Case Brief

Case Citation: Ramirez v. Autosport, 88 N.J. 277 (1982).

Page Number/Topic: Supplemental Case/Rejection of a defective good & remedies/

Facts:

 On July 20, 1978, plaintiffs and salesman employed by defendant reached an agreement on the sale
of a new camper and the trade in value of the plaintiff’s van
 Plaintiffs returned on set date to pick up camper, which had several things wrong with it
o 2nd salesman advised them to not accept the camper, as it was not ready
 Plaintiffs made several telephone calls, but were continually told the camper was not ready
o They wanted the camper for their summer vacation
 August 14, the plaintiffs were told the camper was ready, but when they arrived to pick it up, the
paint was still being touched up and the interior was soaking wet
o Defendant manager suggested that they take the van in the condition that it was in and they
would replace the wet cushions later
o Plaintiffs said they would take the camper if they could withhold $2000
o Defendant manager said they could withhold $250
o Plaintiffs refused
o Manager said he would call when camper was ready
 Plaintiff made several phone calls to defendant, but was advised camper was still not ready
 Defendant informed plaintiff to pick camper up on September 1, they arrived & waited for 1.5 hours,
they then left without ever being seen
 October 1, 1978, plaintiffs returned with an attorney.
o Parties discussed whether to return the plaintiff’s van. Defendant manager wanted to go
ahead with the deal
 Later in October, defendants sold the traded in van to an innocent 3 rd party for $4995
 Defendant claimed van had a blue book value of $3200 and they had put $1159.62 worth of repairs
into the van. Based on these figures, they would have made a $600-700 profit
 Autosport did not effect a cure

Contract:

 Agreement reached/K signed on July 20, 1978

Procedural History:

 Plaintiff’s filed suit on November 20, 1978, seeking, among other things, rescission of the contract
 o “In UCC parlance, plaintiffs’ request was for the cancellation of the contract and recovery
of the price paid”
 Defendant counterclaimed for breach of contract
 Trial court ruled plaintiffs were within their rights to reject the van and awarded them fair market
value of their trade in
 Appellate court affirmed

Issue:

 “This case raises several issues under the Uniform Commercial Code concerning whether a buyer
may reject a tender of goods with minor defects and whether a seller may cure the defects”
o Main Issue: Whether the plaintiffs could reject the tender by defendant of a camper van
with minor defects and cancel the contract for the purchase of the van.
 I1)Whether a consumer may reject defective goods that do not conform to the
contract of sale/under UCC as adopted by NJ, a seller has the duty to deliver goods
that conform precisely to the contract
 “A further problem, however, is identifying the remedy available to a buyer who rejects goods with
insubstantial defects that the seller fails to cure within a reasonable time”

Rule:

 R1) NJ UCC 2-106 states that goods conform to a contract “when they are in accordance with the
obligations under the contract”
o 2-601 authorizes a buyer to reject goods if they “or the tender of delivery fail in any respect
to conform to the contact”
 Rest. 2d §241 Comment B mitigates the harshness of the perfect tender rule and
balances the interests of buyer and seller
 Done through provisions for revocation of acceptance and cure
 Within the time set for performance in the contact, the seller’s right to cure is
unconditional
 After the time set for performance, the seller has a further reasonable time to cure
if he believed reasonably that the goods would be acceptable
 What constitutes further reasonable time depends on the surrounding
circumstances, which includes the amount of inconvenience to the buyer
o Rest. §241
o After acceptance, the buyer may revoke acceptance only if the nonconformity substantially
impairs the value of the goods to him 2-608
 “The Code permits a buyer who rightfully rejects goods to cancel a contract of sale. Because a buyer
may reject goods with insubstantial defects, he also may cancel the contract if those defects remain
uncured”
o The code permits a seller to cure imperfect tenders. Should the seller fail to cure the
defects, whether substantial or not, the balance shifts again in favor of the buyer, who has
the right to cancel or seek damages
 o “A buyer who rightfully rejects goods and cancels the contract may, among other possible
remedies, recover so much of the purchase price as has been paid.” NJSA 12A:2-711

Holding:

 H1) We conclude that the seller is under such a duty to make a “perfect tender” and that a buyer
has the right to reject goods that do not conform to the contract
o “We conclude that the perfect tender rule is preserved to the extent of permitting a buyer
to reject goods for any defects”
o “The trial court properly concluded that plaintiffs were entitled to “rescind”—ie to “cancel”
–the contract”
o “Because Autosport had sole the trade-in to an innccent third party, the trial court
determined that the Ramirezes were entitle not to the return of the trade in, but to the fair
market value, which the court set at the contract price of $4700.”

Reasoning:

Misc. Information

 “Rejection includes both the buyer’s refusal to accept or keep delivered goods and his notification to
the seller that he will not keep them”
 General contract law permits rescission
 “Where the goods are rejected for not conforming to the contract, the burden is on the seller to
prove the nonconformity was corrected”
 “If a merchant sells defective goods, the reasonable expectation of the parties is that the buyer will
return those goods and that the seller will repair or replace them”

Lexis Summary:

PROCEDURAL POSTURE: Defendant challenged a ruling of the New Jersey Superior Court,
Appellate Division, holding that plaintiffs rightfully rejected tender of a defective van under New
Jersey Uniform Commercial Code, N.J. Stat. Ann. § 12A:1-101 et seq., and awarding plaintiffs the
fair market value of their trade-in.

OVERVIEW: Defendant argued that plaintiffs had breached a contract for the sale of a camper
van by rejecting tender of the van because it had minor defects, and that they were not entitled
to rescind the contract. The court found that the New Jersey Uniform Commercial Code, N.J.
Stat. Ann. § 12A:1-101 et seq., retained a perfect tender rule, and that plaintiffs had properly
rejected tender of the van within a reasonable time. The court noted that once plaintiff rejected
the van, the burden shifted to defendant to prove that the defects had been cured. The court
found that because defendant had not done so within a reasonable time, plaintiffs were entitled
to rescind or cancel the contract. The court then found that the fair market value of their trade-
in was the proper remedy rather than recovery of their trade-in, because the trade-in had been
sold to an innocent third party.
OUTCOME: The court affirmed the ruling, holding that plaintiffs could reject tender of the van
for minor defects, because the New Jersey Uniform Commercial Code retained the perfect
tender rule, and that they could cancel the contract, because defendant failed to cure the
defects in a reasonable time.

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