Hawaii Attorney Legal Blog

Over the past few weeks, I have addressed the sale of goods in Hawaii under the Uniform Commercial Code. Article Two of the Uniform Commercial Code has been adopted in every state (except Louisiana) and governs contracts for the sale of goods. Hawaii has adopted the Uniform Commercial Code. Obviously, the express terms of a contract for the sale of goods will control the manner in which the sale is to be carried out. If the seller tenders goods that are not timely rejected by the buyer, the buyer is obligated to make payment pursuant to the terms of the sales contract. What constitutes effective "rejection" by the buyer is discussed in my entry of April 23, 2007. This blog entry concerns the rights of a seller to cure any defects alleged by a buyer.

A seller has the right under the UCC to cure a buyer's rejection of nonconforming goods if; (1) "the time for performance has not expired" or, (2) there were "reasonable grounds to believe" the imperfect tender "would be acceptable" as suitable substitution. HRS § 490:2-508. The seller must also "seasonably notify the buyer of his intention to cure." HRS § 490:2-508. "Curing" by the seller basically entails repairing and/or replacing the good to make it conforming and free of defect(s). This ensures that a buyer gets what he bargained for in the contract and allows seller to "avoid injustice...by reason of a surprise rejection by the buyer." Comments to HRS § 490:2-508.

If a seller seasonably notifies the buyer of its intention to cure an alleged defect, the buyer must not interfere. If a seller attempts to cure the nonconformity but is frustrated by the buyer in his attempts (ie. is prevented from picking up the good) then the buyer may be deemed to have accepted the nonconforming goods and waives his right to have the good cured. See Contours, Inc. v Lee, 10 Haw.App. 368 (1994). Moreover, if the buyer has used or modified the allegedly defective good before it could be cured, in some circumstances, Courts have determined that the buyer has waived its right to seek compensation.

Sellers and buyers should document all of their communication concerning efforts to cure (if you are the seller) or efforts to obtain a cure (if you are the buyer). Too often business persons hold written documents in disdain (as mere formalities) and, therefore, fail to protect themselves by documenting their reasonable efforts to solve a problem. It is wise for a businessperson to solve their own problems, and being reasonable is always the best course of action. But it may not do you any good to be the most reasonable party to a transaction, if you cannot prove that you were the most reasonable party. Any good trial lawyer will tell you that the outcome of a case is not always determined by what actually happened, but what the attorneys can prove through admissible evidence. The easiest way to ensure that you will be able prove that you were the most reasonable party to a transaction is to put all your communications in writing (and save your emails). And, of course, be the most reasonable party in all of your transactions.

Labels: Commercial Litigation

Under the Uniform Commercial Code ("UCC"), a breach of a sales contract may occur when a seller delivers non-conforming goods to the buyer. It is the buyer's burden of proof to establish this breach once goods are accepted. H.R.S. § 490:2-601. Upon delivery and acceptance of goods, the buyer is obligated to pay the contract price to the seller. H.R.S. § 490:2-401. Specifically, tender of delivery requires that the seller place and hold conforming goods at the buyer's disposition and give the buyer any notification reasonably necessary to enable him to take delivery. H.R.S. § 490:2-503

Upon delivery of a non-conforming good by the seller, the buyer has three options; 1) reject the goods, 2) accept the goods, or 3) accept any commercial unit and reject the rest. H.R.S. § 490:2-601. For a buyer to adequately reject the goods, the goods must be truly non-conforming or the rejection will be considered wrongful and may give the seller "immediate remedies for breach." H.R.S. § 490:2-602 including comments.

A buyer may reject goods if they "fail in any respect to conform to the contract." (H.R.S § 490:2-601) But that rejection "must be within a reasonable time after their delivery or tender", and the buyer must "seasonably notif[y] the seller." H.R.S. § 490:02-602. The importance of this provision cannot be overemphasized. A buyers failure to timely reject nonconforming goods has been found to constitute a waiver of the right of rejection. Also to be effective, a rejection requires a "clear and unequivocal act," and not merely a request for cure. Matrix v Jolie, 2005 WL 1074774 at 6 (N.Y.City Civ.Ct., 2005), citing Hooper Handling, Inc. v. Jonmark Corp., 267 A.D.2d 1075, 1076 (N.Y.A.D. 4th Dept., 1999); Sears Roebuck & Co. v. Galloway, 195 A.D.2d 825, 827 (N.Y.A.D. 3d Dep., 1993).

The notice of rejection must be "clear and unequivocal". A buyer's "mere complaints" about the goods were not sufficient notice of rejection. If the buyer does not reject the goods pursuant to H.R.S. § 490:2-602, then the buyer is deemed to have accepted the goods. H.R.S. § 490:2-602. Moreover, the buyer's use of the goods and failure to return the goods regardless of his "mere complaints" constituted acceptance. Maggio Importato, Inc. v Cimitron, Inc. 189 A.D.2d at 664. Mere complaints also are ineffective in revocation of acceptance. Swift Spinning Mills v. B&H Apparel, 2003 WL 942610 at 2 (S.D.N.Y., 2003) ("Although [buyer] may have informed [seller] that the denim streaked, there is no evidence that it revoked its prior acceptance. All denim has defects, and if a buyer wants to revoke acceptance of a fabric, it has to involve more than merely complaining of those defects.").

This rule is also supported by H.R.S. § 490:2-605 which requires a buyer to "state in connection with rejection, a particular defect" or risk waiving his objection to acceptance.

