CH22_Blueprint_Performance_of_Sales_Contracts_-_Assurance
Flint Hills Resources, LP, a crude oil refiner, agreed to buy "approximately 1,000 barrels per day" of Mexican natural gas condensate from JAG Energy, Inc., an oil broker. Four months into the contract, Pemex, the only authorized seller of freshly extracted Mexican condensate, warned Flint Hills that some companies might be selling stolen Mexican condensate. Fearing potential criminal liability, Flint Hills refused to accept more deliveries from JAG without proof of the title to its product. JAG promised to forward documents showing its chain of title. After several weeks, when JAG did not produce the documents, Flint Hills canceled their agreement. JAG filed a suit in a federal district court against Flint Hills, alleging breach of contract.
What is the name of the law that applies to the duties and obligations of parties to a sale of goods contract?
a. Uniform Transactions Code
b. Uniform Sales Code
c. Uniform Commercial Code
d. Uniform Goods Code
Who is the seller?
a. Flint Hills Resources
b. JAG Energy
Who is the buyer?
a. Flint Hills Resources
b. JAG Energy
The seller's obligation is to tender
a. perfect good
b. conforming goods
c. reasonably perfect goods
d. adequately conforming goods
This rule is called the
a. confirmation rule
b. good faith rule
c. perfect tender rule
d. reasonable tender rule
Is JAG Energy potentially not tendering conforming natural gas condensate?
a. Yes
b. No
What might be the problem with the tender?
a. the goods are stolen
b. the goods might be stolen
c. there is no problem as there is no proof
What exception to the perfect tender rule arises here?
a. the parties agreed to waive any criminal implications
b. the parties agreed that using a different carrier was acceptable
c. the parties agreed to accept a nonconforming installment
d. an occurrence unforeseen by either party is making performance commercially impracticable
e. one party has reasonable grounds to believe the other party will not perform
f. one party is refusing to cooperate
Does this particular exception apply equally to both the buyer and seller?
a. Yes
b. No
Who is worried about performance in this case?
a. buyer
b. seller
What section of the UCC applies when one party believes the other will not perform?
a. 2-311
b. 2-609
c. 2-615
d. 2-613
Does UCC 2–609 state that if a contracting party has "reasonable grounds" to believe that the other party will not perform, he or she may "demand adequate assurance" of that performance?
a. Yes
b. No
Does the buyer, Flint, have reasonable grounds to believe the natural gas condensate to be delivered by JAG may be stolen?
a. Yes
b. No
Why? Pemex ______ the only authorized seller of natural gas condensate.
a. is
b. is not
After asking for assurance from JAG, how many days does Flint have to wait before a non-response from JAG may be considered a repudiation of the contract?
a. 14
b. 30
c. 60
d. 90
Does Flint have to keep making payments while they wait?
a. Yes
b. No
Did JAG ever produce proof of title for the natural gas condensate?
a. Yes
b. No
How long did Flint wait?
a. several weeks
b. a few weeks
c. eight weeks
Assume Flint waited more than 30 days. Would UCC2-609 apply?
a. Yes
b. No
Under the UCC2-609, did Flint have a right to cancel the contract?
a. Yes
b. No
((What if the facts were different?))
What if Flint had heard about this allegation of stolen natural gas from someone other than Pemex- would their demand for assurance be justified?
a. Yes
b. No
Why? The information from any other source would be
a. reasonable grounds
b. unreasonable grounds
