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Martin Silver is a practicing attorney with offices in Hauppauge, N.Y. He was a flooring installer before and during the time he went to law school and has since represented numerous industry people and companies. To contact him, call 631-435-0700.

10:16:28 AM 
Defects, Notice and Payment

Over the years I have repeatedly stressed how important it is that a buyer, who believes that the goods that have been delivered to him are defective in one way or another, give immediate, written notice to the seller or manufacturer of those goods. A buyer who fails to give this notice, may very well be stuck with those goods, defect and all.

The theory behind this is contained in the Uniform Commercial Code. Simply put the code provides:

1. Goods with easily ascertainable defects (such as the wrong color or size) must be immediately rejected by a buyer or they will be deemed to have been accepted.
2. Such an acceptance may be later revoked upon a finding by but only if immediate notice of that hidden defect is given to the seller when the buyer actually, or in the ordinary course of business should have, discovered such defect.
3. Goods that are deemed accepted must be paid for at the contract price.

Although this is the general rule, many courts will not allow a seller of defective goods off the hook merely because the buyer did not give proper, timely notice of those defects. In fact, in a recently decided case, New York's second highest Appeals Court did just that. In the decision in that case the court determined that the seller of the defective goods must retain some responsibility for those defects despite the buyers failure to give timely notice of same.

This case got to the Appellate Court after the buyer appealed a lower courts decision which gave a judgment to his seller for the full purchase price of goods which the buyer claimed contained various defects. In its decision overturning that judgment the court said the following:

"Here, plaintiff (seller) put forth admissible evidence that defendant (buyer) used all the goods delivered to the job site and paid for three of four shipments. Significantly defendant admitted that it never rejected any of the goods and indeed did use them at the job site. In fact defendant does not seriously dispute that acceptance of the goods occurred. This apparent acceptance would normally obligate defendant to pay the contract price for the goods."

So far, the Court has followed the reasoning of the trial judge. But now comes the interesting part;

"Nevertheless", the Appeals Court continued, "as the Court of Appeals (New York's highest court) has noted, a buyer may defeat or diminish a sellers action for goods sold and delivered by interposing a valid counterclaim for breach of the underlying sales agreement."

The court is apparently saying here that the law, or at least that of New York State, as interpreted by its highest court, entitles a buyer to damage against a seller of defective goods even though notice of these defects was not timely given by the buyer to the seller.

In fact, just to clarify its meaning, the court concludes its reasoning by stating:

"Further, even though a buyer has accepted non-conforming goods, damages equal to the difference between the value of the goods accepted and the value of the goods as warranted is an appropriate remedy under the Uniform Commercial Code."

It appears then, that under the law of the sale of goods as found in the Uniform Commercial Code, a buyer who "forgets" to give notice of a defect may still be able to hold the seller or manufacturer responsible for such defect. Assuming the buyer has refused to pay, either in whole or in part, for the defective goods, this can be done by the buyer, in the lawsuit brought by his seller for the full purchase price of the goods delivered and accepted without objection, his asserting of a a counterclaim stating, in substance, that the goods delivered were defective and, accordingly, had little , or no value to him.

If he can provide proof, acceptable to the Court, of the value, if any, of the defective goods delivered he should be able to have his obligation to pay the full purchase price reduced accordingly. This strategy will probably not work as well if the buyer has paid the seller in full for the goods and sues to try to get his money back.

Edited by Admin 1/13/2012
10:19:11 AM

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2:51:49 AM

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