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Reproduced with permission from 13 Georgia Law Review (1979) 805-846

Buyer's Right of Rejection: A Quarter Century Under the Uniform Commercial Code and Recent International Developments

Francis A. Miniter [*]

I. Introduction

The last quarter century has seen the greatest development of commercial legal theory in history, both within the United States and without. This Article examines these developments with respect to the issue of the buyer's right to reject non-conforming goods. Domestically, courts have guided theory toward a modified substantial breach test involving considerations of prejudice and good faith. Internationally, the substantial breach test has come into favor through a number of law reform projects and commissions that have comprehensively treated the subject. The variations and subtleties developed abroad are ripe for consideration and possible adoption in this country in view of the clear but piecemeal attempts by the judiciary to effect a standard for the buyer's right of rejection. [1]

An orderly commercial community requires both the knowledge that with some degree of certainty transactions agreed upon will run to completion and the assurance that the rights of the parties to such transactions will be fairly protected in any dispute. Yet sometimes the attainment of a high degree of certainty in the performance of transactions conflicts with the balancing of the parties' rights. [2] The more accurately a vendor can say in advance of a delivery that the goods will not come back to him or the more confident a buyer feels in his ability to rid himself of unwanted goods, the less the rights of the other party are taken into account. On the other hand, the more finely tuned the dispute resolution mechanism is to the balancing of rights, the less predictable is the outcome of any transaction, especially where the parties are not legally sophisticated.

Throughout the history of the common law the courts have enunciated different tests along the continuum of rights and certainty as economic and social forces have shaped the times. In the time of Bracton the rule was that of perfect tender unhampered by other considerations.[3] The event of delivery was central to the contract.[4] The development of the theory of mutuality of promises [5] altered this simplicity, emphasizing the event of contracting over that of delivery. More important was the entire contracts doctrine that denied relief unless the contract was performed in its entirety by the suitor.[6] This held sway for more than a century before yielding in non-sales matters only to a substantial performance test.[7] At the start of the Industrial Revolution the courts changed from a blinkered application of ill-fitting ancient principles to an affirmative attitude of forwarding commercial transactions, especially where the parties were dealing at great distances. Property concepts brought in through the notion of equitable conversion, however, encumbered the emphasis on the event of contracting.[8] Rejection was unavailable after the property had passed.[9] On the other hand, the buyer could pry loose goods as his own if the seller refused to complete the transaction.[10] At the same time the courts began to characterize terms as "conditions, " i.e., terms central to the contract, any breach of which entitled the injured party to rescind, and "warranties," any breach of which gave rise to damages only.[11] By this mass of legal fictions the law of sales became encumbered for 150 years with considerations irrelevant to the issue-oriented resolution of rejection problems. While the parties could easily determine when property had passed and hence when the right to reject had ceased, justice was not always done. Chalmer's Sale of Goods Act in 1893 [12] and Williston's Uniform Sales Act of 1906 codified this approach in various forms.

The Uniform Commercial Code adopted an issue-oriented analysis with the banishment of property principles from the law of sales. Although it did not conform the law of sales to the rest of contract law by endorsing a substantial performance standard for rejection, the perfect tender rule was retained in modified form by the creation of a right to cure in the seller. The net effect was some theoretical movement away from the attainment of certainty in transactions and toward the balancing of the parties' rights.[13]

While the Code does not embody the substantial performance standards that some of its sponsors sought,[14] judicial treatment of the complex of rejection and cure provisions has resulted in a sliding-scale type of substantial breach test.[15] This has been achieved by reading the requirements of U.C.C. sections 2-602, 2-606, and 2-606 not as prerequisites to a valid rejection, but as guidelines to be applied or not as the facts of the case warrant. Additionally, courts occasionally have read section 2-508 to restrict the seller's right to cure substantial non-conformities or to enlarge the right where the non-conformity is minor. Further, to a rough extent, the courts will weigh the substantiality of the non-conformity against any special prejudice to the seller (e.g., the goods have been processed) to limit the right of rejection. They do not, however, seem to weigh the seller's costs of retrieval or resale among the special prejudices warranting a limitation on the right of rejection.[16]

The result is a further movement along the continuum toward a theory of balancing of rights at the expense of certainty. Yet, as this Article will show, a synthesis of the existing body of case law indicates that a greater certainty about rights at the inception of the dispute supplants this loss of certainty concerning the completion of the contract. This synthesis is the object of Part II of this Article.

II. Rejection Under the Uniform Commercial Code

A. The Statutory Framework

(1) U.C.C. § 2-612 [17]

While the main concern of this Article lies with claims for rejection under section 2-601, a few words should be said about claims for rejection under section 2-612 of part or all of an installment contract. Section 2-612(3) continues the policy of the Uniform Sales Act § 45(2), allowing rejection where the breach is so material as to justify a refusal to proceed. Section 2-612(2) does not have any counterpart in the Uniform Sales Act, which applied the perfect tender rule to individual installments.[18]

Professor Priest asserts that this section in effect creates a substantial breach test for merchants, because consumers almost always come under section 2-601, and only merchants use installment contracts.[19] The inference is unwarranted. The mass of litigation under section 2-601 contrasts with the sparsity of litigation under section 2-612,[20] suggesting that only a small percentage of business is done by installment contracts. Further, while many merchants do maintain regular relationships with suppliers and buyers, the continual placing of orders does not create an installment contract. Theoretically the two forms of relationship should, perhaps, be treated more similarly. Differing results should not flow solely from the manner in which delivery is taken; if 10,000 widgets are delivered all at once, a perfect tender rule now applies, whereas if they are delivered 5,000 today and 5,000 in seven days, a substantial breach test applies.

Where the breach falls under section 2-612(2), the buyer loses his right to reject if the non-conformity can be cured and the seller gives an adequate assurance of cure. The section, therefore, seems to contemplate that the seller should have the right to cure substantial breaches. Yet the apparent judicial trend is to allow cure under this section if the non-conformity is minor.[21] A fortiori, it would seem that there should be no right to cure substantial non-conformities falling under section 2-612(3). The one case to treat the question, however, found a right to cure at least where the time for performance had not lapsed and the seller had given the buyer seasonable notice of his intent to cure.[22] In sum, therefore, the question of right to cure under section 2-612 remains unresolved. The structure of this section would seem to indicate that the drafters intended to create a right to cure substantial non-conformities. The wavering judicial treatment, however, suggests that such a policy has not yet been clearly formulated.

(2) U.C.C. § 2-601, 2-602 and 2-605

Section 2-601 sets forth the right of rejection with deceptive simplicity, the only condition being that the goods or the tender of delivery "fail in any respect to conform to the contract." This phrase throws a wide net over the types of tenders that will activate the section. Section 2-106(2) defines "conform" as follows: "Goods or conduct including any part of a performance are 'conforming' or conform to the contract when they are in accordance with the obligations under the contract."[23] Official comment two to the section states in part: "It is in general intended to continue the policy of requiring exact performance by the seller of his obligations as a condition to his right to require acceptance."

On its face the provision embodies the perfect tender rule, a broad right to reject,[24] but a number of other provisions may reduce the scope of this remedy. Some are formal or technical in nature (sections 2-602 and 2-605) and some are substantive (sections 2-606 and 2-508). Further, revocation of acceptance (section 2-608), an expanded right of rescission, also competes with rejection and might narrow its scope.

Of the formal requirements, section 2-602(1) requires that rejection be made "within a reasonable time" after tender or delivery, mirroring the substantive rule in section 2-606 that deems acceptance to occur after a "reasonable opportunity to inspect." Section 2-602(1) also requires the buyer seasonably to notify the seller of the rejection. This too is a question of reasonableness in fact. Both of these requirements are, therefore, subject to manipulation.

Section 2-602(2)(b) further obligates the buyer to hold the rejected goods "with reasonable care at the seller's disposition." Again, the Code states no consequences of a breach of this provision. Likewise, the requirement under section 2-603 that a merchant buyer make reasonable efforts to resell rejected goods for the seller includes no consequences.

In contrast, section 2-605 explicitly states that a buyer may not rely upon a ground of rejection not seasonably communicated with particularity to the seller. The rationale for the explicit bar is that lack of specification prejudices the right of the seller to cure.

(3) U.C.C. § § 2-606, 2-608, 2-508

Section 2-606(1)(a) states that a buyer accepts if he has had a reasonable opportunity to inspect and signifies to the seller that he will take the goods. Flexibility enters in interpreting whether such a reasonable time has passed as to make the signification meaningful. Section 2-606(1)(b) covers the situation where the buyer does not signify to the seller. Again, "reasonable opportunity to inspect" leaves the courts much latitude. Section 2-606(1)(c) also provides only a vague standard for acceptance by "any act inconsistent with the seller's ownership." It seems to adopt the crusty property test abandoned elsewhere in the Code generally, and especially with respect to rejection.[26]

Section 2-608(2)(b) provides for revocation of acceptance, formerly labeled rescission.[27] Substantial impairment of value is a precondition to the operation of the section. Even then only two instances exist in which the remedy can be used. In the first, the buyer must know of the non-conformity and reasonably assume that the seller would, but has failed to, cure it. If the buyer accepted the goods with the assumption that the seller would cure a minor defect, the section does not permit a later revocation should the seller fail to cure. The second instance contemplates the buyer's acceptance without knowledge of the non-conformity, but only if the non-conformity was difficult to discover or if the seller's assurances induced the buyer not to inspect. Section 2-608(2) requires that revocation be made within a reasonable time after the buyer should have discovered the defect. It also requires notification, but says nothing of the seasonableness of the notice. Subsection (3), however, cures this hiatus, imposing on the buyer the same rights and duties as if he had rejected. The courts are unsettled as to whether the cure provisions also apply to revocation of acceptance.[28]

The Code eliminates the obligation of the buyer under the Uniform Sales Act to elect between rescission and damages,[29] thus making revocation competitive with rejection. While under the Uniform Sales Act a buyer would only elect to rescind if actual losses were small or if retaining the goods would not mitigate damages, the breadth of the Code provision makes rescission a reasonable alternative to the rejection remedy. A strict definition of acceptance is all that would be needed to change the basic standard from one of perfect tender to one of substantial impairment.

Finally, the cure provisions of the Code substantially restrict the scope of rejection. Section 2-508(1) provides that where the time for performance has not yet fully elapsed, the seller may cure the non-conformity if he first notifies the buyer of his intention to do so and he effects the cure within the contract time. Section 2-508(2), providing for cure after the time of performance, is more crucial because contracts generally designate no particular time for performance, and buyers, especially consumers, often receive the goods at the time of sale. By a flexible interpretation of the provision regarding the seller's reasonable belief in the acceptability of the tender and the seasonable notification requirement, and by a possible limiting of the scope of cure, this section may be manipulated to modify the scope of rejections.[30]

B. The Impact of the Judiciary on the Code

The casual reader of the case law under the Code may be excused if his first impression is that the courts are wallowing in a vacuum without standards. How else could he explain why one court allowed a buyer to reject a truck after two years and 115,000 miles, while another refused any remedy to a consumer who test-drove his new automobile for a mere three hours? Yet the cases show that where the buyer can demonstrate a substantial breach, very rarely will he lose; where he can show only a minor breach, he will rarely win. Cases involving substantial breaches fall prey to technicalities significantly less frequently than do cases involving minor breaches. The rationale for this predilection is presumably that the courts, though not making a cost analysis as Professor Priest suggests,[31] are suspicious of the attempt of buyers to use drastic remedies for minor breaches, and are sympathetic to those who suffer real losses. Then, too, the courts are not insensitive to the general need of society that commerce should go forward. The courts apply the requirements flexibly so as to balance the substantive rights of the parties.[32]

(1) Cases under U.C.C. § 2-601

Section 2-601 merely states the right to reject non-conforming goods and thus is not the subject of much litigation. It does not explicitly impose a good faith obligation to accept, but there is judicial pronouncement to that effect. Maas v. Scoboda [33] contains dicta that the buyer is expected to make a good faith attempt to adapt the goods to his purpose.[34] This is simply an application of the obligation imposed by section 1-203 to the rejection and cure provisions.

One court explicitly has construed section 2-601 to apply to cases other than trivial breaches. In Gindy Manufacturing Corp. v. Cardinale Trucking Corp. [35] faulty radius rods on semi-trailers allegedly had caused premature tire wear. The seller resold the goods and sued for the deficiency. While this appears to be a revocation rather than rejection case, the New Jersey Superior Court found it necessary, in response to the buyer's arguments that the goods were unmerchantable, to address the scope of rejection. It stated:

"For contract purposes an issue may be raised as to whether the defects in question were minor, unremarkable defects which require adjustment and correction without constituting a breach of an implied warranty of merchantability. Compare Adams v. Peter Tramontin Motor Sales, Inc., 42 N.J. Super. 313 (App. Div. 1956), where it was held that defects in motor tuning, door locks, dome lights and the like did not make a new car unmerchantable, with Zabriske Chevrolet, Inc. v. Smiths, 99 N.J. Super. 441, 457 (Law Div., 1968), where a faulty transmission, making an auto inoperable, justified the buyer's rejection."[36]

And again the court noted: "Some defects do not justify rejection by the buyer but can be cured by replacement or repair, N.J.S.A. 12 A: 2-508."[37] The court appeared to substitute "unmerchantable" for "non-conforming." The former implies something more than mere lack of perfection in the goods tendered. This makes the limitation of rejection in cases of minor breaches more understandable. Under a literal reading of the Code a buyer might reject even though the goods could not be said to breach any of the express or implied warranties provided for in sections 2-312 through 2-315.[38] But the court did not reason this way. For its proposition that "some defects do not justify rejection by the buyer but can be cured by replacement or repair" it cited only section 2-508, which one would expect could only apply after a buyer has rejected.[39] Moreover, the Adams case, upon which the court relied to establish this dichotomy, arose under the Uniform Sales Act, which provided that breach of warranty was required for both rejection and rescission.[40] While the result achieved by the court, that in cases of minor breaches there is no right of rejection but there is a right to demand cure, may be sensible, it is not immediately derivable from the Code itself.

