Non Conforming Goods: Everything You Need to Know
Nonconforming goods are goods delivered that don't satisfy the specifications (quantities and qualities) of the requested goods defined in a purchase contract.3 min read
2. UCC Payment Requirements
3. UCC Goods Acceptance Requirements
4. An Exception
5. General Contract Law vs UCC
Nonconforming goods are goods delivered that don't satisfy the specifications (quantities and qualities) of the requested goods defined in a purchase contract.
Uniform Commercial Code Overview
The UCC (Uniform Commercial Code) says if a seller supplies non-conforming goods, the buyer can accept or refuse to accept all the goods, or accept some while rejecting some. If a buyer decides to reject delivered goods that fall short of the specifications in a purchase contract, they have to do it reasonably soon after the goods delivery. Also, a buyer isn't bound to pay for the non-conforming goods they reject.
For instance, a buyer orders red mugs from a seller but the seller supplies blue mugs instead. The supply doesn't perfectly match the specific request according to the UCC requirements because of the difference in colors. Therefore, the buyer is at liberty to reject all the mugs, accept all of them, or reject some while accepting others.
UCC Payment Requirements
As a general rule, the primary responsibility of a buyer is to pay for delivered goods according to the UCC. More specifically, the UCC points out that, by default, a seller's supply of the requested goods and a buyer's payment should happen together. Unless differently stated in a contract, when a seller delivers requested goods, a buyer should pay, and when a buyer pays for requested goods, a seller should deliver. Even though it's possible for a buyer and a seller to have other binding agreements concerning payments, a buyer doesn't have any right to claim ownership of the goods or discard them upon delivery without paying for them first.
Concerning methods of payment, the UCC permits payments made via any regular payment medium, except the seller specifically requests payment in cash. Some of the valid means of payment permitted by the UCC are:
- Bank checks.
- Credit cards.
- Wire transfer.
UCC Goods Acceptance Requirements
The UCC allows buyers to thoroughly examine goods before accepting and paying for them. The goods inspection as allowed by the UCC, is one conducted in any manner and at any location or time deemed reasonable. That means if the buyer is taking the goods from the seller's place, the buyer should inspect the goods there.
In a case where the seller conveys the goods to the buyer, the buyer should, while abiding by UCC requirements, inspect the goods upon delivery to them at their location. Take note that the UCC considers a buyer paying for goods as being different from a buyer accepting goods.
It's the buyer's obligation to pay for the costs of inspecting the goods. But if the goods don't meet the specifications defined in the contract, the buyer should rightfully request any amount of money spent on inspections from the defaulting seller.
Despite the general rule of permitting buyers to inspect goods before paying, the UCC has some exceptions that require buyers to pay before making inspections. One of the major exceptions to the rule concerns goods to be paid for by “COD” (cash on delivery).
General Contract Law vs UCC
General contract law, which is unlike the UCC (Uniform Commercial Code), generally permits a party to significantly satisfy the terms of a contract. It means even if the party doesn't perfectly or exactly satisfy the terms of the contract, their significant performance would be considered sufficient. The UCC, on the other hand, settles for nothing less than perfectly satisfying the terms of a commercial contract.
A buyer can accept delivered goods and later revoke the acceptance for the following reasons:
- They initially accepted the nonconforming goods because they reasonably assumed that the seller would instantly correct (or cure) the non-conformity.
- They accepted the goods before they found out the nonconformity as a result of its difficulty to detect, or because the seller assured them of conformity.
As it applies to rejection, revocation of previously accepted goods must happen soon enough. It should ideally be soon after the buyer detects the reason for revocation and before any depreciation of value occurs on the goods, other than the reason for the revocation. In addition, goods acceptance is irrevocable except the buyer duly informs the seller.
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