Exam 21: Performance and Breach of Sales and Lease Contracts

Signal Sets Company contracts to deliver one hundred television sets to a new retail customer, Tuner Electronics Warehouse, on May 1, with payment to be made on delivery. Signal tenders delivery in its own truck. Tuner's manager notices that some of the cartons have scrape marks. Tuner's owner phones Signal's office and asks whether the sets might have been damaged as they were being loaded. Signal assures Tuner that the sets are in perfect condition. Tuner tenders Signal a check, which Signal refuses, claiming that the first delivery to new customers is always for cash. Tuner promises to pay the cash within two days. Signal leaves the sets with Tuner, which stores them in its facility pending its "Grand Opening Sale" on May 15. Two days later, Tuner's stocker opens some of the cartons and discovers that a number of the sets are damaged beyond ordinary repair. Signal claims Tuner has accepted the sets and is in breach by not paying on delivery. Will Signal succeed on these claims? Explain.

A buyer can revoke his or her acceptance if it was predicated on a reasonable assumption that the goods' nonconformity would be cured, and the nonconformity was not cured.

Cruisin' Autos, Inc., sells cars to consumers. To avoid liability for oral express warranties, each sales agreement should note that a car is sold

An implied warranty can arise as a result of a well-recognized trade custom that a court could infer the parties intended to apply to their contract.

If a buyer rightfully rejects nonconforming goods, he or she can resell them and retain the proceeds, without crediting the amount to the seller.

Beef Burgers, Inc. contracts to buy five hundred head of cattle from Cattle Ranch. Before the seller delivers, an outbreak of disease causes a quarantine of the ranch. In this circumstance, the perfect tender rule

If, before the time for contract performance, one party communicates an intent not to perform, the other party can only wait to see if the repudiating party will decide to perform.

To create an express warranty, a reasonable buyer must regard a seller's representation of fact-for example, on a product label-as part of the basis of the bargain.

Express and implied warranties do not displace each other because more than one warranty can cover the same goods in the same transaction.

Steel Buildings, Inc., agrees to sell four portable garages to Truck Service Center. Five days later, Truck Service refuses delivery and cancels the contract. Steel is entitled to

In an action based on breach of implied warranty, a buyer must show that the warranty existed and its breach proximately caused the damage sustained.

If a contract states that repair or replacement is the exclusive remedy, then it is, even if repair or replacement is not possible.