Nonetheless, a textual argument exists for the equation of "non-conforming" with breach of warranty. Section 2-106(2) defines "conforming" to mean that the goods and tender are in accordance with the obligations of the contract. The obligations of the contract include, inter alia, the express and implied warranties provided for in sections 2-312 through 2-315. As to alleged defects going to these obligations, can goods that satisfy the warranty in question be held in non-conformity with the obligations of the contract? The obligations must remain constant. There cannot be one test for breaches of warranty and another for rejection.[41] Although this approach would not by itself effect a substantial performance test, it would certainly assist the rationalization of one. The cases instead have achieved the same result by manipulating the limiting provisions in sections 2-508, 2-602, 2-605, 2-606, and 2-608.

(2) Rejection Within a Reasonable Time and Deemed Acceptance: Sections 2-602(1) and 2-606

(a) Rejection shortly after delivery

On the restrictive side an exemplary case is Rozmus v. Thompson's Lincoln-Mercury Co.,[42] in which the buyer of an automobile returned it on the day of delivery because of a loud, banging noise, and demanded another in substitution. The seller indicated that he wanted instead to repair the vehicle. The buyer then left without the car and never returned. The seller repaired the vehicle -- two engine mounting bolts were loose and required tightening -- and later sued for the deficiency upon resale. The court inferred from the easy repair that the defect did not substantially impair the value of the goods to the buyer. The court then held that the buyer's signifying to the seller and driving the car home amounted to an acceptance of the goods.

"There is no doubt that the plaintiff accepted this new automobile. He executed the conditional sales contract which provided that he acknowledged the acceptance of the Mercury in good order, and he drove it from the show room to his home. Section 2-606 . . . provides that acceptance takes force when the buyer either signifies his acceptance to the seller or does an act inconsistent with the seller's ownership."[43]

The court failed to note that section 6-606(1)(a) mandates that the act of signifying should only be effective after the buyer has had a reasonable opportunity to inspect the goods. Because the opportunity does not usually arise until after the goods have been delivered, some time must be allowed. In the case of automobiles, part of the inspection must consist of driving the vehicle, precisely what the buyer in Rozmus did. The defect was minor, however, and the buyer attempted to dictate the nature of the cure, which the court might have viewed as constituting bad faith.[44]

The converse of Rozmus is Havas v. Love,[45] in which the purchaser bought an air-conditioned motorbus. The next business day, the air conditioning smoked and the buyer immediately demanded that the seller remedy the defect. After several hours of work, the unit still smoked. The buyer asked for a substitute in acceptable condition and the seller refused. The court held that the buyer rightly had rejected and thereupon was entitled to a return of the money he had paid. The major factual distinctions between this and Rozmus are that here the defect was not readily cured and the buyer showed good faith by giving the seller an opportunity to repair. Arguably the court should have considered the case under the revocation provision so that it could have openly considered the substantiality of the breach. The analysis used, however, conformed better to the common understanding of the place of revocation and rejection.

Where the buyer would win on either rejection or revocation grounds, the court can determine with greater neutrality which rule to apply. In Rose v. Epley Motor Sales [46] the buyer test drove the automobile for three hours before closing the deal. Later that same day and after delivery, the car caught fire and the purchaser immediately returned it to the seller. The court found that the buyer had accepted the goods, because a three hour test drive provided a reasonable opportunity to inspect, but that there was a substantial impairment of the value of the goods and the buyer had acted seasonably to rescind. While Rozmus might justify such a narrow reading of "reasonable opportunity to inspect" by a result-oriented analysis, no such need arose there. The buyer would have won whether the court had called the remedy rejection or rescission. The case does serve, though, to indicate the general policy of courts that revocation, not rejection, is the preferred remedy, and that, therefore, courts should find acceptance readily.[47]

(b) Rejection long after delivery

These cases pose more substantial problems. At one extreme is Gramling v. Baltz.[48] The plaintiff there bought a truck for use in his business as a long distance hauler, immediately noticed a defect in the truck's ability to haul loads, and complained of the defect, which the seller repeatedly but unsuccessfully tried to repair. The court held that he could reject the truck, even after two years and 115,000 miles of use, for a defect in the engine block that required replacement of the engine. Apparently the continuous complains of the buyer after purchasing the truck and the inability of the seller to effect the promised cure extended the time constituting a reasonable period for rejection. Several cases have approved of this principle of extension [49] and some have allowed rejection after like periods of possession by the buyer.[50]

In Jones v. Abriani [51] a mobile home purchased by the plaintiff contained different equipment and a different floor plan than he had ordered. The buyer told the seller that he did not want the home as delivered. When the seller threatened forfeiture of the down payment, the buyer took possession on the condition that the seller cure the defects. The home contained numerous other defects and, after one year, the buyer finally brought an action for rescission. The court held:

"The Abrianis' complaint requested rescission of the contract, but it is not clear whether the theory relied on was rejection under 2-601, or revocation of acceptance under 2-608. Ordinarily, acceptance with knowledge of a defect is made on the reasonable assumption that the non-conformity would be cured. Failure to seasonably cure raises a right to revoke acceptance under 2-608(1)(a)."

"In the case at bar, revocation of acceptance would have been an acceptable remedy, but we believe that rejection would have been a more appropriate remedy. Here the Abrianis did not make an acceptance as contemplated by the Code, but rather agreed to take possession of the goods until such time as sellers had an opportunity to cure their defective tender. In fact, had it not been for sellers' threats, it appears that the Abrianis would not have voluntarily accepted the goods even if the seller had made assurances that they would repair the defects. The Abrianis were entitled to 'try out' the goods to discover defects in the home for a reasonable period before acceptance occurs. 2-606(1). . . . [T]he seller's repeated assurances of cure extend the reasonable time for notice of rejection."[52]

The court held that use of goods did not necessarily invalidate a rejection and did not do so here.

The Abriani case rightly recognized the need for a try-out period within which defects could be discovered and the goods returned. But the two years and 115,000 miles of use in Gramling and the one year and 50,000 miles of use in Trailmobile Division of Pullman, Inc. v. Jones [53] are extreme cases. Official comment six to section 2-608(2) indicates that the right of revocation should be lost if the goods have substantially deteriorated for reasons other than the defect. Prolonged use, as in these cases, may result in significant deterioration.[54] Thus, in Axion Corp. v. C.D.C. Leasing Corp.,[55] where the court could not find a substantial impairment of value to the buyer of two valve testing machines used for eight months before payments ceased and for another six months before notice of rejection was given, the court stated that revocation was the more appropriate theory and that the attempt to revoke had failed for want of substantial impairment. The court may have had in mind the deterioration resulting from fourteen months of constant use, and the consequent prejudice to the seller if he were required to take back the goods.

Where, as in Abriani or Gramling, the buyer's possession and use of the goods is prolonged as a result of a notional extension of the time for rejection because of the seller's assurances, should the seller be compensated for the benefits the buyer actually received? In Moore v. Howard Pontiac-American, Inc.,[56] a revocation case, the court held that the seller should be granted an allowance for use. It would seem to follow that where rejection is permitted after prolonged usage, the same result should obtain. The reported cases do not discuss this point.

Finally, is the distinction drawn in Abriani, that this was a case of possession pending cure, rather than acceptance on the assurance of cure, a valid and viable one? There was certainly possession without acceptance during the period between delivery and discovery of the defects, most likely until the notification to the seller of the defects. When the seller indicated that he would cure and the buyer indicated that he would retain the goods because of the seller's promise of cure, the situation appeared to be precisely that covered by section 2-608(1)(a). Little advantage is gained by characterizing the situation as continued possession before acceptance; there may even be a disadvantage. Technically, the right to reject for any non-conformity would remain. The buyer thus might receive an extended period of use of and value from the goods before rejecting. If the seller were not then given an allowance for the buyer's use, his burden would be significantly increased.

Where the breach is minor, the courts will never find anything to justify a prolongation of the reasonable time to reject. The court in Reece v. Yeager Ford Sales, Inc. [57] held for the seller where the buyer attempted to rescind or reject an automobile two months and 3400 miles after delivery. The buyer had begun a trip from West Virginia to Chicago with the car on the day of delivery. In Chicago he noticed that the chrome moulding and trim did not fit properly. After eleven days and 1600 miles he noticed some white specks of paint on the car. After a further seven days he returned it for repairs, which the seller performed. He took more trips, and when he finally attempted to return the car, the cost of the repairs for the items that he claimed to be defective amounted to eighty dollars. This sum the manufacturer offered to pay. After stating that a reasonable time depended upon the facts, the court held that these facts did not show that rejection or rescission had occurred within a reasonable time.[58]

In some cases, rejection has been denied on the ground of lack of reasonable time despite the substantiality of the breach. In Th. Van Huijstee, N.V. v. Faekadrich [59] customs officials would not approve the labeling of packages of imported eggs. The buyer stored the eggs to prevent deterioration but waited fifteen days before notifying the seller of the non-conformity. The notification was not explicitly a rejection, although such might have been inferred. The court found that the buyer had not seasonably rejected, using the Code's flexibility to effect its conclusion that the prejudice to the seller in receiving back the goods not in the state shipped (eggs being perishable) outweighed the buyer's complaint.[60] Avoidable prejudice to the seller may, then, be a factor that outweighs the effect of a substantial impairment of the value to the buyer.

In summary, the courts apparently have relaxed or restricted the bounds of "a reasonable time" as the occasion required to give effect to the buyer's claim for a substantial breach or the seller's defense of an insignificant breach, respectively.[61] The Faehndrich situation, however, indicates that such a simple analysis may not fully account for these decisions. Perhaps a sliding scale analysis is more appropriate, the underlying principle being that of the major-minor defect analysis modified by an inquiry of avoidable prejudice to the seller.

(3) Seasonable Notice of Rejection: Section 2-602(1)

This requirement is little more than an appendix to the requirement that rejection occur within a reasonable time; the discussion, therefore, will be abbreviated. Where the seller would be unable to effect a cure due to the buyer's delay [62] or where the breach is minor and the delay substantial,[63] the buyer's claim of rejection will be denied.

One problem unique to this area is whether commencement of a suit cuts off the buyer's time for giving of notice. The cases are divided. In Moeller Manufacturing, Inc. v. Mattis [64] the buyer of a defective hay grinder stopped payment on checks he had given to the seller. Three weeks after the seller sued, the buyer gave notice of revocation. On the issue of seasonable notice the court found for the buyer, even though he had not given notice before commencement of the suit.[65]

On the other hand, Lynx, Inc. v. Ordnance Products, Inc. [66] held that where no notice has been given prior to the institution of an action by the seller for the price, the notice of rejection or revocation is not seasonable, even though the buyer notified the seller that most of the goods were "unsatisfactory" prior to the suit. The buyer was supposed to make regular predelivery inspections of a kind that should have discovered the defect. It may be that the court felt that the neglect of the buyer to discover the defect would result in prejudice to the seller if the court allowed rejection or revocation.

A related case, Desilets Granite Co. v. Stone Equalizer Corp.,[67] held that neither attachment of the goods nor the complaint sufficed as notice of rejection. The attachment was merely to allow the buyer to obtain control before payment to determine the fitness of a machine. Service of a complaint might be notice, but not here where it was done before the buyer discovered the non-conformity. Assuming that it could constitute notice in the proper circumstances, could the seller then cure the defect under section 2-508? Until the seller has had the opportunity to exercise that right, the buyer's right to reject may be only conditional. Granted that the commencement of the law suit does not in theory prohibit the seller from curing, the practical effect may nonetheless be that. A further consideration arguing against service of the complaint as notice is the desirability of achieving nonjudicial resolutions of commercial problems. An informed bar that knows courts will not countenance undue haste in suing may counsel buyers to negotiate first.

(4) Acceptance by Acts Inconsistent with the Seller's Ownership; Herein of Exercise of Ownership after Rejection: Sections 2-606(1)(c) and 2-602(2)(a)[68]

Here, as with the reasonable time cases, where the breach is substantial, neither an exercise of ownership after rejection or revocation nor an act inconsistent with the seller's ownership will result in denial of rejection or revocation unless the seller would suffer tangible prejudice. Where the breach is insubstantial or the prejudice to the seller-great, however, sections 2-602(2)(a) and 2-606(1)(c) have been used to limit the buyer's remedies. At one extreme, mere possession rarely has been used as a basis for establishing acceptance, and never in the case of a substantial breach. Next, installation, use, alteration and encumbrance, in that order, increasingly interfere with the seller's expectations, and each has thus been the basis for denying the buyer's claim. The kind of inconsistent act is therefore a consideration when balancing the buyer's rights against the prejudice to the seller.

