GFI, Inc., a Hong Kong company, makes audio decoder chips,

one of the essential components used in the manufacture of

MP3 players. Egan Electronics contracts with GFI to buy

10,000 chips on an installment contract, with 2,500 chips to

be shipped every three months, F.O.B. Hong Kong via Air

Express. At the time for the first delivery, GFI delivers

only 2,400 chips but explains to Egan that while the

shipment is less than 5 percent short, the chips are of a

higher quality than those specified in the contract and are

worth 5 percent more than the contract price. Egan accepts

the shipment and pays GFI the contract price. At the time

for the second shipment, GFI makes a shipment identical to

the first. Egan again accepts and pays for the chips. At the

time for the third shipment, GFI ships 2,400 of the same

chips, but this time GFI sends them via Hong Kong Air

instead of Air Express. While in transit, the chips are

destroyed. When it is time for the fourth shipment, GFI

again sends 2,400 chips, but this time Egan rejects the

chips without explanation. Using the information presented

in the chapter, answer the following questions.

1. Did GFI have a legitimate reason to expect that Egan

would accept the fourth shipment? Why or why not?

2. Does the substitution of carriers in the third shipment

constitute a breach of the contract by GFI? Explain.

3. Suppose that the silicon used for the chips becomes

unavailable for a period of time and that GFI cannot

manufacture enough chips to fulfill the contract, but does

ship as many as it can to Egan. Under what doctrine might a

court release GFI from further performance of the contract?

4. Under the UCC, does Egan have a right to reject the

fourth shipment? Why or why not?

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Status NEW Posted 26 May 2017 02:05 AM My Price 12.00

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