Ames contracts to ship one hundred Model Z TVs to Curley. The terms of delivery

Question

Ames contracts to ship one hundred Model Z TVs to Curley. The terms of delivery are F.O.B. Ames's city, by Green Truck Lines, with delivery on or before April 30. On April 15, Ames discovers that because of an error in inventory control, all Model Z sets have been sold. Ames has Model X, a similar but slightly more expensive unit, in stock. On April 16, Ames ships one hundred Model X sets, with notice that Curley will be charged the Model Z price. Curley (in a proper manner) rejects the Model X sets when they are tendered on April 18. Ames does not wish to be held in breach of contract, even though he has tendered nonconforming goods. Discuss Ames's options.

Explanation / Answer

Ames can ‘cure’ the non-conforming goods. ‘Cure’ refers to the seller’s or the lessor’s rights to replace or repair the non-confirming goods within the contract’s time for performance. In this case, Ames can issue a notice to Curley as quickly as possible that he would replace the non-confirming goods within April 30th (the date mentioned in the contract). After the issuance of the notice, Ames needs to take necessary measures to procure the model Z as promised in the contract. Then deliver the goods as per the contract terms to Curley. By doing this Ames will be able to maintain the ‘Perfect Tender Rule’ and avoid the breach of the contract.

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