Quiz 27: Remedies for Breach of Sales Contracts

Business

Refer to the case Firwood Manufacturing v General Tire (96 F3d 163). Case Issue The issue is whether seller can recover for the difference in contract price and selling price to other buyers after the original buyer breach the contract, even though it took the seller three years to make resale. Trial court granted the difference amount to seller. Buyer appealed the decision. Relevant Terms, Laws, and Cases UCC 2-706 - allows the seller to sell goods to other buyers when the original buyer breach contract. It requires that seller make sale in a commercially reasonable manner and inform buyer its intention to resale. Opinion Higher court affirmed the decision. The court looked at whether the seller made their resale in a commercially reasonable manner as required by UCC 2-706. The court conceded three years is a long time, but the reasonable time is not determined by time itself but rather by the goods itself. The court found that these goods were intended for a specific usage, and there were no market for the seller's good at during the three years; hence, they determined seller made a good faith effort to cover losses.

Refer to the case Gast v Rodgers-Dingus Chevrolet (585 So2d 725). Case Issue The issue is whether the buyer had effective revoked acceptance on a car by stopping finance payment for the loan to buy the car. Trial court granted judgment not withstanding verdict in favor of the seller. Buyer appealed the decision. Relevant Terms, Laws, and Cases UCC 2-608 - allows buyer to revoke acceptance of goods for nonconformity and failure of seller to cure defect. However, the buyer must inform the seller of the decision. Opinion Higher court affirmed the decision. The buyer did not effectively revoked acceptance of the vehicle. The buyers claimed to have revoked the acceptance by stopping payment on the car loans, however, the court disagrees that this is a revoke of acceptance. The court argued that under 2-608 the buyer needed to inform seller of decision to revoke, the seller was never aware of that buyer stopped payment. Furthermore, it was not the seller that took back the car but rather the bank that financed it. Hence, the buyer failed to make a proper revocation.

Refer to the case Presto Manufacturing v Formetal Engineering (360 NE2d 510). Case Issue The issue is whether the buyer properly rejected the goods, when they returned it 125 days after the notice of rejection to seller. Trial court granted summary judgment in favor of seller. The buyer appealed the decision. Relevant Terms, Laws, and Cases UCC 2-601 2-602 - 2-601 States that buyer has the right to reject nonconforming goods, however, they must do so within reasonable time after delivery of goods (2-602) Opinion Higher court reversed the decision. The buyer made a proper rejection. The court contends that under UCC 2-601 the buyer can reject the nonconforming goods. In this case, they found that buyer notified the seller of rejection. Seller argued that buyer was responsible for returning the nonconforming goods because the buyer promised to return, but the court noted that the promise to return is only gratuitous; court cited UCC 2-602 buyer is not responsible to return the goods, seller must take them back.

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