Critical Legal Thinking Case Study 3 (2)
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School
Florida State College at Jacksonville *
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Course
3130
Subject
Law
Date
Feb 20, 2024
Type
Pages
3
Uploaded by saraheastburn1996
The probable legal issues in this case include the quality of the received goods, timely
payment and discount, the decision of storage and inspection, the impact on contracts
due to defective goods, and replacement costs. Generally, the timely payment of
invoices and earning a discount implies that the buyer has accepted the goods.
Cabinet Co. notified the accounting department, and the invoice was paid within the
discount period. However, the issue becomes apparent when the defective casters are
discovered later.
Is the Cabinet Co. entitled to any remedy or compensation for the defective casters,
considering that the payment was made within the specified discount period?
Regardless of the fact that someone had ordered extra, the caster boxes should have
been inspected before storing them for later. This situation could be handled by the
buyer's remedies. The buyer’s remedies are used "if the seller wrongfully fails to deliver
the goods or repudiates the contract, or if the buyer justifiably rejects the tendered
goods, then, Section 2-711 of the UCC, the buyer has several choices" (Bagley, 2018).
Frank made the decision to store the casters in a secure and covered corner of the
receiving dock until June 20, citing space constraints in the regular storage facilities.
Under the Uniform Commercial Code (UCC), there are implied warranties of
merchantability and fitness for a particular purpose. “Uniformity of law is essential in this
area for the interstate transaction of business. Due to the UCC being universally
adopted, businesses can enter into contracts with confidence that the terms will be
enforced in the same way by the courts of every American jurisdiction. The resulting
certainty of business relationships allows businesses to grow and the American
economy to thrive. For this reason, the UCC has been called “the backbone of
American commerce.” (ULC).
The defective casters may constitute a breach of these implied warranties, allowing
Cabinet Co. to seek remedies. Under the UCC, the Cabinet Co. can "cancel the contract
with the manufacturers of the casters and recover as much as the price as has been
paid" (Bagley, 2018).
Reasonableness and industry standards may play a role in assessing the decision to
store goods. Frank made the final decision to store the casters in a secure and covered
corner of the receiving dock until June 20, citing space constraints in the regular storage
facilities.
Was it reasonable for Frank to store the casters on the receiving dock, and did this
decision impact the company's ability to seek remedies for the defective goods?
Cabinet Co. could argue that there was a breach when it comes to warranty, including
damages. The company may be entitled to recover the increased replacement cost as
part of the damages resulting from the breach. Cabinet Co. may have a legal claim for
damages resulting from the default on contracts due to the defective goods.
Damages may include replacement costs and any other consequential damages. The
15% increase in replacement cost may be recoverable if it was a foreseeable
consequence of the breach. As part of the breach-related damages, the company may
be able to recover the increased replacement cost.
As a supervisor, Frank should have known better than to not inspect the products. He
should have inspected the product as soon as he laid eyes on it. He should have
inspected the product before telling accounting that he received the order. It is the
buyer's responsibility to inspect the products upon receiving it to insure against defects.
The implied warranty of merchantability is “a merchant's basic promise that the goods
sold will do what they are supposed to do and that there is nothing significantly wrong
with them” (FTC). This guarantees that the goods are reasonably fit for the general
purpose for which they are sold and that they are properly packaged and labeled.
Cabinet Co. and its employees may pursue legal action against the supplier for
delivering damaged products. These may include financial losses, increased
replacement costs, and any other damages arising resulting from the breach of implied
warranties. The reasonableness of actions, adherence to industry standards, and
contractual arrangements will have a major impact on the results of potential legal
actions. Cabinet Co. must seek advice with legal professionals to pursue appropriate
legal remedies.
References:
Uniform Law Commission. (n.d.). The Uniform Commercial Code (UCC). Uniform Law
Commission.
https://www.uniformlaws.org/acts/ucc#:~:text=The%20Uniform%20Commercial%20Cod
e%20(UCC,a%20uniformly%20adopted%20state%20law
Bagley, Constance E.Managers and the Legal Environment: Strategies for the 21st
Century.South-Western, 2019
Federal Trade Commission. (n.d.). Businessperson's Guide to Federal Warranty Law.
Federal Trade Commission.
https://www.ftc.gov/business-guidance/resources/businesspersons-guide-federal-warran
ty-law
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