A Unified Rationale for Section 2-607(3)(A) Notification
22 Pages Posted: 27 Jan 2016
Date Written: 2009
An aggrieved buyer that fails to give its seller timely notification of breach, or that gives a timely but insufficient notification, suffers serious and sometimes catastrophic consequences under Article 2 of the Uniform Commercial Code (UCC or Code). On the serious end, a buyer entitled to reject must provide its seller with a timely notification' that makes it clear that the goods again belong to the seller, with failure as to either timeliness or sufficiency resulting in acceptance rather than rejection. Obvious policy rationales support both requirements. The timeliness requirement creates an incentive for a buyer to exercise its inspection rights quickly. Prompt detection and reporting of a nonconformity is desirable because a cure can be effectuated more quickly, thereby mitigating the harm to both parties. If there is no cure, the seller can maximize the goods' resale value by recovering them quickly and, as nearly as practicable, in the same condition as when they were tendered. Regarding sufficiency, if a notification merely states that there is a problem, the seller could legitimately assume that the buyer intends to accept the goods and that the purpose of the notification is to preserve its right to recover monetary damages. This level of information will not suffice for a rejection: The seller must be made aware that the buyer does not intend to keep the goods so that it can exercise its cure rights or recover the goods. A revocation of acceptance also requires a timely notification that advises the seller that the seller owns the goods, and the underlying policies are the same as in cases of rejection.
Professor Richard Speidel, to whose memory this tribute issue is dedicated, sought through the Article 2 revision process to ameliorate the harsh effects of section 2-607(3)(a). The premise of this Article is that the approach drafted by Professor Speidel is far superior to the original approach. The denial of any remedy to an aggrieved party because it stumbles with respect to some aspect of a notification is draconian, and section 2-607(3)(a) should not be retained in its present form. It is easy to see why Professor Speidel, who championed fairness in the substance and application of the law, was troubled with the provision.
JEL Classification: K12, K19
Suggested Citation: Suggested Citation