Twomey & Jennings BUSINESS LAW
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Transcript of Twomey & Jennings BUSINESS LAW
© 2004 West Legal Studies in BusinessA Division of Thomson Learning
BUSINESS LAW BUSINESS LAW Twomey • Jennings 1stEd.Twomey • Jennings 1stEd.
Twomey & JenningsTwomey & Jennings
BUSINESS LAWBUSINESS LAWTwomey & JenningsTwomey & Jennings
BUSINESS LAWBUSINESS LAW
Chapter 25Obligations and Performance
Chapter 25Obligations and Performance
2© 2004 West Legal Studies in BusinessA Division of Thomson Learning
BUSINESS LAW BUSINESS LAW Twomey • Jennings 1stEd.Twomey • Jennings 1stEd.
Good FaithGood FaithGood FaithGood Faith
• Every sales contract imposes an obligation of good faith and timely performance. – Good faith means honesty in fact in the conduct
or transaction concerned. – For merchants, the UCC imposes the additional
requirement of observing “reasonable commercial standards of fair dealing in the trade.”
• Every sales contract imposes an obligation of good faith and timely performance. – Good faith means honesty in fact in the conduct
or transaction concerned. – For merchants, the UCC imposes the additional
requirement of observing “reasonable commercial standards of fair dealing in the trade.”
3© 2004 West Legal Studies in BusinessA Division of Thomson Learning
BUSINESS LAW BUSINESS LAW Twomey • Jennings 1stEd.Twomey • Jennings 1stEd.
RepudiationRepudiationRepudiationRepudiation
• A buyer’s or a seller’s refusal to perform a contract is called a repudiation.
• A repudiation made in advance of the time for performance is called an anticipatory repudiation.
• Repudiation is a breach of the contract.
• A buyer’s or a seller’s refusal to perform a contract is called a repudiation.
• A repudiation made in advance of the time for performance is called an anticipatory repudiation.
• Repudiation is a breach of the contract.
4© 2004 West Legal Studies in BusinessA Division of Thomson Learning
BUSINESS LAW BUSINESS LAW Twomey • Jennings 1stEd.Twomey • Jennings 1stEd.
Adequate Assurance Adequate Assurance of Performanceof Performance
Adequate Assurance Adequate Assurance of Performanceof Performance
• If either party to a contract feels insecure about the performance of the other, that party may demand in writing adequate assurance of performance.
• If that assurance is not given, the demanding party may treat the contract as repudiated.
• If either party to a contract feels insecure about the performance of the other, that party may demand in writing adequate assurance of performance.
• If that assurance is not given, the demanding party may treat the contract as repudiated.
Hornell Brewing Co., Inc. v Spry (1997) Were there adequate assurances by the Defendant?
Hornell Brewing Co., Inc. v Spry (1997) Were there adequate assurances by the Defendant?
5© 2004 West Legal Studies in BusinessA Division of Thomson Learning
BUSINESS LAW BUSINESS LAW Twomey • Jennings 1stEd.Twomey • Jennings 1stEd.
Seller’s DutiesSeller’s DutiesSeller’s DutiesSeller’s Duties
• The seller has a duty to deliver the goods in accordance with the terms of the contract.
• The time, manner and place of delivery are usually a part of the contract, or are determined by the usual course of dealing in that business.
• In any case, this duty requires that the seller permit the transfer of possession of the goods to the buyer.
• The seller has a duty to deliver the goods in accordance with the terms of the contract.
• The time, manner and place of delivery are usually a part of the contract, or are determined by the usual course of dealing in that business.
• In any case, this duty requires that the seller permit the transfer of possession of the goods to the buyer.
6© 2004 West Legal Studies in BusinessA Division of Thomson Learning
BUSINESS LAW BUSINESS LAW Twomey • Jennings 1stEd.Twomey • Jennings 1stEd.
Buyer’s Right to Buyer’s Right to InspectInspect
Buyer’s Right to Buyer’s Right to InspectInspect
• The buyer has the right to inspect the goods upon tender or delivery. – Inspection includes the right to open cartons
and conduct tests.
• Exception to this is a COD delivery.– Buyer has no right until payment is made.
• The buyer has the right to inspect the goods upon tender or delivery. – Inspection includes the right to open cartons
and conduct tests.
• Exception to this is a COD delivery.– Buyer has no right until payment is made.
7© 2004 West Legal Studies in BusinessA Division of Thomson Learning
BUSINESS LAW BUSINESS LAW Twomey • Jennings 1stEd.Twomey • Jennings 1stEd.
