Ramirez v. Autosport

The Supreme Court of New Jersey
88 N.J. 277, 440 A.2d 1345 (1982)

ELI5:

Rule of Law:

Under the Uniform Commercial Code, a buyer may reject goods for any nonconformity (the perfect tender rule), but this right is balanced by the seller's right to cure the defects. If the seller fails to cure within a reasonable time, the buyer may rightfully cancel the contract.

Facts:

On July 20, 1978, Mr. and Mrs. Ramirez signed a contract with Autosport to purchase a new camper van, providing their own van as a trade-in with a value of $4,700.
The contract stipulated a delivery date on or about August 3, 1978.
On August 3, the Ramirezes arrived to find the new van had scratched paint, missing electric and sewer hookups, and uninstalled hubcaps; an Autosport salesman advised them not to accept it.
On August 14, the Ramirezes returned to find workers still painting the van and the interior cushions soaking wet from being left in the rain; they again refused to accept it.
Between August 15 and September 1, 1978, Autosport repeatedly told the Ramirezes the van was not ready, despite having transferred title to them without their knowledge on August 15.
On September 1, the Ramirezes went to the showroom at Autosport's invitation, were told to wait, and left in disgust after being ignored for an hour and a half.
On October 5, 1978, the Ramirezes formally rejected the van and requested the return of their trade-in vehicle.
Later in October, Autosport sold the Ramirezes' trade-in van to a third party.

Procedural Posture:

Mr. and Mrs. Ramirez (plaintiffs) sued Autosport (defendant) in a New Jersey trial court, seeking rescission of the contract.
Autosport filed a counterclaim against the Ramirezes for breach of contract.
The trial court found that the Ramirezes had rightfully rejected the van and awarded them $4,700, the fair market value of their trade-in.
Autosport, as the appellant, appealed to the Appellate Division of the Superior Court.
The Appellate Division affirmed the trial court's judgment.
Autosport appealed the decision to the Supreme Court of New Jersey.

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Issue:

Under the Uniform Commercial Code, does a buyer have the right to reject goods with minor, curable defects and subsequently cancel the contract if the seller fails to cure the defects within a reasonable time?

Opinions:

Majority - Pollock, J.

Yes. A buyer has the right to reject goods with minor defects and cancel the contract if the seller does not cure those defects within a reasonable time. The Uniform Commercial Code (UCC) preserves the 'perfect tender rule' under § 2-601, which allows a buyer to reject goods if they 'fail in any respect to conform to the contract.' However, this right is balanced by the seller’s right to cure under § 2-508. In this case, the Ramirezes rightfully rejected the non-conforming van on multiple occasions. Autosport was given ample opportunity throughout August to cure the defects but failed to do so. A seller's failure to cure within a reasonable period perfects the buyer's right to cancel the contract under § 2-711. This right to reject for any defect before acceptance is distinct from the right to revoke acceptance, which requires a 'substantial impairment' of the goods' value.

Analysis:

This decision clarifies the interplay between the UCC's perfect tender rule, the seller's right to cure, and the buyer's remedy of cancellation. It affirms that while the modern UCC softens the harshness of the common law perfect tender rule, it does not abolish it. The ruling establishes a clear procedural framework: a buyer can initially reject goods for any defect, but the rejection does not automatically terminate the contract. The seller is afforded a reasonable opportunity to cure, and only upon the seller's failure to do so does the buyer's right to cancel the contract arise, thereby balancing the interests of both parties.

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