Cases Concerning Fundamental Breach And Non Delivery

Lost primary profits – Lost profits the π would have made in the resale of the faulty goods

-The Issue: were all the elements of a contract present to make the contract enforceable?

A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing” UCC § 2-201. Other terms including price, delivery date and place should be included in the contract. The contract must be signed by both parties in the event in suing for damages.

According to the UCC §§ 2-609(2) and 2-609(4) Between merchants the reasonableness of grounds for insecurity and the adequacy of any assurance offered

Within a contract consideration must be made to the creation of the contract. The terms of the contract define the obligations of the parties. It is by analysing the terms that you can find out what has to be done to discharge those obligations. For example in Cehave NV v Bremer Handelsgesellschaft mbH [1976] QB 44; [1975] 3 All ER 739, the buyer Cehave did not want to accept the delivered goods because they were not in ‘good condition’ although they were in satisfactory condition to perform their purpose which was to be used as animal feed.

 - the seller is to follow through with what is outlined in a contract. Buyers are required to pay for and accept items as any contract states.

Ethically the company will not have shipped out a known defective product but consumer moral will be lowered due to not receiving everything that they have paid for. The company operated morally but did not give the consumer what they asked for.

It is agreed by many, if not all, that the compensatory principle is the ruling principle in breach of contract

This means that under the company’s current policy, revenue is recognized too early, before delivery, while actual payment is not received until 30 days after customer acceptance or until the 90-day warranty period has ended. Furthermore, the 90 day warranty provision creates an uncertainty in the collectibility of sales proceeds.

The rule that courts will imply a term that was overlooked when the contract was being made, as it was so obvious

The CRA now incorporates a three-tier system to resolve any problems between the consumer and the trader. The degree and nature of the remedies available will depend on the amount of time the consumer has owned the product or on the type of service provided. The first step is when the goods are not satisfactory, in which consumers are entitled to reject them, as provided under Section 22. A full refund can be claimed and must be given without undue delay and this has been covered under Section 20. The second step occurs when the consumer has either lost the chance or not chosen to reject the goods. Under Section 23, the consumer is entitled to claim a repair or replacement of the goods. The trader must repair or

able to conduct business. We may be facing another three weeks to three months of delay

SAB 104 lays down the following conditions that should all be fulfilled to enable revenue recognition in cases on non-delivery of goods: (1) The risks of ownership need to have been transferred to the purchasers, (2) The customers have made commitments, preferably written, to procure the goods, (3) The purchasers call for the ‘bill and hold’ transactions, (4) The buyers should be

The Sales of Goods Act 1893 provides the definition of ‘condition’ and ‘warranty’. During the period between 1893 to 1962 both ‘condition’ and ‘warranty’ was generally accepted that they were the only two types of terms which assist in ‘identifying the breaches which entitled the injured party to terminate the contract. In the turning point of 1962, a new type of term-intermediate term brought about a whole new page into the Law of Contract. Hong Kong Fir Shipping Co. Ltd vs Kawasaki Kisen Kaisha Ltd is the key case which owns the credit for this discovery. In the case, the ship owner hired out the Hong Kong fir, ‘being in every way fitted for ordinary cargo service’. The ship was delivered on 13 February 1957, sailing

Therefore, the period between contract signing and delivery is equal to 40 days. So, we adjusted revenues to remove this 40 day early recognition. This resulted in a decreased, but more conservative, amount of revenue recognized per fiscal year. (See appendix)