Jakowski v. Carole Chevrolet, Inc.
180 N.J. Super. 122, 31 U.C.C. Rep. Serv. (West) 1615, 433 A.2d 841 (1981)
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Rule of Law:
Under U.C.C. § 2-510(1), when a seller delivers non-conforming goods that give the buyer a right of rejection, the risk of loss remains with the seller until the seller cures the defect or the buyer accepts the goods.
Facts:
- On March 8, 1980, Stanley Jakowski entered into a contract with Carole Chevrolet, Inc. to purchase a new 1980 Chevrolet Camaro.
- The parties agreed that the car would be delivered with undercoating and a polymer finish.
- On May 19, 1980, Carole Chevrolet delivered the Camaro to Jakowski without the specified coatings.
- The next day, Carole Chevrolet contacted Jakowski, acknowledged the nonconformity, and instructed him to return the car for application of the coatings.
- On May 22, 1980, Jakowski returned the car to Carole Chevrolet's premises for the cure.
- During the evening of May 22 or the morning of May 23, the car was stolen from Carole Chevrolet's property.
- The car was never recovered, and Carole Chevrolet refused to provide a replacement or a refund.
Procedural Posture:
- Stanley Jakowski filed a complaint against Carole Chevrolet, Inc. in the Superior Court of New Jersey, Law Division, Essex County, a trial court.
- Jakowski moved for summary judgment on the first count of his complaint, which alleged breach of contract.
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Issue:
Does the risk of loss for stolen goods remain with the seller if the goods delivered to the buyer failed to conform to the contract, and the buyer returned them to the seller for cure of the defect?
Opinions:
Majority - Newman, J.S.C.
Yes. The risk of loss remained with the seller because the goods were non-conforming, the buyer had not accepted them, and the seller had not yet cured the defect. The court's reasoning followed a three-part analysis under U.C.C. § 2-510(1). First, the car failed to conform to the contract by lacking the specified coatings, which, under the 'perfect tender' rule, gave the buyer a right to reject it; the degree of nonconformity is irrelevant. Second, the buyer did not 'accept' the car because taking possession is not equivalent to acceptance, and a buyer must have a reasonable opportunity to inspect. Here, the seller's own communication acknowledging the nonconformity and exercising its right to cure precluded any acceptance by the buyer. Third, the seller had not effected a cure before the car was stolen. Therefore, all conditions of § 2-510(1) were met, and the risk of loss never passed from the seller to the buyer.
Analysis:
This case provides a clear application of U.C.C. § 2-510(1), reinforcing that the risk of loss does not automatically transfer to the buyer upon physical delivery if the goods are non-conforming. It solidifies the principle that a seller's attempt to cure a nonconformity effectively keeps the risk of loss on the seller until that cure is complete. The decision underscores that 'acceptance' is a distinct legal act requiring more than mere physical possession, particularly when the seller admits the goods are defective. This holding protects buyers from bearing the loss for goods that do not meet the contract specifications, even after the goods have left the seller's premises.