(a) Possession

In Jones v. Abriani [69] where the buyers had received a severely defective mobile home, the court held that the buyers had a right to possession as security until their promissory note was returned to them, although rejection of the goods had occurred one year after delivery. The court went on to state that from the time of rejection, the buyers did not have the right to use the goods unless such use was necessary to preserve them. Because an empty dwelling deteriorates rapidly, the action of the buyers in continuing to reside in the home was justified. The possession argument in Abriani complements the "tryout" argument also presented there. At least for the tryout period, possession should not be considered an act inconsistent with the ownership of the seller.[70]

At some point, however, possession together with the lapse of time gives rise to an inference of acceptance. Such was the case in Green Chevrolet Co. v. Kemp [71] where the buyer kept an automobile for more than six months and 3000 miles before attempting to reject for "alleged mechanical defects." The opinion leaves the impression that the defects were not serious. Nothing indicates that the buyer did anything other than treat the vehicle as his own. It appears that the court simply used this vague statutory phrase to defeat a weak but technically correct claim by the buyer. The opinion shows that the seller had promptly cured all previous complaints. This, together with the lapse of time and the perceived insubstantiality of the buyer's present complaint support the result that the court achieved. Such lapse of time also weakens the probability that the defect was present in the goods when sold.

Finally, in Campbell v. Pollack [72] the buyer of commercial car washing equipment removed some of the equipment from the building in which it was stored. The court held that this removal in itself was an exercise of dominion sufficient to constitute acceptance. Shortly thereafter, the seller's title to a material part of the goods was found to be defective, and, in addition, the seller failed to supply a relatively inexpensive but essential piece of equipment. On the basis of this substantial impairment of value, the court sanctioned revocation. By readily finding an acceptance the court was able to insure that in future cases only a substantial breach would result in a return of goods to the seller.

(b) Installation

In La Villa Fair v. Lewis Carpet Mills, Inc. [73] the buyer attempted to install carpeting in a display apartment he was building as part of a development. Satisfactory installation was not possible because the carpet was delaminated in places and had been patched, despite its warranty of first quality. These attempts to install were held not so inconsistent with the seller's ownership as to amount to acceptance. The installation might be necessary to determine if the goods were conforming.[74]

On the other hand, the court in Cervitor Kitchens, Inc. v. Chapman [75] held that the installation of kitchen units by a contractor in a new dormitory constituted an act inconsistent with the ownership of the seller, and the buyer was deemed to have accepted the goods. The alleged defects apparently were not serious; thus, revocation was unavailable. The court, in an overly broad statement, held that rejection must occur before installation. Where the goods, as here, do not require testing after installation, that may be reasonable. Otherwise, this requirement is inapt, as evidenced by La Villa Fair.

(c) Use

Two types of use must be distinguished: use before rejection and discovery of the non-conformity, and the continued employment of the goods after notice of rejection or revocation.

(i) Use Before Rejection

In Carl Beasley Ford, Inc. v. Burroughs Corp. [76] the court held that the use of machinery during an eleven month period in which the seller futilely tried to make a computer program work was not an inconsistent act constituting acceptance. The buyer's claim was substantial. The program simply would not run. Moreover, the use, as in the Abriani and Gambling cases, was in the nature of a tryout. In all these cases the buyer, far from expressing satisfaction with the goods, continually complained to and urged the seller to remedy the defects.[77] Where the seller has prevailed, the cases invariably have involved only minor breaches. In Webb v. Chevy Chase Cars, Inc. [78] the buyer of a pickup truck for use in his business retained the vehicle for one week before returning it to the seller because it did not have a steel bed or oversized wheels. The contract did not call for these items. The seller had repaired minor defects as they were brought to his attention, and during the week of possession the buyer drove the vehicle more than 3,000 miles. The buyer defended against the seller's suit on a check, claiming that he had rejected the goods. The court held for the seller, stating that the use of the goods by the buyer in his own business constituted an acceptance.[79]

In Axion Corp. v. G.D.C. Leasing Corp. [80] a buyer of valve testing equipment attempted to reject after fourteen months of use, having refused to make any further payments on the purchase price during the last six months. The machinery did not operate within the five percent deviation from specifications required by the contract. The buyer produced evidence showing that operation of the machinery too far above or too far below specifications would be a danger to safety, but produced no evidence as to how much danger if any was present in the actual operation of the machinery. In argument, counsel for the buyer cited Carlo Bianchi & Co. v. Builders' Equipment & Supplier Co.,[81] which held that "use during the period when both parties were concerned with improving the plant signified only that the buyer would accept it if the attempted improvements proved efficacious."[81] The court declined even to distinguish the Bianchi case, mentioning only that it was decided under the Uniform Sales Act, and saying that here it was more appropriate to treat the buyer's actions as a revocation of acceptance rather than as a rejection. The protracted use of the equipment constituted acceptance. The court then determined that the buyer had not shown the existence of a non-conformity that substantially impaired the value of the goods to him, despite the fact that the machinery did not perform within the contract specifications, because the buyer did not indicate the extent of impairment of value resulting from the fact that specifications were not met. Therefore, the court could proceed to determine substantiality without reference to the specifications the buyer set.

The case typifies the tendency of the courts to use revocation theory as a limiting factor on the scope of rejection, but introduces some problems for contracts that specify the operating limits of the subject equipment. Buyers specify operating limits not only to insure a safe and profitable rate of production but also to insure a certain rate and a certain accuracy. If such a contractual specification does not indicate the parties' agreement on the limits of substantial value, it is difficult to see what would. Should the court's opinion in Axion Corp. be followed, the utility of making specifications will be undermined. A seller might find that it is significantly cheaper to make the machinery capable of operation within a seven percent deviation than to make it operate within only a five percent deviation as required by the contract. He would be gambling that the buyer could not make out a case for substantial impairment independent of the contract and that any damages that the buyer might prove would be less than his cost savings in producing the inferior machine. This cost disadvantage is inherent in the use of a substantial breach test. Sellers have less incentive to produce quality products under a substantial impairment rule than under a perfect tender rule.

(ii) Use After Rejection

Although different considerations apply to this area, generally cases of major breach fall to the buyer and those of minor breach fall to the seller.

As noted above, Jones v. Abriani [83] permitted use after rejection in order to preserve the goods from deterioration. The same rationale was employed in Jorgensen v. Pressnall,[84] where the buyer revoked his acceptance of a seriously defective mobile home but continued to live there for almost a year thereafter. The court held that this use of the goods was not inconsistent with the seller's ownership for two reasons: (1) the buyers retained a security interest in the goods; and (2) they were entitled to preserve the collateral and continued occupancy was the most feasible way to protect against water seepage, one of the major defects of the home.

Valley Die Cast Corp. v. A.C.W., Inc. [85] set out another, perhaps more important, consideration. The buyer of a car wash system took delivery in July 1966, rejected it in January 1967, but continued to use it until May of that year, when a replacement system was installed. The buyer recognized depreciation on the equipment for the two tax years involved. The court held that neither the taking of the depreciation nor the continued use after rejection amounted to acceptance of the goods. Such use mitigated the buyer's damages and was therefore permissible.[86] In effect, where it is cheaper for the buyer to use the goods than to put them aside and acquire replacement goods, or where replacement goods are not immediately available, the seller cannot complain because the buyer has minimized his damages.[87]

The court's approach may solve the traditional problem of the impecunious buyer. Historically, the inability of the buyer to replace the goods because his capital was tied up in the rejected goods was no excuse for not mitigating his losses by replacement. The rule makes sense when the suit involves merchants dealing in commodities. It does not when the buyer is purchasing a central piece of equipment for his business or a home, mobile or otherwise. Such buyers have invested the bulk of their funds and are left few choices if the goods are not fit for their purpose and no refund can be obtained. Hence, where the court can find that the buyers have been substantially wronged in the purchase and further wronged by the seller's refusal to refund, it may be inclined to read section 2-712 literally.

An initial, substantial non-conformity is nonetheless a necessity for this preferred treatment. Where this element is lacking the courts have consistently found that the action of the buyer in continuing to use the goods invalidated the rejection or revocation.[88] The fact of continued use without more may be evidence that the defect was not substantial.

(d) Alteration

Research revealed no case in this area in which the buyer succeeded. The last subsection concerned goods which when used retained their identity; the concern here is with goods that are processed or altered or manufactured so that they are consumed in their use by the buyer. If the seller must take back the goods, he will receive something other than what he sold. For instance, a seller may have markets for animal skins, whether first class or defective, but not for shoes made from the skins.[89] Therefore, by using a sliding scale approach, no minor defect should permit rejection, and even many major defects may be insufficient when balanced against this prejudice to the seller. Something approaching a total failure of consideration or fraud should be required before the buyer can succeed.

The only possible counter-example, Askco Engineering Corp. v. Mobil Chemical Corp.,[90] was decided under section 2-606(1)(a) rather than section 2-606(1)(c). The buyer of film that the seller had warranted to be low-density polyethylene attempted to process it before discovering the non-conformity. The condition of the film made it totally useless to the buyer who prevailed in his suit to recover the purchase price. Had the issue of an inconsistent act been raised, the buyer still should have prevailed on the ground of a failure of consideration.

(e) Title

Title problems occur when either a sub-buyer or creditor of the buyer or sub-buyer obtains an interest in the goods. The seller does not want back goods infected with the interest of a third party. The buyer may be able to eliminate the interest of the third party if the seller refunds the purchase price and thus obtains a return of the goods in the same condition as when sold. Even goods whose value to the buyer is substantially impaired by the non-conformity, however, are not immune from the reach of this bar to recovery. The courts view the prejudice to the seller as substantial, and as the third party may not be before the court his rights may not be determinable.

The limitation was applied despite a substantial breach in Moeller Manufacturing, Inc. v. Mattis.[91] The buyer had purchased a hay grinder with a third party loan secured by the goods. When the machine failed to work, the buyer had stopped payment on checks payable to the seller. In the seller's suit the court held that because the buyer's title was encumbered, he had performed an act inconsistent with the seller's ownership and could not revoke acceptance. His only remedy was in damages. While nothing was said of the buyer's ability to clear title, there was also no indication that he was willing to do so. The case neglects as well the obvious problem of the buyer's lack of money and the issue of whether the goods once tainted are forever tainted.

Where the buyer has sold the goods to a third party, he is generally held to have done an act inconsistent with the seller's ownership.[92] Only one case stated, by way of dicta, that such a sub-sale would not preclude a revocation.[93] Presumably, it would be enough for the sub-buyer to reject the goods and throw them back at the buyer.

An exception occurs when the buyer deals with the goods either to realize his security interest in the rejected goods or to protect the interest of both buyer and seller. A rare instance is Clark v. Zaid, Inc.,[94] holding that the buyer's sale of part of the goods was not an act inconsistent with the ownership of the seller. The buyer sold the table of a dining room set to an insurance company in settlement of a claim against the third party who damaged the goods while in the possession of the buyer after rejection, the proceeds being held for the victor in the action. No prejudice could accrue here to the seller, and prejudice is the basis for disallowing the buyer's rejection.

(5) The Seller's Right to Cure: Section 2-508

Unlike the provisions of Part Six of Article Two, much has been written about the cure section,[95] but relatively few cases have been decided under it. The brevity of section 2-508 has left much room for judicial development.

Where the buyer has refused to allow the seller to cure the defect, where he has otherwise acted in bad faith, or where he has tried to limit the seller's options in curing the defect, the courts have deprived the buyer of his right to reject. These judicial limitations have been applied generally, though not solely, in instances of minor breaches.

Section 2-508 also has been used to restrict the seller's right to cure; in cases involving a substantial breach, such use has been invariable. The techniques employed to achieve this result include limiting the time the seller has to effect the cure, limiting the right to cure to minor defects, limiting the mode of cure where the buyer's confidence in the goods has been destroyed, and interpreting repeated but unsuccessful attempts to cure as no cure at all.[96]

In the cases that restrict the buyer's right of rejection, the limitations of bad faith and refusal to allow cure often overlap. The most frequent manifestation of bad faith is such a refusal. Nonetheless, several cases stress the good faith issue over the particular manifestation.

Bartus v. Riccardi [97] is such a case. The seller delivered a new and improved version of a hearing aid rather than the old model ordered by the buyer. The seller prevailed in his claim for the price because he had reasonable grounds to believe that the newer model would be accepted, he had notified the buyer within a reasonable time of a conforming tender, and the buyer had not meanwhile altered his position by repurchasing. It appears that the buyer simply decided not to buy any hearing aid and used the trivial non-conformity as an excuse to avoid the deal.

