PERFORMANCE OF SALES CONTRACTS

1. PERFORMANCE OF SALES CONTRACTS

2. Terms: CURE F.A.S. EX SHIP F.O.B.

3. RIGHTS AND DUTIES S's DUTIES Tender delivery of conforming goods to B Put goods aside and hold for B Notify B B's DUTIES Accept Pay

4. RIGHTS AND DUTIES B's RIGHTS To inspect In a reasonable time, place and manner (B is responsible for the costs) If goods are nonconforming, Accept Reject and hold the S in breach Give S the right to cure

5. RIGHTS AND DUTIES BUT, S CAN CURE If the time for performance has not expired, S can notify B of intent and cure within the time period If the time for performance has expired, S can cure within a reasonable time if: S had reasonable grounds to believe that B would accept the nonconforming goods, and S notifies B within a reasonable time

6. RIGHTS AND DUTIES B CAN ACCEPT THE GOODS BY - Indicating that the goods conform - Indicating that the good do not conform, but that B will still accept - Failing to properly (and timely) reject - Acting in a manner inconsistent with S's ownership

7. RIGHTS AND DUTIES PAYMENT (unless otherwise indicated) IS DUE When goods are accepted In any commercially acceptable manner

8. JOC OIL v. CON ED OF NY

9. JOC OIL v. CON ED OF NY Joc Oil USA contracted to purchase low sulfur oil from an Italian refinery. The refinery issued a certificate stating that the sulfur content was 0.52%. Joc entered into a contract with Consolidated Edison of NY for oil. Con Ed would pay $17.87 per barrel, and the sulfur content was not to exceed .50%. Joc knew that Con Ed could burn fuel with up to a 1 % sulfur content, and was actually using .6% -.8%, and sometimes in excess of 1 %.

10. JOC OIL v. CON ED OF NY When the Italian oil arrived it was put in Con Ed's tanks. 2/20 Con Ed issued a report describing sulfur content as being .92% Same day 2 parties met & Joc offered to reduce the price by $.50 �$.80 a barrel. Con Ed expressed willingness to accept the oil at $13 a barrel (market price at that time). 2/21 Joc made an offer to cure by substituting conforming shipment of oil that was already on a ship and due to arrive in a week or two. Con Ed rejected the offer to cure, and Joc Oil sued for breach of contract. 

11. REVOCATION A Buyer who has accepted can subsequently revoke if: The goods are nonconforming The nonconformity substantially impairs the value of the goods to the Buyer AND One of the following is shown: a. the Seller's promise to seasonably cure the nonconformity is not met b. the goods are accepted before the nonconformity is discovered and it was difficult to discover OR c. the goods were accepted before the nonconformity was discovered and the Seller assured the Buyer that the goods were conforming

12. A Revocation is not effective until the S is notified must occur within a reasonable time after B discovers or should have discovered must occur before there is a substantial change in condition of goods

13. YBARRA V. MODERN TRAILER SALES, INC. Ybarra's purchased a new double wide mobile home from Modern. 3/11 Modern delivered. A few days after delivery, portions of the floor began to rise and bubble creating an unsightly and troublesome situation. Ybarra's complained to Modem as soon as the problem was discovered. Modern sent repairmen to cure on 3 occasions, each time unsuccessful. Ybarra's continued to complain and continued to rely on Modern's assurances that it was able and willing to repair the floor. After 4 years of complaints, Ybarra sued to revoke their acceptance. What do you think Modern argued?

14. MCCLURE OIL V. MURRAY EQUIPMENT, INC. McClure Oil was in the business of selling gasoline, fuel oil and other petroleum products. In May or June, 1983, McClure spoke to Murray Equipment about the possibility of building a "tank farm" consisting of several large above-ground storage tanks. 8/83 The tanks were under construction, and McClure told Murray that they wanted the tank farm to be operational as soon as possible. They wanted it completed by 11/83. They also stated that: They needed 4 pumps capable of loading a truck at the rate of 750 gallons per minute. (The rate of unloading was never discussed.) They wanted the farm completed as economically as possible. Murray agreed to furnish the equipment but not the installation. Murray did not agree to provide drawings with which to have the installation done. McClure relied on Murray's expertise. Murray found that a 700 gallon per minute pump was more feasible that the 750, and McClure agreed. At that time in October, no specific price was discussed. They agreed that the pumps would be as cheap as possible. McClure said to order immediately. McClure picked up some of the equipment in late October and the rest in November. Murray sent invoices on October 31 and December 7. McClure did not object to the invoices when they were received.

15. 1/84 Murray talked to McClure about the unpaid invoices. McClure complained for the first time about the lack of drawings. Murray still never agreed to furnish drawings. They contacted McClure in February and March requesting payment. April 1984 McClure was about to make payment, when Murray's attorney filed suit. McClure did not make payment. April 1984 McClure hired someone to install the tanks. In August, he had installed all that he could without detailed drawings. Some one else was hired to complete the job. By September 12, 1984 the pumps were working, but they did not unload a truck as quickly as McClure desired. Nine days later, McClure ordered four more pumps from another company at nearly double the cost of the original pumps. The original pumps were used for 6 to 8 weeks when they were replaced by the new pumps. McClure had to pay to have the new pumps installed. At the time of trial McClure had not paid for nor had they returned the equipment to Murray. In October, McClure filed a countersuit alleging a breach of warranty.

16. 1. Did the purchaser accept or reject the goods? 2. Were the goods nonconforming? 3. Did the purchaser revoke its acceptance?

18. SALE ON APPROVAL Neither title or risk pass to B until and unless B accepts. B will have accepted if: B signifies acceptance B does not return the goods B subjects goods to unreasonable usage

20. EXCUSED PERFORMANCE Impossibility of performance Commercial impracticability Failure to cooperate

21. MISHARA CONSTRUCTION COMPANY V. TRANSIT-MIXED CONCRETE CORPORATION Mishara was employed as a general contractor to build a public housing project for the elderly. 9/21 Mishara entered into contract with Transit whereby Transit would supply all the concrete that Mishara needed for the project. April A labor dispute disrupted the project. Transit had been performing faithfully, but when the striking union set up pickets at the job site, Transit honored the picket line and would not deliver the concrete. Mishara was forced to purchase the concrete from another supplier at a higher price. Mishara subsequently sued Transit to recover this additional cost. Transit argued that the strike and picket line excused its performance.

22. PROBLEMS Assume that the S in a sales contract did not mention the manner of payment in the agreement, although the contract did specify that payment is due upon delivery. What manner of payment can be used? What if the S wants cash?

23. PROBLEMS Acme Corp., a Boston business, enters into a contract to sell goods to Nacy�s, a Chicago retailer. The contract called for the goods to pay $10,000 for the goods �F.O.B. Chicago.� Which party is responsible for the risk of shipping the goods, and why?

24. PROBLEMS Scott, a merchant, sent Roy some goods under a contract. Ray was to receive them by 12/18. On 12/12, Roy received nonconforming goods from Scott, and Roy promptly called Scott to inform him of the nonconformity. What should Scott do to avoid being sued for a breach of contract?

25. PROBLEMS Mary and Agnes are merchants. Mary sent goods to Agnes under a contract. Agnes glanced at the boxes and paid Mary for the goods. Agnes later discovered that the goods were of inferior quality and design. What rights does Agnes have against Mary? What should Agnes have done differently?