(Paralegal) Uniform Commercial Code and buyer’s rights (Discussion)

Case Study:

A sales contract requires a seller to deliver 100 shirts to a buyer. When the buyer inspects the delivered goods, it is discovered that 99 shirts conform to the contract, but one shirt does not conform. What remedies are available to the buyer, if any? Please be sure to cite to the applicable section of the UCC to support your response.

Discussion: 

According to UCC § 2-513, a buyer has the right to examine purchased goods at a reasonable time and pace. This is especially important for goods that are purchased from a catalog or online, where a buyer has not had the opportunity to examine them first-hand before agreeing to purchase them. There is a separation from the buyer’s purchase of the goods (if there has not been a limiter such as “as is” or “all sales are final” or “all terms of sale are non-negotiable” included by the seller) and actual acceptance of those goods.

A buyer can purchase goods that come in lots (i.e., many items sold as a unit or in bulk for one price) and accept them all regardless of a percentage of those goods failing to meet the buyer’s approval (perhaps due to not conforming to a contractual requirement that the goods meet standards the buyer reasonably expects), or reject part of the lot and accept the rest. A buyer can also reject the entire lot if one item in that lot proves not to meet agreed-upon standards (and UCC § 2-313(a) would permit this). This applies to both personal property items (chairs and shirts would be included in this category) as well as commodities (like jet fuel, gasoline or milk): they are all “goods”.

If the seller was selling items like food or construction materials or medicine, one unacceptable item in the entire lot is more than enough grounds to return the entire shipment. A buyer should not be forced to hand-examine each and every item in a huge lot — or even to accept the remainder of the lot — if one of the items is inedible or inoperable, does not conform to safety guidelines, does not meet building code requirements, or if it fails to otherwise meet other similar reasonable standards, especially if the goods sold must be fit for human consumption or use.

A buyer may also be a vendor who resells goods to third parties, and may reject goods that she or he knows that the third-party buyer will not accept (an example given was shirts purchased from one seller and sent out to another company for customization; the buyer was dismayed to discover that the shirts had the incorrect slogan on them and refused to pay for them).

UCC § 2-602 requires the buyer to reject unacceptable goods in a reasonable amount of time and for reasonable reasons (and the seller can demand return of goods the buyer refuses to pay for). The buyer has a duty to accept non-resellable goods if there are no reasonable grounds to reject them (you can find examples of sellers protecting themselves in catalogs which offer personalized goods; personalized items, unless there is an error on the part of the seller or damage of the item not due to and separate from the imprinting done on it, are usually sold as “non-returnable”), but since the shirt does not conform to the standards the buyer expected and the rest of the shirts demonstrate that the seller is capable of meeting those standards, the buyer can return it — or the whole shipment — to the seller.

If damage to the shirt occurred in transit, and is not due to the seller accidentally including an item that does not conform or deliberately sending a damaged or otherwise unacceptable item, the buyer is still not stuck with the shirt even though the seller was not at fault: the buyer can resort to revocation of acceptance (of the sales contract). The buyer can also opt to accept credit for or a replacement shirt for the non-conforming item (UCC § 2-607, UCC § 2A-516).

As another classmate pointed out, it would be much more reasonable for the buyer to negotiate with the seller for a replacement shirt or a refund of the cost of the shirt rather than forcing the seller to bear the cost of shipping the entire batch of shirts back (as noted above; see also UCC § 2-211), but the buyer is not required to be reasonable to this degree and be “forced” to pay for the rest of the shirts even if the problem is restricted to just one unacceptable shirt out of one hundred.

It is likely that a buyer who earns a reputation for being difficult to this degree may find fewer and fewer sellers willing to sell goods to him or her (perhaps he or she may have to resort to finding other sellers online after annoying all local vendors with nitpickiness!), but that is about the extent of the protest an annoyed seller can resort to, given that the buyer can legally reject the entire shipment based on a minor issue if she or he wishes to.

(References: Twomey & Jennings (class textbook) and SUO online class lecture for Week Two)

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