Also worthy of mention here is Wilson v. Scampoli,[98] where the buyer rejected a color television because of poor color but would not allow the seller to adjust it in his shop. The court found that the buyer could not impose on the seller the mode of cure and thereby preclude the determination of the severity of the defect. Evidence indicated that the defect was minor and capable of adjustment. The court then cited Professor Hawkland [99] as authority for the proposition that the magnitude of the defect should govern the result.

In Maas v. Scoboda [100] the buyer was found to have acted in good faith when he rejected a high moisture silo that needed continual repairs. The contract provided for a one year warranty of satisfaction. The court held that the buyer must express his dissatisfaction in good faith and that the standard for rejection is that of the reasonable man, not the buyer's subjective satisfaction. But in Peter Pan Seafoods, Inc. v. Olympic Foundry Co., [101] where the buyer of a marine engine on six months approval complained after five months, the court held for the seller because the buyer had refused to allow the seller to cure. The seller's right to cure was absolute because the time for final performance had not yet passed. While the case had a strong element of refusal to allow cure, the court may have suspected that the buyer was seeking to make illicit use of the approval clause to gain a free benefit.

Should breach of the good faith obligation result in loss of rejection or simply damages in favor of the seller? [102] It might prove difficult under the circumstances to measure the seller's damages. On the other hand, the buyer, though acting in bad faith, may have a substantial complaint. Where the buyer's bad faith leads him to actions that frustrate the ascertainment of the substantiality of the breach, however, he can hardly complain if his conduct is held to bar his right to reject.

Where the buyer refuses to allow the seller to cure the defect, the courts have consistently found for the seller, even where in some cases the defect complained of appears to have been substantial. Traynor v. Walters [103] illustrates this position well. A wholesaler contracted to buy 1,680 "top quality" Christmas trees from a grower and later agreed to take delivery until December 16. On December 7, 625 trees were delivered. Of these the buyer rejected 440 scotch pines, 200 of which the buyer rejected as non-conforming. Before the final day for performance, the seller tendered delivery of 600 more scotch pines obtained from a different source; the buyer rejected these trees while demanding performance of the rest of the contract. The buyer's suit for damages failed because of his refusal to allow the seller to cure.

The same result seems to obtain under section 2-508(2). In Beco, Inc. v. Minnechaug Gold Course, Inc. [104] the buyer of golf course equipment refused to allow the seller to cure defects and was held to have lost the right to damages. This was also the case in General Motors Corp. v. Halco Instruments, Inc.,[105] where the second purchaser of an automobile complained of a rough ride after the expiration of the express and exclusive warranty. The manufacturer offered to correct the defects without charge even though the warranty had expired, but the buyer sued to rescind. The court held for the seller on the ground that the buyer did not make the vehicle available for cure when it was offered.

Nor may the buyer try to determine the mode of cure that the seller is to employ. [106] (Of course, there comes a point when the inability of the seller to repair justifies the buyer in making such a demand.) [107] The rationale is possible prejudice to the seller and concern for the buyer's good faith. The seller is presumed to know the best and most economical way to effect cure as long as the end product is the same as that for which the buyer bargained. The presumption disappears when the evidence shows that the seller has failed to effect a cure within a reasonable time. Both Rozmus and Scampoli, however, involved relatively minor defects while Havas involved a relatively major defect. What attitude would the court take in the Havas situation were the buyer, recognizing the magnitude of the defect, immediately demanded a replacement rather than a repaired vehicle? Zabriskie Chevrolet, Inc. v. Smith [108] suggests that the buyer might prevail even then. The magnitude of the defect probably limits the seller's options in such circumstances.

The courts also have developed several restrictions on the seller's right to cure, invariably in cases of substantial breaches. First, where the seller has made repeated but unsuccessful attempts to cure, the buyer may reject even though the seller indicates his willingness to continue attempts at cure. Such was the case in Tiger Motor Co. v. McMurtry, [109] where the buyer had returned an automobile to the seller at least thirty times during the first year after its purchase. No lower limit on the number of times can be set, of course, because much depends upon the facts of the case, but in Hayes v. Hettinga [110] the combination of two unsuccessful attempts to cure and the expiration of the time for performance cut off the seller's unfettered right to cure. Other cases reach a similar result. [111]

Where the time for performance has not yet expired, an opposite result may obtain. [112] Numerous attempts might still give the buyer grounds for rejecting, especially if the defect were substantial. The right of the seller is probably not as strong as the statute would lead one to think, even in the preperformance period. If nothing else, the statute itself qualifies the right in section 2-609, giving the buyer the right to demand an adequate assurance of performance. Further judicial modification is therefore not unreasonable.

Likewise, the "further reasonable time" allowed to the seller to cure under section 2-508(2) will be read to the buyer's benefit.[113] In Davis v. Colonial Mobile Homes [114] ninety days was more than a reasonable time to cure the defects in a mobile home delivered in severely damaged condition. The nature of the goods and the needs of the buyer will probably determine the limits of the reasonable time in any particular instance. [115] In all these cases the defects were substantial. There remains the possibility, however, that the unwillingness or inability of a seller to cure a minor defect would result in a judicial allowance of rejection. The defect may in fact be minor. The defect may annoy the buyer but not impair the value of the goods to him. Or the seller might find it too costly to repair and, if the goods came factory-sealed, might find replacement (leaving him with unpackaged goods) a burden. In such circumstances, perhaps, the seller would proceed properly if he only offered the buyer an allowance off the price to reflect the diminished value. Yet there appears to be no case that discusses an allowance as a mode of cure.

Another judicially developed limitation on the seller's right to cure is the "shaken faith doctrine." This doctrine arose from Zabriskie Chevrolet, Inc. v. Smith,[116] and appears wholly confined to consumer sales. The buyer of a new automobile had driven it hardly one mile after purchase when it broke down. The seller attempted to cure by replacing the transmission, but the buyer would have nothing more to do with the car. The New Jersey Superior Court took note of the magnitude of the defect and the fact that the car was brand new and held that the buyer could not be forced to take a new automobile with a transmission of unknown lineage, because the buyer had expected goods fresh from the factory. Further, because the immediate and sudden breakdown destroyed the buyer's confidence in the product, the buyer had a right to peace of mind by avoiding the transaction altogether.[117]

This theory had not been applied in commercial circles. In Traynor v. Walters [118] the buyer had strong reason for believing that the seller could not deliver to him spruce pines that would conform to the contract. Still, the court found that he improperly had refused to allow the seller to cure when he declined to examine a third tender of spruce pines of different origin. Apparently, because the commercial buyer will often not use the goods, but will resell them, his own diminished confidence in the goods is not as relevant. Yet this has an odd ring, for it implies that the tradesman cannot act as watchdog for the consumer by rejecting goods that the consumer could reject. That the tradesman can find buyers for the inferior goods is presumed.

Finally, some courts have stated in dicta simply that the seller may cure minor defects.[119] Except as provided in section 2-612(3), the Code does not imply that the seller should not be able to cure substantial breaches. This judicial gloss on section 2-508 is further evidence of the scope given to rejection. Cure has therefore become discretionary.

C. A Summary of the Last Quarter Century Under the Code

This analysis illustrates the judicial drift toward a reinterpretation of the Code to effect a substantial breach test weighted with considerations of good faith and excessive prejudice to the parties. The drift is not a raging current. Nor is it universal or comprehensive. The considerations of good faith and prejudice are carried out in gross terms, not refined to an economic nicety.

The inescapable lack of comprehensiveness has led to an unsatisfactory treatment of many issues and has raised new issues, all of which require further analysis. Perhaps an eventual reconstruction of the Code in this area will be required. First, limiting rejection to cases of substantial breach raises the issue of whether a buyer of goods with minor defects will have any alternative to damages which, in view of the costs of litigation, may prove impractical. Second, some courts, but not all, have limited the seller's right to cure to minor breaches. Third, the issue presented by the impecunious buyer has been dealt with openly in some cases, covertly in some, and ignored in others. Some courts have espoused the view that possession and use of the goods to mitigate damages may be an exception to the "inconsistent act" limitation, but it is far from established. Other courts have reached the same result by a notional extension of the time for rejection. Fourth, the situation of consumers is unclear. If the substantial breach test is to apply to them, can a damages remedy be meaningful at all? Should the right to cure apply against consumers or should the shaken faith doctrine be a bar to cure?

The following examination of developments outside the United States may help to shed light on some of these questions. In any event, where the treatment of the question has been comprehensive, a complete model is at least available for analysis.

III. Recent International Developments

A. The Uniform Law of International Sales

Because of the relative remoteness of the parties to an international sales contract, the rules regarding rejection become even more significant. A seller may not be able to cure defects in large quantities of goods so far away; he may not have time to effect a retender; and he may not have the contacts in the buyer's local market to dispose of the goods rejected there by the buyer. It is therefore desirable that the rules should take account of the problems caused by the physical separation of buyer and seller.

In the 1960's, the growth of the European Economic Community gave impetus to the movement to standardize international trade relationships. The result was the Uniform Law on the International Sale of Goods (ULIS),[120] adopted by most Western European nations but by virtually no other country. ULIS was enacted by and governs commercial transactions between the signatory nations. Where ULIS applies, conflicts of laws principles do not.[121] On the other hand, as with municipal law, ULIS gives the parties to a contract the freedom to exclude the Convention or any of its provisions.[122] The Convention does not explicitly exclude consumer transactions from its scope.

Article 33(1) contrasts with the Uniform Commercial Code definition of "conforming" by listing the situations in which the seller has not fulfilled his obligations under the contract to deliver the goods. A lack of conformity would occur when the seller hands over only part of the goods or a different quantity than contracted for; when he delivers goods that lack the quality of the sample; when he delivers goods which are not of the same description; when the goods do not possess the qualities necessary for their ordinary or commercial use; when the goods are not fit for a particular purpose contemplated by the contract; and when the goods do not generally possess the qualities expressly or impliedly contemplated by the contract. This last item is a catch-all and may have little content beyond the specifics of the first five items. Setting forth standards permits the court considering a case under the Convention to examine the alleged non-conformity to determine if it comes within the categories set out above. On the other hand, it might prove too restrictive. Once the determination is made, the rights set out in the Convention are exclusive of all others. In some cases the buyer's knowledge or imputed knowledge of the defect will be a defense to the seller.

Article 38 obliges the buyer to examine the goods as soon as is possible, and further provides for deferred examination where the buyer, to the actual or imputed knowledge of the seller, redispatches the goods.[123] Article 39 compels the buyer, in order to preserve his rights, to notify the seller of any non-conformity promptly after it should have been discovered, and places a two year limitation period on all notices unless the contract carries a longer guarantee. The notice must specify the nature of the complaint.[124]

The remedies given the buyer for lack of conformity include, upon notice to the seller, specific performance, avoidance of the contract, or reduction of the price;[125] in addition, the buyer has a right to damages.[126] Avoidance is available only for a fundamental breach of the seller's obligations to deliver conforming goods or to deliver on time.[127] The definition of fundamental breach [128] is at best unhelpful. No meaningful standard is given. It may exclude only very trivial defects.

The Convention speaks simply of avoidance of the contract, not of rejection, rescission, or revocation. No such distinction is necessary because the concept of acceptance is also absent from ULIS. Also, the buyer usually will have already paid for the goods. Article 71 makes delivery and payment concurrent conditions, but this is subject to Article 72 which allows the seller to withhold shipment or reserve a right of disposal during transit until payment where the contract involves carriage,[129] and which permits the contract to require the buyer to make payment against shipping documents without an opportunity to inspect.[130] Most international sales involve carriage of the goods and are financed by a letter of credit, entitling the seller to payment upon presentation of a draft accompanied by the relevant shipping documents. Hence, to distinguish rejection from rescission would have no practical effect. The entirety of the buyer's obligations would have been performed by the time he sought to avoid the contact.

The distinction has even less utility because the contract cannot be avoided unless the non-conformity amounts to a fundamental breach. The scope of the pre- and post-acceptance common law remedies have been blended into one. Even fraud does not appear to give the buyer greater rights but only limits the defenses available to the seller under Articles 38 and 39.

The limitation of the buyer's right of avoidance to fundamental breaches reflects the above considerations, i.e., the extra burdens faced by the seller in international sales. It may also reflect the view that a minor breach should not merit the destruction of the whole transaction and that commercial transactions should go forward whenever possible for the overall good of the economic community. But ULIS does not deprive the buyer of all his remedies. Damages may be sought. Furthermore, Article 44(2) gives the buyer the right to demand that the seller cure minor defects within a reasonable time. Where the seller does not so remedy the defect, the buyer may, inter alia, avoid the contract, thus getting a step-up in rights. The Code, by contrast, gives the buyer neither a right to demand cure nor a step-up for lack of cure after acceptance,[132] but neither does the Code limit the buyer to rejection for substantial breaches. In this way the Code, like ULIS, on its face maintains a balanced situation.

Article 44(1) gives the seller a limited right to cure.[133] First, it is only available "in cases not provided for in Article 43." This language is ambiguous. While it seems to mean that the seller can cure only when there is no fundamental breach, it could mean that the seller may cure only where the buyer has not avoided. There may be a fundamental breach without avoidance but there can be no avoidance without a fundamental breach; thus, the distinction does matter. The narrowest interpretation is that the seller can cure where there is no fundamental breach for which the buyer has avoided the contract. Whether the seller's right is limited to a cure of minor defects is uncertain. Second, the article also states the modes of cure available to the seller, i.e., delivery of the deficient quantity or part, substitute delivery or remedy of the defect. Apparently, this latter method of cure means that the seller shall repair the good because the French version of the Convention uses the words réparer le défaut.