The UCC is a road map for buyers and sellers to follow in the event they have a dispute involving a contract for the sale of goods. A buyer or seller should state their objections to a transaction clearly, unequivocally and in writing. If it is cost efficient, consult with your attorney before proceeding. Retain copies of everything. These days, copies of email communication can be as valuable as any other writing. If you have any doubt whether it should be saved, print it out and show it to your lawyer.

Labels: Commercial Litigation

The Uniform Commercial Code (UCC), Article 2, governs all contracts for the sale of goods in Hawaii under Title 27, Chapter 490, Article 2 of the Hawaii Revised Statutes ("HRS"). The purposes of the UCC are:

(1) To simplify, clarify, and modernize the law governing commercial transactions;(2) To permit the continued expansion of commercial practices through custom, usage, and agreement of the parties; and (3) To make uniform the law among the various jurisdictions. HRS § 490:1-103.

Prior to the creation of the UCC, each state had its own (and sometimes conflicting) laws concerning the sale of goods. The UCC brought ease and consistency to the sale of goods throughout the United States regardless of where the buyer and seller are located. The UCC has been broadly interpreted and amended in order to adapt to changing times. Indeed, 49 of the 50 states have adopted Article 2 of the UCC (sales). Louisiana is the only state that has not fully passed Article 2 of the UCC.

How does a buyer or seller know if the UCC governs its transaction? There must be a valid contract for the sale of goods.

What is a contract? A valid contract requires an offer, acceptance, and consideration. An offer is a commitment communicated to an identified person containing definite terms. Acceptance is agreement to the terms of the offer by a person to whom the offer was made. Consideration is an exchange of the bargain (i.e. goods) for a benefit (ie. money).

What is a sale? The answer to this question and many other are found in the UCC. "A 'sale' consists in the passing of title from the seller to the buyer for a price." HRS § 490:2-106.

What is a good? "Goods means all things (including specially manufactures goods) which are movable at the time of identification to a contract for sale. The term includes the unborn young of animals, and growing crops, and other identified things attached to realty." HRS § 490:2-105.

As a commercial litigation attorney for over twenty years, I have had many cases involving the UCC. Over the next few weeks, I will address certain UCC issues commonly encountered in Hawaii.

Labels: Commercial Litigation

Many of our friends and clients know that my office manager, Warren Fabro, is a top rate legal professional. Warren does his job well every day. Each week I am told how lucky I am that he works with me. I know how fortunate I am. What many of our clients do not realize is that Warren is also an accomplished actor. And although Warren may kill me for doing this, allow me to sing his praises.

Warren's professional acting career took off in 1988 in the film, Aloha Summer. Admittedly, the film never won any Academy Awards, but it is a very entertaining movie and Warren appears on the video cover. In fact, the NY Times wrote that "Aloha Summer is a magnificently photographed delight for surf-movie aficionados." Besides it is the only film that showcases both Warren's fighting and surfing skills.

Warren's film credits also include the movie, Picture Bride (which starred Tamlyn Tomita and Cary-Hiroyuki Tagawa). The LA Times called Picture Bride, "a gentle and eloquent tale of perseverance that blossoms finally into the most tender of love stories". It is an important film about the period between 1907 and 1924, when more than 19,000 Japanese women immigrated to Hawaii to marry Japanese sugar-cane workers. These couples knew little of each other beyond an exchange of photos. Picture Bride is based on some of the actual experiences of many such women. I am very proud that Warren appears in this film.

Another important credit for Warren was the miniseries Blood & Orchids. This miniseries starred Kris Kristofferson, Sean Young and Madeline Stowe. It told the story of four Native Hawaiian youths wrongly accused of attacking the wife of a naval officer in 1937. Based on the Massie case, it handled the difficult questions raised when four Hawaiian youth were tried by an all white Court in 1930's Hawaii. Warren ably plays one of the wrongly accused youths.

Warren has also had a distinguished television career. Last year he took off time from work to appear on the NBC crime drama, Hawaii. You may recall Warren's character running from the police through the streets of Chinatown only to be cornered in a seedy bar. Soon thereafter, Warren confesses his part in a plot to rob tourists at the Honolulu airport. Surprisingly, Warren was completely believable as a low life thug preying on unsuspecting tourists.

Warren's other television credits include Magnum PI (Tom Selleck was the second best looking guy on the show); Jake and the Fatman; and One West Waikiki.

In the summer of 2006, Hawaii audiences had the treat of watching Warren appear in a major supporting role to Richard Chamberlain in the Hawaii Opera Theatres fine production of The King and I. I was honored to attend the final performance. I am sure that I was not the only audience member who felt that Warren more than held his own with all of the other fine professional dramatic actors on the stage.

So that is a quick summary of Warren Fabro's major acting accomplishments. Those of you who know Warren, understand that he would never "sing his own praises". That is just one of the reasons that he is such a unique person. So the next time Warren assists you, remember, he is not just an excellent legal professional, Warren is also an accomplished actor.

Labels: Office News

We are pleased to welcome Effie A. Steiger as an associate effective April 3, 2007. Ms. Steiger recently completed a clerkship for the Honorable Stefaney Miley. Ms. Steiger is a 2006 graduate of the University of Nevada - Las Vegas, William S. Boyd School of Law. She graduated from the University of Hawaii in 2002 with her B.A. in Political Science.

Ms. Steiger is licensed to practice law in Nevada and will take the Hawaii Bar exam in August, 2007.

Labels: Office News