Chapter 22 Remedies for Breach of Sales and Lease Contracts

1. Chapter 22 Remedies for Breach ofSales and Lease Contracts

2. §1:Seller §2: Buyer Goods in Seller’s Possession Goods in Seller’s Possession Goods are in Transit Seller delivers non-conforming goods Goods in Buyer’s Possession Proceed to Section 3 Remedies Click on the Links Below

3. §3: Contractual Provisions Affecting Remedies • Parties to a contract can vary their rights and duties that preempt UCC provisions. • Parties can stipulate whether contractual provisions are “exclusive”. However, provisions limiting consumer rights may be unconscionable.

4. §4: Lemon Laws Automobile under warranty possesses significant defect that affects vehicles use or value that cannot be fixed within statutory period. Buyer’s remedies include: • A new car; • Replacement of defective parts; • Or full refund.

5. §5: Remedies for Breach of International Sales • CISG provides remedies similar to the UCC: • Monetary damages that are foreseeable, consequential damages. • Damages are difference between contract price and market price. • Parties can agree to what law they will use.

6. Seller- Goods in Seller’s Possession • Seller may withhold delivery of the goods: • If material breach by Buyer, Seller can withhold delivery of all goods. • If non-material breach, Seller can withhold delivery of this installment. • Seller can withhold delivery of all goods if Buyer is insolvent. Next

7. Seller- Goods in Seller’s Possession • Seller may rescind the contract. • Seller may identify the goods to the contract. • Seller may sell raw materials for scrap or finish production. Next

8. Seller-Goods in Seller’s Possession • Seller may resell the goods; and • Recover damages: the difference between the contract price and the resale price + incidental damages+ damages = the market price at the time & place of tender + incidental damages - expenses saved. • If No Damages, Seller can sue for lost profits. • Case 22.1:Brandeis Machinery v. Capital Crane Rental (2002). Next

9. Seller-Goods in Seller’s Possession • Seller may sue Buyer for breach of contract. • Recover Damages = the market price at the time & place of tender + incidental damages. • if there are no damages, Seller can sue for lost profits. Return

10. Seller-Goods in Transit • Goods are “in transit” when Seller has tendered goods to Carrier. • Goods are in transit until: • Buyer is given negotiable document of title to goods. • Buyer is given non-negotiable document of title or Bailee has acknowledged Buyer’s right to have the goods. • Buyer has had a reasonable time to pick up the goods. Next

11. Seller-Goods in Transit • Seller has the right to stop the goods in transit if: • Buyer is insolvent - Seller can stop entire shipment of goods. • Buyer is in breach - Seller may stop a whole truckload or whole container. Return

12. Seller-Goods in Buyer’s Possession • Seller may sue for the purchase price. • Seller may also sue Buyer if goods were “specially-made” which Seller cannot resell. • Seller may also sue for the purchase price if the goods were destroyed and the risk had already passed to the Buyer. • Seller can reclaim goods received by an insolvent Buyer if demand made within 10 days of receipt. Return

13. Buyer-Goods in Seller’s Possession • Buyer Wants Goods • Specific performance or replevin • Recover goods from Seller if Seller becomes insolvent within 10 days after receiving first payment. • Buyer Does Not Want Goods • Rescind contract. • Cover or do not cover and sue for breach of contract. Case 22.2: KGM Harvesting v. Fresh Network (1995). Return

14. Buyer-Seller Delivers Nonconforming Goods • If Seller does not make perfect tender Buyer has the right to reject all or part of goods. • Buyer must timely notify Seller of rejection and reasons and follow Seller’s directions. • Buyer is entitled to commission for selling perishable goods. • Buyer may store the goods and retain a security interest in the goods for his costs. Next

15. Buyer-Seller Delivers Nonconforming Goods • If Buyer has accepted non-conforming goods, she may: • Sue for breach of warranty. • Sue for ordinary damages. • Deduct damages from purchase price. • Case 22.3:China National Metal Products v. Apex Digital (2001). Return

16. § 3: Contractual Provisions Affecting Remedies • Limitation of Damages. • Limitation of Remedies. • Waiver of Defenses.

17. § 4: Lemon Laws • The majority of the states have enacted lemon laws in regard to automobile sales. • Seller’s limitations were too “good.” • Buyer must: • Give notice. • Seller gets four chances to fix. • Arbitration: decision binding on manufacturer, not on Buyer.

18. § 5: Remedies for Breach of International Sales Contracts • CISG provides remedies similar to the UCC. • Article 74 provides for money damages, foreseeable consequential damages. • Damages are difference between contract price and market price. • Article 28 provides for specific performance where a country would normally grant it in their own law. • Parties can agree to what law they will use.

19. Law on the Web • Discussion of Lemon Law basics. • Example of 3M Excusive Warranty Remedy. • Legal Research Exercises on the Web.