UCC SALES
Professor VerSteeg
Slides Set 1
Introduction
 UCC: state statute regulating commercial matters that has
been enacted in all jurisdictions (with some variations)
 Article 1: general Article, rules applicable to all the Articles
that follow
 Article 2: applies to transactions in goods
 Changes to the code are promulgated by 2 organizations:
 American Law Institute (ALI)
 National Conference of Commissioners on Uniform State
Laws (NCCUSL)
 Then sent to states for adoption
§1-103
 “must be liberally construed and applied”
 trying to help consumerism, making it easier to buy and sell goods
 purpose of the code is to simplify, clarify, and modernize the law
governing commercial transactions
§1-201:
 (10) “conspicuous”: so written, displayed or presented that
a reasonable person ought to have noticed it
 (20) “good faith”: honesty in fact and the observance of
reasonable commercial standards of fair dealing
 (37) “signed”: any symbol executed or adopted w/present
intention to adopt or accept a writing
§1-303: Course of Performance, Course of Dealing,
and Usage of Trade
(a) “Course of Performance” = sequence of conduct b/w the
parties to a particular transaction…
(b) “Course of Dealing”: a sequence of conduct concerning
previous transactions b/w the parties…establishing a
common basis of understanding for interpreting their
expressions and other conduct
(c) “Usage of Trade”: any practice or method of dealing having
such regularity on a place/vocation/trade as to justify an
expectation that it’ll be observed to the transaction in
question
Scope of Article 2
 2-102: Unless the context otherwise requires, this Article applies to
“transactions in goods”; it does not apply to any transaction
which although in the form of an unconditional K to sell or present
sale is intended to operate only as a security transaction nor does
this Article impair or repeal any statute regulating sales to
consumers, farmers, or other specified classes of buyers.
 2-105: “Goods” means all things (including specially
manufactured goods) which are movable at the time of
identification to the K for sale other than the money in which the
price is to be paid, investment securities (Art 8) and things in
action.
Problem 1
 Does Article 2 apply to the following matters?
Sale of insurance policy
Sale of real property
Sale of house apart from realty
Sale of bldg materials as part of construction project
Sale of standing timber/crops? Hospital scenarios – defenctive
spinal plate
 Sale of membership in a health spa
 Clothing store
 Sale of electricity





Milau Associates, Inc. v. North
Avenue Development Corp.
 Issue: Whether the
UCC applies here—
i.e., whether the was a
“transaction in goods.”
 Predominate purpose
test: Court concludes
that it was for
services—goods
(pipes) incidental to
work of installing the
pipes/system.
Analysts Intern Corp. v. Recycled
Paper Products, Inc.
 Issue: Does Article 2
apply to the
design/implementation
of computer program?
 Whether the software
agreement is a
“transaction in goods.”
 Predominant purpose
test
Anthony Pools v. Sheehan
 Issue: Whether this is an
Article 2 transaction, giving
the purchaser implied
warranties?
 Gravamen test: Whether
the gravamen of the action
involves goods or services.
Look at the complaint.
 Different than predominate
purpose test—here, the
diving board is at issue,
which is a good (it is
“movable”).
UCC SALES
Professor VerSteeg
Slides Set 2
Warranties
 2-313: Express Warranty
 2-314: Implied Warranty of
Merchantability
 2-315: Implied Warranty Fitness for
Particular Purpose
 2-316: Disclaimers
§2-104:
“Merchant” means a person who deals in goods of
the kind or otherwise by his occupation holds
himself out as having knowledge or skill
peculiar to the practices or goods involved in the
transaction…
Siemen v. Alden
•
Plaintiff sought recovery for injuries sustained while operating multi-rip saw
purchased from defendant
• Sale of the saw was an isolated transaction that did not come within the
terms of §2-314 and plaintiff failed to provide facts sufficient to raise a
question of material fact as to his reliance on defendant’ skill and
knowledge in selecting the saw under §2-315.
§2-315 Fitness for Particular Purpose: where seller at time of contract has
reason to know any particular purpose for which the goods are required and that
the buyer is relying on the seller’s skill or judgment to select goods, there is an
implied warranty that the goods shall be fit for such purpose.
Two prong test:
1. The seller knows of the particular purpose for which the goods are
required; and 2. The buyer rely on seller’s skill or judgment in selecting
the product.
Statute of Frauds
 §2-201:
 Except as otherwise provided in this section, K for sale of
goods price of $500 or more is not enforceable unless there is
some writing sufficient to indicate that a K for sale has been
made between the parties and signed by the party against
whom enforcement is sought or by his authorized agent or
broker. A writing is not insufficient because it omits or incorrectly
states a term agreed upon but the K is not enforceable under
this paragraph beyond the quantity of goods shown in such
writing.
