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McCullough v. Bill Swad Chrysler-Plymouth, Inc.

Ohio Supreme Court
5 Ohio St. 3d 181 (1983)
ELI5:

Rule of Law:

A buyer's continued use of goods after notifying the seller of revocation of acceptance does not constitute a waiver of the right to revoke if such use is reasonable under the circumstances.


Facts:

  • An individual (appellee) purchased a new automobile from a dealer (appellant).
  • The vehicle suffered from numerous and chronic defects, including problems with the steering, transmission, brakes, and various cosmetic flaws.
  • The appellant and its successor made multiple, unsuccessful attempts to repair the vehicle; often, new defects would arise after a repair attempt.
  • Appellee notified appellant of her intent to rescind the purchase agreement (revoke acceptance) and requested instructions regarding the disposition of the vehicle.
  • Appellant did not provide instructions for the vehicle's return.
  • Appellee, a clerical secretary of limited financial means who needed the car for transportation, continued to operate the vehicle after her notice of revocation.
  • The vehicle had been driven approximately 12,000 miles at the time of revocation and less than 35,000 miles by the time of trial.

Procedural Posture:

  • The buyer sued the seller in the trial court seeking to rescind the purchase agreement.
  • The trial court found in favor of the buyer.
  • The seller, as appellant, appealed the decision to the intermediate court of appeals.
  • The court of appeals affirmed the trial court's judgment.
  • The seller, as appellant, then appealed to the state's highest court.

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Issue:

Does a buyer's continued use of a vehicle after notifying the seller of her revocation of acceptance waive her right to revoke that acceptance?


Opinions:

Majority - Locher, J.

No, the buyer's continued use of the vehicle after revoking acceptance did not waive her right to revoke. A buyer's post-revocation use is permissible so long as that use is reasonable, which is a question for the trier of fact. The court found appellee's use reasonable because: (1) appellant failed to provide instructions for the car's return after being notified of the revocation; (2) appellee was in a difficult financial position and needed the car for personal and business use; (3) appellant's successor continued to provide assurances that the defects were remediable by attempting repairs post-revocation; and (4) appellant was not unduly prejudiced by the continued use, as the car was still marketable. Furthermore, under R.C. 1302.85(C), a buyer who has made payments has a security interest in the goods and may retain them to protect that interest. The court also rejected appellant's arguments that the defects did not substantially impair the vehicle's value and that the warranties were the sole remedy, finding that any defect shaking the buyer's faith in the vehicle constitutes substantial impairment and that the limited warranty had failed its essential purpose due to the inability to cure the defects.


Concurring-in-part-and-dissenting-in-part - Holmes, J.

This opinion concurs with the majority's adoption of the 'reasonable use' legal standard but dissents from the failure to award the seller a setoff. The case should be remanded to the trial court to determine the reasonable value of the buyer's use of the automobile after she revoked acceptance. It was not reasonable to expect the seller to have presented evidence on this value at trial when its primary legal argument was that the buyer had waived any right to revoke.



Analysis:

This decision establishes a flexible, fact-based 'reasonableness' standard for evaluating a buyer's use of goods after revoking acceptance under the Uniform Commercial Code. It moves away from a strict interpretation where any use would void revocation, instead protecting buyers who are financially constrained or receive no cooperation from the seller. The ruling reinforces the principle that a limited warranty 'fails of its essential purpose' when a product cannot be repaired in a reasonable time, allowing the buyer to access the full range of UCC remedies. This case provides a key precedent for 'lemon law' disputes, shifting some of the post-revocation burden onto the seller to instruct the buyer on return procedures.

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