Brief Fact Summary.
Plateq Corporation (Plaintiff) sued Machlett Laboratories (Defendant) to recover damages measured by the contract price and incidental damages, arising out of the Defendant’s alleged wrongful cancellation of a written contract for the manufacture and sale of two leadcovered steel tanks and appurtenant stands.
Synopsis of Rule of Law.
Uniform Commercial Code (UCC) §42a-2-606(1): “acceptance of goods occurs when the buyer (a) after a reasonable opportunity to inspect the goods signifies to the seller… that he will take… them in spite of their nonconformity; or (b) fails to make an effective rejection.
The tanks were designed for the special purpose of testing x-ray tubes and were required to be radiation-proof within certain federal standards. The Plaintiff encountered difficulties performing to contract specifications and completing within the time required, but Defendant did no more than point out the deficiencies during various inspections. Plaintiff’s performance was belatedly but substantially complete on October 11, 1976, and Defendant’s engineer pointed out some final deficiencies so that the goods could be delivered the next day. The engineer even made arrangements for Defendant’s truck to pick up the goods the next day, but the truck never came. Instead, Defendant send a notice of cancellation on October 14, 1976, without providing any reason why.
The trial court found that the Defendant wrongfully revoked acceptance and awarded the Plaintiff $14,837.92, equaling the contract price, minus salvage value, plus interest.
Did the Defendant accept the goods before attempting to cancel the contract?
Yes. There was no error.
· By October 11, 1976, Plaintiff was in substantial compliance with the contract. Defendant responded to Plaintiff’s notification by arranging for its truck to pick up the goods, indicating its willingness to accept them despite possible remaining minor defects.
· Defendant’s telegram of cancellation constituted both a wrongful and ineffective rejection of the goods.
· The UCC applied to this transaction, as it involved a sale of goods.
· The Defendant indicated it would accept the goods in spite of possible minor defects, and also failed to effectively reject the goods.