St. Ansgar Mills v. Streit
•Streit, owner of large hog farm, makes oral contract on for the purchase
of corn with St. Ansgar Mills. Oral contract is made on July 1st
• St. Ansgar provides Streit with confirmation letter on August 10th. Streit
later refuses delivery of the corn orally purchased. St. Ansgar brings
action for breach of contract.
•This is a transaction between merchants, §2-201(2) applies. Main issue
– was the written confirmation provided to Streit within a reasonable
time?
•UCC defines a reasonable time for the action in relationship to “the
nature, purpose and circumstances” of the action. Factors to
consider: course of dealings between the parties, custom and
practice, usage of trade, or course of performance.
SOF §2-201
 Unlike common law requirements, The only term which must
appear is the quantity term which need not be accurately
stated but recovery is limited to the amount stated. See:
Comment 1
 Four exceptions to §2-201(1):
1. Merchant confirmation letters
2. Special manufacture
3. Part performance
4. Admission in legal proceedings
 2-202(2): between
merchants
 Problem 6: Does the
memo pad satisfy 2-201?
Parol Evidence Rule
 2-202: Terms with respect to which the confirmatory
memoranda of the parties agree on or which are
otherwise set forth in a writing intended to be a final
expression of their agreement with respect to such
terms as are included therein may NOT be
contradicted by evidence of any prior agreement or of
a contemporaneous oral agreement but may be
explained or supplemented
 By course of performance, course of dealing, or usage of
trade
 By evidence of consistent additional terms unless the court
finds the writing to have been intended also as a complete and
exclusive statement of the terms of the agreement.
Parol Evidence Test
Is the writing the final expression of the agreement?
 NO? then parol evidence can come in.
 If Yes? Then ask
Is the writing the complete integration or partial integration?
If complete integration
 NO PAROL
If partial integration
 Extrinsic evidence is admissible if its consistent with the writing and
supported by additional consideration or would have been naturally
omitted from the agreement.
Problem 9
 Airplane construction K
 Merger Clause
Columbia Nitrogen v. Royster
 Agreement of
purchase/sale of
Phosphate
 Market price for
phosphate drops
dramatically.
 Buyer backs out
 1-303(3): Usage of
trade evidence
UCC SALES
Professor VerSteeg
Slides Set 4
Offer & Acceptance
2-204:
 A K for sale of goods may be made in any manner sufficient to
show agreement, including conduct by both parties which
recognizes the existence of such a K.
 An agreement sufficient to constitute a K for sale may be found
even though the moments of its making is undetermined.
 Even though one of more terms are left open a K for sale does not
fail for indefiniteness if the parties have intended to make a K and
there is a reasonably certain basis for giving an appropriate
remedy.
Offer & Acceptance
2-205: Firm Offers
 An offer by a merchant to buy or sell goods in a
signed writing which by its terms gives assurance that
it will be held open is not revocable, for lack of
consideration, during the time stated or if no time is
stated for a reasonable time, but in no event may such
period of irrevocability exceed 3 months; but any such
term of assurance on a form supplied by the offeree
must be separately signed by the offeror.
Offer & Acceptance
2-206:
 Unless otherwise unambiguously indicated by the language or
circumstances
 An offer to make a K shall be construed as inviting acceptance in
any manner and by any medium reasonable under the
circumstances
 An order or other offer to buy goods for prompt or current shipment
shall be construed as inviting acceptance either by a prompt
promise to ship or by the prompt or current shipment of
conforming or non-conforming goods, but such a shipment of
non-conforming goods does not constitute an acceptance if the
seller seasonably notifies the buyer that the shipment is offered
only as an accommodation to the buyer.
Purchase Order
Offer
Buyer
(Offeror)
Seller
(Offeree)
Sales
Acknowledgment
Form
Acceptance
2-207: Additional Terms
 Definite/seasonable expression of acceptance or written
confirmation sent w/in a reasonable time operates as an
acceptance EVEN THOUGH it has additional/different terms,
UNLESS acceptance is EXPRESSLY made conditional on assent
to the additional/different terms [proviso clause]
 Between merchants, additional terms become part of the K
UNLESS:
 Offer expressly limits acceptance to terms of offer
 They materially alter it
 Conduct by both parties which recognizes existence of K
establishes a K EVEN IF writings do not.
 In those cases, terms of K are those which AGREE, plus
UCC gap-fillers
Diamond Fruit Growers v. Krack
 Does disclaimer of liability become apart of the contract? Battle of the
forms.
 2-202(1): proviso – if acceptance is expressly conditioned on the offeror’s
assent to additional terms the parties differing forms do not result in a
contract unless such assent is made.
