Chapter 27 REMEDIES FOR BREACH OF SALES CONTRACTS

Statute of Limitations üThe 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. 2

Remedies of the Seller ü 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. ü The seller may also recover reasonable incidental damages. ü In secured transactions, the buyer may have pledged some other property to the seller in case of default by the buyer. 3

Remedies of the Seller 4

Seller’s Remedies under Article 2 *Misrepresentation of insolvency (3 mos/10 day rules) 5

Remedies of the Buyer üRemedies of the buyer may include: § (1) rejection of nonconforming goods; § (2) revocation of acceptance; § (3) an action for damages for non-delivery -- both incidental and consequential damages; 6

Remedies of the Buyer (cont’d) § (4) an action for breach of warranty; § (5) cancellation of the sales contract; § (6) the right to resell the goods; § (7) the right to bring an action for conversion, recovery of goods, or specific performance; and § (8) the right to sue for damages and cancel if the seller has been negligent or fraudulent. 7

Remedies of the Buyer 8

Buyer’s Remedies Under Article 2 9

Other Types of Damages üOccurs when the parties agree on remedies through a contractual provision: § Liquidated Damages. § Exclusion of Damages. § Limitations on statutory remedies, or § Waiver of defenses. 10

Remedies Under CISG üUnder 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. üUnder 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. 11