CHAPTER 20: PERFORMANCE
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TOPICS COVERED CHAPTER 20:
PERFORMANCE
A. Performance by the Seller.
B. Performance by the Buyer.
C. Obligations of Both Parties.
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PERFORMANCE BY THE SELLER
 Tender of Delivery –seller makes
available to the buyer goods
conforming to the contract and so
notifies the buyer.
• Buyer – obligated to accept conforming
goods.
• Seller – entitled to payment of the contract
price.
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PERFORMANCE BY THE SELLER
 Time of Tender – tender must be
made at a reasonable time and kept
open for a reasonable period of time.
 Place of Tender – if none is specified,
place for delivery is the seller's place
of business or, if he has no such
place, his residence.
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PERFORMANCE BY THE SELLER
 Place of Tender.
• Shipment Contracts – seller must tender
delivery of the goods to a carrier for
delivery to buyer; shipment terms
include: F.O.B. place of shipment, F.A.S.
port of shipment, C.I.F., C.&F. 
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PERFORMANCE BY THE SELLER
 Place of Tender.
• Destination Contracts – seller must
tender delivery of goods at a named
destination.
• Goods Held by Bailee – seller must
either tender to the buyer a document
of title or obtain an acknowledgment
from the bailee.
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PERFORMANCE BY THE SELLER
 Perfect Tender Rule.
• The seller's tender of performance must
conform exactly to the contract terms
and specifications.
• MOULTON CAVITY & MOLD INC. V. LYN-FLEX
IND. (1979). 
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PERFORMANCE BY THE SELLER
 Perfect Tender Rule. Exceptions:
• Agreement by the Parties – the parties
may contractually limit the operation of
the perfect tender rule. 
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PERFORMANCE BY THE SELLER
 Perfect Tender Rule. Exceptions:
• Cure by the Seller – when the time for
performance under the contract has not
expired or when the seller has shipped
nonconforming goods in the belief that
the nonconforming tender would be
acceptable, a seller may cure or correct
her nonconforming tender
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PERFORMANCE BY THE SELLER
 Perfect Tender Rule. Exceptions:
• Cure by the Seller – when the time for
performance under the contract has not
expired or when the seller has shipped
nonconforming goods in the belief that
the nonconforming tender would be
acceptable, a seller may cure or correct
her nonconforming tender
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PERFORMANCE BY THE SELLER
 Perfect Tender Rule. Exceptions:
• Installment Contracts.
• Buyer may reject nonconforming installment
if it substantially impairs the value of that
installment and cannot be cured.
• If nonconformity substantially impairs the
value of the whole contract, the buyer can
treat the breach as a breach of the whole
contract.
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REVIEW: TENDER OF
PERFORMANCE
Identification of Goods
Shipment
contract
Destination
contract
Goods held by
bailee without
moving
Seller holds goods
for buyer
Duly delivered?
Seller holds goods
for buyer at
destination?
Seller tenders
document of
title?
Seller notifies
buyer that goods
are held at his
disposal?
No
Yes
No
Yes
Yes
No
Yes
Breach
Breach
1
2
3
4
5
Continued on next slide… (match arrow numbers)
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No
Breach
REVIEW: TENDER OF
PERFORMANCE (2)
1
Yes
2
3 Yes
Yes
4
5
No
Bailee
acknowledges
buyer’s right to
possession?
No
Proper
contract?
Notifies
buyer?
Yes
No
Notifies Yes
buyer of
shipment?
No
Breach
Yes
No
Breach
Yes
Breach
Tender
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Yes
PERFORMANCE BY THE BUYER
 Inspection.
• Buyer has a reasonable time to inspect
goods to determine if they conform.
 Rejection.
• Buyer's manifestation of unwillingness
to become the owner of the goods;
must be made within a reasonable time
after the goods have been tendered 
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PERFORMANCE BY THE BUYER
 Rejection.
• . . . or delivered, gives the buyer the
right to: (1) reject all of the goods, (2)
accept all of the goods, or (3) accept any
commercial unit(s)and reject the rest.
• FURLONG V. ALPHA CHI OMEGA SORORITY
(1993).
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PERFORMANCE BY THE BUYER
 Acceptance.
• Buyer's expressed or implied willingness
to become the owner of the goods. 
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PERFORMANCE BY THE BUYER
 Revocation of Acceptance.
• Can occur if a nonconformity substantially
impairs its value, provided that
acceptance was (1) based on an
assumption that the nonconformity
would be cured by the seller and it was
not, or (2) the nonconformity was an
undiscovered hidden defect. 
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PERFORMANCE BY THE BUYER
 Revocation of Acceptance.
• WADDELL V. L.V.R.V. INC. (2006).
 Obligation of Payment.
• In the absence of an agreement,
payment is due at the time and place
the buyer is to receive the goods.
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PERFORMANCE BY THE BUYER
Goods
conform
Breach
by buyer
Goods
conform
Goods do not
conform
Seller
cures
defect
Buyer accepts goods
OR
Buyer rejects goods
Seller
does not
cure
Buyer
rejects
Buyer
accepts
Breach
by buyer
Buyer
liable for
price
Buyer
liable for
price
Breach
by seller
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Goods do not
conform
Buyer
revokes
acceptance
Buyer
retains
goods
Breach
by seller
OBLIGATIONS OF BOTH PARTIES
 Casualty to Identified Goods.
• If goods were identified when the
contract was made and those goods
are totally lost or damaged with-out
fault of either party and before risk of
loss passes to the buyer, the contract is
avoided. 
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OBLIGATIONS OF BOTH PARTIES
 Nonhappening of Presupposed
Condition.
• The seller is excused from the duty of
performance on the nonoccurrence of
presupposed conditions that were a
basic assumption of the contract,
unless the seller has expressly assumed
the risk.
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OBLIGATIONS OF BOTH PARTIES
 Substituted Performance.
• Where neither party is at fault and the
agreed manner of goods becomes
commercially impracticable, a
substituted manner of performance
must be tendered and accepted.
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OBLIGATIONS OF BOTH PARTIES
 Right to Adequate Assurance of
Performance.
• When reasonable grounds for insecurity
arise regarding either party's
performance, the other party may
demand written assurance and suspend
his own performance until he receives
that assurance.
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OBLIGATIONS OF BOTH PARTIES
 Right to Cooperation.
• Where one party's required cooperation
is untimely, the other party is excused
from any resulting delay in her own
performance.
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OBLIGATIONS OF BOTH PARTIES
 Anticipatory Repudiation.
• If either party clearly indicates an
unwillingness or inability to perform before
the performance is due, the other party may
await performance for a reasonable time or
resort to any remedy for breach.
• HESSLER V. CRYSTAL LAKE CHRYSLER-PLYMOUTH,
INC. (2003).
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