Worksheet on 2-609 through 2-611
Prof. Bill Long 4/13/05
I only give two problems here, but I think they cover the major issues in these sections.
1. B, a clothing manufacturer, contracts to buy a quantity of linen from S, a material mill. The written contract specifies a price of $5 per yard, payable 30 days after B receives delivery. Delivery is scheduled for March 15.
a. On February 10, S sends a letter saying that she must "rescind the agreement, but I hope we can work together in the future." Is this a repudiation? If it is, what rights does B have upon receipt of the letter?
b. Instead of the contents of the letter given in a., S's letter says "I will deliver but am running behind schedule a bit. Delivery isn't going to happen until the end of April at the earliest. Other than that, everything is fine." How would you analyze this situation under 2-610? What if S's letter had not said that it would be delayed in delivery until the end of April but only until March 17. Would that change your analysis?
c. Let's assume that delivery will be on time, but the letter sent to B by S on March 1 says that "Delivery will be on time, although I won't be able to deliver for less than $5.25 per foot. No response from B is requested. May B see this as a repudiation and act accordingly?
d. Let's say that S's letter says that delivery will be on time and that the new price is $5.25 per foot but then the letter goes on to say: "I am adding this additional $.25 per foot in conformity with the contract in light of increased costs of material to me and the usage of trade in our industry of making adjustments in such circumstances. What is the result now?
2. B, who owns a toy store, enters into a contract with S, a toy manufacturer, to purchase a large number of dolls. Usually S doesn't operate on credit, but B asks him to make a special concession this time around and S relents. Their contract calls for payment within 60 days of delivery.
a. Before shipment, however, S, who rued the contract the moment he signed it, decides to write B requesting that she pay for the dolls upon receipt instead. B does not respond to the request. S waits 30 days and then repudiates the contract. Was S within his rights to do so?
b. Let us say that after extending credit to B, S goes to a toy manufacturer convention and hears reports from two people that B was in trouble financially and had not been paying her bills on time. Can S demand adequate assurances?
c. Let us assume, in fact, that S normally extends credit. After the contract for dolls was signed B was late in paying off a previous contract with S for yo-yos. S gets worried that B might not be good for the dolls contract. B is claiming, actually, that the reason she is not paying for the yo-yos is that they were defective. Is S within its rights in demanding adequate assurances?
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