Full access allows:
- Solve all tests online without limits;
- Remove all advertisements on website;
- Adding questions to favorite list;
- Save learning progress;
- Save results of practice exams;
- Watching all wrong answered questions.
25. If the bank sues the computer company for failure to perform its computer contract, the court will probably decide the case in favor of
After making the contract with the bank, the computer company discovered that the new technology it intended to use was unreliable and that no computer manufacturer could yet build a reliable computer using that technology. The computer company thereupon notified the bank that it was impossible for the computer company or anyone else to build the contracted-for computer «in the present state of the art.»
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.»
Comments (0)
There are no comments at the moment. If you found an error or think question is incorrect, tell everyone about it
Only signed in users can write comments
Signin
Under Uniform Commercial Code (UCC) § 2-615(a), unless otherwise agreed, delay or non-delivery by a seller is not a breach of a contract of sale where performance has been made impracticable by the occurrence of an event the non-occurrence of which was a basic assumption of the contract. This test is designed to allow courts to allocate risk between the parties, based on what the court thinks parties would have done if they had planned for the contingency that is currently making performance impracticable. Excuse on grounds of impracticability will not be available, however, if the event in question was sufficiently foreshadowed so as to fairly be viewed as part of the risks that the seller assumed when entering into the contract.
D is correct. At the time that it undertook to sell the mainframe computer, the computer company was aware that the new technology it was planning to utilize was not yet perfected. Therefore, the fact that this technology turned out to be unreliable is a risk that the computer company should bear, and therefore the computer company's failure to perform the contract should not be excused.
A is incorrect. Impracticability will excuse performance when an unforeseen risk makes completion overly costly or time-consuming, not whether performance is literally impossible. However, an impracticability excuse will not discharge performance where the party seeking to be excused could have foreseen the possibility of the risk. The fact that the computer company knew the technology was not yet perfected will prevent excuse because it entered the contract knowing unreliability was a risk.
B is incorrect. This is an incorrect statement of the law. A duty only to undertake «its best efforts to achieve the result contracted for» would have had to be expressly included in the contract. If design specifications are drawn up by the vendor, rather than the purchaser, and the vendor is not able to produce up to that specification, the vendor is almost always held to have implicitly borne the risk of not being able to make the necessary design breakthroughs anticipated in the contract.
C is incorrect. Under the UCC, the legal doctrine of impracticability does apply to both merchants as well as non-merchants selling goods.