Specific Performance as a Seller Remedy for Buyer's Breach of a Sales Contract-The Availability of Judicial Purchase Orders

By Thatcher, Charles M. | South Dakota Law Review, Summer 2012 | Go to article overview

Specific Performance as a Seller Remedy for Buyer's Breach of a Sales Contract-The Availability of Judicial Purchase Orders


Thatcher, Charles M., South Dakota Law Review


When might a court issue a decree ordering specific performance as a remedy available to a seller for a buyer's breach of a contract for sale of goods? The Sales Article of the Uniform Commercial Code does not acknowledge that specific performance is a remedy available to a seller aggrieved by a buyer's breach. (1) Instead, specific performance is identified as a potential remedy for a buyer of goods aggrieved by a seller's breach. (2) The only analogous remedy available to aggrieved sellers (3) is afforded in an action to recover the price of the goods. (4) Because receipt of the purchase price is the seller's primary objective in concluding a contract for sale of goods, the seller's recovery of damages measured by the price of the goods will be sufficient in most cases to put the aggrieved seller "in as good a position as if the [buyer] had fully performed" (5) when the facts satisfy any of the alternative requirements that U.C.C. section 2709(1)(a) or (b) imposes. (6) The question whether specific performance is a remedy available to aggrieved sellers of goods has received only passing attention in the secondary authorities. (7) This article identifies those situations in which achievement of the remedial ideal (8) is possible only if a court issues a decree ordering specific performance of a buyer's contractual duties on behalf of an aggrieved seller of goods.

Specific performance should be available to an aggrieved seller of goods when none of the seller remedies identified in UCC sections 2-702 to 2-710 will be adequate to protect the expectation interest of the seller. (9) In such cases, the seller should be afforded the opportunity to obtain a decree ordering specific performance of the breaching buyer's duties under the contract or a prohibitory injunction enjoining the buyer from breaching its duties under the contract. The determinative factor in deciding whether specific performance or an injunction against breach would be an appropriate remedy for a seller injured by a buyer's breach is whether an award of one or more of the seller remedies identified in Article 2 "would be adequate to protect the expectation interest of the injured [seller]." (10) If not, then the seller should have a fight to specific performance coextensive with the right that UCC section 2-716(1) affords to buyers in various circumstances. (11)

Among the cases in which specific performance would be an appropriate remedy for an aggrieved seller of goods are those in which the seller is not entitled to bring an action for the price. For example, when a buyer repudiates a long-term output or requirements contract, (12) an action for the price will not always be available to the aggrieved seller as a remedy for breach. (13) An action to recover the price of the contract goods is not available to the seller if the buyer repudiates its remaining duties under such an executory contract before the goods have been accepted, before the risk of their loss has passed to the buyer, (14) and before some or all of the goods have been produced or identified to the contract. (15) Yet that repudiation gives the injured seller an immediate fight to bring an action for breach of the sales contract. (16) When the buyer's repudiation of the whole contract occurs before the seller has begun to produce or acquire some or all of the goods, the seller might not be able to be made whole by obtaining any of the remedies explicitly afforded to aggrieved sellers in sections 2-702 through 2-710 of Article 2. In that event, a court should be willing to order specific performance or to issue an injunction against the buyer's continuing breach as the only remedies that might be capable of securing the seller's unique entitlement under a long-term output or requirements contract. (17)

The courts in two pre-Code cases acknowledged that specific performance or an injunction against breach were remedies available to aggrieved sellers of goods in appropriate circumstances. …

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