Fact Analysis
Marta operated a successful fishing shop. (Marta is a merchant under UCC.) She needed a new bait cooler (sale of goods), which had to be in place by May 1 for the first day of fishing season. (condition)
On February 1, Marta entered into a valid written contract (no formation issue needs to be discussed) with Don to purchase a Bait Mate cooler (quantity and Subject matter) for $5,500 (price) to be delivered no later than April 15. (time of performance)
On February 15, Don called Marta and told her that he was having trouble procuring a Bait Mate cooler. Marta reminded Don that meeting the April 15 deadline was imperative. “I’ll see what’s possible,” Don responded in a somewhat doubtful tone. (This paragraph raises anticipatory repudiation issue which needs to be discussed in full.)
Concerned that Don might be unable to perform under the contract, Marta immediately sent him the following fax: “I am worried that you will not deliver a Bait Mate cooler by April 15. Please provide your supplier’s guarantee that the unit will be available by our contract deadline. I want to have plenty of time to set it up.” Believing that Marta’s worries were overblown and not wanting to reveal his supplier’s identity, Don did not respond to her fax. (This paragraph raises anticipatory repudiation issue which needs to be discussed in full.)
When Don attempted to deliver a Bait Mate cooler on April 16, Marta refused delivery. (This could be a material breach to the contract condition as the time was of essence.) Marta had purchased a Bait Mate cooler from another seller on April 14, paying $7,500, which included a $2,000 premium for one-day delivery by April 15. (This raises contract remedies issues.)
Have Marta and/or Don breached the contract? (Needs to discuss Contract law) If so, what damages might be recovered, if any, by each of them? (Needs to discuss Remedies law) Discuss.
SAMPLE ANSWER
Governing Law
The Uniform Commercial Code (UCC) governs contracts for the sale of goods.
Anticipatory repudiation
An anticipatory repudiation is an unequivocal expression by a party, occurring before the time for performance is due, that she will not perform under the contract. Where the conduct of a party is not unequivocal enough to rise to the level of an anticipatory repudiation, but does cause reasonable grounds for insecurity about their forthcoming performance, the insecure party can demand adequate assurances of due performance. This must be done in writing and he may suspend his own performance until receiving adequate assurances.
Material Breach under UCC-Perfect Tender Rule
The perfect tender rule applies to contracts for a single delivery and provides that if the goods tendered fail to conform to the contract in any respect, the buyer can- (1) reject the whole within a reasonable time; or (2) accept the whole; or (3) accept any commercial unit and reject the rest.
Contract Remedies
UCC Expectation damages
This compensates a plaintiff for the value of the benefit plaintiff expected to receive from the contract. Expectation damages put the plaintiff in the position he would have been in if the contract was performed. If the buyer covered damages are the difference between the contract price and the cover price.