Jorgensen v. Pressnall
274 Or. 285, 545 P.2d 1382, 18 U.C.C. Rep. Serv. (West) 1206 (1976)
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Rule of Law:
Under the Uniform Commercial Code (UCC), a buyer may revoke acceptance of goods if a nonconformity substantially impairs the value of the goods to the buyer subjectively. After a justifiable revocation, a buyer with a security interest in the goods may continue to use them in a reasonable manner to preserve their value without waiving the revocation.
Facts:
- Plaintiffs purchased a new mobile home from Pressnall, who represented it as being of 'good, sound construction' and suitable for frequent moves.
- Plaintiffs traded in their old mobile home as a down payment and financed the balance of the purchase.
- Upon delivery, plaintiffs discovered numerous defects, including water and air leaks, gaps in the structure, and defective doors, cabinets, and vents.
- Plaintiffs promptly notified Pressnall of the defects and were assured repairs would be made.
- Despite repeated requests and some minor, unsatisfactory repair attempts over the next two months, the serious problems, such as leakage, persisted.
- On December 27, 1972, plaintiffs' attorney sent letters to Pressnall and the financing company, notifying them of the decision to rescind the contract and tendering back the mobile home.
- On the advice of counsel, plaintiffs continued to occupy the mobile home for nearly a year after the notice of revocation to protect it from damage.
- Pressnall assigned the financing contract for the mobile home to Commercial Credit Company.
Procedural Posture:
- Plaintiffs sued Pressnall (seller) and Commercial Credit Company (financier) in a state trial court for rescission of the purchase contract.
- Commercial Credit Company filed a counterclaim against Pressnall for breach of warranty.
- The trial court found in favor of the plaintiffs against Pressnall.
- The trial court also found for Commercial Credit on its cross-complaint against Pressnall.
- Pressnall, as the appellant, appealed the trial court's judgment to the state's highest court.
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Issue:
Under the Uniform Commercial Code, does a buyer validly revoke acceptance of a mobile home when its defects substantially impair its value to their particular needs, even if the buyer continues to reside in it after notifying the seller of the revocation?
Opinions:
Majority - O’Connell, C. J.
Yes. A buyer's revocation of acceptance is valid when a product's nonconformity substantially impairs its value to the buyer's particular circumstances, and continued reasonable use of the product to preserve its value after revocation does not constitute a new acceptance. The court found that the defects, such as persistent leaks, substantially impaired the mobile home's value to the plaintiffs as a residence, which was their intended purpose. The seller, Pressnall, had ample opportunity to 'seasonably cure' the defects but failed to do so. The plaintiffs' continued occupancy of the mobile home after revoking acceptance was permissible because they retained a security interest in it for their down payment and were entitled to take reasonable steps, such as occupying it, to preserve the collateral from weather damage.
Analysis:
This case is significant for clarifying the standard for 'substantial impairment' under UCC § 2-608, establishing a two-part, subjective-objective test that focuses on the buyer's specific circumstances rather than a purely objective 'reasonable person' standard. It affirms that the cost of repair is not the sole determinant of substantial impairment; the loss of use and comfort to the specific buyer can be sufficient. Furthermore, the decision provides crucial guidance on post-revocation conduct, establishing that a buyer's continued, reasonable use of goods to preserve them does not invalidate an otherwise rightful revocation, especially when the buyer holds a security interest.
