Michigan Notice by Buyer of Rejection of Goods - Risk of Loss Remains on Seller

State:
Multi-State
Control #:
US-02882BG
Format:
Word; 
Rich Text
Instant download

Description

In this form the buyer giving notice of its rejecting delivery of the goods. This is covered by Section 2-602 of the Uniform Commercial Code, which state:


Rejection of goods must be within a reasonable time after their delivery or tender. It is ineffective unless the buyer seasonably notifies the seller. Subject to the provisions of the two following sections on rejected goods (Sections 2-603 and 2-604). After rejection any exercise of ownership by the buyer with respect to any commercial unit is wrongful as against the seller; and


" If the buyer has before rejection taken physical possession of goods in which he does not have a security interest under the provisions of this Article (subsection (3) of Section 2-711), he is under a duty after rejection to hold them with reasonable care at the seller's disposition for a time sufficient to permit the seller to remove them; but


" The buyer has no further obligations with regard to goods rightfully rejected.

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FAQ

With a shipment contract, the buyer bears the risk of loss for the goods prior to actually receiving them. Here, the seller's only duty is to get the goods to a common carrier and make proper delivery arrangements for the goods to get to the seller.

If a seller has delivered nonconforming goods that have been rejected, upon notice of an intent to cure, the seller automatically then has 15 days to deliver conforming goods. In the case of Rosenfeld v. Basquiat, Basquiat sold several paintings to Rosenfeld and provided him with a written receipt.

Risk of loss is the allocation of responsibility for covering the Risk of damage to or loss of goods after a sale has been completed, but before delivery. If the seller bears risk of loss during transport, the seller has a responsibility to provide substitute goods should the goods get lost or destroyed in transit.

If a buyer refuses to accept delivery of goods, the seller can store the goods for the buyer and sue to recover the sales price if the goods are not readily resalable to another customer. Stoppage in transit is the right of an unpaid seller to stop goods in transit and order the carrier to hold them for the seller.

If a buyer wrongfully refuses to accept goods, the seller can bring an action to recover the damages sustained. When a buyer has breached a sales contract, and the goods are in his or her possession, the seller can sue to recover the purchase price, but not incidental damages.

If a seller fails to deliver goods or if the delivered goods are defective, the buyer is entitled to damages. However, the mere fact that a seller has breached the contract does not entitle the buyer to recoup anything more than its actual loss.

(1) Where a tender or delivery of goods so fails to conform to the contract as to give a right of rejection the risk of their loss remains on the selleruntil cure or acceptance.

When the buyer refuses to accept delivery of the goods, the seller may retain the goods and sue the buyer for the difference between the contract price and the market price at the time the buyer refused to honor the contract.

So if there is a breach by the seller (delivery of nonconforming goods), the risk of loss never shifts except if the buyer has taken possession of the nonconforming goods; in that case, the buyer does have the risk of loss insofar as her insurance covers the loss.

If there is a breach, the UCC places the risk of loss on the breaching party, with this caveat: where the nonbreaching party is in control of the goods, the UCC places the risk of loss on that party to the extent of her insurance coverage.

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Michigan Notice by Buyer of Rejection of Goods - Risk of Loss Remains on Seller