*** Chapter Outcome ***
Explain what constitutes acceptance by the buyer and the buyer’s right to revoke
acceptance.
Acceptance
Acceptance of goods means a willingness by the buyer to become the owner
of the goods tendered or delivered to him by the seller. Acceptance occurs
when the buyer, after a reasonable opportunity to inspect the goods (1)
signi!es to the seller that the goods conform to the contract, (2) signi!es to
the seller that he will take the goods or retain them in spite of their
nonconformity to the contract, or (3) fails to make an effective rejection of
the goods.
Revocation of Acceptance
A buyer may revoke acceptance of defective goods if the nonconformity
substantially impairs the value of the goods to him and if either the buyer
CASE 22-3
WADDELL v. L.V.R.V. INC.
Supreme Court of Nevada, 2006
125 P.3d 1160
http://scholar.google.com/scholar_case?
q=125+P.3D+1160+&hl=en&as_sdt=2,34&case=13475809545477317507&scilh=0
Gibbons, J.
L.V.R.V. Inc., D/B/A [doing business as] Wheeler’s Las Vegas RV (Wheeler’s) sold a 1996
Coachmen Santara motor home (the RV) to * * * Arthur R. Waddell and Roswitha M.
Waddell (the Waddells). * * *
* * *
* * * Before they took possession of the RV, the Waddells requested that Wheeler’s
perform various repairs. The Waddells’ request included a service on the RV’s engine
cooling system, new batteries, and alignment of the door frames. Wheeler’s told Arthur
When the Waddells returned from California, they took the RV back to Wheeler’s for
repairs. Despite Wheeler’s attempts to repair the RV, the Waddells continually experienced
more problems with the RV, including further episodes of engine overheating. Between
September 1997 and March 1999, Wheeler’s service department spent a total of seven
* * *
[U.C.C. §2–608(1)] provides that a buyer may revoke his acceptance if the item suffers
from a “nonconformity [that] substantially impairs its value to him” and (a) the buyer
accepted the goods on the understanding that the seller would cure the nonconformity or (b)
the buyer was unaware of the nonconformity and the nonconformity was concealed by the
difficulty of discovery or by the seller’s assurances that the good was conforming.
* * *
The Supreme Court of Oregon has established a two-part test to determine whether a
nonconformity, under the totality of the circumstances, substantially impairs the value of the
goods to the buyer. The test has both an objective and a subjective prong:
Since [the statute] provides that the buyer may revoke acceptance of goods “whose
nonconformity substantially impairs its value to him,’ the value of conforming goods to
* * *
Mr. Waddell’s testimony demonstrates that the RV’s subjective value to the Waddells
was based on their ability to spend two or three years driving the RV around the country.
Thus, we must consider whether the RV’s nonconformities substantially impaired the value
of the RV based on the Waddells’ particular needs.
Mr. Waddell testified that as a result of the RV’s defects, he and his wife were unable to
enjoy the RV as they had intended. Mr. Waddell further testified that the RV’s engine would
* * *
Accordingly, we conclude that substantial evidence exists to support revocation of
acceptance under [U.C.C. §2–608(1)].
Wheeler’s argues that the Waddells should not have been allowed to revoke their
acceptance because they did not attempt to revoke within a reasonable time after purchasing
the RV. We disagree.
Under [U.C.C. §2–608(2)], “revocation of acceptance must occur within a reasonable
time after the buyer discovers or should have discovered the ground for it and before any
Obligation of Payment
Unless otherwise agreed, payment is due at the time and place the buyer is
to receive the goods, even if the place of shipment is the place of delivery.
This rule allows the buyer the right to inspect the goods before paying for
them.
CISG — Unless required otherwise, the buyer must pay for goods when they
or their controlling documents are made available; payment place is either at
the seller’s business or at the place where the goods or documents are
transferred to the buyer.
NOTE: For a summary of performance by the buyer, see Figure 22-2 in the text.
C. OBLIGATIONS OF BOTH PARTIES
*** Chapter Outcome ***
Identify and discuss the excuses for nonperformance and the Uniform Commercial
Code’s provisions for protecting the parties’ expectations of performance by the other
party.
Sometimes the performance obligations of one or both parties may be
excused, such as if one party defaults or if the goods which are the subject of
the contract are somehow destroyed. The Code contains three sections that
address the situations which may excuse performance.
Casualty to Identified Goods
If goods are destroyed:
• before an offer is accepted, the offer is terminated
• after the o$er is accepted, the rules for the passage of risk of loss usually
apply
Only exception: if the contract is for already identi!ed goods, and these
goods are totally lost or damaged, without fault of either party and before
the risk of loss passes to the buyer, the contract is avoided and each party is
Nonhappening of Presupposed Condition
Although increased costs may not be relied upon to avoid a contract
obligation, the non-happening of a condition which was understood and
assumed by both parties when the contract was formed will excuse the
seller’s performance. This is like the common law impossibility of
performance but governed under the more liberal Code standard of
commercial impracticability.
Substituted Performance
If neither party is at fault, but the agreed-upon manner of delivering the
goods becomes commercially impracticable, a substituted manner of
performance, if commercially reasonable, must be tendered and accepted.
Right to Adequate Assurance of Performance
If reasonable doubts arise regarding either party’s performance, the other
party may suspend his own performance until he receives written assurance.
