Opinion ID: 396497
Heading Depth: 2
Heading Rank: 4

Heading: Rejection or Revocation of Acceptance of the Goods

Text: 28 E-Systems also argues that, even if the equipment was non-conforming, ARB has no action for breach of contract because it neither rejected nor revoked an acceptance of the goods. The master found that ARB rejected the goods or, alternatively, revoked its acceptance of them. 29 The relevant statutory provision on the rejection question is Md.Com.Law Code Ann. § 2-602 (1975), which reads in part: 30 (1) Rejection of goods must be within a reasonable time after their delivery or tender. It is ineffective unless the buyer seasonably notifies the seller. 31 E-Systems argues here, as it did in connection with its argument that ARB breached the contract by withholding payment, that ARB consistently gave the go-ahead for further production and otherwise demonstrated its satisfaction with the equipment. This argument is no more convincing in this context than it was in the former. As the master found, ARB seasonably, and indeed repeatedly, notified E-Systems that the equipment as delivered was unacceptable. (Mem. Op. at 22, J.A. at 774.) This finding meets the requirements of section 2-602. ARB's authorizations of the production run and limited installation of the meters were made on the basis of assurances by E-Systems that the equipment would and could be made conforming. ARB never accepted the equipment as delivered, and rejected it within a reasonable time under the circumstances. The communications from ARB to E-Systems beginning in January 1974 constituted sufficient notification within the meaning of Md.Com.Law Code Ann. § 1-201(26) (1975) (taking such steps as may be reasonably required to inform the other in ordinary course). 32 The master found alternatively that, even if ARB accepted the equipment, it later revoked this acceptance under Md.Com.Law Code Ann. § 2-608 (1975). This section provides in relevant part: 33 (1) The buyer may revoke his acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to him if he has accepted it 34 (a) On the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; ... 35 .... 36 (2) Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. It is not effective until the buyer notifies the seller of it. 37 E-Systems challenges this finding on two grounds: first, there was no notification, and second, revocation would have been impossible even had notification been given because of substantial change in condition of the goods which (was) not caused by their own defects. The first contention fails for the reasons set out immediately above: the master's finding that ARB notified E-Systems within the meaning of sections 2-608 and 1-201(26) was not clearly erroneous. The second contention is related to and should be discussed together with E-Systems's independent argument that ARB accepted the goods under section 2-606(1)(c) by damaging the equipment, in that such damage was inconsistent with the seller's ownership. To the extent that the damage E-Systems is alleging here is damage naturally flowing from the attempts to make the equipment work, it was neither inconsistent with the seller's ownership nor a substantial change within the meaning of section 2-608. White and Summers discuss the application of these provisions in a similar situation: 38 The most difficult case is that in which the buyer uses the goods in his business with the knowledge that they are defective but before he has attempted to reject. Such circumstances will often arise as the buyer and seller are attempting to work the bug out of a complex piece of machinery. In such circumstances courts should be hesitant to find that the acts are inconsistent with the seller's ownership. The parties should be encouraged to engage in this kind of bargaining and adjustment, and the buyer should not be made to engage in it at his peril. 39 J. White & R. Summers, Handbook of the Law of the Uniform Commercial Code 300 (2d ed. 1980) (footnote omitted). The same reasoning applies to the substantial change in condition argument: under the circumstances of this contract, changes occurring in the process of a good faith attempt to make the equipment work are not substantial changes in condition within the meaning of section 2-608(2). To the extent that the damage E-Systems claims is damage caused by ARB's mistreatment of the equipment stemming from other causes, E-Systems's evidence is spotty and inadequate.