Signal Sets Company contracts to deliver one hundred 52-inch plasma high-definition television sets to a new retail customer, Tuner TV Store, on May 1, with payment to be made on delivery. Signal tenders delivery in its own truck. Tuner’s manager notices that some of the cartons have scrape marks. Tuner’s owner phones Signal’s office and asks whether the sets might have been damaged as they were being loaded. Signal assures Tuner that the sets are in perfect condition. Tuner tenders Signal a check, which Signal refuses, claiming that the first delivery to new customers is always for cash. Tuner promises to pay the cash within two days. Signal leaves the sets with Tuner, which stores them in its warehouse pending its “Grand Opening Sale” on May 15. Two days later, Tuner’s stocker opens some of the cartons and discovers that a number of the sets are damaged beyond ordinary repair. Signal claims Tuner has accepted the sets and is in breach by not paying on delivery. Will Signal succeed on these claims? Explain.
Signal won’t necessarily succeed on his claims. “Acceptance of the goods prevents the buyer or lessee from exercising the right of rejection, but it does not necessarily prevent the buyer or lessee from pursuing other remedies” (Business Law Today; page 337). In some circumstances, a buyer or lessee are allowed to revoke their acceptance of the goods. The revocation of acceptance is not effective until the seller has been notified. The seller must also be notified within a reasonable time after the buyer discovers or should have discovered the grounds for revocation. Tuner noticed cartons with scrape marks and right away questioned Signal, but Signal assured they would not be damaged. A couple days later Tuner’s stocker opens some cartons and then discovers the damages, notifying Signal. Two days later is within a reasonable time. Therefore Tuner has not breached for accepting the goods. He could now keep the goods and recover damages caused by Signal’s breach.
Signal also stated that Tuner had breached contract for not paying on delivery. Payments can be made by any means agreed on by both parties. Under this contract there is no specific type of payment set. “ If the seller demands cash when the buyer offers a check, credit card, or the like, the seller must permit the buyer reasonable time to obtain legal tender” (Business Law Today; page 329). In this case Tuner offered Signal a check on the day of delivery, but Signal refuses, claiming the first delivery to new customers is always for cash. So signal must than give Tuner reasonable time to pay. In this case Tuner promises to pay the cash within two days. Therefore Signal is wrong and Tuner did not breach for not paying on day of delivery. Signal is most likely not going to succeed on his claims.