Capitol Dodge Sales v. Northern Concrete Pipe, Inc.
346 N.W.2d 535, 131 Mich. App. 149 (1983)
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Rule of Law:
Under the Uniform Commercial Code, a buyer's acceptance of goods does not occur until the buyer has had a reasonable opportunity to inspect them, which for complex goods like a vehicle, includes an opportunity to put the product to its intended use to ensure it conforms to the contract.
Facts:
- William Washabaugh, an officer of Northern Concrete Pipe, Inc., test-drove a new Dodge pickup truck with a snowplow attachment at Capitol Dodge Sales, Inc.
- During the test drive, the truck's engine overheated.
- Capitol's salesman, John Fuller, assured Washabaugh that the overheating was solely due to the improper positioning of the snowplow blade and was not a mechanical defect.
- Relying on this assurance, Washabaugh purchased the truck on behalf of Northern Concrete, paid the full price by check, and arranged for his employees to collect it the next day.
- Over the next two days, Northern Concrete's employees attempted to drive the truck on three separate occasions, both from the dealership and after a purported repair by Capitol.
- Each time, despite assurances and one attempted repair by Capitol (replacing a radiator cap), the truck's engine severely overheated within a short distance.
- On the third day, after the third instance of overheating, Washabaugh instructed his employee to immediately telephone Capitol, notify them that Northern Concrete was rejecting the truck, and stop payment on the check.
- That same evening, Capitol Dodge Sales, Inc. sent a wrecker to retrieve the truck from Northern Concrete's property.
Procedural Posture:
- Capitol Dodge Sales, Inc. (plaintiff) sued Northern Concrete Pipe, Inc. (defendant) in district court for breach of contract.
- The district court, sitting as the trial court, entered a judgment for the plaintiff, Capitol Dodge.
- Northern Concrete Pipe, the defendant, appealed the judgment to the circuit court.
- The circuit court affirmed the district court's judgment.
- Northern Concrete Pipe, the appellant, was granted leave to appeal to the Court of Appeals of Michigan.
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Issue:
Does a buyer's act of taking possession of a vehicle and driving it off the seller's lot constitute 'acceptance' under UCC § 2-606, thereby precluding the buyer from rejecting the goods for nonconformity?
Opinions:
Majority - W. R. Peterson, J.
No. A buyer's act of taking possession does not by itself constitute acceptance under UCC § 2-606; acceptance occurs only after the buyer has had a reasonable opportunity to inspect the goods. The court reasoned that the UCC clearly contemplates an act beyond mere delivery or taking possession. Citing Zabriskie Chevrolet, Inc. v. Smith, the court held that for complex goods like a vehicle, a 'reasonable opportunity to inspect' is not limited to a visual inspection but necessarily includes putting the product to its intended use to verify that it performs as intended. Here, Northern Concrete never had a true opportunity to use the truck because it consistently failed to perform due to the overheating issue. Each attempt to drive the truck was part of the inspection period. Since the truck was non-conforming and Northern Concrete never signified acceptance, it retained its absolute right under the 'perfect tender rule' of UCC § 2-601 to reject the truck, which it did by seasonably notifying Capitol.
Analysis:
This decision clarifies the critical distinction between possession and acceptance under the UCC, particularly in the context of complex consumer goods. It reinforces that the 'reasonable opportunity to inspect' is a substantive right that includes actual use and testing, not merely a cursory visual check. The case strongly affirms the 'perfect tender' rule, empowering buyers to reject goods for any non-conformity discovered during this initial inspection period, rather than being forced to accept defective goods and then seek the more difficult remedy of revocation of acceptance.
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