Sales and Leases | 220
Example: A retailer ordered widgets from a manufacturer. The contract price was $15,000. The retailer prepaid $5,000 upon entering the contract, with the remainder due upon acceptance of the widgets. The manufacturer completed and properly tendered the widgets, and the widgets conformed to the contract. Even so, the retailer wrongfully rejected the widgets, breaching the contract. In good faith and in a commercially reasonable manner, the manufacturer resold the widgets for $10,000, incurring $500 in resale expenses and saving no costs due to the breach. The manufacturer’s damages are $1,000, consisting of: $15,000 (contract price) - $10,000 (resale price) + $500 (resale expenses) - $4,500 (retailer’s restitution claim for $5,000 prepayment minus $500 statutory penalty under § 2-718(2)(b)) - $0 saved due to the breach. [ See 2 Hawkland UCC Series § 2-706:1, Westlaw (database updated June 2021).] b. Implementing the Resale Except as otherwise provided in § 2-706, and unless otherwise agreed, resale may be by public sale or private sale. The seller may implement the resale by one or more contracts for sale, or the seller may even identify the goods to a separate, existing contract. The seller may resell the goods as a unit, in parcels, at any place, and in any manner. However, each aspect of the sale must be commercially reasonable, including the time, place, terms, manner, and method of sale. The seller must reasonably identify that the resale refers to the breached contract. [U.C.C. § 2-706(2) (1951).] Resale of Future Goods Resale does not require that, at the time of breach, the goods exist or be identified to the contract. [U.C.C. § 2-706(2) (1951).] Public Sale v. Private Sale For purposes of resale, a public sale is one by auction. Any other sale is a private sale. Different rules apply to each type of resale. [2 Hawkland UCC Series § 2-706:2, Westlaw (database updated June 2021).] Rules for Resale by Private Sale If the resale is by private sale, the seller must afford the buyer reasonable notice of intent to resell. The seller need not give notice of the time and place of resale, but notice must come within a reasonable time. The time frame will depend on the matter’s urgency. [U.C.C. § 2-706(3), cmt. 8 (1951).]
Made with FlippingBook - Online Brochure Maker