The termination and cancellation of the contract may occur when either party puts an end to the contract because of the breach of another party. Once a contract has been terminated the obligations binding both parties no longer exist but the ones prior to the breach are still compulsory (Legal Information Institute, 1992). In this case, Jeremy who purchased a car and signed a contract promising to pay $200 every month until the car is fully paid canceled his contract with Smooth Sales Used Cars. He wanted to give back the car and get his money back. According to the Uniform Commercial Code Article 2-106 (3 and 4), Jeremy can give back his car and discontinue his monthly payment of $200 to Smooth Sales Used Cars but he can no longer get his money back because of previous obligations prior to his breach of contract is still mandatory. Since he is underaged and a minor, technically he cannot acquire a transaction with the car dealer shop but this was neglected by the company thus remedies for such situation is, the company pays back Jeremy’s initial down payment because of its failure to restrict sales to a minor but they keep the monthly payments from Jeremy prior to the cancellation of the contract because “the canceling party also retains any remedy for breach of the whole contract or any unperformed balance”(Legal Information Institute, 1992). Legal matters may arise in the negligence of the car company in transacting with a minor. Jeremy can site that his transaction with Smooth Sales Used Cars was invalid since technically he is not of legal age. This may give rise to a legal suit against the company. On the other hand, Jeremy can also be blamed since he knew he was not of age in transacting. The act of his contract cancellation presents a breach and he is liable to all obligations following such breach. Remedies of settling such a case should be agreed upon by both parties. According to Article 2 of the UCC section 702 (2):
“Where the seller discovers that the buyer has received goods on credit while insolvent, the seller may reclaim the goods upon demand made within a reasonable time after the buyer’s receipt of the goods. Except as provided in this subsection, the seller may not base a right to reclaim goods on the buyer’s fraudulent or innocent misrepresentation of solvency or of intent to pay” (Legal Information Institute 1992).
But such a case of reclaiming is still subject to the rights of the buyer under section 702 (3). Under section 709, when the buyer fails to pay the agreed payment dues to the car shop, the seller may recover the car sold.
Reference List
Legal Information Institute. (1992). Uniform Commercial Code: Article 2 Sales. Web.
The American Law Institute and National Conference of Commissioners on Uniform State Laws. (2000). Revision of Uniform Commercial Code Article 2-Sales. Web.
Towle, H. (2003). Revised UCC Articles Erect New Hurdles for E-commerce. Legal Backgrounder, 18 (16). Web.
Uniform Commercial Code. Web.