On the whole ULIS restricts the rights of the buyer but provides for complimentary restrictions on the rights of the seller. ULIS may be said to favor the seller more than did the common law, which gave a wider right of rejection and severely limited the options of the seller. Here the options of the seller are only slightly more liberal, but the options of the buyer are reduced. Compared to the Code, ULIS restricts both the rights of the seller and the rights of the buyer, achieving perhaps a similar balance, but with far less flexibility. Yet given the particular situation to which it addresses itself, ULIS may be correct in stressing the need for certainty in the determination of rights over the need for obtaining true justice between the parties, if obtaining the latter means a period of financial uncertainty. The complexity of the system assumes that the parties to the transaction have some sophistication.

B. The Draft Convention of the United Nations Commission on International Trade Law

Outside Westem Europe, ULIS did not engender much enthusiasm. In part, it was too prolix and cumbersome; in part, many felt it unduly favored the seller, and hence, industrial nations. Thus, in the late 1960's the United Nations Commission on Intemational Trade Law (UNCITRAL) set for itself the task of drafting a trade Convention acceptable to all interests. A draft Convention has now been approved.[134] This Convention has to some extent succeeded in ameliorating the problems seen in ULIS.

The Convention would apply to international transactions when the parties have places of business in Contracting States, or when conflicts of laws principles lead to the application of the law of a Contracting State.[135] The Convention would not apply to consumer sales.[136]

Like ULIS, the UNCITRAL Convention specifies what obligations the seller must fulfill to tender conforming goods. The shopping list in Article 19 is more compact, however, and amounts to fulfilling warranties of description, particular purpose, quality, quantity, and packaging. Again, defects that the buyer knew or ought to have known about do not raise liability in the seller. Also as in ULIS, Article 22(1) requires the buyer to examine the goods as soon as possible,[137] and Article 23(1) imposes an obligation on the buyer promptly to notify the seller of a lack of conformity. Article 31(2)(b) makes this requirement a condition of avoiding the contract.

Where the seller fails to perform his obligations, Article 27 gives the buyer certain rights, including the right to demand performance or to avoid the contract. In addition, the buyer retains the right to damages. He may avoid the contract under Article 31(1) where the seller has fundamentally breached the contract or failed to deliver the goods within an additional reasonable period set by the buyer. Article 8 defines a fundamental breach as one resulting in "substantial detriment to the other party unless the party in breach did not foresee or had no reason to foresee the result." The emphasisis significantly different from that in ULIS and stresses the position of the party in breach. Article 33 deals with partial deliveries and provides that the buyer can avoid the contract as to a delivery if there is a fundamental breach thereof, and can avoid the entire contract only if the seller's breach is fundamental to the whole contract. Essentially this is the rule under U.C.C. section 2-612. Article 33, however, appears to encompass non-installment sales as well,[138] and to that extent it overlaps with Article 31(1).

The cure provisions of the Convention differ markedly from both those of the Code and those of ULIS. Article 28(2) gives the buyer a right to demand cure of a non-conforming tender by delivery of substitute goods, but only if the lack of conformity constitutes a fundamental breach. There is no such right where the defect is minor. Hence, there is no way for a buyer to step up his rights when a minor breach occurs. If the seller is unwilling to cure, the buyer is restricted to his remedy in damages. Article 31(1)(b) makes it clear that the failure of the seller to perform his obligations when so required by the buyer under Article 28(1) can lead to avoidance only where the seller has failed to deliver the goods. Were it not for Articles 28(2) and 31(1)(b), Article 28(1) might be interpreted to give the buyer a right to demand cure for minor defects. As the Convention is drawn, however, this interpretation appears untenable.

Article 28(2) is unusual in another respect as well. The only mode of cure it mentions is substitution; it states nothing about cure by repair or other means, which the seller may employ under Article 30 at his own option. The UNCITRAL Convention, it would seem, follows a far narrower line than ULIS here. This narrowness seriously threatens the delicate balance between buyer and seller. Because the buyer's rights to demand cure are limited to situations of fundamental breaches and because the type of cure demanded is limited to substitution, the balance may tilt too much in favor of the seller. A seller may be quite willing to repair but not to substitute goods. The buyer may be forced into a choice between accepting defective goods from a seller who cannot or will not substitute goods, and destroying the contract altogether. The seller may refuse to substitute, sensing that practical considerations force the buyer to keep the goods.

The seller himself is given a right to cure under the UNCITRAL Convention that is more clearly set out than that in ULIS. Under Article 30 the seller may of his own choice remedy the breach of his obligations as long as the buyer has not yet avoided the contract. Unlike the Code where the remedy accrues after rejection, here the remedy is available until the buyer avoids the contract. There is merit to this position. It makes the event of avoidance one which leaves no doubt as to the certainty of performance. From that point forward, there are no such difficult entanglements of rights as Professor Whaley [139] found to exist in the Code provisions. Further, the option is available to the seller whether or not there is a fundamental breach. There is no need to guess whether the defect is minor and whether minor defects may be cured. Unlike ULIS, this Convention does not set forth the modes of cure available to the seller. Presumably, any reasonable means would suffice.

The UNCITRAL Convention clarifies the rights of buyer and seller and makes them more determinable at any given time than does ULIS. The balance, however, seems to list even more in favor of the seller. The buyer is limited in his demand for cure to situations of fundamental breach; the seller is given greater options. The weak link, then, is the buyer's rights in regard to minor defects. With no right to demand cure and no right to avoid the contract, he may be left with a remedy in damages that is of no practical value.

C. Substantial Performance and the Sale of Goods Act: A Recent English Case

As noted above,[140] the doctrine of substantial performance took hold in some areas of contract law, but not in the sales area. Nonetheless, the condition-warranty distinction still caused some problems even in the non-sales areas. Beginning in 1962, however, a new method of analysis was developed, which in 1976 finally found its way into sales law.

In the 1962 case of Hongkong Fir Shipping Co. v. Kawasaki Kisen Kaisha Ltd.,[141] a charterer of a ship purported to repudiate the charterparty when the ship proved unseaworthy after the first trip and in need of repairs that eventually required twenty weeks to complete. The buyers argued breach of a condition as to seaworthiness. Lord Justice Diplock gave the opinion of the court of appeals that a contract may contain terms other than conditions and warranties:

"There are . . . many contractual undertakings . . . which cannot be categorized as being 'conditions' or 'warranties.' . . . Of such undertakings all that can be predicated is that some breaches will and others will not give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain. . . ."[142]

As to the indeterminate terms, the owner merely had a duty of substantial performance. Here the ship would still have been available for use for approximately eighty percent of the term of the charterparty. Hence, the buyer had wrongfully repudiated.

In the 1976 case of Cehave N.V. v. Bremer M.B.H.,[143] the court of appeals, in an opinion by Lord Denning, M.R., extended this theory to sales law, despite the provision of the Sale of Goods Act [144] that seems to define terms as either conditions or warranties and nothing else. The seller had shipped oranges to the buyer who rejected after a small portion was found to be damaged. Between the time of sale and the time of delivery the market price had fallen greatly. The carrier obtained an order for a judicial sale. At this sale an agent of the buyer bought the goods at a fraction of the contract price and resold them to the buyer, who then used them for his original purpose. In reviewing the arbitral award, Lord Denning held for the seller:

"The task of the court can be stated simply in the way in which Upjohn, L.J. stated it. . . . First, see whether the stipulation, on its true construction, is a condition strictly so called, that is, a stipulation such that, for any breach of it, the other party is entitled to treat himself as discharged. Second, if it is not such a condition, then look to the extent of the actual breach which has taken place. If it is such as to go to the root of the contract, the other party is entitled to treat himself as discharged; but, otherwise, not."[145]

Here the buyer got substantially what he bargained for in the goods.

The definition of condition has been effectively narrowed so that it covers only those terms the breach of which in any way would cause substantial detriment to the buyer. All else is to come under the test of whether the breach goes to the "root of the contract." In spite of the statute, a substantial breach test has obtained. Because this is judicial lawmaking, however, the questions of cure and its related issues have not been touched. The result is to limit the options of the buyer without varying the options of the seller. Such limitation on the right to reject should call for an expansion of the buyer's options in some other direction, for instance, in the right to demand cure for minor defects. It is questionable whether the balance struck by this decision can long prevail. Not enough scope is given here to the interests of the buyer. Nonetheless the case represents another step in the recent movement toward a substantial breach test for rejection.

D. More Proposed Reforms

The Law Reform Commission of New South Wales recently undertook a study of the state's Sales of Goods Act and made recommendations [146] similar to those in other recent reforms. The proposal would give the buyer the right to terminate only for material breach [147] and only where the goods had not deteriorated (other than that attributable to the breach of the seller).[148] The term "material breach" is defined as a breach "so grave as to go to the root of the contract."[149] The provisions are predicated on the existence of a warranty, implied or explicit, that has been breached. (The Commission also recommended that the condition-warranty distinction be eliminated to facilitate the use of the material breach system.)[150] The buyer loses the right to terminate if he affirms the contract; affirmation occurs where he is deemed to accept the goods or where he fails to give timely notice to the seller of his election to terminate.[151]

The Commission would also give the seller a right to cure if the breach is "capable of remedy."[152] Generally, it appears that this is the case if the remedy will prevent the occurrence of the consequences that would make the breach a material one.[153] This would imply that if the consequences follow immediately upon the rejection, the right to cure would lapse before becoming capable of exercise. Thus, the Commission recommended that if the "breach is not capable of remedy" there is no right to cure.[154] This is self-evident. Putting it into practice, however, might give rise to considerable difficulties, e.g., a buyer refusing to allow cure claiming that the breach is not capable of cure by the seller. A priori ascertainment of the fact will not be easy.

The Commission did not adopt a different standard for consumers than for sellers.[155] Nor did the Commission seem to give the buyer any balancing rights, such as the right to demand cure in the case of minor breaches. The buyer can only sue for damages.

Still more recently the Ontario Law Reform Commission has undertaken the drafting of a Report and a new Sale of Goods Act based in large part upon Article Two of the U.C.C. The Commission has given extensive consideration to all recent developments and to the case law under the Code, but its report has not yet been made public.[156]

IV. Conclusions

The overwhelming international trend is toward some form of substantial breach test, but the various proposals make it clear that not everyone means the same thing by "substantial breach." The Code's use of "substantial impairment" may be something very different from the "incapable of cure" test of the New South Wales Law Reform Commission.

The substantial impairment test contemplates a breach that is not so severe as to render cure impossible, but one that makes the present state of the goods practically useless to the buyer. It presumes that in many cases the defect can be repaired or conforming goods substituted to give the buyer the value he sought. The incapable of cure test would be but a small subclass of the substantial impairment class and therefore unduly restrict the remedy of rejection by often leaving a buyer with useless goods and only a claim for damages. The test of foreseeability used by UNCITRAL, while reflecting the classical common law position as to extent of liability, does not contribute to the formulation of standards of substantiality.

Assuming that some standard of substantial breach can be established, what alternatives to a remedy in damages will the buyer have? They might include a right to demand cure with or without a step up in rights, or a right to reduce the contract price. The latter would probably not be of significance because usually price is paid at delivery before inspection. An examination of these alternatives would have to include the economic costs of each remedy to the buyer and seller. The option, however, if several remedies are available, must lie with the buyer. Otherwise the seller can choose the option that maximizes the buyer's costs and minimizes his own, even though the wrong lies with him. This cost analysis should be done at the legislative level and thereafter the courts should simply weigh the given legislative mandate with other factors such as good faith and unwarranted prejudice to the parties.

On the other side, should the seller only be able to cure minor defects as UNCITRAL would have it? This limitation would compel a definition of substantial breach as one that cannot or should not be cured. There is merit in stopping one from attempting the impossible and thus aggravating damages, but there is also merit in allowing the seller to determine if there is some way that he can cure. Often his expertise will prove useful, as was true in Rozmus v. Thompson's Lincoln Mercury Co.[157]

The position of the consumer must also be considered. While the U.C.C. includes consumer transactions, UNCITRAL has explicitly excluded them. The Ontario Sale of Goods Act,[158] if revised, would still apply to consumers, but Ontario has a Consumer Protection Act [159] and Business Practices Act [160] whose provisions override inconsistent provisions in the Sale of Goods Act. Ontario is also considering a Consumer Products Warranty Act [161] and is evaluating the state of products liability law generally. If a substantial breach test is explicitly adopted, a consumer code may be necessary to preserve the perfect tender rule, especially where the value of the goods does not merit litigation of damages.[162]

Finally, while the substantial breach test may forward commercial transactions, it may have its own economic costs. The perfect tender rule is an incentive to sellers to ensure that the goods conform. If substantial performance suffices to prevent rejection, sellers and manufacturers might lower their standards of quality control.

In view of the judicial reinterpretation of the Uniform Commercial Code currently under way, and in view of the above noted problems inherent in the substantial breach test, a re-examination should be undertaken to handle the matter comprehensively.


