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CANADIAN INDUSTRY ONLINE - JUNE 2013
A
RT ICLE 2 OF
the Uniform
Commercial Code (UCC) regu-
lates business dealings between con-
struction material suppliers and mate-
rial purchasers in the United States.
This is the last article of a three part
series on various Article 2 related top-
ics. The first article discussed offers
and acceptance and the second article
discussed warranties. This last article
will discuss Buyer’s and Seller’s rem-
edies.
BUYER’S REMEDIES AGAINST THE
SELLER – UCC SECTIONS 2-711-
2-715
What can a purchaser of goods do
when there has been a breach by the
seller? What if the goods are not deliv-
ered in a timely fashion? What if the
goods do not conform to that which is
ordered? There are a number of differ-
ent sections within the UCC that deal
with the buyer’s remedies.
BUYER’S REMEDIES IN GENERAL
When the seller fails to make a
delivery, repudiates the agreement in
its entirety, or if the buyer properly
rejects the goods, then the buyer may
cancel the order and recover the mon-
ey that has been paid to the seller. The
buyer has an obligation to “cover” for
the goods in order to try and reduce
its damages. “Cover” means that after
a breach by the seller, the buyer must
make a good faith effort to purchase
substitute goods. Once the buyer has
covered, the buyer can then recover
the difference between the cost of the
cover and the initial contract price as
damages from the seller.
The buyer may also sue for what
the law calls incidental and consequen-
tial damages. Incidental and conse-
quential damages include damages
which arise from the seller’s breach;
expenses such as:
•
Those reasonably incurred in in-
spection of the goods;
•
Those reasonably incurred in receipt
of the goods;
•
Those reasonably incurred in trans-
portation, care and custody of the
goods;
•
Any commercial and reasonable
charges, expenses or commissions;
and
•
Any other reasonable expense inci-
dent to the delay or other breach.
The law then tells us that recover-
able consequential damages include
losses resulting from particular re-
quirements of the buyer that the seller
had reason to know of at the time of
contract and which could not be pre-
vented by cover. This could include
the imposition of liquidated damages
from the owner.
BUYER’S REMEDIES AFTER
ACCEPTANCE OF DEFECTIVE GOODS
What happens when a contractor
accepts goods and retains them after
delivery? If the buyer has accepted
goods then he/she is precluded from
rejecting them unless the buyer objects
within a reasonable time after discov-
ering a problem. If the buyer accepts
the goods, but then discovers defects
and notifies the seller, the buyer will
then retain the right to recover from
the seller any losses resulting in the
ordinary course of business from the
seller’s breach including those types of
items o
ove.
CONSTRUCTION LAW
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