Part I

UCC Breach

Unlike Common Law, where we determine the materiality of the breach, the UCC has a different rule

Perfect Tender Rule — Sale of Goods

If goods or their delivery fail to conform to the contract in any way, the buyer generally may:

• reject all;
• accept all; or
• accept any commercial units and reject the rest

Commercial Unit

A unit by which the commercial usage treats as a single whole which, if divided, materially diminishes its value.

I can't take two eggs out of the carton and return ten.

Right to Reject Cut Off by Acceptance

Remember that UCC acceptance is more than just taking delivery—there's a right to inspect for conformance. Right is cut off by:

• Indicates goods conform or will keep anyway
• Fails to reject or notify seller of rejection in a reasonable time
• Commits act inconsistent with seller's ownership

More on rejection

Rejections will not be evidence of a seller's breach if:

• Seller could have cured breach if notified
• Buyer refuses to provide seller with full written statement of defects [between merchants only]

After Rejection

• Buyer must hold goods with reasonable care
  • merchants must follow reasonable instructions from seller
• When no instructions, arrangements to return, store, or resell. Associated expenses born by the seller
• If resold, expenses and commission

Revoking Acceptance

Limited right to revoke. Defect of goods that substantially diminishes value and:

• accept with reasonable belief defect would be cured, but is not; or
• defect was not immediately apparent; or
• seller made assurances that goods conformed

• Must be in a reasonable time from discovery of defect
• Must occur before any substantial change to the goods

Installment Contracts

Don't follow Perfect Tender Rule. Similar to substantial performance at common law.

Installment can only be rejected if nonconformance substantially impairs value of that installment and cannot be cured.

Considered a breach of contract only if the nonconformance substantially impairs value of the entire contract.

Seller's right to cure

If a buyer rejects and the time of performance is not yet due, the seller can give reasonable notice of intent to cure and make a new tender of conforming goods.

Cure past contract time

Generally no right. Allowed additional time when:

• trade custom or course of dealing led seller to believe the goods would be accepted (e.g. buyer usually accepts and allows cure)
• seller unaware of defect despite proper business conduct

barbri examples make these clear

Installment Contracts

Generally allow for defects to be cured.

Breach by Buyer

Seller can treat any of these as material breach

• refusal to accept conforming goods or rejection of conforming goods
• nonpayment

Perfect Tender Rule Test Answers

https://pcl1lcontracts.classcaster.net/2021/03/08/perfect-tender-rule-test-answers/

Part II

Summing Up Breach

From an essay (and even complaint) perspective, you're overarching analysis looks like this:

• GL
  • preliminaries
  • formation?
    • dtf?
  • terms
  • disposition?

Summing Up Breach

• disposition?
  • performance?
  • condition to performance?
    • discharge?
    • breach

Summing Up Breach

• breach
  • CL
    • material/major? (benefit of bargain)
    • minor? Look to: Amount of Benefit Received; Adequacy of Damages; Extent of Part Performance; Hardship on Breaching Party; Negligent or Willful Behavior; Likelihood of Full Performance

Summing Up Breach

• breach
  • UCC
    • Perfect Tender Rule
      • Buyer: reject all; accept all; or accept any commercial units and reject the rest
      • Seller: treat as major breach

Next step is damages/remedies, we begin next week.

Group Essay Practice

https://docs.google.com/document/d/1rKogWNrBuvJJduORRuR2rmUbdyjLpyTVY4COm-gi-_k/edit?usp=sharing

1. Work on final essay #2 part that people struggled with
2. Choose from either of these featuring Perfect Tender Rule:

• June 2018 FYLSX
• February 2016 CBX

Part III

Questions, then Cases.

Our cases this week

UCC Article 2 Part 6 (pp 835–841 in 6th Ed.)

Smith v. Zimbalist

Review: Barbri outline § VII

@peoplescollolaw