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§7.20 UCC—Relief Available

Lesson 7:
& Warranties

If the goods or tender of delivery fail to conform to the contract, the buyer may exercise self-help remedies; e.g., the buyer may:

  • Reject nonconforming goods [Com C §2601(a)], or
  • Revoke acceptance if the nonconformity substantially impairs the value to the buyer and the nonconformity has not seasonably been cured, or acceptance was reasonably induced by the difficulty of discovery or by the seller’s assurances [Com C §2608(1)]. The burden is on the buyer to prove a breach after a product is accepted. [Com C §2607(4).]
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When the goods fail to conform to a Commercial Code warranty, the buyer’s legal remedies include the right to:

  • Retain accepted goods and recover the difference in value for any nonconformity plus incidental and consequential damages [Com C §§2714(2), 2715]; or
  • Reject the goods, cancel the contract, and recover all moneys paid to the seller plus incidental and consequential damages [Com C §2711(1); see Com C §§2713, 2715].

Incidental damages resulting from the seller’s breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover, and any other reasonable expense incident to the delay or other breach. [Com C §2715(1).]

Consequential damages resulting from the seller's breach include [Com C §2715(2)]:

  • Any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise, and
  • Injury to person or property proximately resulting from any breach of warranty.

The parties may agree to set a reasonable sum as liquidated damages, subject to and in compliance with CC §1671 [Com C §2718(1)], or contractually modify or limit the above remedies [Com C §2719(1)], subject to the limitations established by the rules on liquidated damages and unconscionability. For example, the parties may agree to limit the buyer's remedies to return of goods and repayment of price or to repair and replacement of nonconforming goods. A limit on personal injury damages is invalid unless the limitation is not unconscionable. [Com C §2719(3).]

A buyer must notify the seller of any defects. For example, a buyer must reject goods within a reasonable time after their delivery or tender, and must seasonably notify the seller. [Com C §2602(1).] If the goods were accepted [Com C §2606], the buyer must, within a reasonable time after he or she discovers or should have discovered any breach, notify the seller of breach or be barred from any remedy. [Com C §2607(3)(A).]

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