Risk of Loss
Buyer's Remedies for Seller's Breach I
On March 12 we turned from consideration of warranties to actual performance of contract or breach of the contract. I constructed a table, which I don't think I yet know how to do on this page, but I will try to explain it as best I can. It tried to capture all the cases and Code sections for the day in one easy chart.
I called it the TARR chart, standing for Tender, Acceptance, Rejection and Revocation.
A tender may be a proper or improper presentation of the goods. In the words of the Code, it can be conforming or non-conforming. Under the perfect tender rule (2-601), which restates the common law principle, a tender that is non-conforming may be accepted or rejected in whole or in part. Though 2-601allows a rejection if goods aren't perfectly tendered, that rule is softened considerably by 2-508 (seller's right to cure), 2-612 (the subarticle on installment sales), and 2-608 (revocation of acceptance). One should note at this point, however, that cure doesn't give a seller a right to "try again" on any tender of goods. 2-508 only applies in the situation where a nonconforming tender is delivered before the "time for performance" has "yet expired." It doesn't give a seller a free "second chance" in every circumstance.
The case examining the applicability of the perfect tender rule to a non-installment contract was D.P.Techonology (p. 395). The court reviewed the applicability of that rule to a Connecticut case and concluded that, though the Code allows for perfect tender, Connecticut law has softened it to a "substantial nonconformity" rule. I think the facts of the case were important, however, because the goods appeared to be unique (and thus hard to resell) and the delay seemed not to work hardship on the seller.
If the tender is a conforming, the buyer may accept or reject it. If s/he accepts, her duty is to "pay at the contract rate for any goods accepted (2-607(1))." If she rejects a conforming tender, the seller has rights indicated in 2-602(3). That section directs you to the series on remedies and specifically to 2-703 (coming later).
If it is uncertain whether the tender was actually accepted, we are in the situation where we have to learn the rules on acceptance and rejection. The Miron case (p. 418) and sections 2-606, 2-607 and 2-602 especially help us differentiate between rejected and accepted goods. I started with the definition of acceptance in 2-606. The three ways a good may be accepted are: (1)(a) signifying to the seller after a chance to inspect that goods are acceptable; (1)(b) failing to make an effective rejection after reasonable opportunity to inspect goods; and (1)(c) doing anything "inconsistent with the seller's ownwership." Comments 1, 3, and 4 are helpful in adding flesh to that skeleton.
In Miron, the New York case having to do with the sale of a race horse for $32,500 and attempted return of that same horse by the buyer the day after sale, the court held that in this instance even the delay of one day in notifying the seller of the leg break constituted an acceptance under 2-606(1)(b). The court interpreted the "reasonable opportunity to inspect" requirement to require inspection at the point of sale. Note that the "reasonable time" to inspect would vary considerably from trade to trade. For some goods, one could imagine a period of days or weeks as an "inspection" time, especially if the defects are not easily perceptible, but the longer the time from sale, the more a court would tend to conclude an acceptance has taken place, and then the only remedy for the disgruntled buyer would be revocation of acceptance (2-608).
I also said that acceptance of goods after tender is the default rule. What I meant by that is that unless the goods are effectively rejected, they are accepted. No reaction means acceptance. Rejection of goods "must be within a reasonable time after their delivery or tender." (2-602(1))." If the goods have been delivered, the buyer, in order still to have the option to reject the goods, must notify the seller in a timely fashion of rejection, preferably using the word "reject"[note also that the Code requires the specific reason to be stated...in 2-605, but I am not requiring that section to be learned] and then must hold the goods (if delivered) "with reasonable care at the seller's disposition (2-602(2)(c))." That is all that is required. There is no duty to return the goods. In the question on the quiz regarding whether hanging the drapes until the seller picked them up could be consistent with rejection, the right analysis would be to use the code language of whether this act constituted "any exercise of ownership by the buyer" and then give factors that both parties would use to buttress their cases (need to have something to cover windows, this preserves them vs. keeping them in the container). The next page finishes the class.