FOOTNOTES

* LL.B., University of Toronto Faculty of Law; LL.M., Columbia University.

1. In addition this Article takes issue with the thesis of Professor Priest’s article, Priest, Breach and Remedy for the Tender of Nonconforming Goods Under the Uniform Commercial Code: An Economic Approach, 91 Harv. L, Rev. 960 (1978), which argues for an analysis of the judicial treatment of rejection in terms of economic efficiency. While he may be correct that "the results of decisions interpreting the Code are consistent with minimization of long run costs of formation of the contract, of delivery and handling of the goods, and of resolution of disputes arising under the contract," id. at 960 (emphasis in original), this consistency exists only because the application of a substantial breach approach often yields such results. Furthermore, such detailed, or even generalized, economic analysis is not undertaken by the courts in their resolution of disputes. The rights of the parties are weighed in grosser terms of who has been wronged, how badly, and who has shown good faith in the transaction. The courts attempt to balance rights. If, as Professor Priest argues, the resolution of rejection cases should depend on a balancing of costs, then the courts are not the proper forum for this sort of dispute resolution.

2. But cf. Priest, supra note 1, at 967: "First, courts may reduce the parties’ expenditures in attempts to gain distributional benefits by making legal rules certain in application. As legal rules become more certain, the probability of each party’s manipulating them to his advantage decreases . . . ." Such rigidity allows little room for justice, as was discovered twice in legal history: first, before the Court of Chancery evolved; second, during the glorious days of the forms of actions.

3. Bracton, De Legibus et Consuetudinibus Angliae, f. 62.

4. Id. at f.61b; Glanvill, x, 14. See 2 F. Pollock & F. Maitland, The History of English Law Before the Time of Edward I 207 (2d ed. 1923).

5. Doig’s Case, Y.B. Trin. 20 Henry VI, f.34, plea 4 (1442), reprinted in 51 Selden Society 97 (1933); Strangborough v. Warner, 4 Leo 3, 74 Eng. Rep. 686 (K.B. 1589); Goodisson v. Nunn, 4 T.R. 761 (1792). But see A. Corbin, Corbin on Contracts § 709, at 666 (1952). See generally T. Plucknett, A Concise History of the Common Law 643-44 (5th ed. 1956).

6. E.g. Cutter v. Powell, 6 Term. Rep. 320 (1795); Pordage v. Cole, 1 Wms. Saund. 319 (1669).

7. Boone v. Eyre, 1 H. Bl. 273 (1779). See generally G. Chesire & C. Fifoot, The Law of Contract 491 (7th ed. 1969). In the United States, see generally W. Story, A Treatise on the Law of Contracts 552-55 (4th ed. 1871).

8. Lysaght v. Edwards, 2 Ch.D. 499, 506 (1876) (Lord Jessel, M.R.). Compare Shaw v. Foster, L.R. 5 H.L. 321 (1872).

9. Street v. Blay, 2 B. & Ad. 456, 461-62, 109 Eng. Rep. 1212, 1214 (K.B. 1831). Contrast the earlier attitude in Fielder v. Starkin, 1 H.B. 17, 126 Eng. Rep. 11 (Common Pleas 1788). Accord, Freeman v. Clute, 3 Barb. 424 (N.Y. Sup. Ct. 1848).

10. See generally E. Farnsworth & J. Honnold, Cases & Materials, Commercial Law 476 (3d ed. 1976), citing 3 W. Holdworth, A History of English Law 355-56 (3d ed. 1923); Blackburn, The Contract of Sale 188-89 (1845).

11. Glaholm v. Hays, 2 Man. & G. 257, 133 Eng. Rep. 743 (C.P. 1841); Chanter v. Hopkins, 4 M. & W. 399, 404, 150 Eng. Rep. 1484, 1486 (Exch. 1838). Accord, Heyworth v. Hutchinson, L.R. 2 Q.B. 447, 451 (1867), per Lord Blackburn. This distinction was unknown in the United States, e.g., Dorr v. Fisher, 55 Mass. (1 Cush.) 271 (1848), and not followed in the Uniform Sales Act. To the English courts a condition was a priori serious. Hence, a breach of it was serious. This is the fallacy of attribution.

12. 56 & 57 Vict., c.71 (1893).

13. Cf. Whaley, Tender, Acceptance, Rejection and Revocation – The UCC’s "TARR"-Baby, 24 Drake L.Rev. 52 (1974) (stressing the difficulties faced by buyers and sellers).

14. E.g. Llewellyn, On Warranty of Quality, and Society (pts. 1 & 2), 36 Colum. L. Rev. 699 (1936), 37 Colum. L. Rev. 341 (1937).

15. But cf. Priest, supra note 1, at 972-75. Priest believes the Code embodies a substantial breach test for merchants and that this is not at one with "the ideal of cost minimization" which he states the courts have affected despite the Code. His analysis requires the reader to disbelieve the courts’ stated opinions and to delve into the "underlying concern." Id. at 982. The present Article gives greater respect to the opinions of the courts, and tries to explicate how the courts have used the flexibility inherent in the Code to achieve a substantial breach test.

16. Contra, Priest, supra note 1, at 976.

17. On these provisions, see generally E. Farnsworth and J. Honnold, supra note 10, at 650-51; J. Honnold, Sales and Sales Financing 248 (1st ed. 1954); Honnold, Buyer’s Right of Rejection, 97 U. Pa. L. Rev. 457, 472-79 (1949); Peters, Remedies for Breach of Contracts.

18. E.g., In re A.W. Cowen & Bros., 11 F.2d 692 (2d Cir. 1926)

19. Priest, supra note 1, at 973.

20. Accord, Priest, supra note 1, at 1000 n.124.

21. Graulich Caterer Inc. v. Hans Holterbosch, Inc., 101 N.J. Super. 61, 243 A.2d 253 (App. Div. 1968); Continental Forest Prod., Inc. v. White Lumber Sales, Inc., 256 Or. 466, 474 P. 2d 1 (1970). This is a misreading of the section according to Note, UCC Section 2-508: Seller’s Right to Cure Non-Conforming Goods, 6 Rut.-Cam. L.J. 387, 410-11 (1974).

22. Traynor v. Walters, 342 F. Supp. 455 (M.D. Pa. 1972).

23. "Contract" is defined in § 1-201 (11) as "the total legal obligation which results from the parties’ agreement as affected by this Act and any other applicable rules of law." In turn, "agreement" is defined in § 1-201(3) as "the bargain of the parties in fact as found in their language or by implication from other circumstances including course of dealing . . . ." Official comment three to the section indicates that the intention was to extend the scope of the term as far as possible. Thus, it ties into § 2-313(1)(a) making "any affirmation of fact or promise . . . which relates to the goods and becomes part of the basis of the bargain . . . an express warranty . . . ."

24. See 1 N.Y. Law Revision Commission Report on the Sale of Goods 513 (1955): "Section 2-601 of the Code, standing alone, would not change the prevailing rules in this area."

25. Official comment five to § 2-603 states that the buyer who fails in this duty would be subject to damages.

26. In this Article revocation and rejection are discussed together because a policy of readily finding acceptance can be used to require the application of U.C.C. § 2-608 standards rather than those of § 2-601.

27. The old remedy of rescission was not as wide as revocation, requiring fraud or material breach of an unexecuted contract. See Simmons v. California Inst. of Technology, 34 Cal. 2d 264, 209 P.2d 581 (1949); Weiss v. Gumbert, 191 Or. 119, 227 P.2d 812 (1951).

28. Asciolla v. Manter Oldsmobile-Pontiac, Inc., 370 A.2d 270 (N.H. Sup. Ct. 1977), and the cases limiting cure to minor breaches, would not allow cure on a revocation. Conte v. Dwan Lincoln-Mercury, Inc., 172 Conn. 112, 374 A.2d 144 (1976), would allow cure up to the time of revocation. Gigandet v. Third Nat’l Bank, 333 So. 2d 557 (Ala. Sup. Ct. 1976), and Reece v. Yeager Ford Sales, Inc., 184 S.E. 2d 722 (W. Va. 1971), would bar revocation where the buyer refuses to allow cure. The state of the law here may be one reason why some courts prefer to give a notional extension of the time for rejection rather than apply revocation theory.

29. Uniform Sales Act § 69(1).

30. Priest, supra note 1, at 972-73. Priest states that § 2-508(2) "is more likely to limit rescission by merchant buyers because it is chiefly by virtue of an ongoing commercial relationship, such as that between merchants, that a seller would have reason to believe a nonconforming tender to be acceptable." Id. at 973.

Priest uses this argument as evidence that the Code on its face creates a substantial breach test for merchants but not for consumers. His argument ignores the numerous applications of the provisions to consumers. E.g., Wilson v. Scampoli, 228 A.2d 848 (D.C. 1967) (tender of a factory crated television); Bartus v. Riccardi, 55 Misc. 2d 3, 284 N.Y.S.2d 222 (Utica City Ct. 1967) (tender of a new and improved model hearing aid).

31. Priest, supra note 1, at 960, 1001.

32. Compare R. Anderson, Uniform Commercial Code Cumulative Supplement 1970-1974, 616 (2d ed. 1974) with J. White & R. Summers, Handbook of the Law Under the Uniform Commercial Code 211-12 (1972).

33. 188 Neb. 189, 195 N.W. 2d 491 (1972). The court allowed recission of a high moisture silo that needed continuous repairs where the contract contained a one year satisfaction warranty clause.

34. See generally Wilson v. Scampoli, 288 A. 2d 848 (D.C. 1967); Bartus v. Riccardi, 55 Misc. 2d 3, 284 N.Y.S. 2d 222 (Utica City Ct. 1967); Carnes Constr. Co. v. Richards & Conover Steel & Supply Co., 10 U.C.C. Rep. 797 (Okla. Ct. App. 1972), where the buyer refused to allow the seller to demonstrate that conforming goods were actually delivered even though the boxes were mislabelled. Most of these cases involved the cure provisions and will be discussed below.

Regarding the good faith obligation of the buyer where the contract contains a satisfaction warranty clause, see generally 2 R. Anderson, Uniform Commercial Code 158-60 (2d ed. 1971).

35. 111 N.J. Super, 383, 268 A. 2d 345 (Law Div. 1970).

36. Id. at 348.

37. Id. at 348 n.1.

38. But see William F. Wilke, Inc. v. Cummins Diesel Engines, Inc., 252 Md. 626, 250 A.2d 886 (1969); Campbell v. Pollack, 101 R.I. 223, 221 A.2d 615 (1966), to the effect that "conformity" refers to the totality of contractual obligations, not merely quantity and quality.

39. Bonebrake v. Cox, 499 F. 2d 951 (8th Cir. 1974).

40. Uniform Sales Act § 69.

41. See U.C.C. §§ 2-711, -712, and official comments thereto.

42. 209 Pa. Super. Ct. 120, 224 A.2d 782 (1966).

43. 209 Pa. Super. Ct. at 123-24, 224 A.2d at 784.

44. Priest, supra note 1, at 984, argues: "[C]ourts will define ‘reasonable time’ by balancing the cost to the buyer of discovering the defect with the cost to the seller of delay in discovery . . . ." Rozmus is an example to the contrary. There the seller suffered no prejudice in the delay and the time was short. Cf. Max Bauer Meat Packer, Inc. v. United States, 458 F. 2d 88 (Ct. Cl. 1972), holding that an attempted rejection of meat four hours after delivery because of excessive fat was ineffective as not within a reasonable time where the buyer had meanwhile frozen the meat, making reworking impossible. The prejudice to the seller controlled despite the objectively short delay.

45. 89 Nev. 458, 514 P.2d 1187 (1973).

46. 288 N.C. 53, 215 S.E. 2d 573 (1975).

47. Where the defect has been substantial, however, "reasonable opportunity to inspect" has not been read restrictively. Perkins Pipe & Steel Co. v. Acme Valve & Fitting Co., 2 Ill. App. 3d 338, 276 N.E. 2d 355 (1971); Askco Eng’r Corp. v. Mobil Chem. Corp., 535 S.W. 2d 893 (Tex. Civ. App. 1976).

48. 253 Ark. 352, 485 S.W. 2d 183 (1972).

49. E.g. Jones v. Abriani, 350 N.E. 2d 635 (Ind. Ct. App. 1976); Stephens Indus., Inc. v. American Express Co., 471 S.W. 2d 501 (Mo. Ct. App. 1971); Maas v. Scoboda, 188 Neb. 189, 195 N.W. 2d 491 (1972).

50. Lloyd v. Classic Motor Coaches, Inc., 388 F. Supp. 785 (N.D. Ohio 1974) (several weeks delay held reasonable in view of actions of seller and latency of defects); Carl Beasley Ford, Inc. v. Burroughs Corp., 361 F. Supp. 325 (E.D. Pa. 1973), aff’d mem., 493 F.2d 1400 (3d Cir. 1974) (buyer rejected within a reasonable time when after eleven months the seller could not get a computer program to work); Jones v. Abriani, 350 N.E. 2d 635 (Ind. Ct. Ap. 1976); La Villa Fair v. Lewis Carpet Mills, Inc., 219 Kan. 395, 548 P. 2d 825 (1976) (nine-month delay in inspection reasonable where trade usage permitted the buyer not to inspect the goods until ready for use); Cervitor Kitchens, Inc. v. Chapman, 82 Wash. 2d 673, 513 P. 2d 25 (1973) (a contractor’s three-month delay in inspecting kitchen units was not an acceptance).

