Suppose a liquor store owner enters into a contract with an out-of-state

A1 Business and Technical College Business Law Case Study

Read the case and answer the questions that follow.

Suppose a liquor store owner enters into a contract with an out-of-state alcohol wholesaler to deliver 100 cases of an alcoholic beverage called Four Lokos each month on the first of the month for the next six months. However, after the contract is created, a newly enacted state regulation that neither party anticipated forbids the importation of Four Lokos due to health and safety concerns. Subsequently, the wholesaler does not deliver the beverage as promised in the contract, but does offer to deliver a similar, legal beverage to the liquor store instead. The liquor store owner is upset about the nondelivery of the product and demands the delivery of the beverage under the perfect tender rule.

1. What is the perfect tender rule? In this situation, what are the terms that the alcohol wholesaler must meet to qualify as perfect tender?

2. Does the situation described in the case fall under any exceptions to the perfect tender rule?

3. Suppose that the facts of the case change and that in the state in question, no state regulation exists banning the beverage. However, there is another problem with the delivery of the product. Suppose something happens in the manufacturing of the Four Lokos and there is a problem with the ingredients. Somehow the product is manufactured without alcohol in it and the product is thereby not an accurate representation of what the liquor store ordered. Neither party disputes that the Four Lokos in question were nonconforming goods. What recourse is possible for the alcohol wholesaler to fix the problem?