Hays Merchandise, Inc. v. Dewey
474 P.2d 270, 78 Wash. 2d 343 (1970)
Rule of Law:
Under UCC § 2-608, a buyer's revocation of acceptance is effective only if the goods' non-conformity substantially impairs their value to the buyer, notice of revocation is given within a reasonable time, and the buyer refrains from exercising acts of ownership over the goods after giving notice.
Facts:
- In autumn 1967, Mr. Dewey planned to establish a "Toyland" in his paint store for the Christmas season.
- Dewey visited Hays Merchandise, Inc., a wholesale toy company, and selected toys with a particular emphasis on stuffed animals.
- The parties agreed to an order for approximately $2,500 to $3,500 worth of toys, which included the stuffed animals and other items to be selected by a Hays employee.
- Hays made several shipments to Dewey's store in October and November, but these shipments contained less than half of the stuffed animals Dewey had anticipated.
- The value of the stuffed animals that were ordered was found to not exceed $500.
- Dewey repeatedly complained about the shortage and was assured the missing items were on back-order.
- Shortly before December 1, Dewey told a Hays employee he wanted no more toys, but he kept the shipments he had already received.
- Dewey then priced the delivered toys, displayed them in his "Toyland," advertised them, and sold them to customers during the Christmas season.
Procedural Posture:
- Hays Merchandise, Inc. filed a lawsuit against Dewey in a Washington state trial court to recover the sale price of the toys.
- The trial court found in favor of Hays, holding that the failure to deliver all the stuffed animals was not a 'material breach' of the contract.
- The trial court entered a judgment against Dewey for $3,436.36.
- Dewey, as the appellant, appealed the trial court's judgment to the Supreme Court of Washington; Hays Merchandise, Inc. is the appellee.
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Issue:
Does a buyer effectively revoke acceptance of goods under UCC § 2-608 when the non-conformity does not substantially impair the value of the goods, and the buyer delays notice of revocation while exercising dominion over the goods by attempting to sell them?
Opinions:
Majority - Finley, J.
No. A buyer does not effectively revoke acceptance when the non-conformity is not a substantial impairment and the buyer's actions are inconsistent with revocation. The court held that the standard for revocation under RCW 62A.2-608 is whether a non-conformity 'substantially impairs' the value of the goods to the buyer, which is an objective factual determination, not a subjective one based on the buyer's personal belief. The trial court's finding that the shortage of stuffed animals was not a 'material breach' was equivalent to a finding of no substantial impairment, and this was supported by the evidence. Furthermore, the buyer's notice of revocation was untimely. An attempt to return seasonal goods, such as toys, months after the primary selling season (Christmas) is unreasonable. Finally, even if notice had been timely, the buyer's subsequent acts of pricing, displaying, advertising, and selling the toys constituted acts of dominion inconsistent with a valid revocation, as such acts are for the buyer's own account and violate the duty to hold the goods for the seller's disposition.
Analysis:
This case clarifies the standard for a buyer's revocation of acceptance under UCC § 2-608, distinguishing it from the lower threshold for initial rejection of goods under § 2-601. The court establishes that 'substantial impairment' is an objective, fact-based inquiry tailored to the buyer's specific circumstances, not a purely subjective test of the buyer's satisfaction. The decision reinforces that a rightful revocation requires not only timely notice but also that the buyer must cease all acts of ownership over the goods. This precedent provides a clear framework for analyzing post-acceptance disputes, emphasizing that a buyer cannot treat goods as their own while simultaneously claiming to have revoked acceptance.
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