51. 350 N.E. 2d 635 (Ind. Ct. App. 1976).

52. Id. at 643 (citations omitted). The following cases were among those cited by the court: Tiger Motor Co. v. McMurtry, 284 Ala. 283, 224 So. 2d 638 (1969) (rejection after 30 attempts at repair by the seller had failed); Dougall v. Brown Bay Boat Works & Sales, Inc., 287 Minn. 290, 278 N.W. 2d 217 (1970); Stephens Indus., Inc. v. American Express Co., 471 S.W. 2d 501 (Mo. Ct. App. 1971).

53. 118 Ga. App. 472, 164 S.E. 2d 346 (1968) (affirming a jury verdict for the buyer where the seller had given assurances of repair, but had failed to remedy the problem). The court held that "a reasonable time" was a question of fact for the jury.

54. Prolonged use also makes proof of defect at the time of sale difficult. Miron v. Yonkers Raceway, Inc., 400 F. 2d 112 (2d Cir. 1968); Hudspeth Motors, Inc. v. Wilkinson, 238 Ark. 410, 382 S.W. 2d 191 (1964). Cf. Priest, supra note 1, at 987, arguing that "the Code provision giving the buyer a ‘reasonable time’ to inspect and reject after tender is a useful tool for cost minimization."

55. 269 N.E. 2d 664 (Mass. 1971). See also Southern Union Gas Co. v. Taylor, 82 N.M. 670, 486 P. 2d 606 (1971).

56. 492 S.W. 2d 227 (Tenn. Ct. App. 1972). See also Stroh v. American Recreation & Mobile Home Corp., 530 P.2d 989 (Colo. Ct. App. 1975); Jorgensen v. Pressnall, 274 Or. 285, 545 P.2d 1382 (1976). Priest, supra note 1, at 993, argues that an allowance "cannot be reconciled with any plausible interpretation of the Code’s revocation provisions." This is a blinkered view of the Code and ignores § 1-103, which provides that the principle of law and equity, unless displaced by the Code, shall supplement it. Revocation is supposed to be broader than recission, not narrower.

57. 184 S.E. 2d 722 (W. Va. 1971), Accord, Mazur Bros. & Jaffee Fish Co., 3 U.C.C. Rep. 419 (Vet. Adm. CAB 1965); Robinson v. Jonathan Logan Financial, 277 A.2d 115 (D.C. App. 1971).

58. The court in its opinion failed properly to distinguish between rejection and rescission. The court slipped in its analysis from one concept to the other. See also Green Chevrolet Co. v. Kemp, 241 Ark. 62, 406 S.W. 2d 142 (1966) (attempted rejected for "alleged mechanical defects" after six months and 3,000 miles); Akron Brick & Block Co. v. Moniz Eng’r Co., 365 Mass. 92, 310 N.E. 2d 128 (1974) (buyer used the machinery for three months); SCA Int’l, Inc. v. Garfield & Rosen, Inc., 337 F. Supp. 246 (D. Mass. 1971) (buyer waited six to nine months to inspect shoes).

59. 10 U.C.C. Rep. 598 (N.Y. Civil Ct. 1972).

60. Prejudice to the seller, in gross terms, has controlled in other cases, e.g., Max Bauer Meat Packer, Inc. v. United States, 458 F.2d 88 (Ct. Cl. 1972); Michael M. Berlin & Co. v. T. Whiting Mfg., Inc., 5 U.C.C. Rep. 357 (N.Y. App. Div. 1968). See also Hudspeth Motors, Inc. v. Wilkinson, 238 Ark. 410, 382 S.W. 2d 191 (1964), where the nonconformity, if any, at the time of delivery was allowed to worsen until catastrophe, so that cure was impossible.

61. While most courts view reasonableness as a question of fact, as U.C.C. § 1-204(2) seems to imply, Frontier Mobile Homes Sales, Inc. v. Trigleth, 256 Ark. 101, 505 S.W.2d 516 (1974); Trailmobile v. Jones, 118 Ga. App. 472, 164 S.E. 2d 346 (1968); Chrysler Corp. v. Adamatic, Inc., 59 Wis. 2d 219, 208 N.W. 2d 97 (1973), the New York Supreme Court has held at least twice as a matter of law that rejection may not occur beyond a certain time. Ladavas & Girola S.N.C. v. Principe Tie Corp., 14 U.C.C. Rep. 691 (N.Y. Sup. Ct. 1974); Societe Nouvelle Vaskene v. Lehman Saunders, Ltd., 14 U.C.C. Rep. 692 (N.Y. Sup. Ct. 1974). Compare Carl Beasley Ford, Inc. v. Burroughs Corp., 361 F. Supp. 325 (E.D. Pa. 1973), aff’d mem., 493 F. 2d 1400 (3d Cir. 1974), which holds that reasonableness is a question for the court but may be left to a properly instructed jury.

62. E.g., Max Bauer Meat Packer v. United States, 458 F.2d 88 (Ct. Cl. 1972).

63. See SCA Int’l, Inc. v. Garfield & Rosen, Inc., 337 F. Supp. 246 (D. Mass. 1971); Robinson v. Jonathan Logan Financial, 277 A.2d 115 (D.C. App. 1971); Th. Van Huijstee, N.V. v. Faehndrich, 10 U.C.C. Rep. 598 (N.Y. Civil Ct. 1972).

64. 33 Colo. App. 300, 519 P.2d 1218 (1974). See also Explorers Motor Home Corp. v. Aldridge, 541 S.W. 2d 851 (Tex. Civ. App. 1976); Testo v. Russ Dunmire Oldsmobile, Inc., 16 Wash. App. 39, 554 P. 2d 349 (1976); Fenton v. Contemporary Dev. Co., 12 Wash. App. 345, 529 P.2d 883 (1974).

65. 33 Colo. App. at 304, 519 P.2d at 1220. The buyer lost the case, however, on another point.

66. 273 Md. 1, 327 A.2d 502 (1974).

67. 133 Vt. 372, 340 A.2d 65 (1975).

68. Priest, supra note 1, at 976, suggests:

"In order to provide the cost-effective remedy for a defective tender, a court might define an "act inconsistent with the seller’s ownership" as one which shows that the buyer’s loss from the defect is less than either the diminution in market value of the goods due to the defect or to the seller’s costs of retrieving and reselling them."

This definition does not relate to the terms of the Code. Further, it misses the point of the provision –- a concern for impediments to the seller resuming full legal control over the goods.

69. 350 N.E. 2d 635 (Ind. Ct. App. 1976).

70. See Zoss v. Royal Chevrolet, Inc., 111 U.C.C. Rep. 527 (Ind. Super. Ct. 1972) (possession of a title document of rejected auto pending repayment is not an act inconsistent with the seller’s ownership). Compare Zabriskie Chevrolet, Inc. v. Smith, 99 N.J. Super. 441, 240 A.2d 195 (1968) (possession is not acceptance).

71. 241 Ark. 62, 406 S.W. 2d 142 (1966). See Blowers v. First Nat’l Bank, 45 Ala. App. 485, 232 So. 2d 666 (1970).

72. 101 R.I. 223, 221 A.2d 615 (1966).

73. 219 Kan. 395, 548 P.2d 825 (1976).

74. In re Automated Bookbinding Servs., Inc., 336 F. Supp. 1128 (D. Md.), rev’d. 471 F.2d 546 (4th Cir. 1972). See dicta in William F. Wilke, Inc. v. Cummins Diesel Engines, Inc., 252 Md. 611, 250 A.2d 886 (1969).

75. 82 Wash. 2d 673, 513 P.2d 25 (1973). See Economy Forms Corp. v. Kandy, Inc., 391 F. Supp. 944 (N.D. Ga. 1974), aff’d mem., 511 F.2d 1400 (5th Cir. 1975); United States ex rel Fram Corp. v. Crawford, 443 F. 2d 611 (5th Cir. 1971); John C. Kohler Co. v. United States, 498 F.2d 1360 (Ct. Cl. 1974)(where the United States, as buyer, took possession after testing and used the boiler involved.).

76. 361 F. Supp. 325 (E.D. Pa. 1973), aff’d mem., 493 F.2d 1400 (3d Cir. 1974).

77. For cases reaching the same result through revocation, see Tiger Motor Co. v. McMurtry, 284 Ala. 283, 224 So. 2d 638 (1969); Zoss v. Royal Chevrolet, Inc., 11 U.C.C. Rep. 527 (Ind. Super. Ct. 1972); Moore v. Howard Pontiac-American, Inc., 492 S.W. 2d 227 (Tenn. Ct. App. 1972).

78. 259 Md. App. 284, 269 A.2d 810 (1970).

79. See Marbelite Co. v. City of Philadelphia, 208 Pa. Super. Ct. 256, 222 A.2d 443 (1966), holding that the city’s use of traffic signal equipment was inconsistent with the seller’s ownership, and constituted acceptance. The equipment had been used for a significant time. In Fred J. Miller, Inc. v. Raymond Metal Prods. Co., 265 Md. 523, 290 A.2d 527 (1972), a dredging contractor was held to have accepted dredging pipe when he used it in his business despite his complaints that assembly time was excessive. In Economy Forms Corp. v. Kandy, Inc., 391 F. Supp. 944 (N.D. Ga. 1974), aff’d mem., 511 F.2d 1400 (5th Cir. 1975), the use of steel-forming equipment for two months was deemed an acceptance. See also Atlantic Aluminum & Metal Distrib. V. Adams, 123 Ga. App. 387, 181 S.E. 2d 101 (1971).

80. 359 Mass. 474, 269 N.E. 2d 664 (1971).

81. 347 Mass. 636, 199 N.E. 2d 519 (1964).

82. Id. at 648-49, 199 N.E. 2d at 527.

83. 350 N.E.2d 635 (Ind. Ct. App. 1976).

84. 274 Ore. 285, 545 P. 2d 1382 (1976). Compare Maas v. Scoboda, 188 Neb. 189, 195 N.W. 2d 491 (1972); Davis v. Colonial Mobile Homes, 28 N.C. App. 13, 220 S.E. 2d 802 (1975). But see Underwood v. Monte Asti Buick Co., 73 Pa. D. & C. 2d 773 (Pa. C.P. Allegheny Cty. 1976); Fecik v. Capindale, 54 Pa. D. & C. 2d 701 (Pa. C.P. Montgomery Cty. 1971), indicating that this rationale can be so abused as to bar revocation.

85. 25 Mich. App. 321, 181 N.W. 2d 303 (1970).

86. See Garfinkel v. Lehman Floor Covering Co., 60 Misc. 2d 72, 302 N.Y.S. 2d 167 (Dist. Ct. 1969). See generally Public Util. Comm’n v. Burroughs Business Machs. Ltd., 6 Ont. 2d 257 (Ont. Ct. App. 1974), where the seller of a computer system failed to make it operate for the particular purpose required. After notice of rescission the buyer used the goods for 14 months until a replacement could be obtained. It was held that this was proper mitigation. Priest, supra note 1, at 991, would read such holdings as "violating a literal interpretation" of the Code. This writer finds the Code drawn less narrowly. Otherwise, Priest’s analysis is appropriate here because mitigation is one area where economic considerations control.

87. This is consistent with the "reasonable time" permitted for cover in U.C.C. § 2-712.

88. See Ingle v. Marked Tree Equip. Co., 244 Ark. 1166, 428 S.W. 2d 286 (1968) (rejection permitted for any nonconformity but voided by use); L.J. Robinson, Inc. v. Arber Constr. Co., 292 A.2d 809 (D.C. 1972); Stephens Indus. Inc. v. American Express Co., 471 S.W. 2d 501 (Mo. Ct. App. 1971); Robertson Mfg. Co. v. Jefferson Tile Co., 5 U.C.C. Rep. 119 (N.Y. Sup. Ct. 1968). This principle has also been used to invalidate revocations without passing on the substantiality of the breach. Waltz v. Chevrolet Motor Div., 307 A.2d 815 (Del Super. Ct. 1973); Charney v. Ocean Pontiac, Inc., 17 U.C.C. Rep. 982 (Mass. Dist. Ct. 1975); Fablok Mills, Inc. v. Cocker Mach. & Foundry Co., 120 N.J. Super. 350, 294 A.2d 62 (Law Div. 1972).

89. Donnell & Mudge, Inc. v. Bonita Leather Fashions, Inc., 8 U.C.C. Rep. 699 (N.Y. Sup. Ct. 1971). See Mazur Bros. v. Jaffee Fish Co., 3 U.C.C. Rep. 419, VACAB-512 (Vet. Adm. CAB 1965) (no rejection after shrimp had been cooked); Engel Mortgage Co. v. Triple K. Lumber Co., 56 Ala. App. 337, 321 So. 2d 679 (Civ. App. 1975) (structures built with materials supplied by seller); Brute C.E. & E. Inc. v. Pronto Foods Corp., 3 Ill. App. 3d 135, 278 N.E. 2d 477 (1971) (alteration and use of incinerator); Bowen v. Young, 507 S.W. 2d 600 (Tex. Ct. App. 1974) (buyer made $600 worth of alterations); Park County Implement Co. v. Craig, 397 P. 2d 800 (Wyo. 1964) (buyer installed hoist and dump bed on a truck).

