Rejection of Hawaii Goods Under the UCC

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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.