Instructions: Read the cases below and answer the questions that follow each case.

Buyer's Rights and Obligations

The buyer's primary obligation is to accept conforming goods and pay for them.

Inspection and Acceptance

The buyer generally has the right to inspect the goods before paying or accepting.

Partial Acceptance

The buyer may accept some goods and reject others if they can be divided into commercial units.

Revocation

A buyer may revoke acceptance but only if the non-conformity substantially impairs the value of the goods and only if she had a legitimate reason for the initial acceptance.

Rejection

The buyer may reject non-conforming goods by notifying the seller within a reasonable time.

Case:Lile v. Kiesel[1]

Facts:Edward and Kelly Kiesel bought a trailer from James Lile, the owner of Lile's Trailer Sales.That same day, the Kiesels used the trailer.The next morning, after an all-night rain, the Kiesels noticed water inside the trailer, near the door.The next time it rained, Edward noticed more pooling.A week later, Edward brought the trailer in for repairs.

Lile repaired the roof with new silicone.But a week later the trailer leaked again and Kelly reported it to Lile and demanded a refund.Lile refused the refund but offered to make repairs.Instead, the Kiesels took the trailer to a different shop and the owner told them that based on the extensive rust, the trailer had been leaking for longer than the Kiesels had owned it.

The Kiesels sued.Lile claimed that the Kiesels had accepted the trailer and unfairly refused repairs.The trial court awarded the Kiesels the full purchase price and, Lile appealed.

Issue:Were the Kiesels entitled to the trailer's purchase price?

Holding:Yes, judgment for the Kiesels affirmed.Lile argued that the Kiesels accepted the trailer and therefore could not later reject it.The court agreed.However, that did not mean that the Kiesels could not revoke their acceptance.According to the UCC 2-608, a buyer may revoke acceptance if the non-conformity substantially impairs the value of the good, and the non-conformity was difficult to discover before acceptance of the goods.Here, the court found that Edward made several visits to Lile's before purchasing the trailer, and eventually negotiated a purchase price.The trailer leaked twice within one week of buying it, and Edward reported the leaking problem promptly.

The court found that the leaking and rust damage substantially impaired the value of the trailer.Also, because the leaks were due to rain, it would have been difficult for the Kiesel's to have discovered them prior to buying the trailer.Thus, the court found that the Kiesel's met the requirements of 2-608 for revocation of acceptance.

Lile also argued that the Kiesel's acted in bad faith by not allowing him to cure the trailer's defects.However, because the Kiesels had accepted the goods, there was no obligation to allow Lile to cure.The Kiesels could only revoke their acceptance.According to the court, there was no evidence that the Kiesels acted in bad faith.To the contrary, Edward gave Lile an opportunity to repair the trailer even though he was not obligated to do so.

Question:The trailer had water damage before the Kiesel's purchased it.Why did Lile argue that they were not entitled to their money back?

Question:Why would Lile want to fix the trailer, wouldn't it be easier just to give them their money back?

Seller's Remedies

The seller can always cancel the contract. She may also be able to:

Stop delivery of the goods

Identify goods to the contract

Resell and recover damages

Obtain damages for non-acceptance, or

Obtain the contract price.

This case can serve as a general review of many of the issues discussed in this chapter, and a few from earlier chapters.

Additional Case:Byblos U.S.A., Inc. v. Morris & Sons[2]

Facts:Byblos sold offprice designer clothing manufactured by an Italian parent company.Morris & Sons was a Chicago retailer that had been selling men's and women's clothing for 40 years.Aaron Krichevsky, the president of Morris, contacted Patricia Saracini, the sales manager for Byblos, to discuss buying some Byblos clothing.He stated that he wanted only first-quality merchandise in good condition-no samples or damaged goods.She agreed to send such items.He further described the kinds of clothing Morris required.The parties agreed that Byblos's sales representatives would select merchandise for Morris and ship it, sight unseen, for approval or rejection.Over a threeyear period, Byblos made about 14 shipments to Morris, with each shipment containing from 10 to 400 articles of clothing.Each shipment contained an invoice, ranging from $1,000 to $12,000.

Morris sold some but not all of the clothing.Krichevsky testified that many of the goods were defective.For example, some of the adult sweaters had an opening large enough only for an infant's head.Nonetheless, Morris continued to accept the shipments, and to sell what items it could.After the final shipment, Morris still owed about $111,000, which it refused to pay because of the alleged defects.Byblos sued.

Issue:Were the clothes nonconforming?Was Morris's rejection of the goods effective?

Holding:Judgment for Byblos.

Question:Neither party said anything about warranties.Did the goods come with any warranties?

Question:What was the express warranty?

Question:What were the implied warranties and how were they created?

Question:What does the implied warranty of merchantability require?

Question:What is the full name of the implied warranty of fitness, and what does it require?

Question:At trial, Byblos claimed that it did not intend any warranties to apply.Based on the facts as described, rule on this claim.

Question:The contract said nothing about Morris's right to inspect the goods.Did the retailer have such a right?

Question:Suppose Morris found some clothing in one shipment to be defective.Could it reject the entire shipment?

Question:If Morris found some clothing defective but other items acceptable, could it keep some and reject the others?

Question:Does the Code require rejection be in a certain form?

Question:Byblos delivered about 14 shipments and had received only partial payment.What was its most likely remedy?

Question:Morris did inspect all goods as they arrived.After Byblos sued to its contract price, Morris rejected many of the goods.Comment.

Question:Inspection followed by silence amounts to what?

Question:Who won?