A1 Business and Technical College Business Law Discussion

Explain the application of the Perfect Tender Rule and its exceptions.  Discuss the following:

Your post must be between 200-500 words.

2/1/2018
Chapter 23
Performance and Obligations Under
Sales and Leases
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Overview
• LO23-1: What is the perfect tender rule?
• LO23-2: What is the difference between
conforming and nonconforming goods?
• LO23-3: What is the right to cure?
• LO23-4: What is a revocation of the
contract as compared to rejection of
nonconforming goods?
• LO23-5: What is commercial
impracticability?
23-2
The Basic UCC Performance
Obligation
• Sellers and lessors are obligated to transfer
and deliver conforming goods
• Buyers and lessees are obligated to accept
and pay for conforming goods in
accordance with terms of contract
• Good faith required in performance and
enforcement of every contract
23-3
1
2/1/2018
Good Faith
• Definition: Honesty in fact
• In transaction between merchants, UCC
also imposes obligation of reasonable
commercial standards of fair dealing
(commercial reasonableness)
23-4
Perfect Tender Rule
• States that if goods or tender of delivery
fail in any respect to conform to contract,
buyer/lessee has right to:
• accept the goods;
• reject entire shipment; or
• accept part and reject part
23-5
Exceptions to Perfect
Tender Rule
•
•
•
•
•
Industry norms
Past dealings between parties
Agreement between parties
Seller’s/lessor’s right to cure
Excuse from performance when identified goods
destroyed through no fault of parties
• Substantial impairment (as it relates to revocation of
acceptance and installment contracts)
• Commercial impracticability
23-6
2
2/1/2018
Commercial Impracticability
Doctrine
• Delay in delivery or nondelivery, in whole
or in part, does not constitute breach if
performance made impracticable because
contingency has occurred that was not
contemplated when parties reached
agreement
23-7
Inspection, Payment, and
Acceptance
• Buyers/lessees obligated to accept and pay for
conforming goods in accordance with contract
• Exceptions exist
• Buyers/lessees typically inspect goods to ensure
agreement conformity
• The concept of reasonableness governs
inspection process
• Post-inspection, buyer has option to accept,
partially accept, reject, or revoke acceptance
• UCC guidelines govern right to exercise particular
options post-inspection
23-8
3