CISG — A party may suspend performance if there is doubt about the other
party’s performance, but must immediately notify other party of the
suspension and must not suspend performance if the other party gives
adequate assurance of performance.
Right to Cooperation
Where one party’s cooperation is necessary to the agreed performance but is
not timely forthcoming, the other party is excused for any resulting delay in
Anticipatory Repudiation
If, before the time to perform occurs, one party takes an action that makes
performance impossible, this action may be considered an anticipatory
repudiation. If the repudiation substantially impairs the value of the
contract, the aggrieved party may (1) await performance for a commercially
reasonable time or (2) resort to any remedy for breach. In either case, she
may suspend her own performance.
CISG — If prior to the date for performance, it is clear that one party will
commit a fundamental breach, the other party may declare the contract
avoided.
CASE 22-4
DONALD R. HESSLER v. CRYSTAL LAKE
CHRYSLER-PLYMOUTH, INC.
Appellate Court of Illinois, Second District, 2003
788 N.E.2d 405, 273 Ill.Dec 96, 50 U.C.C. Rep.Serv.2d 330
http://scholar.google.com/scholar_case?
q=788+n.e.2d+405&hl=en&as_sdt=2,34&case=8385072036048572860&scilh=0
Callum, J.
In February 1997, Chrysler Corporation introduced a new promotional vehicle called the
Plymouth Prowler. However, the company did not reveal whether it would manufacture any
of the vehicles. Plaintiff became aware of j the vehicle and of its uncertain production, and,
on February 4, 1997, contacted several dealerships to inquire about purchasing a Prowler.
Customer to pay $5,000 00/100 over list price by manufacturer. Money refundable if can
not [deliver] by 12/30/97. Dealer to keep car 2 weeks.
* * *
The order also noted that plaintiff had deposited $5,000 by check.
The Agreement contained a box labeled “TO BE DELIVERED ON OR ABOUT.” Inside
the box was written “ASAP” in a handwriting and ink different from that in the rest of the
document. * * * Rosenberg stated that the term “ASAP” is used in his business “in lieu of a
stock number. Just line it up in order. As soon as you can get it done, do it.” * * *
Rosenberg testified that plaintiff was the first person to place an order for a Prowler.
Further, Rosenberg was “pretty sure” that plaintiff’s order was the first order on which he
received a deposit.
* * *
[Plaintiff testified that on August 11, 1997, Rosenberg informed plaintiff that no
Prowlers would be delivered to the Midwest and that he would be returning plaintiff’s
check. Defendant, according to the plaintiff, nevertheless, stated that should defendant
receive a vehicle, it would be plaintiff’s. Defendant denies having stated this.] * * *
Plaintiff next testified that he attended a Chrysler customer appreciation event at Great
America on September 19 and spoke to a company representative about the Prowler. Two
days later, the representative sent him a fax that contained a tentative list of dealers who
were to receive Prowlers. Defendant’s name was on the list.
Plaintiff testified that he called Rosenberg on September 22 to notify him that his
dealership was on a list of dealers due to receive Prowlers. Rosenberg informed plaintiff that
On October 24, 1997, plaintiff attended a Prowler coming-out party at the Hard Rock
Cafe and saw a purple Prowler in the parking lot with a sign in its window that had
defendant’s name written on it. On October 25, plaintiff went to defendant’s showroom and
saw a Prowler parked there. He found Rosenberg and informed him that he was there to pick
up his car. Rosenberg stated that he was not going to sell plaintiff the car and that he did not
want to do business with him. Later that day, plaintiff purchased a Prowler from another
dealer for $77,706.
On October 27, 1997, defendant sold the only Prowler it received in that year to Palandri
for a total sale price of $54,859, including his $10,000 deposit.
* * *
On April 23, 1998, plaintiff sued defendant for breach of contract. * * *
Following a bench trial, the court entered judgment for plaintiff and awarded him
$29,853 in damages. It concluded that defendant breached the Agreement and that plaintiff
properly covered by purchasing a replacement vehicle for $29,853 more than the contract
* * *
Under the UCC, certain actions by a party to a contract may constitute an anticipatory
repudiation of the contract if the actions are sufficiently clear manifestations of an intent not
to perform under the contract. [UCC §] 2–610; [citation.]
* * *
Comment 1 to Section 2–610 provides, in relevant part:
Anticipatory repudiation centers upon an overt communication of intention or an action
which renders performance impossible or demonstrates a clear determination not to
continue with performance.
* * * When such a repudiation substantially impairs the value of the contract, the
aggrieved party may at any time resort to his remedies for breach. * * * [UCC §] 2–610,
Comment.
that he would not do business with plaintiff. Further, Rosenberg’s testimony about this
conversation corroborated plaintiff’s, in that Rosenberg stated that he told plaintiff that the
vehicle was already “committed.” The trial court also heard both plaintiff and Rosenberg
testify that, when plaintiff went to defendant’s showroom on October 25 and informed
Rosenberg that he was there to pick up his car, Rosenberg told plaintiff that he did not want
to do business with him.
We conclude that the trial court did not err in finding that defendant’s foregoing actions
reasonably indicated to plaintiff that defendant would not deliver to him a Prowler under the
Agreement. * * *