Cal State University Northridge Business in California Case Study


To briefcases, case problems and questions, use the following “IRAC” format:
Issue: What question must be answered in order to reach a conclusion in the case? This should be a legal
question which, when answered, gives a result in the particular case. Make it specific (e.g. “Has there
been a false imprisonment if the plaintiff was asleep at the time of ‘confinement’?”) rather than general.
Most cases present one issue. If there is more than one issue, list all, and give rules for all issues raised.
Rule: The rule is the law which applies to the issue. It should be stated as a general principal, (e.g. A duty
of care is owed whenever the defendant should anticipate that her conduct could create a risk of harm
to the plaintiff.) not a conclusion to the particular case being briefed, (e.g. “The plaintiff was negligent.”)
Application: The application is a discussion of how the rule applies to the facts of a particular case. While
the issue and rule are normally only one sentence each, the application is normally paragraphs long. It
should be written debate -not simply a statement of the conclusion. Whenever possible, present both
sides of any issue. Do not begin with your conclusion. The application shows how you are able to reason
on paper and is the most difficult (and, on exams, the most important) skill you will learn.
Conclusion: What was the result of the case? With cases, the text gives you a background of the facts
along with the judge’s reasoning and conclusion. When you brief cases, you are basically summarizing
the judge’s opinion. With case problems, the editors have given you a summary of the facts of an actual
case, but have not given you the judge’s opinion. Your job is to act as the judge in reasoning your way to
a ruling, again using the IRAC format.
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Chapter Twenty One Performance of Sales Contracts
5 Q 21-1:
+ – .
Hillerich & Bradsby Co. v. Charles Products 88 UCC Rep. 2d 178 (W.D. Ky. 2015)
On November 29, 2010, Charles Products entered into an agreement so provide Hillerich & Bradsby with a variety of products to be sold
In Werich & Bradsys Lowvile Star Museo Stove. The products included all and cupsets, shall ple banks, Borter ducks,
stress balls By H20 copies. Kids Pop-Up Water Bottles Bunny Simpy Cups and functiones
Under Consumer Product Safety Impowa of 2008 (CASH), mely must provide accoming
shipment of goods designed to be sold to children a certificate of compliance that identifies the manufacturer or private labeler issuing
the caricate and anythinarty comforty assessme body or when she can depends. “CPSIA ako gwire man
facturers to place permanent, distinguishing marks on children’s products and packaging The markings are intended to enable the
mwfactory as well as the imate purchase to ascertain the location and date of production of the product and color information
(including the butch, raumber or other identing characteristic). CPSI also mandates ar children’s products generally must noe
contain more than 100 pais per million of total
Charles Products began tendering the items about February 15, 2011. Ar two months of selling the items, the decay of retail
the missent an email to the regional sales represent for Charles Products asking whether they were sure the paint on the hall
and cupset was mor lead based and whether is complied with the CPSIA regulations. In November, sowe wise months after Charles
Products besontender products to Hillerich & Bradby the director of retail again contacted the Charles representative indicating
Thurshe needed the certificates for the products they had that were ended for youth and 12. Subsequew she also asked fortes
documentation shar they were in compliance with the CPSIA widelines. Further email exchanges between the parties in February 2012
focused on the lack of documentation for the products
In April 2012 Charles Products was formed that one of its products-a rubber die ca m-as tested for lead content and found 10
exer the CPSIA lead the following me other product-the baseball ey bank and the lunchbox-reward found
to be nonconforming the excess lead. Hillerich & Bradsby then had to pull those items from the sales floor and sought to return them
of the purchase price. In Augusta/ter considering with the Cow Product Sakety Commission concerning with
noncompliant tracking labels, Hillerich de Brods by informed Charles Products would be returning all noncompliant items
HW & Bruidsby had sold a substantialer of some items. For example, il se track only 107 / 25 mars hade
ceived. 34 of 748 Watter ducks.” 1.394 out of 4.4452 ‘stress balls, and 263 of 1.001 “Big Rig Trailers. “Ole the other hand it had only
sold a small fraction of the amount of some other items from Charles Products for exampled 1.3381443 “Bwin
H 30 cups 1.236 out of 1.438 “Kids Pop Up Water bottles,” and 2.321 of 2.472 el Bunny Sins Cups. However, over a period of a
year and a half Millerich & Bradshy had sold hundreds of products subsequently alleged wwe nonconforming
Charles Products picked up the remaining products on September 14, 2012, and then hired a division of Underwriters Laboratory to
w she de products to determine whether or notre products were compliant with the CPSIA and how to bring them
into compliance. Charles Products advised Hillerich & Bradsby of the results on November
Horah & Brabby show filed a breach of contract claim again Charles Produits alleging noncompliance with the CPSIA, aw .
