Part 4- Sales, Chapter 21: Performance of Sales Contracts, Doc 5

Case Analysis and Legal Concepts in Performance of Sales Contracts Rochester Gas and Electric Corp. v. Delta Star, Inc.   Case Summary: o Background: Delta Star contracted with Rochester Gas and Electric (RG&E) to sell eight transformers at a fixed price. Due to steel shortages and increased demand, Delta Star sought to raise prices, invoking the force majeure clause and claiming commercial impracticability. o RG&E Response: RG&E rejected Delta Star’s price increase, demanded assurance of performance at the original price, and later terminated the contract when assurances were not satisfactory. o Court Ruling: The court found for RG&E, rejecting Delta Star’s defenses of commercial impracticability and force majeure. Key Legal Findings: 1. 2. 3. Commercial Impracticability:  Under UCC §2-615, performance may be excused if unforeseen events make it impracticable.  However, the court ruled that increased costs alone, even if significant, do not meet the threshold for impracticability unless they result from extraordinary, unforeseen events that fundamentally alter the contract’s nature. The steel price hike was not deemed unforeseeable. Force Majeure:  The force majeure clause did not excuse Delta Star’s nonperformance as steel, though more expensive, was available, and the clause did not cover mere price increases. Risk Allocation:  Fixed-price contracts are intended to allocate risk, including material cost increases. Delta Star assumed the risk of fluctuating steel prices. Related Legal Concepts and Hypothetical Cases 1. Rejection and Resale (Walters v. Traynor)   Issue: Traynor rejected nonconforming Christmas trees and resold them to mitigate losses. Analysis: o Rejection of nonconforming goods was valid under UCC [2-602]. Traynor acted reasonably by reselling perishable goods and is entitled to recover related expenses [2-603]. 2. Buyer’s Right to Inspect (Ledford v. Cowan)   Issue: Ledford withheld payment until he could inspect a vehicle. Analysis: o Buyers generally have the right to inspect goods before accepting or paying for them unless explicitly waived [2-513]. Ledford’s refusal to pay before inspection was valid under these circumstances. 3. Revocation of Acceptance (McCullough v. Bill Swad Chrysler-Plymouth)   Issue: McCullough sought to revoke acceptance of a defective vehicle but continued using it. Analysis: o Revocation is valid if the nonconformity substantially impairs the value and occurs within a reasonable time [2-608]. Continued use, however, can undermine revocation rights, unless unavoidable or necessary. 4. Buyer’s Obligation Post-Rejection (Maxwell Shoe Co. v. Martini Industries)   Issue: Maxwell Shoe rejected defective goods but refinished and sold them. Analysis: o By reselling the goods without proper rejection or instructions from the seller, Maxwell may have accepted the shipment and could owe the seller for the goods [2-603, 2-606]. 5. Farkas Violin Purchase   Issue: Whether Mrs. Farkas accepted the violin by taking possession and paying. Analysis: o Acceptance occurs when a buyer, after inspection or failure to reject, exercises ownership [2-606]. If the sale was “as is,” defects might not void acceptance unless fraud or misrepresentation is proven. Conclusion These cases highlight the balance between buyer and seller obligations under the UCC. They emphasize the importance of contract terms, timely notice, and reasonable actions in remedying disputes related to nonconforming goods or unforeseen difficulties in performance.