DeJesus v. Cat Auto Tech Corp.

Civil Court of the City of New York
1994 N.Y. Misc. LEXIS 289, 615 N.Y.S. 2d 236, 161 Misc. 2d 723 (1994)

ELI5:

Rule of Law:

Under UCC § 2-602, a buyer's rejection of non-conforming goods is ineffective unless the buyer seasonably notifies the seller of the rejection; placing a stop-payment order on a check without further communication is not seasonable notification because it denies the seller an opportunity to cure.

Facts:

Plaintiff seller and defendant buyer, an Amoco gasoline station operator, entered into a contract for the production and delivery of 10,000 gift certificate booklets.
The certificates were intended for distribution to Montefiore Hospital employees before the Christmas holidays, with a specified delivery time of two weeks.
The plaintiff delivered the certificates approximately two weeks late.
The defendant's president, Michael DiBarro, accepted the late delivery, stating he did so because of an immediate need for the certificates, and paid the balance due with a check.
The defendant did not inspect the goods at the time of delivery.
One day after delivery, the defendant inspected the certificates and found alleged defects, including different paper stock, a missing decorative border, and misaligned colors on the Amoco logo.
After the inspection, the defendant placed a stop-payment order on the check but did not otherwise communicate the action or the reasons for dissatisfaction to the plaintiff.
The plaintiff only learned of the defendant's dissatisfaction upon receiving a notice from her bank regarding the stopped payment.

Procedural Posture:

Plaintiff seller filed an action against defendant buyer in the Civil Court of the City of New York, Bronx County, which is a trial court.
The plaintiff sought to recover the unpaid balance for a delivery of gift certificates.
The case was tried before a judge sitting without a jury.

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Issue:

Under UCC § 2-602, does a buyer effectively reject non-conforming goods by placing a stop-payment order on a check without providing any other direct or timely notification to the seller?

Opinions:

Majority - Lucindo Suarez, J.

No. Under UCC § 2-602, a buyer does not effectively reject non-conforming goods by merely placing a stop-payment order on a check, as this does not constitute seasonable notification to the seller. The Uniform Commercial Code requires that for a rejection to be effective, the buyer must seasonably notify the seller. The primary purpose of this notification requirement is to afford the seller a reasonable opportunity to cure the non-conformity under UCC § 2-508. In this case, the defendant's stop-payment order, without any other communication, was not a seasonable or reasonable method of notification. It failed to inform the seller of the alleged defects and deprived her of the chance to cure by, for example, offering a price reduction or substituting conforming goods. Because the defendant failed to provide proper notice, the rejection was ineffective, meaning the defendant is deemed to have accepted the goods and must pay the contract price.

Analysis:

This decision clarifies the meaning of 'seasonable notification' for the rejection of goods under UCC § 2-602, emphasizing that the method of notification must be direct and substantive. It reinforces the seller's right to cure defects under UCC § 2-508, establishing that a buyer's actions cannot unilaterally frustrate this right. The ruling serves as a precedent that a passive or indirect action, like a stop-payment order, is legally insufficient to constitute rejection, thereby promoting communication and good faith between commercial parties and discouraging buyers from avoiding payment without first attempting to resolve issues with the seller.

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