Sunday, November 22, 2009

Contracts/Sales: Buyer's Rights Under the UCC.

Question:

What if: In a single delivery, in response to an order by a regular customer, the seller ships both conforming and non conforming goods with a note attached explaining the shortage of conforming goods as the reason for the mix. Does buyer have the right to keep part of the goods and reject the other part? If yes, can he sue for the shortage in delivery?


Response:

When the seller ships non-conforming goods, along with conforming goods, the buyer can accept the conforming goods, and reject the non-conforming goods. The buyer then must seasonably notify the seller, explaining that he is rejecting due to the non conformity. By notifying the seller of his reason for rejecting the non-conforming goods, buyer has provided seller the opportunity to cure the defect.

The seller is then given an opportunity to cure the defect generally within the time originally provided for performance by either giving reasonable notice to buyer of seller's intention to cure, or making a new tender of conforming goods (in this case seller would tender conforming goods to replace the non-conforming goods he had originally sent to buyer.)

If seller does not cure, then buyer can sue for damages. The damages is the difference between the contract price, and either the market price or the cost of buying replacement goods (replacing the non-conforming goods originally sent by seller to buyer). Incidental damages, and consequential damages, minus expenses saved as a result of seller's breach, are also allowable.