Sales and Leases - A Problem-based Approach, 2016a

deal of flexibility. We believe that the seller should have considerable flexibility
and that courts will not often improve things by putting their oar in. The seller's
selfish long-term interest in maintaining a cadre of customers will usually induce
a seller to treat most of its customers as it should.
James J. White and Robert S. Summers, Uniform Commercial Code (6th ed.), § 4-10.
11.7. Section 2-616. UCC § 2-616 lays out the buyer’s options when the seller’s duties have been
excused under § 2-615. Assuming the buyer has received notice that the seller will make an
allocation or be delayed under that section, if the deficiency “substantially impairs the value of
the whole contract” under § 2-612, then the buyer can either terminate the contract or modify it
by agreeing to take the allocation. If the buyer does not respond within a reasonable time not
exceeding 30 days, the seller can assume the contract has lapsed.
Problem 11-2. Buyer law school has agreed to purchase 150 t-shirts with the law school’s logo
for its entering 1-L class. The seller informs the buyer that due to an unanticipated event, its
manufacturing ability has been impaired and it will be able to ship only 100 of the t-shirts. What
are the law school’s options? What if the law school does not respond to the seller?
11.8. Section 2-613. UCC § 2-613 governs the situation where a contract requires delivery of
goods that have been identified when the contract is made, for example, a particular horse or car.
As a prerequisite to the application of this section, the goods must be identified when the
contract is made. In addition to the identification requirement, the goods also must suffer casualty
without the fault of either party, and the risk of loss must not yet have passed to the buyer. If the
elements are satisfied, then the contract is avoided if the loss is total.
Valley Forge Flag Co. v. New York Dowel & Moulding Import Co.
395 N.Y.S.2d 138 (N.Y. City Civ. Ct. 1977)
In a classic contract action, the plaintiff buyer sues the seller for failure to deliver. The
plaintiff then purchased goods on the open market and seeks as damages the difference between
the contract price and the subsequent purchase price. These facts are undisputed. However, the
defendant alleges that the goods were totally destroyed on shipboard during a heavy storm in
transit from Malaysia and therefore it is not liable under the contract. It relies upon section 2-613
of the Uniform Commercial Code which states in pertinent part: "Where the contract requires for
its performance goods identified when the contract is made, and the goods suffer casualty
without fault of either party before the risk of loss passes to the buyer … then (a) if the loss is
total the contract is avoided.”
Assuming the defendant's claim of total loss is true, the remaining question is whether the
goods destroyed were identified when the contract was made.
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