 If offeror does not assent but the parties proceed with the
transaction their performance results in formation of a contract with
the terms of the contract which the parties forms agree.
 Look at all forms to the extent they agree. To the extent they do not agree,
they get red-lined out (knockout rule). Then you look to Art. 2 gapfillers
Problem 15
 Tugboat
dilemma
 Different vs.
Additional
terms
Klocek v. Gateway
 Arbitration clause in
packaging shipped
with computer
 Keeping Computer
for 5 days equals
acceptance
 Additional Term
UCC SALES
Chapter 3
Warranties
WARRANTIES
QUALITY
Express § 2-313
TITLE §2-312
Implied
§ 2-314
Merchantability
§ 2-315 Fitness for a
Particular Purpose
WARRANTIES
TITLE
§2-312
QUALITY
Express
§ 2-313
Implied
§ 2-314
Merchantability
§ 2-315
Fitness for a
Particular
Purpose
Warranty of Title
 2-312: Warranty that title if good and transfer rightful,
and the goods are delivered free from security
interests/liens/encumbrances
Moore v. Pro Team Corvette Sales, Inc.
 Facts : Moore buys a corvette from ProT. When he goes to register the car
he finds out that it is a stolen car.

ProT states the the car was sold as is and included language in the
contract that “all warranties pursuant to 2-312 are excluded from this
transaction.
 A warranty of title can be exclude by SPECIFIC language. In order to
exclude a warranty the language must be precise and unambiguous.
Warranties Continued
 Express Warranties
 2-313: Express warranties created
by…
 Affirmation of fact or promise from S
to B that becomes basis of bargain
 Description which is part of basis of
bargain
 Sample or model which is part of
basis of bargain
 Mere “puffing” does not create
warranty
Implied Warranties
 Express warranties are created only where the seller
does something affirmative (says something, ad in
newspaper, displays a sample)
 Implied warranties are automatically part of the K
unless the seller (or the circumstance) does something
affirmative to get rid of them
2-314
Implied Warranty of Merchantability
Unless excluded or modified under 2-316, a
warranty that the goods shall be merchantable is
implied w/respect to goods of that kind.
Under this section, the serving for value of food
or drink to be consumed either on the premise or
elsewhere is a sale
Shaffer v. Victoria Station, Inc
2-314(2) Goods to be merchantable must
be at least such as
(c) are fit for the ordinary purposes
for which such goods are used
(e) are adequately contained,
packaged, and labeled as the agreement
may require
Strict liability claim: Responsible not just
for wine, but also container for wine
Fitness for a Particular Purpose
 2-315: Where the seller at the time of
contracting has REASON TO KNOW any
particular purpose for which the goods are
required and the buyer is RELYING on seller’s
skill/judgment, there is unless excluded or
modified under the next section an implied
warranty that the goods shall be fit for such
purpose.
1973 Ford LTD
Harold Thumbs
Blue Ship Tea Room
Bell Sports, Inc. v. Yarusso
 Express warranties in owner’s
manual: Helmet would reduce
harmful effects of blow to the
head
 Issue: whether you an express
warranty may be disclaimed?
 2-316(1)
Webster v. Blue Ship Tea Room, Inc.
 ∏ ordered fish chowder, bit into fish bone and was injured as a result.
 Issue: Whether fish bone in chowder constitutes a breach of implied
warranties (merchantability and/or fitness for particular purpose)?
 Reasonable expectations test: Permit recovery even where
consumer is injured by a natural substance as long as the biter’s
reasonable expectation is that it would have been removed.
 Does fact that she was born in New England matter? Shouldn’t make a
difference—test NOT slanted to particular customer
Same result if ∏ purchased
can of fish chowder and
encountered the bone?
Disclaiming Implied
Warranties
 2-316(2)
 2-316(3)
 Must be in a writing
 Must be conspicuous
Cate v. Dover Corp.
 Disclaimer: Under the heading entitled “WARRANTY”;
nothing to distinguish the 3rd paragraph, which
contained the disclaimer
 not in different size, color, type, etc.
 Issue: Whether this was an effective disclaimer of the
implied warranty of merchantability?
Bowdoin v. Showell Growers, Inc
 Post-sale disclaimer of implied warranties found in
the instruction manual that accompanied the spray
rig was ineffective because it did not form a part of
the basis of the bargain.
 Must get disclaimer at time of K.
 Must be conspicuous!
UCC Sales
Professor Versteeg
Slides Set 6
Warranties Continued
 LIMITATIONS ON WARRANTIES
 2-719:
 Agreement may provide remedies in addition to/in
substitution for those provide in this article and may
limit/alter damages, by limiting B’s remedies to return
and repayment or repair and replacement of NONCONFORMING goods or parts
 Resort to a remedy as provided is optional UNLESS the
remedy expressly agreed to be EXCLUSIVE in which
case it is the sole remedy.
