Thursday, November 5, 2009

Contracts/Sales: Revocation vs. Rejection

Question:

Can you explain the difference between revocation and rejection?



Response:

The difference here is based primarily on timing. Under the UCC, if the seller provides the buyer with goods, and those goods do not conform to the contract, the buyer may reject the goods, and either cancel the contract or sue. This rejection must be made a reasonable time after delivery (or tender), and before acceptance.

Revocation, on the other hand, occurs after acceptance of the goods. The buyer has already accepted the goods (unlike rejection in which there has not yet been an acceptance), but there is a defect in the goods which substantially impairs the value. In addition, the buyer accepted the goods on the reasonable belief that the defect would be cured, and it has not been, or the goods were accepted because of the difficulty of discovering the defects, or because the seller had given the buyer assurance that the goods conformed to the contracts.

So, in order to reject, there must not have been an acceptance. But if there has been an acceptance, the buyer is not out of luck, because under certain circumstances, the buyer can still revoke, even if there has been an acceptance of the goods. A proper revocation of acceptance, has the same effect as a rejection.