90. 535 S.W. 2d 893 (Tex. Ct. App. 1976).

91. 33 Colo. App. 300, 519 P. 2d 1218 (1974).

92. O’Day v. George Arakelian Farms Inc., 24 Ariz. App. 578, 540 P.2d 197 (1975) (seller shipped directly to buyer’s sub-buyer; not a rejection case); Haken v. Sheffler, 24 Mich. App. 196, 180 N.W. 2d 206 (1970) (buyer sold part of goods; no claim of nonconformity); Pettibone Minnesota Corp. v. Castle, 247 N.W. 2d 52 (Minn. 1976); Hays Merchandise, Inc. v. Dewey, 78 Wash. 2d 343, 474 P. 2d 270 (1970).

93. Gulf Chem. & Mettalurgical Corp. v. Sylvan Chem. Corp., 122 N.J. Super. 499, 300 A.2d 878 (Law Div. 1973). English law was much more restrictive. E. Hardy & Co. v. Hillerns & Fowler, [1923] 1 K.B. 658. But see now the Misrepresentation Act, 1967, c.7, a.4(2).

94. 263 Md. 127, 282 A.2d 483 (1971).

95. J. White & R. Summers, Handbook of the Law Under the Uniform Commercial Code, 256-57 (1972); Clifford, Article Two: Sales, 44 N.C.L. REV. 539 (1966); Hawkland, Curing an Improper Tender of Title to Chattels: Past, Present and Commercial Code, 46 Minn. L. Rev. 697 (1962); Ryan, Article 2: Sales, 115 Okla. L. Rev. 249 (1962); Note, Uniform Commercial Code – Sales – Sections 2-508 and 2-608 – Limitations on the Perfect-Tender Rule, 69 Mich. L. Rev. 130 (1970); Comment, Uniform Commercial Code: Minor Repairs or Adjustments Must Be Permitted by a Buyer When The Seller Attempts to "Cure" a Non-Conforming Tender of Merchandise, 52 Minn. L. Rev. 937 (1968); Note, UCC Section 2-508: Seller’s Right to Cure Non-Conforming Goods, 6 Rut.-Cam. L.J. 387 (1974). See also Priest, supra note 1, at 999-1000.

96. Priest, supra note 1, at 999, finds the decisions on cure contradictory and less coherent.

97. 55 Misc. 2d 3, 284 N.Y.S. 2d 222 (N.Y. City Ct. 1968).

98. 228 A.2d 848 (D.C. App. 1967).

99. See note 95 supra.

100. 188 Neb. 189, 195 N.W. 2d 491 (1972).

101. 17 Wash. App. 761, 565 P.2d 819 (1977).

102. See Priest, supra note 1, at 968.

103. 342 F. Supp. 455 (M.D. Pa. 1972). See Boysen v. Antioch Sheet Metal, Inc., 16 Ill. App. 3d 311, 306 N.E. 2d 69 (1974), where the buyer was held to have wrongly refused to permit cure of a defective furnace by removing the subject furnace and replacing it with one from a third party. Unlike Traynor, this case would come under U.C.C. § 2-508(2) because the time for performance had lapsed.

104. 5 Conn. Cir. Ct. 444, 256 A.2d 522 (1968); Gigandet v. Third Nat’l Bank, 333 So. 2d 557 (Ala. Sup. Ct. 1976); Koppers Co. v. Brunswick Corp., 224 Pa. Super. Ct. 250, 303 A.2d 32 (1973); Peter Pan Seafoods, Inc. v. Olympic Foundry Co., 17 Wash. App. 761, 565 P.2d 819 (1977).

105. 124 Ga. App. 630, 185 S.E. 2d 619 (1971). See Meads v. Davis, 22 N.C. App. 479, 206 S.E. 2d 868 (1974); Carnes Constr. Co. v. Richards & Conover Steel & Supply Co., 10 U.C.C. Rep. 797 (Okla. Ct. App. 1972). Note though that where a buyer seeks damages only, he may refuse to allow cure. Bonebrake v. Cox, 499 F.2d 951 (8th Cir. 1974); Boies v. Norton, 526 S.W. 2d 651 (Tex. Civ. App. 1975).

106. Wilson v. Scampoli, 228 A.2d 848 (D.C. App. 1967); Rozmus v. Thompson’s Lincoln-Mercury Co., 209 Pa. Super. Ct. 120, 224 A.2d 782 (1966).

107. E.g., Havas v. Love, 89 Nev. 458, 514 P. 2d 1187 (1974). See Davis v. Colonial Mobile Homes, 28 N.C. App. 13, 220 S.E. 2d 802 (1975).

108. 99 N.J. Super. 441, 240 A.2d 195 (Law Div. 1968).

109. 284 Ala. 283, 224 So.2d 638 (1969). Priest, supra note 1, at 999, sees this as a limitation of cost outlays where "the seller’s investment outweighs the benefits conferred upon the buyer." Because the cure attempts have generally ceased long before the suit reaches trial, however, this does not make sense. Rather, the courts are merely recognizing that successive inability to repair betokens a truly major defect and that to burden the buyer with such goods would be unfair. The courts probably, in such cases, suspect the good faith of the seller.

110. 228 N.W. 2d 181 (Iowa Sup. Ct. 1975).

111. E.g., Conte v. Dwan Lincoln-Mercury, Inc., 172 Conn. 112, 374 A.2d 144 (1976); Stofman v. Keenan Motors, Inc., 63 Pa. D. & C.2d 56 (Pa. C.P. Phil. Cty. 1972); Shofner v. Williams & Pearson Furn. Co., 8 U.C.C. Rep. 48 (Tenn. Ct. App. 1970). Compare the developing trend in Canada. Lightburn v. Belmont Sales Ltd., 6 D.L.R. 3d 692 (B.C. Sup. Ct. 1969), held a disclaimer clause inapplicable and allowed the buyer to rescind where the seller failed to cure after repeated attempts. Rafuse Motors Ltd. v. Mardo Construction Ltd., 41 D.L.R. 2d 340 (N.S. Sup. Ct. 1964), held that the buyer had not accepted a tractor where continual repairs had been required. See also Cain v. Bird Chevrolet-Oldsmobile Ltd., 12 O.R. 2d 532 (Ont. H.C.J. 1976); Western Tractor Ltd. v. Dyck, 7 D.L.R.3d 535 (Sask. Ct. App. 1969).

112. Traynor v. Walters, 342 F. Supp. 455 (M.D. Pa. 1972).

113. Marine Mart, Inc. v. Pearce, 252 Ark. 601, 480 S.W. 2d 133 (1972).

114. 28 N.C. App. 13, 220 S.E. 2d 802 (1975).

115. Tiger Motor Co. v. McMurtry, 284 Ala. 283, 224 So. 2d 638 (1969) (seller does not have an unlimited time to cure); Conte v. Dwan Lincoln-Mercury, Inc., 172 Conn. 112, 374 A.2d 144 (1976) (seller does not have an unlimited time and buyer’s rejection after one year was proper).

116. 99 N.J. Super. 441, 240 A.2d 195 (Law. Div. 1968).

117. Accord, Bayne v. Nall Motors, Inc., 12 U.C.C. Rep. 1137 (Iowa Dist. Ct. 1973).

118. 342 F. Supp. 455 (M.D. Pa. 1972).

119. Wilson v. Scampoli, 228 A.2d 848 (D.C. App. 1967); Reece v. Yeager Ford Sales, Inc., 115 W. Va. 453, 184 S.E. 2d 722 (1971).

120. See Honnold, The 1964 Hague Conventions and Uniform Law on the International Sale of Goods, 13 Am. J. Comp. L. 451 (1964).

121. ULIS, art. 2.

122. Id. art. 3.

123. This would yield a result opposite that of O’Day v. George Arakelian Farms, Inc., 27 Ariz. App. 578, 540 P. 2d 197 (1975), which held such action by the buyer to be inconsistent with the seller’s ownership.

124. Compare U.C.C. § 2-605(1).

125. ULIS, art. 41(1).

126. Id. art. 41(2).

127. Id. art. 43.

128. Id. art. 10, reads: "For the purpose of the present Law, breach of contract shall be regarded as fundamental whenever the party in breach knew, or ought to have known, at the time of the conclusion of the contract, that a reasonable person in the same situation as the other party would not have entered into the contract if he had foreseen the breach and its effects."

129. Compare U.C.C. § 2-705.

130. Compare U.C.C. §§ 2-512, -513(3), and –605(2).

131. ULIS, art. 40, reads: "The seller shall not be entitled to rely on the provisions of Articles 38 and 39 if the lack of conformity relates to facts of which he knew, or of which he could not have been unaware, and which he did not disclose." Apparently a fundamental breach is still needed to avoid. The U.C.C. position regarding revocation is arguably not so restrictive; U.C.C. § 2-721 provides that the remedies for fraud "include all remedies available under this Article for non-fraudulent breach." The official comment makes it clear that this is intended to expand, rather than to contract, the remedies.

132. See U.C.C. § 2-607(2).

133. ULIS, art. 44(1), reads: "In cases not provided for in Article 43, the seller shall retain, after the date fixed for delivery of the goods, the right to deliver any missing part or quantity of the goods or to deliver other goods which are in conformity with the contract or to remedy any defect in the goods handed over, provided that the exercise of this right does not cause the buyer either unreasonable inconvenience or unreasonable expense."

134. UNCITRAL, Draft Convention on the International Sale of Goods, Report on Tenth Session, 32 GAOR Supp. (No. 17) 11-27, U.N. Dec. A/32/17(1977), reprinted in 1977 8 Y.B. UNCITRAL 11, 35, U.N. Dec. A/CN.9/SER.A/1977.

135. Id. art. 1(1).

136. Id. art. 2(a).

137. Id., art. 22(3), parallels ULIS, art. 38(3) respecting goods redispatched by the buyer. See note 123 and accompanying text supra.

138. Id. art. 33(1), applies "if the seller delivers only a part of the goods or if only a part of the goods delivered is in conformity with the contract."

139. See Whaley, supra note 13.

140. See note 7 and accompanying text supra.

141. [1962] 2 Q.B. 26, [1962] 1 All Eng. Rep. 474 (C.A.). But see The Mihalis Angelos, [1971] 1 Q.B. 164, [1970] 3 All. Eng. Rep. 125 (C.A.).

142. [1962] 2 Q.B. at 70, [1962] 1 All Eng. Rep. at 487.

143. [1976] 1 Q.B. 44, [1975] 3 All Eng. Rep. 739 (C.A.).

144. 56 & 57 Vict., c. 71, § 11(1)(b)(1893).

145. [1976] 1 Q.B. at 60, [1975] 3 All Eng. Rep. at 747.

146. Law Reform Commission of New South Wales, Working Paper on the Sale of Goods, 212-54, 302-07 (1975).

147. Id. at 304, proposed § 54A(9). See also this report at 215 where the Commission argues for a substantial breach test to remove the "temptation for the buyer to act to his economic advantage in a fluctuating market."

148. Id. at 304, proposed § 54A(12).

149. Id. at 302, proposed § 54A(3). Proposed § 54A(4) and (5) makes this clearly a facts and circumstances issue.

150. Id. at 217, 222, 287.

151. Id. at 222, 304, proposed § 54A(10).

152. Id. at 222-24, 305, proposed § 54D.

153. Id. at 305-06, proposed § 54D(2), reads: "A breach is capable of remedy for the purpose of this section, if at the time when the buyer gives to the seller notice of termination, there is some course of action open to the seller (whether by way of repair or alteration of the goods delivered, making good any shortage in quantity, making good any defect in title, delivery of other goods in substitution for the goods delivered under the contract, or otherwise) whereby the consequences of the breach will, within a reasonable time, be so alleviated that the breach ought not to be treated as a material breach within the meaning of section 54A."

154. Id. at 306, proposed § 54E(1).

155. Id. at 224-26. The Commission noted that New South Wales had a Commercial Transaction (Miscellaneous Provisions) Act, 1974 (N.S.W.), § 7 of which voided any provision in a consumer sale contract purporting to restrict or exclude the liability of a seller for beach of implied warranties.

156. This writer had the honor of assisting the Commission in the preparation of its draft bill and report.

157. 209 Pa. Super. Ct. 120, 224 A.2d 782 (1966).

158. Ont. Rev. Stat. 1970, c.421.

159. Ont. Rev. Stat. 1970, c.82.

160. Stat. Ont. 1974, c.131.

161. Bill 110, 3d Sess., 30th Leg. (1976). It received first reading June 15, 1976, but no further action has been taken pending further study.

162. Another alternative is to provide a minimum level of damages plus attorney’s fees, as provided in The Fair Credit Billing Act of 1974, 15 U.S.C. § 1601 (1976).


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