. Normal case presumed if objective standard. 10. In Mathis, had more than a normal case as there was evidence beyond an allegation. Was there honesty in fact? As this was subjective, it may be a question for the jury based on the evidence. 11. The conduct established a lack of honesty in fact. 12. Look at the evidence; as in Mathis v. Exxon, evidence showed Exxons motive was to drive out of business. TEST ANALYSIS 1) Non-Discriminatory Pricing 2) Stops Here if Normal Price 1) Price in Effect 2) Posted Price 3) Market Price Honesty in Fact is presumed. Price is objective because everyone is charged the same.

3) Evidence of Discriminatory Pricing and Bad Faith Motive AND abnormal case. Honesty in fact? If Yes, then in good faith. Court said in abnormal case dishonesty could be inferred.

Another view: 6th Circuit Objective Must only be commercially unjustifiable. Here, wanted to control the business. In the 1st, agreed with Mathis and noted the importance of good faith vs. just nondiscriminatory price Problem 4-2 A. Did they intend to conclude a contract? A signed writing with quantity, subject matter, date, and place looks like a contract. If seller is paying for gas and other obligations to deliver, the price may be reasonable (2-204). There is a contract even though they havent agreed on price. Seller has a duty to agree in good faith. Buyer is correct that there is a contract. Two options: 1) 2-6-09 adequate assurances; and 2) Declaratory Judgment B. 2-305(1)(c) reasonable price C. 2-305(3) Elements for a Contract: 1) Intent to be bound (subject matter, quantity, place, and date may illustrate) 2) Reasonably certain basis for remedy Delivery may be an issue (could be reasonable)

Inspection, Payment and Acceptance of Goods 3) Acceptance, 2) Payment, and 1) Inspection Three separate legal events Goods Oriented Remedies: 1) 2-601 Perfect Tender Rule Subject rules of installment contracts or contractual limitations, if the goods or the tender fail in any respect to conform to the contract, the buyer may (a) reject the whole, or (b) accept the whole, or (c) accept any commercial unit or units and reject the rest. 2) 2-602 Manner of Rejection (a) Goods must be rejected within a reasonable time after delivery or tender, and (b) Buyer must seasonably notify the seller. 3) 2-608 Revocation of Acceptance Have accepted, but a non-conformity substantially impairs the value of the goods Damage Remedies: 1) 2-714 Acceptance of goods, but nonconforming D=VW-VA (Damages = Value of Goods if Warranted minus Value of Goods Accepted) 2) 2-713 Market Measure D=MP-KP (Damages = Market Price minus Contract Price (plus any incidental and consequential damages)) 3) 2-712 D=CP-KP (Damages = Cover Price minus Contract Price (plus and incidental or consequential damages)) a. Cover making in good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from seller Acceptance 2-607 Effect of Acceptance - Easier to push goods back on seller if discovered before acceptance. - If accept, precludes right to reject and must pay the contract price. - Barred to remedies. - Much more difficult to revoke acceptance. - If tender has been accepted, buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy. (2607(3)(a)) Inspection 2-513 General Rule Buyer has right to inspect before payment (may contract away) - CoD, CIF, CNF terms of payment (Collect on Delivery; Cost, Insurance, and Freight; Cost and Freight) - Where? Any reasonable place, time and manner. (2-513(1)) - Who pays expenses of inspection? Buyer (unless 2-715(1)) - Unless otherwise agreed. 2-711 Index of Buyers Remedies