 Consequantial damages may be limited or excluded
UNLESS unconscionable.
Wilson trading Corp. v. David Ferguson, Ltd.
 B purchased yarn from S, made sweater that shredded when
washed. B claims that the yarn was unmerchantable.
 K limitation: Can’t bring claims if made after weaving, knitting, or
processing, or more than 10 days after the receipt of shipment.
 2-719(2): Where circumstances cause an exclusive or limited
remedy to fail of its essential purpose, remedy may be had as
provided in this Act.
Limiting principles on
remedies:
1. Foreseeability
2. Mitigation
3. Reasonable degree of certainty
Problem 33
 K limitation: “B’s remedies limited to repair or
replacement of defective parts.” K conspicuously stated
that S wasn’t responsible for “any consequential
damages.”
DEFENSES IN WARRANTY ACTIONS
 NOTICE:
 In all warranty actions a buyer loses all UCC rights if there is a
failure to give the seller NOTICE of the breach w/in a reasonable
period of time after the breach should have been discovered.
 Reason for this requirement is to preserve for the seller the right to
inspect the goods (2-515) & the right to cure (2-508) & to facilitate
an early settlement of the dispute
 2-607(3)(a) & Comment 4: Where a tender has been accepted the
buyer must within a reasonable time after he discovers or should
have discovered any breach notify the seller of breach or be
barred from any remedy
Fitl v. Strek
 B and S enter into deal for purchase/sale of Mickey
Mantle baseball card. Seller represented that the card
was in “near mint condition.” After S delivered card to B,
B placed it in a safe-deposit box.
 Two years later, B learned themcard was valueless.
 Issue: Whether 20 months was “reasonable notice”?
 Court looks at the 3 policies behind the duty to notify:
1. Correct defect (“cure”)
2. Prepare litigation/negotiation
3. Prevent stale claims
Privity
 A "legal connection" - the buyer must establish that
there was in fact and in law a K between the two
parties
 Vertical privity: how far back up the distribution chain
a buyer can go
 Horizontal Privity: deals w/identifying to whom the
retail seller is liable other than the immediate purchaser
2-318
 ALTERNATIVE A: A seller's warranty (either express or implied)
extends to any natural person who is in the family or household of his
buyer or who is a guest in his home if it is reasonable to expect that
such person may use, consume or be affected by the goods and who
is injured in person by breach of the warranty. A seller may not
exclude or limit the operation of this section.
 ALTERNATIVE B: A seller's warranty (either express or implied)
extends to any natural person who may reasonably be expected to
use, consume, or be affected by the goods and who is injured in
person by breach of the warranty. A seller may not exclude or limit
the operation of this section.
 ALTERNATIVE C: A seller's warranty (either express or implied)
extends to any person who may reasonably be expected to use,
consume, or be affected by the goods and who is injured by breach of
the warranty. A seller may not exclude or limit the operation of this
section w/respect to injury to the person of an individual to whom the
warranty extends

Reed v. City of Chicago
 ∏’s son commits suicide while in jail.
used paper isolation gown
He
to hang himself.
 Basis of claim: Breach of implied
under 2-314 and 2-315.
warranties
 Defense: Lack of privity
 Issue: Whether ∏ a non-purchaser, can recover from the
manufacturer and designer of the gown for breach of warranty.
 Held: Court extends coverage to ∏. Manufacturer had reason to
know the gowns would be worn by detainees See comment 3.
 Policy: There would be no recovery; 2-318 a “floor” to build on
(other jurisdictions see the section as a “ceiling”).
Note: Strict Products Liability
 Hybrid of tort and contract law
 Permits recover by injured consumer against the
manufacturer as long as consumer can prove the
manufacturer distributed into commerce a product that
contained a dangerous defect.
 No necessity of proving either negligence or privity.
 See §402A of Restatement of Torts
 Note differences between §402A and UCC
UCC Warranties and the Magnuson-Moss Act
 Act applies to all consumer products manufactured
after July 4, 1975 that are covered by a written
warranty. In response to many years of consumer
complaints about warranties. The stated purposes of
the statute are to improve the adequacy of information
available to consumers to prevent deception.
 See Mag. – Moss §101: Definitions and
Implied Warranties

§108:
Mag.-Moss Problems 39 - 40
 Problem 39: Attorney Sam Ambulance forms
corporation. When corporation buys a company car, is
it entitled to protection under the Mag.- Moss Act?
Consumer product?
 Problem 40: a. Tom buys car from Sam’s used car lot.
Sam said “no warranties on the car.” Possible Mag. –
Moss action? Oral v. written? Compare with d. of this
problem
Ventura v. Ford Motor Corp.
