Question

A hardware store ordered 200 cans of wood stain in various shades. the written contract between the store and manufacturer provided that 100 cans of stain would be delivered on april 30, and the remaining 100 cans would be delivered on june 30. payment would be due at the time of each delivery. the first shipment arrived on april 30. sales of the stain were brisk, but 25 customers almost immediately returned their stain, complaining that it was not the color indicated on the can. the store owner called the manufacturer and informed it of the problem. the manufacturer truthfully told the owner that they had had a small problem with their labeling machine and a few cans in the store owner's lot must have been mislabeled before they caught the problem. the manufacturer offered to replace all 100 cans from the original order. the store owner refused the offer and told the manufacturer not to deliver the second lot, because he could no longer trust the manufacturer. the owner was very sensitive to the hardware store's good reputation, which he felt was harmed by this incident. if the manufacturer brings a claim of breach regarding the second shipment which was due on june 30, how will the court likely rule? a the buyer had the right to cancel the second shipment, because of legitimate fears that it would contain the same defects as the first shipment. b the buyer had the right to cancel the second shipment, because the first delivery was defective. c the buyer did not have the right to cancel the second shipment, because the defects in the first shipment did not substantially impair the value of the entire contract. d the buyer did not have the right to cancel the second shipment, because he failed to make a demand upon the manufacturer for adequate assurances that the second shipment would be free of defects.

Answer 1

Answer:

c. The buyer did not have the right to cancel the second shipment, because the defects in the first shipment did not substantially impair the value of the entire contract.                  

Explanation:

            In this case, it involves the installment contract. It means that the contract requires deliveries in two different lots and also sale of the goods. Therefore under the Article 2 of the Uniform Commercial Code,  the buyer may wish to declare  total breach of the installment contract, if the defects substantially impairs the entire contract's value.

            In the context, the manufacturer corrected the first defected shipment of stain. The manufacturer offered to cure the defective first shipment to the hardware owner. Thus the first shipment's defect in stain does not impair the whole contract's value.

Hence the correct option is (c).