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Fuji Photo Film USA, Inc. v. Zalmen Reiss & Associates, Inc.

    Brief Fact Summary.

    Defendant agreed to buy 10,000 camera memory cards from Plaintiff at $19.49 each. After selling about 4,000 of the cards, Defendant found out that another company was selling the cards at a wholesale price lower than what Plaintiff charged. Defendant revoked acceptance of the remaining 6,000 memory cards. Plaintiff sold the remaining memory cards to a third party reseller. Plaintiff did not give Defendant notice that it planned to sell the memory cards at a discounted price. Plaintiff brought suit against Defendant, seeking to recover the difference between what they ended up selling the 6,000 cards for and the original contract price.

    Synopsis of Rule of Law.

    A seller must provide notice to a buyer that has wrongfully revoked acceptance prior to the seller privately selling the returned goods.

    Facts.

    Zalmen Reiss & Associates, Inc. (Defendant) agreed to buy 10,000 camera memory cards from Fuji Photo Film USA, Inc. (Plaintiff) for a price of $19.49 each. After selling about 4,000 of the cards, Defendant found out that another company was selling the cards at a wholesale price lower than what Plaintiff charged. As a result, Defendant was no longer able to sell at a profit the cards they had agreed to buy. Because of this, Defendant returned the remaining 6,000 memory cards to Plaintiff. Plaintiff did not authorize the return, and each party refused shipment of the memory cards at least once. Plaintiff eventually processed the return and paid Defendant for the returned memory cards at a discounted rate of $4.50 per card. Plaintiff then sold the remaining memory cards to a third party reseller. Plaintiff did not give Defendant notice that it planned to sell the memory cards at a discounted price.

    Issue.

    Whether a seller must provide notice to a buyer that has wrongfully revoked acceptance prior to the seller privately selling the returned goods.

    Held.

    Yes. Plaintiff’s complaint is dismissed. A seller must provide notice to a buyer that has wrongfully revoked acceptance prior to the seller privately selling the returned goods.

    Discussion.

    Receiving notice allows the buyer to take part in the sale or even pay the contract price in order to avoid greater loss. If the seller does not provide such notice, it is not entitled to recover the difference between the contract price and the resale price. In this case, as an initial matter, there is no question that Defendant wrongfully revoked acceptance of the 6,000 memory cards. However, Plaintiff did not give Defendant the required notice that it was going to privately sell the remaining 6,000 memory cards. Therefore, Plaintiff is not entitled to recover the difference between what they received from the third party reseller and the contract price.


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