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
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.