CLARKSON MILLER CROSS

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
 Seller
must transfer and deliver
conforming goods.
 Buyer must accept and pay for
conforming goods.
 In the absence of an agreement
between Seller and Buyer, UCC
Article 2 controls as set out below.
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2
 The
UCC’s Good Faith Provision.
 Good faith means honesty in fact.
 Contract Performance: For a merchant, it
means honesty in fact and observance of
reasonable commercial standards of fair
dealing in the trade. Merchants are held
to a higher standard of care than nonmerchants. 
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 Good
Faith and Contract
Performance.
 Seller’s obligation is to transfer and
deliver conforming goods.
 Buyer’s obligation is to accept and
pay for conforming goods.
 Court imposes good faith standards
when contract is unclear.
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 Tender
of Delivery: occurs when
seller makes conforming goods
available to buyer.
 Requires reasonable notice,
reasonable hour, and manner.
 Generally, all goods in one installment
(unless agreed upon by parties).
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 Place
of Delivery.
 Parties can agree goods tendered at
a particular destination for buyer to
take possession.
 If the contract does not specify, then
place is the seller’s place of business
(or the location of the goods.) 
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 Place
of Delivery.
 Buyer picks up at Seller’s place of
business or, if Buyer has no place of
business, then Buyer’s residence.
 If both parties know goods are
elsewhere (warehouse), then place
of delivery is where the goods are.
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 Delivery
Via Carrier.
 Shipment Contracts. Seller has a
duty to:
• Put goods into hands of independent
carrier.
• Make contract for transportation.
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 Delivery
Via Carrier.
 Shipment Contracts. Seller has a
duty to:
• Obtain and promptly deliver or tender
to the Buyer any documents necessary.
• Promptly notify Buyer that shipment
has been made.
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 Delivery
Via Carrier.
 Destination contracts. Seller has
duty to:
• Tender the goods at a reasonable
hour and hold conforming goods at
the Buyer’s disposal for a reasonable
period of time.
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 If
goods, or tender of delivery, fail
in any respect to conform to the
contract, the Buyer has the right
to:
 Accept the goods;
Reject the entire shipment; or
 Accept part and reject part.

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 CASE
22.1 WILSON SPORTING GOODS
CO. V. U.S. GOLF AND TENNIS CENTERS,
INC. (2012).
 Exceptions:
 Agreement of the Parties: agree
that some defective goods will be
acceptable. 
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 Exceptions:
 Cure.
• Seller has right to repair or replace
defective goods within the time of
contract performance. -->
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 Exceptions:
 Cure.
• Reasonable Grounds Required: seller
has reasonable grounds to believe
buyer will accept nonconforming
tender. 
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 Exceptions:
 Cure.
• Limits Right to Reject Goods:
substantially restricts right of
rejection; buyers must act in good
faith and give specific reasons for
refusing acceptance.
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 Exceptions:
 Installment Contracts.
• Can be rejected if: installment is
substantially non-conforming and
can’t be cured, OR the nonconforming installment substantially
impairs the entire contract.
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 Exceptions:
 Commercial Impracticability.
• Perfect tender rule no longer applies.
• Seller must notify the buyer as soon
as practicable the shipment is delayed
or undeliverable. 
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 Exceptions:
 Commercial Impracticability.
• Foreseeable versus Unforeseeable
Contingencies: only unforeseeable
events provide a defense.
• CASE 22.2 MAPLE FARMS V. CITY SCHOOL
DISTRICT OF ELMIRA (1974).
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 Exceptions:
 Commercial Impracticability.
• Partial Performance. What happens if
the unforeseeable event only partially
affects the seller’s ability to perform?
Seller can re-allocate goods with
timely notice to buyer.
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 Exceptions:
 Destruction of Identified Goods.
• If no fault of either party and it
occurs,
• Before risk passes to Buyer then,
• Both Seller and Buyer are excused
from performance.
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 Exceptions:
 Assurance and Cooperation.
• Right of Assurance (in writing). Until
received, the other party has the right
to ‘suspend’ performance or delivery.
• Duty of Cooperation. If a party is not
cooperating, the other party has the
right to suspend performance.
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 Payment.
 Unless agreed otherwise, payment
is made where goods are received.
 Credit has to be prearranged.
 Pay with cash, credit card,
check.
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 Right
of Inspection.
 Buyer has absolute right to
inspection before payment, unless
C.O.D.
 Goods must be conforming before
payment.
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 Acceptance.
Buyer can accept
goods:
 By words or conduct.
 If Buyer had reasonable amount of
time and failed to reject.
 Buyer performs an act which
indicates he thinks he is the owner.
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 Partial
Acceptance.
 If some of the goods do not conform
to the contract, and seller has failed
to cure, buyer can make a partial
acceptance.
 But buyer cannot accept less a single
commercial unit.
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 Occurs
when a party
communicates intention he will
not perform when performance
due. 
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 Suspension
of Performance
Obligations.
 Nonbreaching party may suspend
performance and treat the AR as
material breach and pursue a
remedy; or wait a reasonable
time. 
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A
Repudiation May Be Retracted.
