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10. If the computer company sues the bank for breach of contract, which of the following facts, if proved, will best support a recovery by the computer company?
Assume that the computer company tendered the computer to the bank on August 15, and that the bank rejected it because of delay.
A computer company contracted in writing with a bank to sell and deliver to the bank a mainframe computer using a new type of magnetic memory, then under development but not perfected by the computer company, at a price substantially lower than that of a similar computer using current technology. The contract's delivery term was «F.O.B. the bank, on or before July 31.»
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The UCC defines «agreement» as including the parties' express terms as well as those that are implied by applicable trade usage. Under the UCC, trade usage is any practice regularly observed in a place, vocation or trade as to justify an expectation that it will be observed with respect to the transaction in question. The UCC allows trade usage (i.e., industry standard) to inform the interpretation of a contract.
Impracticability means (i) There was an occurrence of an event or condition, the nonoccurrence of which was a basic assumption of the contract; (ii) the occurrence must make performance difficult or impossible; (iii) the event was unforeseeable by the parties.
D is correct. Here, even though the written contract between the computer company and the bank called for delivery «on or before July 31,» evidence of trade usage that the computer company seeks to introduce suggests that buyers should allow for up to 30-days' leeway beyond that date. If the contract were interpreted in light of this usage, then the August 15 delivery would not be a breach of the contract and the bank would be in breach for refusing to take delivery on that date. As such, because this answer provides an interpretation that accounts for trade industry standard, it is the computer company's best support for recovery against the bank.
A is incorrect. As discussed above, under the perfect tender rule, even an immaterial delay in delivery would entitle the bank to reject delivery of the computer. The perfect tender rule requires perfect conformity in terms of goods and tender of delivery. Nonconformance with date of delivery is a valid ground for rejection of the delivery. This answer choice would not support the computer company's recovery against the bank.
B is incorrect. Here, the computer company's belief that because the bank was getting a «super deal» for its money, it would not reject because of the late tender of delivery, would not support a recovery by the computer company. This belief would not excuse the bank because the contract term, if literally construed, required delivery «on or before July 31.»
C is incorrect. As previously mentioned, impracticability involves the occurrence of an event or condition, the nonoccurrence of which was a basic assumption of the contract. The occurrence must make performance difficult or impossible and it must have been unforeseeable by the parties. Because the facts do not suggest that ground shipment requiring truck drivers is a basic assumption on which the contract was made, the strike does not rise to the level of impracticability. Since there is no impracticability in this case, there is no excuse for delay in the tender.