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b. Seller’s Right to Cancel the Contract Generally, if the buyer breaches the contract, the seller may cancel the contract. As discussed above, to cancel the contract means to end it on account of the other party’s breach. Once the contract is cancelled, neither party is under a duty to fulfill its remaining contractual obligations. However, the seller retains her remedies for the buyer’s nonperformance. Here again, the UCC does not require the seller to give notice of cancellation, though it is generally beneficial for the seller to do so. In any communication regarding cancellation, the seller should make clear that she is not waiving her other remedies. Of course, in the case of an installment contract, § 2-612 controls the seller’s ability to cancel. [U.C.C. § 2-703, cmt. 2 (1951); 2 Hawkland UCC Series § 2-703:3, Westlaw (database updated June 2021); Installment Contracts, supra .] 2. Seller’s Right to Identify Conforming Goods Certain of the seller’s remedies require that the goods be identified to the contract, including the right to resell goods and an action for the price. Sometimes, though, the buyer commits a breach before the goods have been identified to the contract. Here, the seller may identify finished goods not previously identified to the contract if (1) the goods conform to the contract and (2) the goods are in the seller’s possession or control when she learns of the breach. The seller may exercise this right to identify goods regardless of whether or to what extent the goods are resaleable. [U.C.C. § 2-704(1)(a) (1951); 2 Hawkland UCC Series § 2- 704:1, Westlaw (database updated June 2021).] 3. Seller’s Options Regarding Unfinished Goods Exercising reasonable commercial judgment, and to assure both avoidance of loss and the seller’s realization of the benefit of her bargain, the seller may take various steps regarding unfinished goods under § 2-704 in the event of the buyer’s breach . For one, the seller may finish manufacturing the goods and then fully identify them to the contract, enabling the seller to invoke remedies that depend on identification. Alternatively, the seller may stop manufacturing the goods and resell them for their scrap or salvage value. Or, the seller may elect to do neither and, instead, take any other reasonable action. Relatedly, if goods were demonstrably intended for the particular contract, the seller may resell them under § 2-706 even if they are unfinished. The seller need not necessarily identify the unfinished goods, but she may instead measure damages under § 2-708 (damages for nonacceptance or repudiation). [U.C.C. § 2-704(1)(b), (2) (1951); 2 Hawkland UCC Series § 2-704:2, Westlaw (database updated June 2021).] a. Requirement That Seller’s Actions Regarding Unfinished Goods Be Commercially Reasonable As mentioned, § 2-704 affords the seller various options regarding unfinished goods.
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