Commercial Law Class 1 Introduction and Scope of the UCC

Commercial LawClass 8PerformanceProfessor RoweSpring 2015

2-608(1): Revocation of Acceptance in Whole or in PartThe buyer may revoke his acceptance of a lot or commercial unit if a non-conformity substantially impairs its value to him and he accepted it on the reasonable assumption that the non-conformity would be cured and it has not been seasonably cured.

The buyer may also revoke his acceptance of a lot or commercial unit if a non-conformity substantially impairs its value to him and he accepted it without discovery of the non-conformity, if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the sellers assurances.

2-608(2), (3): Manner and Effect of Revocation

Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. ( 2-608(2))

Revocation of acceptance is not effective until the buyer notifies the seller of it. ( 2-608(2))

A buyer who revokes has the same rights and duties with regard to the goods as if he had rejected them. ( 2-608(3))

Colonial Dodge, Inc. v. Miller

Revocation of Acceptance

Substantial impairment means whether the non-conformity has a devaluing effect on [that] buyer (subjective standard). Under 2-610, comment 3, substantial impairment means material inconvenience or injustice will result.

Privity required: Buyer can only revoke as to his seller and not remote manufacturer

How to Determine If Use After Revocation Was ReasonableUpon being apprised of buyers revocation of his acceptance, what instructions, if any, did seller give to buyer concerning return of the now-rejected goods?

Did buyers business needs or personal circumstances compel continued use?

During the period of such use, did seller persist in assuring buyer that all non-conformities would be cured or that provisions would otherwise be made to recompense the latter for the dissatisfaction and inconvenience the defects caused him?

Did the seller act in good faith?

Was seller unduly prejudiced by buyers continued use?

Seller may be entitled to setoff for buyers use and resulting depreciation.

2-612: Installment Contract; BreachAn installment contract is one which requires or authorizes the delivery of goods in separate lots to be separately accepted. ( 2-612(1))

The buyer may reject any installment which is non-conforming if the non-conformity substantially impairs the value of that installment and cannot be cured. ( 2-612(2))

If the non-conformity does not fall within subsection (3) and the seller gives adequate assurance of cure, the buyer must accept the installment. ( 2-612(2))

Whenever non-conformity or default with respect to one or more installments substantially impairs the value of the whole contract, there is a breach of the whole. ( 2-612(3))

The aggrieved party reinstates the contract if he accepts a non-conforming installment without seasonably notifying of cancellation, or if he brings an action with respect only to past installments, or demands performance as to future installments. ( 2-612(3))

Bayer Corp. v. DX Terminals, Ltd.

2-508: Cure by Seller of Improper Tender or Delivery; ReplacementWhere any tender or delivery by the seller is rejected because non-conforming and the time for performance has not yet expired, the seller may seasonably notify the buyer of his intention to cure and may then within the contract time make a conforming delivery.

Where the buyer rejects a non-conforming tender which the seller had reasonable grounds to believe would be acceptable, the seller may if he seasonably notifies the buyer have a further reasonable time to substitute a conforming tender.

T.W. Oil, Inc. v. Consol. Edison Co. of N.Y., Inc.