-Acceptance Avoids the right of reject; buyer responsible to pay. -Inspection is a good thing: Avoids incidental costs (unloading, storage, and inadvertent acceptance costs) Right to paymentDefault rules for Payment: Credit Transactions not Presumed 2-607(1) Buyer must pay contracted rate for goods accepted. -Concurrent conditions Pay/Deliver 2-511-Tender of payment is a condition of sellers duty to tender and complete any delivery. -Any means or manner current in the ordinary course of business is sufficient. -Unless seller insists on legal tender and gives extension of time reasonably necessary to procure. 2-310-Open Payment Term -Idea of default payment due when buyer receives the good -Tender is a concurrent condition (payment due at delivery) Tender2-503 Offer of performance -There and Ready Put it There -Code envisions due tender: -Due Tender Offer of performance coupled with present ability to complete all conditions of performance -Previously, court has held no tender if money was not shown (show up at door to pay, but did not display cash). Revocation could still have occurred before acceptance. -Code rejects with due tender. (Offer and ability) Problem 4-4 -Notification provided under 2-503 -Obviously agreed term delivery at buyers A) 2-513 prohibiting inspection impairs tender of payment which is a breach of contract B) Reasonable time, place, and manner? 2-513(1). Could take longer if seller made it (i.e. genetically altered). Remember Trade Usage and Course of Dealings Problem 4-5 A) Delivery Method Quiet? -2-308(a) Sellers place of business or residence if none -Must take possession at reasonable time (circumstances are relevant) -2-511 Payment of check or cash -2-503 Give buyer any notification reasonably necessary to enable him to take delivery -2-513 Inspection Reasonable time, place, and manner -2-307 Goods must be tendered in single lot unless circumstances make separate lots for delivery. If separate lots, price if it can be apportioned may be demanded for each lot. -2-601 Rejection must be able to apportion; if not, reject or accept the whole (then sue for breach)

Risk of Loss Who bears the financial responsibility? (loss, destruction, or harm to property) 2-509: 1) Agreement of the parties (shipping terms) 2) Stage of performance 3) Who has control/possession? 4) Breach of the Contract? 509-510 Policy Possession/control of goods are in the best position to avoid the loss and to have insurance against the loss. 2-509(1) Structure Contract where seller authorized to ship goods by carrier. Shipment Contract Once the seller gets to the carrier, risk of loss passes to the buyer (no requirement to deliver them at a particular destination). Destination Contract Seller has the obligation to load on the carrier and get to the destination safely (goods are there duly so tendered as to enable the buyer to take delivery). 2-509(2)-Held by bailee without being moved, Risk of Loss passes to buyer when: 1) Buyer receives possession or control of a negotiable document of title covering goods, 2) Bailee acknowledges buyers right to possession of goods, 3) Buyer receives possession or control of a non-negotiable document of title or other direction to dliver in a record. 2-509(3) If not (1) or (2), upon buyers receipt of goods if seller is a merchant; otherwise tender of delivery. Note: Group 3 merchant (knowledge of business practices, knowledge of goods, or knowledge of specific business practices or goods). Note: Farmers in Arkansas, regardless of their acreage, are not merchants. F.O.B. 2-319(1)(a)&(b) Free on Board at a named place -Named Place = place of shipment seller must ship goods and bear the expense and risk of putting them into the possession of the carrier -Name Place = place of destination seller must at his own expense and risk transport the goods to that place and there tender delivery of them Breach may reallocate location of the risk of loss.

Problem 4-6 A) Seller. 2-509(3). Merchant does matter here. Buyer hasnt received the good. Look at 2-104(1), Cmt. 2, to see if the seller is a merchant under the rule. There is no tender of delivery here, so merchant really doesnt matter. Seller is still in possession of the goods. 7-102(a)(2) may be relevant. B) 2-503. Must be group 3 merchant in order for 2-509(3) to apply (2-104). C) Buyer. Seller is usually not the bailee. (if seller is not a merchant because the contract was modified). Did the parties agree to risk of loss? Or agreement on delivery? Leave them in the bins, after hoursseller is a merchant, then the seller has the risk. 2-509(3), 2-503(1)(a), and 2-509(4) (no agreement of risk of loss if merchant). Bailee? Where seller operates warehouse and separate storage facilities, essentially these are separate businesses. D) If seller isnt a merchant, not a reasonable hour (so no tender of delivery). If merchant, needs to provide notice under 2-503(1). Buyer cant tender because no noticecould be a breach of contract under 2-509 so go to 2-510. Seller must tender (2-503). Thats the problem of this case. Rejection pushes back on the seller. With 2-503 and 2-509, remains on the seller (if a merchant) until buyer receives. Tender of delivery.then.receipt. E) Payment is conditional, no risk of breach of loss changing. Look at 2-511(3). Buyer would be in breach. But not risk of lossseller would if merchant. Unless a contract that requires payment before inspection (CIG, C&F, COD), still have right to inspect before payment. Problem 4-7 A) 2-319 F.O.B. terms Presumption that always place of shipment (2-503 Comment 5). Per 2-319, doesnt bear notion of risk of loading. CIF (Cost of Goods, Insurance, and Freight) in 2-320 is more appropriate (seller bears the expense when adding the word loading). International shipment terms FOB also requires loading. Incult Terms or UCC Intl Contract (by Int Co. Commerce) 2-504 Duly delivered? (b) Need receipt or bill of lading; (c) notify B) No change, a presumption of shipment contract without specific contract language. Must have an address to a home or construction site! Problem 4-9 A) 2-503 Tender of delivery - 2-503(1) manner (didnt inform the carrier 2-504(a) How to provide to carrier Contract as a reasonable contract; material loss ensures (at end of 2-504) = ground for rejection Non-conforming = 2-601 Failure to conform = may reject (-stays with the seller) 2-510(1) Risk of loss on seller until cure or acceptance

