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.
"CANCEL THE ORDER"
A while back a Pennsylvania Carpet and Furniture dealer was faced with a not altogether unique situation. The story began when an engaged couple came in to order carpet and furniture for the apartment they intended to live in after the marriage. The order form was made out in the husband's to be name and a small deposit was left.
Sometime later the dealer called to inform the couple that the specially ordered and cut carpet and furniture was ready for installation and delivery. At that time, he was sadly informed that the prospective groom had died and that the merchandise ordered was no longer needed. The dealer, not wanting to be "stuck" with the "special order" items sued the estate of the deceased buyer for the full sales price amount.
The Uniform Commercial Code provides that in certain specific instances a seller may, as this dealer was attempting to do, sue and recover the entire sales price from a defaulting buyer. The first part of this section deals with these obvious instances where a buyer has accepted and perhaps used or resold goods which he has not paid for. Although this was not the situation in this case, in these instances when it does happen, the people who wrote the code had no difficulty in allowing the seller to sue for the price the buyer had originally agreed to pay.
The drafters of the code, however, were not as liberal with this remedy in these cases where goods have not been delivered or accepted. While they did want to protect sellers from defaulting buyers they did not really want to give them the power to force the buyer to accept goods that he either no longer wanted, or as in this case, could use.
This reluctance was apparently based on the belief that the seller of the unwanted goods, whether a retailer or a wholesaler, would be in a much better position to sell those goods in the ordinary course of his business than would the defaulting buyer. If the only way he could unload them would be at a lower price, or even a loss, he could than sue the original buyer for that difference.
In accordance with this philosophy the section of the code that deals with this problem gives the seller the right to sue for the entire purchase price only for those goods which can be identified as being held specifically for that contract and only, "if the seller is unable after reasonable effort, to resell them at a reasonable price or the circumstances reasonably indicate that such effort will be unavailing."
The code additionally provides that "where the seller sues for the price he must hold for the buyer any goods which have been identified to the contract and are still in his control except that if resale becomes possible he may resell them at any time prior to the collection of the judgement. The net proceeds of any such resale must be credited to the buyer and payment of the judgment entitles him (the buyer) to any goods not resold."
In this case the dealer, in support of his claim for the full price claimed that since the goods involved were rugs already cut to special sizes and specially ordered furniture with "wild fabrics", it would not be possible to resell them in the normal course of business. The Judge did not buy this argument. In his decision denying the damages to the dealer he said, apparently with some knowledge of the business:
"Most of the rugs...while cut to particular (and odd-sized) lengths to meet the measurements of decedents new home for which they were intended were taken from rolls of standard and unmodified widths of carpeting, and except for such odd lengths would not appear to have been so unusual as to be totally without normal resale characteristics at a mark down of some sort or upon recutting to other lengths.
"Similarly the dining room suite consisted of components specially ordered to a particular design and model, but it was unusual only because of the white and gold fabric seat covers ordered for the chairs. One sofa was unusual in size (108 inches) as well as in the white fabric in which it was specially ordered; the other sofa was apparently standard except for the tangerine color of its covering; neither would seem so peculiar as to be entirely unsaleable to anyone else.
"In short, while it may be that there would be some amount of difficulty in disposing of much of this merchandise at the prices which decedent agreed to pay, largely because of the apparently extreme choices of colored fabrics in which some were made up, this judge is not persuaded that all of it, or even a substantial part thereof, was of such character as would reasonably indicate that (reasonable efforts to resell at reasonably reduced prices) would be unavailing."
This judge was, in effect forcing the dealer to first resell the goods at any "reasonable" price, and then to sue the estate for the difference. While many Judges and many sellers if they were Judges, may decide the issue differently it would appear that this decision is the correct one under the applicable rules and in line with sensible business practices.