 Ventura purchases a mercury. Sues Ford for damages due to defects in the car.
 UCC action for breach of warranty or Mag. – Moss action?
 Buyer can cover but not barred from any other remedy if he fails to effect
cover (2-711, 2-712)
 Recovery through § 2 – 313 Express warranties?
 Recovery through §2 -214 for breach of implied warranty of
merchantability?
 Recovery through Mag-Moss?

Express Warranty: car was substantially impaired defects continued despite
repeated attempts by Ford to cure.

Implied Warranty: court assumes disclaimer was effective in this case and
moves on to Mag – Moss
Ventura v. Ford Motor Corp.
 Mag-Moss recovery if:
 CONSUMER – buyer for personal use
 SUPPLIER – person engaged in business of making a
consumer product available to consumers
 WRITTEN WARRANTY – fact or written promise made in
connection with the sale of a consumer product.
 Ford can’t disclaim under Mag-Moss. They made a written
warranty and entered into a service contract with the consumer.
 Written warranty may not disclaim or modify except to limit
duration any implied warranty to a consumer if conscionable
and in clear/unmistakable language
 Mag-Moss allows damages for attorney fees as part of the
judgment.
UCC SALES
CHAPTER 4:
TERMS OF THE CONTRACT
Professor VerSteeg
Filling the Gaps
 Key provisions: §§2-305 – 2-311
 Traditionally if the parties left out a major term there
was no legally enforceable agreement.
 Courts are now more willing to save the contract by
implying reasonable terms where possible.
 The Code fills these gaps.
Landrum v. Devenport
 Landrum contracts to purchase 3 corvettes from Devenport for his
auto-collection. Purchase order signed with price left blank.
 Essential elements of a suit for breach of contract:
1.
2.
3.
4.
Existence of valid contract
Plaintiff performed or tendered performance
Defendant breached the agreement
Plaintiff was damaged as a result of the breach
 §2-305: There can be contract for sale even when there’s no price
term. Possible outcomes:
 Sticker price (only way B wins – likely result)
 Market (S wins)
 No K (S wins)
 Meeting of the minds is hogwash
UNCONSCIONABILITY
 NOT available under common law.
 Unconscionability not defined in the Code. Prevention of
oppression and unfair surprise. This is a question for the JUDGE,
not the jury.
 Problem 44 (p. 193): B wanted to buy sailboat. He told S he didn’t
know anything about sailboats. S showed him boat costing $3k.
Highest price anyone else was selling the boat was $1k.
 Substantive unconscionability?
 Procedural unconscionability?
 NEED BOTH
Identification of the Goods
 Risk of loss, casualty to goods, damages, and other matters.
 Problem 45 (p. 194):
a) S, a fisherman, contracts to sell entire catch for
season. Does ID occur on making of the K, the
catching of the fish, or on their packaging with a label
indicating they belong to this particular B?
b) Circus enters into K to sell elephant when born. K
made when mom 2 months pregnant? (22 month
gestation period with elephants).
c) Farmer agreed to sell ½ of grain, which was mixed
with other grain. Comment 5: ID occurs at time of the
K. Fungible goods?
Risk of Loss: No Breach
 Absent contrary agreement:
1. Where the seller is a merchant, risk of loss passes to
buyer on the buyers ACTUAL receipt of goods; and
2. Where the seller is NOT a merchant the risk of loss
passes at time of tender of delivery (§2-509)
 Problem 46 (p. 195): B buys care. Seller promises
delivery on the next Monday. On Monday, S called B
and said “take it away.” B said he was busy and he
would pick it up the next day; S agreed. That night the
car was stolen from the lot. Who has risk of loss? Can
seller claim he is a bailee?
 NO—must be a 3rd person. EX: Warehouse.
Risk of Loss: No Breach
 Problem 47 (p. 196): J had garage sale; B offered
$200 for piano. They shook hands and J said “take it
away, it’s yours.” B said she’d come get it the next day.
That night J’s house burnt down. Did the risk shift to B?
See §2-709(1)(a)
 Is this transaction between merchants?
 Has J done her part under the K?
Delivery Terms
 Read §2-509
 Methods of stating whether the sale calls for a
shipment or destination contract
 Shipment K: Risk of loss shifts when goods given to
carrier §2-509(1)(a)
 Destination K: Risk of loss shifts when goods delivered
to buyer §2-509(1)(b)
Delivery Terms
Shipment
Destination
FAS
Ex Ship
CIF
*FOB
C&F
*FOB
***FOB either a shipment or destination K. in a Kit is
always followed by a named place – risk of loss passes
at that place.
