University:
Indiana University Bloomington
Course:
Financial and Managerial Accounting: Information for Decisions - John J. Wild
Academic year:

2024
Views:

41

Pages:

2
Author:

bratrochanter

Summary of Appendix B: UCC Article 2 - Buyer and Seller Remedies in Breach Scenarios Buyer's Rights and Actions in Breach 1. Revocation of Acceptance (§ 2–608): o A buyer may revoke acceptance of goods if:  Non-conformity substantially impairs the value.  The non-conformity was initially assumed curable but remains uncured.  Acceptance was induced by seller assurances or difficulty in discovering defects. o Revocation must occur promptly with seller notification, and the buyer then holds the goods as if rejected. 2. Right to Assurance of Performance (§ 2–609): o If reasonable grounds arise to doubt the other party's performance, a party may demand written assurance. o Failure to provide assurance within 30 days constitutes repudiation. 3. Anticipatory Repudiation (§ 2–610): o If a party repudiates before performance is due, the non-repudiating party may:  Wait for performance.  Seek remedies for breach.  Suspend their own performance. 4. Excuses and Substitutions (§ 2–615, § 2–616): o A seller may delay or avoid performance if unforeseen contingencies make fulfillment impracticable or due to government regulations. o The buyer can modify or terminate the contract based on material delays. Seller's Rights and Actions in Breach 1. Seller's Remedies for Breach (§ 2–703): o If the buyer wrongfully rejects goods, fails payment, or repudiates, the seller may:  Withhold delivery.  Stop delivery in transit.  Resell goods and recover damages.  Recover damages for non-acceptance or, in some cases, recover the full price.  Cancel the contract. 2. Resale of Goods (§ 2–706): The seller may resell goods in good faith and a commercially reasonable manner, recovering the difference between the resale price and the contract price plus incidental damages. 3. Damages for Non-Acceptance (§ 2–708): o The seller may claim damages for:  The difference between market price and unpaid contract price.  Lost profits if standard damages are insufficient to make the seller whole. 4. Stopping Delivery (§ 2–705): o The seller can stop goods in transit if the buyer is insolvent or repudiates the contract. 5. Identification and Salvage of Goods (§ 2–704): o The seller may identify goods intended for the breached contract or salvage unfinished goods in a reasonable manner. o Key Rules for Remedies 1. Commercial Reasonableness: o Actions like resale or substitution must adhere to standards of good faith and reasonableness. 2. Notice and Timing: o Buyers must notify sellers of revocation, breaches, or rejections promptly. o Sellers must notify buyers of any delays, reallocations, or intentions to resell goods. 3. Limitations and Waivers: o Buyers cannot rely on unstated defects when rejecting goods unless such defects could have been seasonably cured by the seller.