Opinion ID: 381814
Heading Depth: 2
Heading Rank: 3

Heading: Point Of Acceptance: Arizona & Southwall Flour

Text: 81 In the Court below, Bolivia argued that it did not accept the Arizona and Southwall flour until it reached South America. Now, for apparently tactical reasons best known to its counsel, Bolivia has changed its position and argues that acceptance occurred before the ships left Mobile. But the District Judge found in Bolivia's favor on its breach of contract claim and in so doing adopted Bolivia's original position that acceptance occurred in South America, not Mobile. The District Judge's implicit finding is revealed by his assessment of damages, which depended on the point of acceptance. 36 82 By computing damages using Bolivian prices, the District Judge clearly rejected ADM's argument that acceptance occurred in Mobile and adopted Bolivia's argument (at that time) that there had been no reasonable opportunity to inspect and hence no acceptance in Mobile, but rather that acceptance occurred in South America. 37 83 Proceeding to the correctness of the District Judge's finding of acceptance, the Code provides that the buyer has a right to inspect the goods before he is deemed to have accepted: 84 Unless otherwise agreed and subject to Subsection (3), where goods are tendered or delivered or identified to the contract for sale, the buyer has a right before payment or acceptance to inspect them at any reasonable place and time and in any reasonable manner. When the seller is required or authorized to send the goods to the buyer, the inspection may be after their arrival. 85 UCC § 2-513(1) (emphasis supplied). Nor does the fact that ADM received payment for the flour prior to its arrival and acceptance in South America affect the determination of the proper point of acceptance: 86 Payment pursuant to Subsection (1) does not constitute an acceptance of goods or impair the buyer's right to inspect or any of his remedies. UCC § 2-512(2). 38 87 Instead, the point of acceptance turns on the buyer's right to inspect the goods: What Constitutes Acceptance of Goods 88 (a) Acceptance of goods occurs when the buyer 89 (1) after a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that he will take or retain them in spite of their non-conformity; or 90 (2) fails to make an effective rejection (Subsection (1) of Section 2.602), but such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them; or 91 (3) does any act inconsistent with the seller's ownership; but if such act is wrongful as against the seller it is an acceptance only if ratified by him. 92 (b) Acceptance of a part of any commercial unit is acceptance of that entire unit. 93 UCC § 2-606 (emphasis supplied). A reasonable opportunity to inspect the goods is of course determined in light of the surrounding facts and circumstances. 39 It is undisputed that no one representing Bolivia examined the Arizona and Southwall flour in Mobile. The flour was not in fact inspected by Bolivian agents until it reached the South American port of Arica, Chile. The Code recognizes that the existence of payment-related documents such as the quality certificates and bills of lading (which were used by ADM to obtain payment under the letter of credit) do not affect the point of acceptance, nor the buyer's right to inspect. There is further evidence that although Bolivia, through St. John, was aware of the live infestation discovered by Superintendence in Mobile, news of the ensuing fumigation of the flour gave Bolivia every reason to believe that all of the flour beetles had been killed and that inspection could wait until the flour reached South America. Given these facts and circumstances, we cannot say that Bolivia's decision to inspect the flour in Arica was outside of the zone of reasonable opportunity. 94 As the Arizona and Southwall began unloading in Arica, Bolivian agents began inspecting the flour and found live infestation. Bolivia immediately instructed port officials to prevent further discharge of the cargoes, a situation which lasted from October 14 until November 5, 1974. From approximately October 14, ADM was made well aware of Bolivia's dissatisfaction with the cargoes and of Bolivia's feeling that ADM was responsible. But ADM was never clearly told that Bolivia would not accept the flour. Moreover, when the ships were finally allowed to unload on November 5, Bolivia took the flour, salvaged it, and resold it to its regular distributors. 95 These facts indicate that following the flour's inspection in Arica, Bolivia must be deemed to have accepted the flour. The Code presumes that the buyer accepts goods unless, following a reasonable opportunity to inspect the goods, the seller is unequivocally and seasonably notified that the buyer is rejecting the goods. UCC § 2-606(1)(b); Stamm v. Wilder Travel Trailers, 44 Ill.App.3d 530, 3 Ill.Dec. 215, 358 N.E.2d 382 (5th Dist. 1976). See also UCC § 2-602(1). Bolivia's conduct in obstructing discharge of the cargoes while not clearly indicating that it rejected (or accepted) the flour brings the Code's presumption of acceptance into effect. 40 The application of that presumption is a largely factual matter. See Cook Industries, Inc. v. Community Grain, Inc., 614 F.2d 978, 980 (5th Cir. 1980) (Although the interpretation of a contract is normally a question of law . . ., that interpretation frequently depends heavily on the resolution of factual disputes.). The District Judge thoroughly evaluated Bolivia's conduct in this regard. 449 F.Supp. at 103-05. His subsidiary findings certainly support an ultimate finding of § 2-606(1)(b) acceptance in Arica. We therefore find that the District Judge was correct in concluding that acceptance of the Arizona and Southwall flour was effected in Arica, not in Mobile.