***Identification must occur before risk can pass
Delivery Terms
 Problem 48 (p. 197): S in NYC contracted to sell 80 boxes of clothes to B in
Savannah, GA. The delivery term was “$1,800 FAS SS Seaworthy, NYC.” S
delivered 80 boxes to the dock alongside the SS Seaworthy and received a bill
of lading from the ship as a receipt. Before the boxes were loaded the dock
collapsed. See §2- 319(2) and §2-322
 Problem 49 (p. 198): S in Detroit; B in Birmingham. Goods destroyed after
carrier received them but before they are loaded on board the railroad car that
was to take them to Birmingham. Who had ROL if: FOB Detroit? FOB RR cars,
Detroit? CIF Birmingham?

Cook Specialty Co. v. Schrlock
 ∆ contracted to sell ∏ a press brake. Brake falls off
truck in transit and is destroyed. Buyer argues seller did
not properly insure brake.
 “F.O.B. Seller warehouse” – under §2-319 where is the
ROL?
 §2-504(a) requires seller to make K with carrier as
may be reasonable having regard to the nature of the
goods and other circumstances of the case?
 “reasonable” in light of nature of the goods (e.g., make
sure there’s refrigeration for perishable goods).
Rheinberg – Kellerei v. Vineyard Wine
 Contract for wine. Seller in Netherlands, Buyer in U.S. Shipment K:
ROL shifts to buyer once seller puts goods on carrier.
 BUT S never notified B when the goods were on the ship. Doesn’t
find out until January; shipped sinks.
 Issue: Whether risk of loss passed from seller to buyer where
seller didn’t give prompt notice of the shipment?
 2-504(c): S must promptly notify B of shipment.
 Failure to notify B or to make proper K under (a) is grounds
for rejection ONLY if material delay or loss ensues.
UCC SALES
CHAPTER 5:
Performance of the Contract
Professor VerSteeg
Installment Sales
 Successful plaintiffs in contract actions were generally
required to prove substantial performance of the terms
of the contract.
 Installment contracts defined in §2-612(1) substantial
performance is still the law. The seller is entitled to
payment even where the tender of goods fails to
conform exactly to the contract as long as it
substantially conforms.
The Perfect Tender Rule
 To prevail in a single delivery sale the seller must make
a perfect tender one that complied with all the terms of
the contract and then show that the buyer refused to
take the goods.
 Read §2 – 601
Cure
 If seller has not made a perfect tender, the seller has
the right in some circumstance to cure the defective
performance.
 2-508: (1) Where tender/delivery by seller is REJECTED because nonconforming AND the time for performance has not yet expired, the
seller may seasonably notify the buyer of his intention to cure and may
then within the K time make a conforming delivery
 (2) Where buyer REJECTS a non-conforming tender which seller had
reasonable grounds to believe would be acceptable with or without
money allowance the seller may if he seasonably notifies the buyer have
a further reasonable time to substitute a conforming tender.
 Comment 2: Protect against “surprise rejection.” Seller is not
protected unless he had “reasonable grounds to believe” that the
tender would be acceptable.
Wilson v. Scampoli
 New Color TV set; problem with screen color.
 Issue: can dealer cure by repair or must he substitute
with a brand new TV?
 Seller can cure the defect in those cases in which he
can do so without subjecting the buyer to any great
inconvenience, risk or loss.
 Note: B rejected the goods but refused to return
them to S. Is this permissible?
 Yes (see 2-711(3)) if he paid all or part of purchase price.
Problem here is that there was no opportunity to cure.
Rejection and Acceptance
 When the seller makes a tender of the goods the buyer
must choose between rejection (2-602) and
acceptance (2-606 and 2-607). But cannot do both.
 Failure to act results in a technical acceptance,
rejections must come within a reasonable time after
delivery.
 Acceptance’s legal consequences are spelled out in 2607.
 Note 1. A buyer is entitled to a reasonable
opportunity to inspect 2-513
Ramirez v. Autosport
 Can buyer reject a tender for minor defects and may a seller cure
those defects?
 Ramirez brought van and agreed to trade in old van bringing price
to 9,902.
 Scheduled delivery for van August 3rd – wasn’t ready until after
Sept 1. due to defects. Ramirez reject the new van and wanted
return of the trade in (already resold)
 If before acceptance the buyer may reject for any
nonconformity. Depending on the circumstances (length of
time and ability to salvage) the seller has a right to cure.
 If after acceptance the buyer may revoke only if the
nonconformity substantially impairs the value of the goods to
him.
Ramirez v. Autosport
 Ramirez never accepted the van – can reject for any
nonconformity.
 What is the remedy available?
 Revocation of acceptance and rescission provide the
same relief
 Autosport did not effect a cure.
Revocation of Acceptance
 Standards under which a buyer can revoke acceptance
are more difficult to meet than standards for rejection.
