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ACCT Notes Chapter 24 and 25

by: Kendall Davis

ACCT Notes Chapter 24 and 25 ACCT 324 - 002

Kendall Davis
GPA 3.8

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From class on 9/19
Survey of Commercial Law
Julius David Johnson (P)
Class Notes
25 ?




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This 2 page Class Notes was uploaded by Kendall Davis on Monday September 19, 2016. The Class Notes belongs to ACCT 324 - 002 at University of South Carolina taught by Julius David Johnson (P) in Fall 2016. Since its upload, it has received 5 views. For similar materials see Survey of Commercial Law in Accounting at University of South Carolina.


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Date Created: 09/19/16
Chapter 24: Remedies for Breach of Sales and Lease Contracts­September 19 Breach by the Buyer  Breach by the buyer­ usually failure to pay  When buyer is in breach, seller can: o Cancel contract o Withhold delivery o Sell or otherwise dispose of goods  If you sell the goods, and you do not get the contract price, you can sue for the difference o Sue to recover purchase price, lease payments due, or some other measure of  damages that give seller/lessor “benefit of bargain” Liquidated Damages  Liquidated damages: damages specified in contract before breach occurs o Usually specified in the contract o Court will only enforce the clause if it is “reasonable” and “non­punitive” o Has to be in writing  If not in writing, the UCC allows non­breaching seller to claim against breaching buyer  20% of the purchase price OR $500, whichever is less Breach by the Seller  Fails to deliver goods or fails to follow perfect tender rule  Remedies Available to Buyers: o Cancel contract o Obtain “cover” (Substitute goods)  Go out in the market and find replacement goods  In order to obtain legal “cover”:  Demonstrate “good faith”  Pay a reasonable price (or sue for the difference)  Act without “unreasonable delay”  Purchase goods that are reasonable substitutes o Sue to recover damages o Recover goods o Obtain specific performance by court  When the subject is “unique” or land o Reject nonconforming goods o Revoke acceptance of nonconforming goods o Accept nonconforming goods and seek damages  Modification/Limitations to Remedies otherwise provided by UCC o Parties to sales and lease contracts are allowed to modify/limit remedies o Courts uphold modifications/limitations to remedies, unless remedies fail in their  “essential purpose” Chapter 25­Warranties  Warranty: sellers promise regarding certain characteristics of good(s) sold o Express Warranty: explicitly stated in contract  Commercials, advertisements and brochures  Description of good’s physical nature or its use   May be found in advertisements or brochures  May be material term of contract  Salesperson’s oral promise concerning good can give rise to express  warranty  Buyer’s reliance on seller’s representations generally means those  representations become express warranties, and thus part of contract o Implied warranty: automatically (by operation of law) applied to contract o Puffery: salesperson’s mere statement of opinion, rather than representation of  facts  Generally does not create express warranty  Ex: the best watch on the market 


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