In turn.filed a counterclaon for breach of contract

Simpson, Senior Judige
Both parties move for summary judgment on Hillerich & Brastys
claim for breach of contract. The Court will grant Hillerich &
Bradsby’s motion for summary judgment on its breach of con
tract claim relating to the baseball piggy bank and rubber die cut
mug products. The court will grant Charles Products’ motion for
summary judgment with respect to all other items except relating
to the lunchbox
a. Timely Revocation of Tendered Goods
Under Kentucky law governing the revocation of tendered goods,
“where a tender has been accepted (a) the buyer must within
a masonable time after he discovers or should have discovered
any breach, notify the seller or breach or be barred from any
remedy. …”12607(emphasis added). Whether an action is
taken within a reasonable time depends on the mature purpose,
and circumstances 11-205). While this is generally a question
for the trier of fact, there simply are situations in which a buyer
has delayed so excessively that his actions become untimely as a
matter of law.” Chemick . Casares, 759 S.W.2d 832, 834 (Ky. CI.
App. 1988)
Beginning about February 15, 2011, Charles Products ten
dered to Hillerich & Bradsby the relevant products. Hillerich &
Bradsby accepted these products and began to sell them in the
museum store. While lead content in products is not readily iden-
tilable, the lack of a certificate of compliance within a shipment
or failure to properly label a product is immediately ascertainable
upon delivery
Hillerich & Bradsby’s representative. Laura Ginnebaugh,
knew CPSIA regulations applied to these products. Yet neither
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Part Four Sales
5 Q 21-14
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b. Meaningful Opportunity to Seasonally Cure the Defects
Under Kentucky law, a “buyer may revoke his acceptance of a lot
or commercial unit whose nonconformity substantially impairs
its value to him if he has accepted it (a) on the reasonable as
sumption that its nonconformity would be cured and it has not
been seasonably cured…” 12-603(1)].
Both parties agree Charles Products advised Hillerich &
Bradsby that any defective products would be brought into con
formance. The only question is whether Charles Products lisad
reasonable time to cure the remaining defective products. As
Charles Products admits the pipky bank and rubber die cup were
not curable, this armative defense does not apply to that aspect
of Hillerich & Bradsby’s claim.
On May 22, 2012, a Hillerich & Bradsby representative
emailed Charles Products indicating that the lunchboxes were
nonconforming. Emails prior to that date inquiring whether
the products were generally conforming did not give Charles
Products sufficient notice that the lunchboxes did not con
form. General inquiry emails are not the same as demanding
specific products to be cured or an affirmative statement of
non compliance
After receiving Hillerich & Bradsby’s test reports on the lead
content or the lunchboxes, Charles Products emailed Hillerich &
Bradsby saying that it was looking at curing the defect by switch
ing the handles on the lunchbox with a compliant part. Approx
mately three weeks later, Hillerich & Bradsby informed Charles
Products that it was revoking the acceptance of goods
The facts suggest that Charles Products would have had dif
ficulties in contacting its overseas manufacturer to replace the
defective handles in a short period of time. While a trier of fact
could find that Charles Products was given a reasonable amount
of time to cure the defect, there remains a genuine issue of mate
rial fact on whether Hillerich & Bradsby allowed Charles Prod
ucts a meaningful opportunity to cure the defects.