 MUST show substantial impairment §2-608
 If a Buyer makes a technical acceptance, he may still
bring a breach of warranty action provided that a
proper 2-607(3)(a) notice has been given. If B DOES
NOT want the goods, but wants a return of the price,
the proper UCC method is revocation of acceptance.
Waddell v. L.V.R.V. Inc.
 Waddell buys RV. There are many problems with the RV. 18
months later, B wants to revoke acceptance of RV based on
numerous deficiencies.
 Waddell can revoke acceptance under 2-608, if the defects
substantially impaired the value. 2-part inquiry:
 Subjective test: Needs and circumstances of B.
 Objective test: Evidence from which it can be inferred that B’s
needs were not met because of the nonconformity.
 Reasonable notice issue: Court tolls the period here based on
constant repairs needed on the RV, finds 18 months to be a
reasonable time.
 Seller can’t postpone revocation forever to fix all the problems .
Risk of Loss: Breach
 §2-509 – applies only where neither party has breached the sales
contract
 §2-510 – applies where a breach has occurred.
 § 2-510 Effect of Breach on Risk of Loss
(1) Where a tender or delivery of goods so fails to conform to the contract
as to give a right of rejection the risk of their loss remains on the seller
until cure or acceptance.
(2) Where the buyer rightfully revokes acceptance he may to the extent of
any deficiency in his effective insurance coverage treat the risk of loss
as having rested on the seller from the beginning
(3) Where the buyer as to conforming goods already identified to the
contract for sale repudiates or is otherwise in breach before risk of
their loss has passed to him, the seller may to the extent of any
deficiency in his effective insurance coverage treat the risk of loss as
resting on the buyer for a commercially reasonable time.
Jakowski v. Carole Chevrolet, Inc.
 Jakowski contracted to purchase a camaro with a polymer coating
applied from Carole Chevy.
 Seller delivered car without coating. Seller called next day to say –
bring car back so coating can be applied.
 Buyer returns car for coating and at some point during that time
the car was stolen from the seller’s premises.
 ISSUE: Who bears the risk of loss?
Jakowski v. Carole Chevrolet, Inc.
 Buyer argues §2-510
1. Did the car fail to conform? YES
2. Did buyer accept car despite nonconformity?
 The mere taking of possession by the purchase is
not equivalent to acceptance – buyer afforded
reasonable opportunity to inspect goods.
 Car did not conform to the contract and the buyer did
not accept the car – the risk of loss remained on the
seller.
Impossibility of Performance
 Review §§2-613 – 2-616
 When unexpected events of life that make the
performance of a contract impossible or commercially
impracticable.
 Assumption by parties that this wouldn’t happen—when
creating contract.
 This excuse has GROWN—protects both S and B
(used to only protect S).
Arabian Score v. Lasma Arabian
 Score enters into an agreement with Lasma to buy horse for 1 million
for the horse and services, including advertising to promote horse up
to 250k. Horse dies. Score seeks197k refund for amount unused in
advertising.
 Was the horse’s death a reasonably foreseeable risk to preclude the
doctrine of impossibility or commercial frustration?
 Score purchased insurance for the horse; clearly
death was foreseeable.
 Commercial frustration = circumstances beyond
the control of the parties which render
performance of the contract impossible and
exonerate the party failing to perform.
Impossibility of Performance
 Problem 67 (p. 251): In mid-60s, Westinghouse
Corp. agreed to sell 27 companies 80 million lbs of
uranium. Average price was $10. In the 70s, it rose
to $40 due to oil embargo. Corp didn’t honor K.
Does this mean performance is “commercially
impracticable”; is this a 2-615 case?
 See comment 4: are increased prices enough
 What about unforeseeable things?
Louisiana Power & Light Co. v.
Allegheny Ludlum Industries, Inc.
 A (seller) and LP (buyer) enter into K for condenser tubing. Seller’s
prices increased after K was made so he asks buyer to modify—
buyer says no. Buyer asks for adequate assurances from seller
and was not responded to. Seller’s defense: commercial
impracticability.
1. Was LP justified in repudiation? 2-609 – (2) between
merchants the reasonableness of grounds for insecurity and
the adequacy of any assurance offered shall be determined
according to the commercial standards. (4) failure to provide
assurance within a reasonable time not exceeding 30 days
is a repudiation of the contract.
Louisiana Power & Light Co. v.
Allegheny Ludlum Industries, Inc.
 Did Seller meet the three conditions to excuse K under 2-615?
1. A contingency must occur
2. Performance must be made impracticable
3 the non-occurrence of the contingency must have been a basic
assumption on which the contract was made.
 Commercially impracticable by an unforeseen supervening event
not within the contemplation of the parties at the time the contract
was entered into.