Problem 4-10 ADI = After Date of Invoice ADF = After Deduct the Freight 319 F.O.B. Question is whether F.O.B. delivered equals F.O.B. destination (is this enough to overcome the presumption that a shipment contract)? Court would likely treat as a destination contract. Has it been tendered by carrier? Subsequent communication additional term in the context of confirmation. 2-207 Additional terms in the form of a confirmation. 2-504 Shipment by seller Article 7-102(3) Consignee if buyer seller, completes obligations Warranty Disclaimers 2-314/2-315 Gap Fillers Default rules that can be disclaimed (could have limited remedy) 2-316 Conspicuous - 1-201(b)(10) out to have noticed, reasonable person. Question of law for the court. - Can have it on the back. In Arkansas, italics are not conspicuous. There is no implied warranty of merchantability. Problem 5-2 A) B) 1) Notice and Planning Function Satisfied. Only the implied warranty of fitness would be exclaimed. No term merchantability. Not effective. B) 2) Is it conspicuous? 2-316(3)(a) depends if the court requires conspicuous. Arkansas case did not. Best to still make it conspicuous. as is C) Examination Conduct by the buyer before the contract was entered. Seller must demand examination. refused to examine If scope doesnt reach the defect, the implied warranty of merchantability is still there. Problem 5-4 A) Did mention merchantability. Conspicuous? Font size, if like in text then it would, assuming the remaining text. No heading and on the back. Similar box on front draw attention to the back? Doesnt refer to the back. No color change. Too similar to the language on the front. B) Unlikely conspicuous C) 2-316 doesnt refer to warranties of title. (2-312 WoT) WoT should be conspicuous as well.

Buyers Remedies 2-601 Buyer has a right to reject other than an installment contract. a) reject the whole b) accept the whole Rejection is a remedies, but can limit remedies in the contract. 2-602 Buyer must make an effective rejection. -must reject within a reasonable time (after inspection) -seasonable notice must be given 2-508 Cure provision 2-605 Must particularize the defect (know (1)(a). or is a wrongful rejection. -Buyer doesnt have a basis for rejection, it is wrongful. -Sellers right to cure has been impaired, unascertainable. -Defect the seller can no longer repair (2-703) -Rightful Rejections In good faith and consistent with contract terms 2-601- must be in good faith (not to motivated to get out of a bad deal) 2-606(1)(b) Acceptance of the good occurs -rejection is ineffective = constitutes an acceptance 2-607 Pay for accepted goods. Acceptance cannot occur before the right to inspect. Wrongful rejects triggers breach and sellers right to remedy Effective rejection Buyer has remedies Rejections right to thrust the goods back on seller for non conformity. Perfect Tender Rule, but the rejection must be rightful. Must be effective. Perfect Tender Rule Limitations: 1) Installment Contracts use substantial performance. If it cannot be cured, it can be rejected (2508). 2) 2-504 Improper shipment contract - material delay or material loss 3) Trade Usage, Course of Dealings, Course of Performance. Vary the degree 4) Good Faith 5) Contract Terms

