Monday, April 13, 2015

MBE Fast Fact: Buyer's Acceptance Under the UCC

When dealing with a question implicating the UCC rather than the common law, it's important to remember that the doctrine of substantial performance does not apply, and instead the Perfect Tender Rule applies. This means that if the goods delivered by the seller fail to conform to the contract in any way, the buyer may reject all the goods delivered, reject some of the goods and accept some of the goods, or accept all of the goods.

As such, it is equally important to understand exactly what constitutes acceptance in such circumstances because the moment of acceptance is also the moment that the buyer loses the ability to reject the goods. A buyer accepts under the UCC under 3 circumstances:

--After a reasonable opportunity to inspect the goods, the buyer indicates to the seller that the goods conform to the requirements of the contract or that the buyer will keep the goods even though they do not conform as required.

--The buyer fails to reject the goods within a reasonable time after tender of delivery or fails to seasonably notify the seller of the rejection.

--The buyer acts in a way that indicates that the buyer is the owner of the goods, or, stated otherwise, acts inconsistent with the seller's ownership of the goods.

One further note here: If none of the 3 above apply, and buyer rightfully rejects the goods, the buyer still has an obligation to hold the goods with reasonable care at the seller's disposition and to follow any reasonable instructions given by the seller as to the rejected goods. If the seller fails to give instructions, the buyer may reship the goods to the seller, store them for the seller's account, or resell them for the seller's account and retain any expenses incurred in following the instructions of the seller.

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