 Must me more than just unfavorable (price increase doesn’t cut
it) must be an extreme and unreasonable risk. Even as much as a
52% increase.
UCC SALES
CHAPTER 6:
REMEDIES
Professor VerSteeg
Seller’s Remedies
 Accepted Goods
 §2-709: Sellers recovery of damages if the buyer has made a
technical acceptance of goods of if the goods are destroyed within
a commercially reasonable period of time after the risk of loss
shirts to the buyer.
 Problem 69 (p. 266): Seller sells B car, who revokes acceptance 1
month later because his garage color clashed with the car’s color.
The notice to S said the car was parked down the street. 3 days
after S received the notice, the car disappeared.
 May the seller recover the price under 2-709?
 Would it make a difference if B rejected the goods for the same
reason?
Seller’s Remedies
 Unaccepted Goods
1. If resale, then §2-706
2. If no resale, then §2-708
 Problem 71 (p. 267): S (corp) and B enter into sale for pool. B
breaches. Pool’s components were purchased for $800 and
assembled ($400).
 2-706: Resold at $2000, so no recovery. 2-708(1): Market price is
$2000, so no recovery. S argues 2-708(2): Inadequate because S is a
lost profit seller. They have lost profit they would have made on the
sale.
Teradyne, Inc. v. Teledyne
Industries, Inc.
 Lost volume seller (if not, no recovery). Buyer (Teledyne) admits they are
in breach, only dispute is over damages. The K price was $98,400; trial
court awards $75,000. They calculated K price – cost saved + incidentals.
 2-708(2) applies when 2-708(1) is inadequate to put the seller in as good
a position as performance would have done.
 2-708(1) is just the difference between unpaid contract price and
market price.
 2-708(2) provides for due credit for payments or proceeds of
resale.
 Lost volume seller – based on the net profit that he has lost as a
result of the broken contract.
 Should variable costs have included wages and fringe benefits?
 Did Seller have to accept B’s offer (for 65k)?
Buyer’s Remedies
 Unaccepted Goods: §2-711
 Gives the buyer a right to cancel and recover the price if the
buyer has already paid. Further recoverable damages are
designed to follow 1-305 to put the aggrieved party in as good a
position as performance would have. Damages depend on
whether the buyer has accepted the goods or not.
 Accepted Goods: §2-606
 Acceptance of the goods has been made and is not later
revoked, the buyer may still sue for breach of warranty (or other
breach) if a notice of the defect has been given to the seller
within a reasonable time after the defect should have been
discovered (2-607(3)(a) damages are them measured by 2-714
and 2-715
Buyer’s Remedies
 Problem 76 (p. 277): B buys van from S, can’t go up hills so he
revokes acceptance. K limited B’s remedy to repair/replacement
and clearly disclaimed liability for consequential damages. B
claimed a security interest in the goods under 2-711(3) and stored
it in a truck depot for $50/day. Does S have to pay storage
charges?
 Under 2-715(1), these are incidental damages (like having
goods inspected). The disclaimer was only for consequential
damages, so B can recover these damages
 2-715(2)(a) test of consequential damages “reason to know”
language (Hadley v. Baxendale). NOT relevant here—
doesn’t apply to personal injury/property damage. You only
do a proximate cause analysis under 2-715(2)(b).
Buyer’s Remedies: Unaccepted Goods
 Situations:
1. Seller doesn’t perform
2. Seller delivers a defective good and B rejects
3. Seller delivers, B accepts, but there’s a substantial
impairment so B revokes acceptance
 2-712 Where buyer is authorized to cover that is
purchase substitute goods. If a buyer covers properly
the damages are measured by a comparison of the
original contact price and the cost of the cover.
Hughes Communications v. U.S.
 NASA and Hughes make agreement to launch Hughes satellites on NASA
space shuttles.
 After K begins Regan stops commercial satellites on NSA shuttles.
 Hughes covers by launching their satellites on ELVs instead of
shuttles seeks damages from NASA.
 Does substitute need to be identical to K satellite?
 §2-712 cmt. 2 – must be commercially usable as reasonable substitutes
under the circumstances (therefore Hughes couldn’t have made a
substantially more costly satellite for the ELVs when a closer model was
available)
Hughes v. U.S.
 Buyers remedy for sellers breach as to those goods equals the
difference between the cost of the replacement goods and the
contract price plus other losses.
 Buyers remedy for sellers breach when buyer covers is the
difference between the cost of the substitute services and the
contract price plus other losses.
 A buyer does not have to cover. IF a buyer fails to cover in an
appropriate situation, consequential damages that could have
been avoided are denied.
 reasonableness for cover is measured against the given factual
situation. Ask if the buyer would have made the same arrangements if
there was no prospect of successful suit against the breaching seller.