Sales and Leases | 125
reasonable appearance was that the dealer and the friend colluded to defraud the state out of tax and registration-fee revenue and to deceive the floor-plan lender as to its collateral. Accordingly, the friend did not buy the car in good faith. [ See 1 Anderson U.C.C. § 1-201:95 (3d. ed.), Westlaw (database updated June 2021) (citing Bank of Ill. v. Dye , 517 N.E.2d 38 (Ill. App. Ct. 1987).] f. Manner in Which a Buyer in the Ordinary Course of Business Acquires Goods A buyer in the ordinary course may buy the goods for cash, in exchange for other property, or on secured or unsecured credit. In addition, a buyer in the ordinary course may acquire goods or documents of title under a preexisting sales contract. [U.C.C. § 1-201(b)(9) (2001).] g. The Shelter Rule and Buyers in the Ordinary Course If a buyer in the ordinary course acquires an entruster’s rights in the goods from a merchant, the buyer may then transfer those rights to a third party. The third party thus acquires the same rights in the goods that the buyer had, regardless of whether the third party would herself qualify as a buyer in the ordinary course. In that sense, the third party is said to shelter in the buyer’s rights. [ See 2 Hawkland UCC Series § 2-403:4, Westlaw (database updated June 2021).] V. Performance This outline has already discussed many provisions of Article 2 dealing with the nature and scope of the parties’ contractual performance obligations. Part 5 of Article 2, though, contains detailed provisions that speak directly to performance. As this section of the outline deals with the parties’ performance, it will focus heavily on Part 5. Heavily, but not exclusively, because provisions speaking to performance are scattered throughout Article 2. For instance, § 2-601, which appears in Part 6, sets forth the perfect-tender rule that governs a seller’s performance. The Perfect-Tender Rule In general, for the seller to avoid liability for breach of contract, both the goods and their tender of delivery must conform to the contract in every respect . This principle is aptly called the perfect-tender rule, for it requires the seller to perform essentially perfectly, or else be in breach. Different rules apply in installment contracts, discussed elsewhere in this outline, and Article 2 may afford the seller the opportunity to avoid liability for breach by curing a defect. Should the goods or the tender of delivery fail to conform, the buyer has specified remedies. Tender of delivery incorporates notions of timeliness. Thus, a late delivery runs afoul of the perfect-tender rule. [ See U.C.C. § 2-601 (1951); Ak. Pac. Trading Co. v. Eagon Forest Prods., Inc. , 933 P.2d 417 (Wa. Ct. App. 1997).]
Made with FlippingBook - Online Brochure Maker