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.
Replacement not allowed
The Uniform Commercial Code, the place where all commercial law originates, specifically provides that in certain cases a seller of what the buyer claims are "defective" goods has the right to "cure": (repair or replace) that defect within a reasonable time. A recent case which dealt with a problem of this type highlights some of the pitfalls that you should all be aware of in these situations.
In this case the carpet in question was sold, delivered and installed at the home of his customer a local retailer for a price in excess of $8,000.00. The carpet was fully paid for upon installation, apparently by cash or certified check. Shortly after installation the buyer claimed he noticed numerous and various problems with the carpet which he claimed rendered the carpet defective and not "first quality" as represented ,and so notified the retailer.
The dealer immediately inspected the carpet and, over the course of the next two weeks, with the consumer's consent, had his mechanics make "several" calls at the house in an attempt to repair the floor covering to the satisfaction of the consumer. At the end of this two week period, and presumably with the carpet still being in a defective condition, the consumer demanded his money back. The dealer, at this point, apparently acknowledging the defects, offered to replace the defective material at the expense of both himself and the manufacturer. The consumer refused this offer and again demanded his money back. The dealer stood firm and insisted his only obligation was to repair or replace the defective goods. The consumer sued.
A trial was held, at the end of which the Court ruled in favor of the seller. The decision stated that when the buyer demanded his money back he was, in effect, revoking his former acceptance. This "acceptance" occurred when the goods were delivered and paid for without objection. When this acceptance was revoked, the Court held the seller then had the right to "cure" the defects. The sellers offer to replace at that point was in fact an attempt to "cure" and so, the trial Court reasoned, since the consumer refused this he could not now get his money back.
This ruling was immediately appealed. The Appellate Court agreed for the most part with this decision stating, that although the seller, at the time of the revocation of acceptance did not have the right to cure by repair, he did have the right to cure by replacement.
The consumer, obviously still not satisfied with the outcome again appealed, this time to the State Supreme Court.
This time the dealer did not do so well. In the final decision in this case, the Supreme Court reversed the two lower Court decisions and held that when a buyer properly revokes acceptance of defective goods, the seller has no right to cure a substantial non-conformity in goods, either by repair or by replacement. So in this case, according to this Court, if the buyer can prove that the goods were in fact defective and that the revocation of acceptance was proper then the dealer must take back the defective carpet and give the customer his money back.
This ruling, it must be noted, applies only in those situations where goods are first "accepted" and only when this "acceptance" is later properly revoked. As we've often noted in the past, however, the concepts of acceptance, rejection and revocation of acceptance are not always that clear. It is clear that if the wrong color was delivered and the customer refused to accept it that this would be a rejection and the dealer would definitely have the right to timely replace that delivery. In the opposite situation, where to goods are delivered and installed with a "latent" defect, one which is not readily apparent, the seller, according to this decision, may not have that right to replace that carpet. Of course, in those situations there is nothing to prevent the buyer from accepting a replacement or price adjustment. In fact, most buyers, if asked, would probably feel obligated and would prefer to accept a replacement if an allowance could not be agreed upon.
What's important here is to know your rights and obligations before you end up in Court. Because if you do, you should, in many cases, be able to avoid incurring the expense and aggravation of a law suit.
Upon receipt of an initial complaint a dealer should immediately have it inspected to ascertain if it is real or imagined, if it involves the material or it installation, and if it is something that can be easily remedied to the customers satisfaction, it which case it should be reminded immediately. If it is manufacturer related, they should be notified immediately and the consumer reassured that if it is in fact defective, the dealer will make every effort to have the manufacturer repair, replace or come up with some other solution to make him happy. A consumer who believes you are looking out for his best interest is much less likely to retain a lawyer to start a lawsuit in which you, the dealer, will loose a ton of good will, time and money even if the judge agrees with you. In my experience, it is almost always better in these situations to "work it out" while you have some control, rather than putting the outcome in the hands of a judge.