UCC Breach of Contract Remedies for Sellers and Buyers: Recent Cases, Best Practices for Mitigating Damages

Description

Article 2 of the UCC governs the purchase and sale of goods such as equipment, tools, and products and shipments between merchants and other parties. Contracts subject to the UCC must comply with its provisions to be enforceable. The UCC specifies remedies for breach of contract that differ from the remedies for common law contracts. In mixed-sales transactions, or those involving goods and services, courts frequently apply a predominant purpose test. Article 2 applies if the transaction is primarily for the sale of goods but not if the transaction is primarily for the provision of services.

The UCC rules outlining contract formation are not as strict as common law. Article 2 permits the enforceability of a clause prohibiting subsequent oral modification of the contract, potential waiver of the clause, and the ability to withdraw any waiver upon reasonable notification. Unconscionability is also recognized under Article 2. In general, privity of contract is required to bring a successful breach of contract action, but in the context of warranties, traditional notions of privity are sometimes relaxed. Article 2 also provides for when title passes and the element of good faith in a transaction.

If either party breaches the contract, the aggrieved party has several options. A seller can withhold delivery of goods, cancel, and pursue resale and recovery of losses. Sellers are also entitled to incidental damages but not consequential damages. A buyer may recover payments made to the seller or make reasonable, good faith purchases of substitute goods. Buyers' damages may include both incidental and consequential damages and potentially specific performance in the case of unique goods.

Listen as our distinguished panel provides business attorneys with an analysis of Article 2's important sections, breach of contract issues and recent cases, remedies for aggrieved parties, and best practices for minimizing risks and damages.