The Court will deny both parties’ motion for summary jude
ment as it pertains to Hillerich & Bradsby’s breach of contract
claim based on Charles Products’ supplying lunchboxes with an
impermissible lead content

e. Baseball Piggy Bank and Rubber Die Cut Mug
The parties agree the baseball piggy bank and rubber die cut
mug contained impermissible amounts or lead under the CPSIA.
Charles Products “has conceded liability on these products and
agreed to provide Hillerich & Bradsty a credit when the parties
still had a commercial relationship
The Court will grant Hillerich & Bradsby’s motion for summary
judgment in part for breach of contract due to the baseball play
hank and rubber die cut mug containing impermissible amounts
of lead.

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Chapter Twenty One Performance of Sales Contracts
5 Q 21-15
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Right to Cure if the seller has some reason to believe might request that the rejected goods be shipped back to
that the buyer would accept nonconforming goods, then
the seller. If the goods are perishable or may deteriorate
the seller can take a reasonable time to reship conforming rapidly, then the buyer must make a reasonable effort to
goods. The seller has this opportunity even if the original
sell the goods. The seller must reimburse the buyer for any
time for delivery has expired. For example, Ace Manufac
expenses that the buyer incurs in carrying out the seller’s
turing contracts to sell 200 red, white, and blue soccer balls instructions or in trying to resell perishable goods. In re-
to Sam’s Sporting Goods, with delivery to be made by April selling goods, the buyer must act reasonably and in good
1. On March 1, Sam’s receives a package from Ace contain-
faith (2-603(2) and (3)
ing 200 all-white soccer balls and refuses to accept them.
If the rejected goods are not perishable or if the seller
Ace can notify Sam’s that it intends to cure the improper
does not give the buyer instructions, then the buyer has
delivery by supplying 200 red, white, and blue soccer balls, several options. First, the buyer can store the goods for
and it has until Aprill to deliver the correct balls to Sam’s.
the seller. Second, the buyer can reship them to the seller.
If Ace thought that Sam’s would accept the all-white soccer
Third, the buyer can resell them for the seller’s benefit
balls because on past shipments Sam’s did not object to If the buyer resells the goods, the buyer may keep his ex-
the substitution of white balls for red, white, and blue balls,
penses and a reasonable commission on the sale. If the
then Ace has a reasonable time even after April I to deliver
buyer stores the goods, the buyer should exercise care in
the red, white, and blue soccer balls 2-508).
handling them. The buyer also must give the seller area-
sonable time to remove the goods 12-604)
Buyer’s Duties after Rejection If the buyer If the buyer is not a merchant, then her obligation after
is a merchant, then the buyer owes
certain duties concern rejection is to hold the goods with reasonable care for a
ing the goods that he rejects. First, the buyer must follow sufficient time to give the seller an opportunity to remove
any reasonable instructions that the seller gives concern them. The buyer is not obligated to ship the goods back to
ing disposition of the goods. The seller, for example, the seller (2-602).

Acceptance, Revocation, and Rejection
Acceptance 1. Occurs when buyer, having had a reasonable opportunity to inspect goods, either (a) indicates
he will take them or (b) fails to reject them.
2. If buyer accepts any part of a commercial unit, he is considered to have accepted the whole unit.
3. If buyer accepts goods, he cannot later reject them unless at the time they were accepted the
buyer had reason to believe that the nonconformity would be cured.
4. Buyer is obligated to pay for goods that are accepted.
Revocation 1. Buyer may revoke acceptance of nonconforming goods where (a) the nonconformity substan
tially impairs she wahee of the goods and (b) buyer accepted the goods without knowledge of
the nonconformity because of the difficulty of discovering the nonconformity or buyer ac
cepted because of assurances by the seller
2. Right to revoke must be exercised within a reasonable time after buyer discovers or should
have discovered the nonconformity
Revocation must be invoked before there is any substantial change in the goods.
4. Revocation is not effective until buyer notifies seller of his intent to revoke acceptance.
1. Where the goods delivered do not conform to the contract, buyer may (a) reject all of the
goods, (b) accept all of the goods, or (e) accept any commercial unit and reject the rest. Buyer
must pay for goods accepted. .
