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Practical Application: Buyer & Seller Remedies Under the Uniform Commercial Code

Instructor: Scott Tuning

Scott has been a faculty member in higher education for over 10 years. He holds an MBA in Management, an MA in counseling, and an M.Div. in Academic Biblical Studies.

The Uniform Commercial Code is the foundation of contract law. In these two scenarios, you'll identify the identify all possible remedies available to a party who believes they have been wronged. You'll then make a recommendation about the best remedy to pursue.

The Uniform Commercial Code

In the United States and many other countries, contracts are the foundation upon which nearly all business is done. Contracts facilitate the exchange of reliable promises and allow people and organizations to conduct their business in good faith, knowing that promises made must (generally) be kept.

The Uniform Commercial Code (UCC) outlines the legal parameters of contracts, and it provides specific remedies when a party to a contract believes that they have been harmed by a breach of contract.

Let's look at two scenarios relating to the UCC. In the first scenario, you will want to identify the possible recourse(s) for a buyer who believes they have been wronged. You can review buyer's remedies by visiting the lesson entitled Buyer's Remedies Under the Uniform Commercial Code.

In the second scenarios, you'll do the same for a seller in the same position.

You can review buyer's remedies by visiting the lesson entitled Seller's Remedies Under the Uniform Commercial Code.

For both scenarios, put yourself in the position of a business consultant giving expert advice. You'll want to lay out all the options for your client, but you'll also need to make a recommendation about which option or options seem most appropriate.

Scenario 1: Buyer Claims Breach

Top Notch Pools is a small, family-owned business that specializes in the installation of in-ground residential pools. The company has great customer reviews, is a member of the local Better Business Bureau, and is active in the local chamber of commerce. In an effort to obtain the best value, Top Notch Pools occasional changes their suppliers for the materials required to complete their projects. They recently changed their supplier for concrete.

About six months after installation, a customer found their basement full of water. The pool, however, was less than half full. It didn't take a rocket scientist to see that the pool had leaked into the ground and ultimately into the basement. Top Notch Pools drained the pool and saw that the concrete in the pool was crumbling. It was clear that the concrete was substandard and did not meet the specifications stamped on each bag.

The company immediately contacted the supplier to address the issue.

Questions to Consider

  • What does Top Notch Pools have to do in order to invoke buyer's remedies under the UCC?
  • What are the major remedies available to Top Notch Pools?
  • Is one remedy better than another? If so, which?
  • After reviewing the available remedies, which remedy would you recommend as the best option for Top Notch Pools?
  • What is your reasoning for your choice?

Possible Answers and Solutions

There are three potential reasons that a buyer like Top Notch Pools could invoke UCC remedies, but only one that applies. The goods were delivered, and the goods were used by the buyer. However, the goods were inconsistent with the terms of the contract. Consequently, Top Notch revokes its acceptance of the substandard goods.

As you prepare your recommendation to your client, you can easily rule out the use of the price adjustment remedy. Since the concrete is already in the ground, and all pools built with the substandard concrete are already installed, it will not benefit Top Notch Pools to demand a price reduction to compensate for the substandard goods. Similarly, it will not help much if higher quality concrete is substituted for the deficient product.

This leaves only one option to recommend to Top Notch Pools. The company should cancel the contract altogether, demand a full refund, and require the seller to pay damages associated with the failure of the substandard concrete.

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