1. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning Chapter 27 Remedies for Breach of Sales Contracts Twomey Jennings Anderson’s Business Law and the Legal Environment, Comprehensive 20e Anderson’s Business Law and the Legal Environment, Standard 20e Business Law: Principles for Today’s Commercial Environment 2e

2. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 2 Statute of Limitations The law provides a number of remedies for the breach of a sales contract. –Remedies based on UCC theories are subject to a four-year statute of limitations. – If the remedy sought is based on a non- UCC theory, a tort or contract statute of limitations established by state statute will apply.

3. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 3 Remedies of the seller may include: –(1) a lien on the goods until the seller is paid, –(2) the right to resell the goods, –(3) the right to cancel the sales contract, and –(4) the right to bring an action for damages (including lost profits) or, in some cases, for the full purchase price. Remedies of the Seller

4. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 4 The seller may also recover reasonable incidental damages. In secured transactions, the buyer may have pledged some other property to the seller in case of default by the buyer. Remedies of the Seller

5. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 5 Remedies of the Seller

6. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 6 *Misrepresentation of insolvency (3 mos/10 day rules) Seller’s Remedies under Article 2

7. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 7 Remedies of the buyer may include: –(1) rejection of improper tender; –(2) revocation of acceptance; –(3) an action for damages for non- delivery—for market price; –(4) an action for damages for non- delivery—for cover price. Remedies of the Buyer

8. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 8 Remedies of the Buyer (cont’d) –(5) an action for breach of warranty; –(6) cancellation of the sales contract; –(7) the right to resell the goods; –(8) the right to bring an action for conversion, recovery of goods, or specific performance; and –(9) the right to sue for damages and cancel if the seller has been negligent or fraudulent.

9. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 9 Remedies of the Buyer

10. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 10 Buyer’s Remedies Under Article 2

11. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 11 Occurs when the parties agree on remedies through a contractual provision: –Liquidated Damages. –Exclusion of Damages. –Limitations on statutory remedies, or –Waiver of defenses. Other Types of Damages

12. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 12 Remedies Under CISG Under the CISG, if the buyer fails to perform any obligation, the seller may require the buyer to pay the price, take delivery, and perform other obligations under the contract. Under the CISG, a buyer may reject goods only if there is a fundamental breach of contract. –The buyer may reduce the price of nonconforming goods.