MBE Tip: Contracts and Sales

Answer to the Contracts and Sales MBE Question

Subject: Sales

Legal Issue: Whether one can recover the purchase price of a good that doesn’t meet its needs.

Legal Rule and Analysis:  When one has accepted goods, they can no longer reject them.  However, they might be able to revoke their acceptance of the goods and recover the full purchase price if four elements are met:

• (1) the nonconformity substantially impairs the value to him;
• (2) he accepted because he had a reasonable belief that the nonconformity would be cured (and it was not) OR he did not discover the nonconformity because the nonconformity was difficult to discover or because of the seller’s assurances;
• (3) he revokes within a reasonable time after he discovers or should have discovered the nonconformity; and
• (4) he revokes before any substantial change in condition of the goods which is not caused by their own defect.

In this question, the problem with the bearings in the snowmobile causes it to be unable to transport heavy loads.  We know that the man needs this snowmobile to transport his monthly supplies back to his house when the roads are un-passable.  If the snowmobile cannot carry heavy loads, then its value to him is substantially impaired.  Thus, element 1 is satisfied.  Second, we know that the man purchased his snowmobile in July to get a cheaper price.  If the first snow didn’t fall until November, then he had no reason to utilize it before then.  It is perfectly reasonable that he didn’t discover the nonconformity when the snowmobile was delivered to him during a time with no snow.  Thus, element 2 is satisfied.  Third, the man placed the call to the shop regarding the problem and then requesting a refund as soon as he first discovered that the snowmobile didn’t work properly.  Thus, the third element is satisfied.  Finally, there is no indication that there has been any change in the condition of the goods not caused by the defect.  Thus, the fourth element is satisfied.

Conclusion: Since all four elements are satisfied, the man can revoke his acceptance of the snowmobile and recover the purchase price.

Look at the answer choices provided. Choose an answer choice that matches your conclusion. Review the other answer choices provided.  The answer choice (B) is therefore correct. (A) is incorrect because there was no implied warranty of fitness for a particular purpose in this scenario.  For this type of warranty to arise, there must be a seller that has reason to know that the buyer is buying goods for a particular purpose and that the buyer is relying on the seller to select suitable goods, and the buyer, in fact, does rely on the seller.  Here, the facts do not indicate that the salesperson knew that the man wanted the snowmobile to carry heavy loads for long distances. The man was also not relying on the seller to furnish the proper goods for this particular purpose. (C) is incorrect because even when and the goods are accepted, the buyer still can revoke his acceptance of the goods if he meets the four elements. Further, this was likely not a “perfect tender delivery” if the snowmobile does not work in the snow. Note that the buyer likely did “accept” the goods because he waiting a few months to reject them and further, he used the snowmobile! This constitutes acceptance under the UCC. (D) is incorrect because if the value of the goods to the buyer is substantially impaired, and the other elements are met, the buyer can revoke his acceptance. He purchased the snowmobile in order to carry supplies and indeed the box even stated it could carry heavy supplies. (This constitutes an express warranty.) Thus, the man can revoke his acceptance of the goods.

MBE Tip: When considering what actions are possibly available to a buyer or seller in contracts and sales questions, remember the importance of the timeline.  If a buyer wants to reject the goods, he must do so before he accepts them.  If the buyer has accepted the goods (e.g. by using them, like he did in this hypo), then he can no longer reject them and must look to other remedies.  This includes possibly revoking his acceptance of the goods.  Just like when you are faced with a contract formation problem, it would be helpful to write out a brief timeline of the events that occur in the fact pattern so that you can see when certain actions cease to be available.  Timing is critical in Contracts and Sales questions!  What has already happened in the past absolutely dictates what can happen in the future!