Buyer-Lessee Obligations

Buyer-Lessee Obligations

Furnish facilities reasonably suited for receipt of the goods.

Make payment at the time and place the Buyer receives the goods.

§ Credit has to be prearranged.

•    Credit period begins on the date of shipment.

§ Pay with cash, credit card, and check.

•     But if Seller asks for cash, Seller has to give Buyer time to get cash.

Exceptions to the Perfect Tender Rule

Exceptions to the Perfect Tender Rule

ü Agreement of the Parties.

ü Cure.

ü Substitution of Carriers.

ü Installment contracts.

ü Commercial Impracticability.

ü Destruction of Identified goods.

Partial Performance.                   

The Perfect Tender Rule

The Perfect Tender Rule

If goods, or tender of delivery, fail in any respect to conform to the contract, the Buyer has the right to:

§  Accept the goods;

§  Reject the entire shipment; or

§  Accept part and reject part.

Place of Delivery—Carriers

Place of Delivery—Carriers

Shipment contracts. Seller has a duty to:

§ Put goods into hands of independent carrier.

§ Make contract for transportation.

§ Obtain and promptly deliver or tender to the Buyer any documents necessary.

§ Promptly notify Buyer that shipment has been made.

Destination contracts. Seller has duty to:

§ Tender the goods at a reasonable hour and hold conforming goods at the Buyer’s disposal for a reasonable period of time.

Place of Delivery--Non-Carriers

Place of Delivery--Non-Carriers

Buyer picks up at Seller’s place of business or, if Buyer has no place of business, then Buyer’s residence.

If both parties know the goods are elsewhere (at a warehouse), then place of delivery is where the goods are.

Seller-Lessor Obligations

Seller-Lessor Obligations

Seller has a duty to “tender” delivery of “conforming goods.”

Tender means “delivery” to agreed place:

§ With reasonable notice.

§ At a reasonable hour.

§ In a reasonable manner.

§ Exactly, unless otherwise agreed.

Good Faith Requirement

Good Faith Requirement

Good Faith is the foundation of every UCC commercial contract.

Good faith means honesty in fact.

For a merchant, it means honesty in fact and observance of reasonable commercial standards of fair dealing in the trade. Merchants are held to a higher standard of care than non-merchants.

Performance of Sales and Lease Contracts

Performance of Sales and Lease Contracts

Introduction

Seller must transfer and deliver conforming goods.

Buyer must accept and pay for conforming goods.

In the absence of an agreement between Seller and Buyer, UCC Article 2 controls as set out below.

Bulk Transfers

Bulk Transfers

Covered by Article 6 of the Uniform.

Commercial Code.

A bulk transfer is defined as:

§ Major part of seller’s inventory.

§ Not made in the usual course of business.

UCC 6 is becoming obsolete and has been repealed by many states.

Insurable Interest

Insurable Interest

Buyer has an insurable interest in goods that have been identified.

Seller has an insurable interest in goods as long as they retain title or a security interest.

Both buyers and sellers can have an insurable interest at the same time.