Sales and Leases | 130
course of dealing, usage of trade, and the context in which the contract arose. The circumstances or the buyer’s conduct or manifestations may indicate that the buyer reasonably expects strict performance. If so, then the seller probably lacks reasonable grounds to believe a nonconforming tender to be acceptable. On the other hand, the seller may have reasonable grounds if the circumstances indicate the goods would be acceptable, perhaps with a money allowance, or if the seller reasonably believed the goods were conforming. [ See U.C.C. § 2-508, cmt. 2 (1951); 2 Hawkland UCC Series § 2-508:3, Westlaw (database updated June 2021).] Note : If time is of the essence under the contract, and especially if the circumstances back the provision up, then that means the seller must strictly comply with any contractual deadlines. In this case, the seller might not have a reasonable additional time to offer conforming tender. [ See 2 Hawkland UCC Series § 2-508:3, Westlaw (database updated June 2021).] Example : An oil company contracted to deliver a stated quantity of oil to an electric utility. Per the contract, the oil was to contain 0.5 percent or less of sulfur. However, both parties knew that the utility could use oil with sulfur content of up to 1 percent, and indeed, the utility had accepted prior shipments of oil with that percentage of sulfur, with an appropriate price adjustment. Just outside the contractual deadline, the shipping company delivered oil containing 0.92 percent sulfur. In the time between contracting and delivery, the price of oil had dropped substantially. Thus, the utility rejected the shipment, citing the excess sulfur content. Within a few days, the oil company offered a replacement shipment of oil containing no more than 0.5 percent sulfur. Here, a state appellate court held that the seller had a further reasonable time, beyond the time for performance, to substitute conforming tender. [ See T.W. Oil, Inc. v. Cons. Edison Co. of N.Y., Inc. , 443 N.E.2d 932 (N.Y. 1982).] Installment Contracts The perfect-tender rule, discussed above, generally does not apply to so-called installment contracts, at least when it comes to defects in the goods themselves. In this context, something closer to the concept of substantial performance applies. Even in installment contracts, the perfect-tender rule applies as to tender of documents. [ See U.C.C. § 2-612 (1951).]
Made with FlippingBook - Online Brochure Maker