Buyer’s Right to RejectBuyer’s Right to RejectBuyer’s Right to RejectBuyer’s Right to Reject
• If the inspection by the buyer reveals that the seller has tendered nonconforming goods, the buyer may reject them. – Subject to certain limitations, the seller may
then offer to replace the goods or cure the problems.
• If the inspection by the buyer reveals that the seller has tendered nonconforming goods, the buyer may reject them. – Subject to certain limitations, the seller may
then offer to replace the goods or cure the problems.
Weil v Murray (2001) Did Murray properly reject the paintings?Weil v Murray (2001) Did Murray properly reject the paintings?
8© 2004 West Legal Studies in BusinessA Division of Thomson Learning
BUSINESS LAW BUSINESS LAW Twomey • Jennings 1stEd.Twomey • Jennings 1stEd.
Buyer’s DutiesBuyer’s DutiesBuyer’s DutiesBuyer’s Duties
• The buyer has a duty to accept goods that conform to the contract, and refusal to do so is a breach of contract.
• The buyer is deemed to have accepted goods either expressly or by implication through his conduct or by lapse of time.
• The buyer must pay for accepted goods in accordance with the contract.
• The buyer has a duty to accept goods that conform to the contract, and refusal to do so is a breach of contract.
• The buyer is deemed to have accepted goods either expressly or by implication through his conduct or by lapse of time.
• The buyer must pay for accepted goods in accordance with the contract.
9© 2004 West Legal Studies in BusinessA Division of Thomson Learning
BUSINESS LAW BUSINESS LAW Twomey • Jennings 1stEd.Twomey • Jennings 1stEd.
Buyer’s Right of Buyer’s Right of RejectionRejection
Buyer’s Right of Buyer’s Right of RejectionRejection
• The buyer can reject goods in commercial units, accept the goods and collect damages for their problems, or reject the full contract shipment.
• The buyer must give notice of rejection to the seller and cannot do anything with the goods that would be inconsistent with the seller’s ownership rights.
• The buyer can reject goods in commercial units, accept the goods and collect damages for their problems, or reject the full contract shipment.
• The buyer must give notice of rejection to the seller and cannot do anything with the goods that would be inconsistent with the seller’s ownership rights.
10© 2004 West Legal Studies in BusinessA Division of Thomson Learning
BUSINESS LAW BUSINESS LAW Twomey • Jennings 1stEd.Twomey • Jennings 1stEd.
Revocation of Revocation of AcceptanceAcceptance
Revocation of Revocation of AcceptanceAcceptance
• Even following acceptance, the buyer may revoke that acceptance if:– the problems with the goods substantially
impair their value and the problems were not easily discoverable, or
– the buyer kept the goods based on the seller’s promises to repair them and make them whole.
• Even following acceptance, the buyer may revoke that acceptance if:– the problems with the goods substantially
impair their value and the problems were not easily discoverable, or
– the buyer kept the goods based on the seller’s promises to repair them and make them whole.
Jackson Hole Traders, Inc. v Joseph (1997) Did Joseph have the right to revoke her acceptance of the goods?
Jackson Hole Traders, Inc. v Joseph (1997) Did Joseph have the right to revoke her acceptance of the goods?
11© 2004 West Legal Studies in BusinessA Division of Thomson Learning
BUSINESS LAW BUSINESS LAW Twomey • Jennings 1stEd.Twomey • Jennings 1stEd.
When Duties are When Duties are ExcusedExcused
When Duties are When Duties are ExcusedExcused
• Commercial Impracticability: Performance can be excused but the seller must show objective difficulties that create more than cost increases.
• Commercial Impracticability: Performance can be excused but the seller must show objective difficulties that create more than cost increases.
Alamance County Board of Education v Bobby Murray (2001) Was Murray excused from performance?
Alamance County Board of Education v Bobby Murray (2001) Was Murray excused from performance?
12© 2004 West Legal Studies in BusinessA Division of Thomson Learning
BUSINESS LAW BUSINESS LAW Twomey • Jennings 1stEd.Twomey • Jennings 1stEd.
Pay Revoke Acceptance(only in some cases)
Correct performance if time allows
Breach of Contract; Buyer may make substitute
contract & recover damages
PerformanceRepudiation
Buyer SellerContract
Right to Inspect
Accept* Reject
*May accept all, accept commercial units, or accept on condition of seller making repair or paying damages for nonconforming goods.
Delivery
Overview of ProcessOverview of ProcessOverview of ProcessOverview of Process