Brief Fact Summary.
Defendant cancelled a contract between itself and Plaintiff because Plaintiff did not ship logs to Defendant as agreed. Plaintiff sued Defendant for breach. The trial court granted Defendant’s motion for summary judgment. Plaintiff appealed.
Synopsis of Rule of Law.
UCC 2-601 states that only perfect tender will satisfy a sales contract, and a buyer may reject delivery of goods that do not conform exactly to contract.
Alaska Pacific Trading Company (Plaintiff) contracted to sell logs and ship them from Argentina to Korea between July and August 1993 and Eagon Forest Products, Inc. (Defendant) agreed to purchase them. Subsequent market changes rendered Defendant’s deal less appealing. Out of fear that Defendant would cancel, Plaintiff did not ship the logs and Defendant subsequently cancelled the contract.
Whether a minor breach of a sales contract may be excused because the breach was not material.
No. The trial court’s ruling is affirmed. UCC 2-601 states that only perfect tender will satisfy a sales contract, and a buyer may reject delivery of goods that do not conform exactly to contract.
At common law, a contract is not breached unless the party’s failure to perform was material. UCC 2-601 did away with the common law requirement of a material breach in favor of the perfect tender rule. The perfect tender rule gives a buyer the right to reject goods if either the goods or the delivery do not conform exactly to the agreement. The plain meaning of the rule is that a buyer is under no obligation to accept goods if the seller makes any deviation from the terms of the contract, no matter how minor. This understanding is further supported by the UCC’s official comments. Plaintiff argues that the breach was not material even though the logs were not shipped by the deadline set forth in the contract because the contract did not state that time was of the essence. Because Plaintiff did not comply exactly with the terms of the contract, there was no perfect tender. Therefore, Defendant had the right to reject the logs.