Problem 7-11 A) 1) 2-601 can reject 100% (10 bushels short (but there is a case saying insignificant amount, seller should have the right to cure)). 2) 2-601 Can reject 100% 3) Triggers the shipment 1 day late - - could reject (2-510). 4) 2-504 material delay is needed for right to reject. B) 1) Must be in a commercial unit and if the price can be apportioned (Dont know where?). 2) Will this be in good faith? Encourage opportunistic behavior? 450 are okay. C) 1) 2-612; 2 requirements: -1) Substantial impairment of the value of the installment? -2) Not cureable? If it is cureable, then there is not rejection. 2-508 Seller knew wasnt performing, but reasonable grounds to believe they were acceptable. We would give a reasonable time to cure the goods with reasonable notice. Rightful Rejection (Contract Terms & Code I can reject)+ineffective = acceptance 2-607- Buyer upon rejection has to pay 2-709 Seller remedies action for the price Wrongful Rejection (Bad faith or no contract right to reject) + effective (timely notice, particularize a defect) = Breach Seller has right to remedy: 2-708 (market measure) or 2-706 (resale measure) Installment Contracts2-612 Perfect tender rule does not apply - May only reject defect that is a substantial impairment of the value and cannot be cured. - Substantial impairment example = car with no extra spare tire and consumer needed as traveled often in the inner cities 2-608 Revocation of Acceptance Same standard (subjective assessment, but objectively applied) - 2-610 has similar language - Analogous to a material breach Keys: - Buyers needs - Objective evidence - Subjective need (quantity, assortment, time, or quality) Cannot be cured? -Cure assured? -Buyer damages for delay in getting cure.

Substantially? -Impaired in value?

-and Adequate assurance of cure -Only reject the installment -Unless the whole contract is substantially impaired in value -May be curable by a price adjustment for example When is the whole impaired? 3 tests: 1) Does the defect create a reasonable apprehension about the ability or willingness to completed the contract as agreed in the terms of the contract? -i.e. garments that are sewn incorrectly (bad quality) -not hems and lengths, but bad thread and sewing -Can the seller produce to the buyers needs? -165 F.3d 27 Midwest Diagnostic Imaging -couldnt be certified (portable imaging machine was not portable -If buyer gives adequate assurances, cant reject unless impairs. 2) Does the accumulation of defects make it impossible or unreasonably burdensome from a financial view to future performance of the non-breaching party? -i.e. cant perform your future contracts? -can you pay others? -=of the whole -Partial or nonpayment by buyer may result because seller cant handle the burden of future acquisition of goods. These two tests come from the Plotnick case. 3) TIME Does the nonconformity only create insecurity? Or Is there a material inconvenience or injustice if the aggrieved party is forced to wait and receive the ultimate tender? Attempted cure + repudiation creates apprehension about ability or willingness. Under CISG, there must be a material breach. Cure and Installment Contract -If not curable, seller has no right to cure. Buyer may reject installment, but not the whole unless impairs the whole. Adequate Assurance-Installment accepted and cure permitted. Buyer may get damages from delay. If not cured, action for breach of installment. -You may sue for breach, or reject (2-608).

If the whole contract is breached, dont just reject, but reject whole contract, too. -2-106 Cancel Contract -2-716-Sue for market measure or cover (2-712) Be careful not to waive defect or damages of delay (even if tenders appropriate cure). Cure may be rejected if installment still substantially impaired. There is no shifting of the standard (i.e. to the seller). Dont forget 2-209 Modification or waiver -Can you reinstate? Yes, unless substantial change in the position of the seller (court may say stopped). -2-209(5) -Revised 1-303(d) or 2-208 if unrevised (I think) ****Key signal right to waive the whole Contract**** Sellers right to cure in an installment contract: -2-618 essentially defines -Some courts may say 2-508 How long right to cure? If not defined in the contract, a reasonable time (2-309(1)). Standard for cure in an Installment Contract Perfect tender? No, only sufficient to not be substantially impaired. Any time nonconformity, not a right to reject the contract, but a right to damages. 2-612 Right to cure in installment contracts -Rationale entered into supply contracts 2-508 Right to cure in noninstallment contracts (not a limitation to 2-508). -2-508(2) limitations -T.W. Oil Case -Seller believed goods were conforming so there was a right to substitute conforming tender. -Doesnt mean buyer must take money allowance. Again: Perfect Tender for Noninstallment Contracts & and Material Breach for Installment Contracts Cure in a Noninstallment Contract A right, but not a duty. -Tender First, time not expired, seller given notice.