2. Where the goods are to be delivered in installments, an installment delivery may be rejected only if the
nonconformity substantially affects the value of that delivery and cannot be corrected by the seller.
3. Buyer must act within a reasonable time after delivery.
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Part Four Sales
5 Q 21-16
Assurance, Repudiation,
and Excuse
canceled the contract or has materially changed position,
for example, by buying the goods elsewhere 2-611).
Indicate when a party to a contract has the right to seek
L0255 assurances from the other party that it will perform its
Evaluate when a party will have its performance excused
1027s on the grounds of commercial impracticability
Assurance The buyer or seller may become con
cerned that the other party may not be able to perform his
contract obligations. If there is a reasonable basis for that
the buyer or seller can demand assurance from
the other party that the contract will be performed. If such
assurances are not given within a reasonable time not ex
ceeding 30 days, the party is considered to have repudiated
the contract 12-609)
Anticipatory Repudiation Sometimes, one of
the parties to a contract repudiates the contract by advis
ing the other party that he does not intend to perform his
obligations. When one party repudiates the contract, the
other party may suspend his performance. In addition, he
may either wait performance for a reasonable time or use
the remedies for breach of contract that are discussed in
Chapter 2212-610
Suppose the party who repudiated the contract changes
his mind. Repudiation can be withdrawn by clearly indicat
ing that the person intends to perform his obligations. The
repudiating party must do this before the other party has
Unforeseen events may make it difficult or impossible
for a person to perform his contractual obligations. The
UCC rules for determining when a person is excused from
performing are similar to the general contract rules. Gent
eral contract law uses the test of impossibility. In most
situations, however, the UCC uses the test of commercial
The UCC attempts to differentiate events that are un
foreseeable or uncontrollable from events that were part of
the risk borne by a party. If the goods required for the per
formance of a contract are destroyed without fault of either
party prior to the time that the risk of loss passed to the
buyer, the contract is voided (2-613). Suppose Jones agrees
to sell and deliver an antique table to Brown. The table is
damaged when Jones’s antiques store is struck by lightning
and catches fire. The specific table covered by the contract
was damaged without fault of either party prior to the time
that the risk of loss was to pass to Beown. Under the UCC,
Brown has the option of either canceling the contract or ac
cepting the table with an allowance in the purchase price to
compensate for the damaged condition 12-6131

The Global Business Environment
Insecurity in International Transactions fundamental breach of contract the other party may declare the
contract avoided. If time allows the party intending to declare the
The Convention on Contracts for the International contract wided must give reasonable notice to the other party
Sale of Goods (CISG) has provisions concerning in order to permit him to provide adequate assurance of his per
insecurity, assurance, and anticipatory repudiation that parallel formance. However, such notice need not be provided if the other
those in the UCC Under Article 71 of CISG, a party my sus party has declared that he will not perform the contra
pend performance of his obligations if, after the contract is en
A German court upheld an Italian shoe manufacturer’s deci
tered, it becomes apparent that the other party will not perform si to avoid a contract and awarded damages against the German
a substantial part of his obligations as a result of (a) a serious buyer. The German company had ordered 100 pairs of winter shoes
deficiency in his ability to perform or his creditworthiness or from the Italian manufacturer. After the shoes were manufactured,
(b) his conduct in preparing to perform or in performing the con the Italian seller demanded security for the sales price as the buyer
tact.” The party suspending performance must immediately give had other accounts payable to the seller still outstanding. When
notice to the other party and must continue with performance if the buyer neither paid nor provided security, the seller declared the
the other party provides adequate assurance of its performance. contract avoided and resold the shoes to other retailers. The court
Under Article 72 of CISG, il prior to the date of performance allowed the seller to recover the difference between the contract
of a contract, it is clear that one of the parties will commit a price and the price it obtained in the substitute transactions
berlund Dard. 17 U 146/93, Jan. 14. 1994 (Germany), I UNILEX D. 19951M. Bellol.)
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