 UCC permits breaching party to
‘retract’ repudiation by any method
that clearly indicates their intent.
 However, no retraction if the
nonbreaching party has materially
changed their position.
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 When
buyer or lessee is in breach,
seller has various remedies under
UCC, depending on circumstances.
 Important considerations: which party
has possession of the goods, whether
goods are in transit, and whether the
buyer has rejected/accepted the goods.
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 Goods
in Possession of Seller.
 Right to Cancel (Rescind) the
Contract.
• Seller must notify buyer.
• Buyer is not discharged from remaining
obligations.
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 Goods
in Possession of Seller.
 Right to Withhold Delivery.
• 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.
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 Goods
in Possession of Seller.
 Right to Resell or Dispose of Goods:
• Seller can resell and keep profits from
sale and hold buyer liable for
difference. 
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 Goods
in Possession of Seller.
 Right to Resell or Dispose of Goods:
• Unfinished Goods: seller can (1) cease
manufacturing, (2) complete
manufacture. Seller can sell and hold
buyer responsible for deficiency.
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 Goods
in Possession of Seller.
 Right to Resell or Dispose of Goods:
• Resale Price is Insufficient. Seller can
recover any deficiency between the
resale and contract price, along with
incidental costs.
• If no deficiency, seller can sue for lost
profits.
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 Goods
in Possession of Seller.
 Right to Recover the Purchase Price
(or Lease Payments) Due.
• Seller can recover purchase price plus
incidentals. If unable to resell, seller
must hold goods for buyer.
• Seller can sell goods anytime prior to
collecting judgment.
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 Goods
in Possession of Seller.
 Right to Recover Damages for
Buyer’s Nonacceptance.
• If buyer repudiates - or wrongfully
chooses to accept - goods, seller can
bring action to recover damages (lost
profits, OR contract price – market
price, + incidentals).
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 When
Goods are In Transit.
 Goods are “in transit” when seller
has tendered goods to carrier.
 Seller can stop 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.
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 When
Goods are In Transit.
 Seller has the right to stop delivery
of the goods until:
• (1) Buyer receives the goods.
• (2) Carrier or bailee acknowledges
rights of buyer in the goods
(reshipment or holding goods for
buyer).
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 When
Goods are In Transit.
 Seller has the right to stop delivery
of the goods until:
• (3) Negotiable document of title has
been transferred to buyer’s
possession.
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 When
Goods are In Possession of
Buyer or Lessee.
 Seller may sue for the purchase
price.
 Seller may also sue Buyer if goods
were “specially-made” which Seller
cannot resell. 
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 When
Goods are In Possession of
Buyer or Lessee.
 Seller may also sue for the purchase
price if the goods were destroyed
and the risk had already passed to
the Buyer.
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 When
Goods are In Possession of
Buyer or Lessee.
 In some situations, seller can reclaim
goods received by an insolvent buyer
if demand made within 10 days of
receipt.
• Seller’s right to reclaim goods is subject
to rights of a good faith purchaser.
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 When
Seller or Lessor Refuses to
Deliver the Goods.
 Buyer has the right to:
• (1) Cancel (rescind) the contract.
• (2) Recover Goods paid for if seller
insolvent: whether partial or full
payment. 
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 When
Seller or Lessor Refuses to
Deliver the Goods.
 Buyer has the right to:
• (3) Sue to obtain specific
performance and recover damages.
• (4) Cover: in some situations. 
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 When
Seller or Lessor Refuses to
Deliver the Goods.
 Buyer has the right to:
• (5) Replevy goods if held by third
person.
• (6) Recover Damages.
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 When
Seller or Lessor Delivers
Nonconforming Goods.
 Buyer has the right to:
• Reject Goods.
 Timeliness and Reason for Rejection.
 Buyer must timely notify Seller of rejection
and reasons and follow Seller’s directions.
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 When
Seller or Lessor Delivers
Nonconforming Goods.
 Buyer has the right to:
• Reject Goods.
 Duties of Merchant Buyers and Lessees
When Goods Rejected: Good faith
obligation to follow instructions.
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 When
Seller or Lessor Delivers
Nonconforming Goods.
 Buyer has the right to:
• Recover Damages and keep the goods.
 CASE 22.3 FITL V. STREK (2005). 
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 When
Seller or Lessor Delivers
Nonconforming Goods.
 Buyer has the right to:
• Recover Damages and keep the goods.
 Recover any loss in ordinary course of events.
With notification to seller.
 Measure of damages: difference between value
of accepted goods and goods as warranted.
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 Exclusive
Remedies.
 Consequential Damages.
 Lemon Laws.
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 Letter
of Credit Transactions.
 The issuer (a bank) agrees to issue a
letter of credit and to determine
whether the beneficiary (seller or
lessor) performs certain acts. In return,
the account party (buyer or lessee)
promises to reimburse the issuer for
the amount paid to the beneficiary. 
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 Remedies
for Breach of
International Sales Contracts.
 CISG provides remedies similar to the
UCC.
 Article 74 provides for money damages,
foreseeable consequential damages. 
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 Remedies.
 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.
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