2-508(2) Key Terms -Reasonable Belief Objective good faith, honesty in fact -Acceptable course of dealing, trade usage, contract terms, facts known to seller at performance including need to satisfy specific performance, and time (buyers need for goods key) Goals of 2-508: 1) ?, 2) conform to difficulties of the business world, and 3) encourage amicable disputes Problem 7-18 C) Not just other cars, but probably yes if from new car and can install as well as the manufacturer. Soundness may be key. Courts have talked about faith shaken. Brisk? Not acceptable when couldnt tell age, etc. of the replacement part. D) Still reject? Reasonable time to inspect and make repairs. More time means less likely allowed to attempt the cure. Some courts say 1 to 2 efforts. There is no hard and fast rule. Again, faith shaken? Reasonable Time Facts: -Complexity of the good may extend -Generally reasonable time from tender Acceptance -Chart in textbook on page 288 Ineffective-Not timely -Defect not particularized (2-605) 2-602(1) Must be within a reasonable time and seasonably notify. PP278 chart. 2-606 Comment 3 Payment after tender does not equal accepatance 2-606 1) a) Signifies acceptance when non conforming. b) Ineffictive rejection 3) rejects and continues to use goods = acceptance Note: By agreement or necessity, the buyer may be permitted to continue to sue the goods (i.e. a farmer has to have the tractor). Comment 4 Action inconsistent with the claim by buyer = acceptance

2-714 - 2-606(1) remedies? 1) Accept and gives notification = recovery for damages for nonconformity of gender = loss from breach. 2) D=Vw-Va D= Kp-50K 3) Still incidental and consequential damages 2-608 - Good oriented remedy Reasonable Time (2-608(2) Timeframe -Where there has been a substantial change in the goods = too late to reject -If substantial change in the good, can change and tender back good. Elements to look for in reasonable time: -nature of defect -knowledge of buyer -complex good - extend use of discovery -time to repair -terms of contract - scope of inspection in contract -Expressed warranties and assurances will extend time -Perishable? Page 288 List of Consequences -2-607 What happens when you accept the goods? 2 remedies: 1) 2-714 - Damages or 2) 2-608 revoke acceptance *Clearly express with notice of effective good. Write it! (4 purposes on page 289) *Cure can always be rejected, unless minor adjustments. 2-608 Revoke Acceptance (1)(a)(b) Subjective impairment (2) Revoke in a reasonable time, before substantial change in conditions (3) Must give notice (definite notice) (a) Assurance by seller that they will cure it (b) got goods that look like they conform

Seasonable Defect Factors 1) Knowledge of defect, assurance of the cure (2-314&5 not disclaimed) 2) Latent defect or persuasive seller to take the goods because not necessary to inspect. -Same factors in reasonable time to reject. Continue to use after acceptance occurs okay if economic hardship if use stops (need compelling circumstances) and mitigate damages. If use after revocation, act may be inconsistent with ownership. 2-606(1)(c) Reject with the title being restored to seller, use = acceptance You would need to explain use (degree of prejudice to the seller): -Does continue use result in harm to the seller? -Bad faith? -Seller give instruction of notice of revocation? -Seller may give instructions, assurances or cash offering (say continue to use and well talk later. Represent Seller: Set-off (reasonable use/rent value as an affirmable defense) Represent Buyer: Watch equivocal language. Make it clear rejecting!!! -In writing -Say goods are defective -Will pursue all legal remedies and recover damages -Some courts require particularization of the defect (doesnt hurt to include) Repair costs may be good evidence of damages In Arkansas, still have to permit cure. 2-714 Damages 1) Goods accepted, any manner reasonable? Tender was late or quantity may be deficient. Measure of recovery dependent under the circumstances. 2) Breach of Warranty-D=Vw(K price, but may be able to prove more) Va (Value accepted) -Repair costs are a strong indication of difference between Vw and Va -Incidental and Consequential damages are recoverable (2-715) Statute of Limitations -2-725: -Must likely be within 4 years, but may be contract, reduced to 1 year (can not extend).

When does the action accrue? When the breach occurs. Failure to pay = due date. Failure to Tender = date of tender under the contract. Reasonable time? = determinate it. Breach of Warranty where tender of delivery occurs unless for future performance (this is expressed language that qualify will extend for a time Lifetime (roof) Satisfactory service at all times. Repair Warranty Until does not repair, then a breach (think car warranty)