Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts

Exercise 25

FACTS L.V.R.V. Inc., doing business as Wheeler's Las Vegas RV (Wheeler's) sold a 1996 Coachmen Santara motor home (the RV) to Arthur R. Waddell and Roswitha M. Waddell. Before they took possession of the RV, the Waddells requested that Wheeler's perform various repairs, including service on the RV's engine cooling system, new batteries, and alignment of the door frames. Wheeler's told Arthur Waddell that the repairs had been performed, and the Waddells took delivery of the RV on September 1, 1997.
The Waddells first noticed a problem with the RV's engine shortly after they took possession of it. They drove the RV from Las Vegas to Hemet, California. On the return trip, while climbing a moderate grade, the RV's engine overheated so much that Mr. Waddell had to pull over to the side of the road and wait for the engine to cool down. When the Waddells returned from California, they took the RV back to Wheeler's for repairs. Despite Wheeler's attempts to repair the RV, the Waddells continually experienced further episodes of engine overheating. Between September 1997 and March 1999, Wheeler's service department spent a total of seven months attempting to repair the RV.
On June 9, 2000, the Waddells filed a complaint in district court seeking both equitable relief and money damages. The district court concluded that the RV's nonconformities substantially impaired its value to the Waddells and allowed the Waddells to revoke their acceptance of the RV.
DECISION Affirmed in relevant part.
OPINION Gibbons, J. [U.C.C. § 2-608(1)] provides that a buyer may revoke his acceptance if the item suffers from a ''nonconformity [that] substantially impairs its value to him'' and (a) the buyer accepted the goods on the understanding that the seller would cure the nonconformity or (b) the buyer was unaware of the nonconformity and the nonconformity was concealed by the difficulty of discovery or by the seller's assurances that the good was conforming.
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The Supreme Court of Oregon has established a twopart test to determine whether a nonconformity, under the totality of the circumstances, substantially impairs the value of the goods to the buyer. The test has both an objective and a subjective prong:
Since [the statute] provides that the buyer may revoke acceptance of goods ''whose nonconformity substantially impairs its value to him,'' the value of conforming goods to the plaintiff must first be determined. This is a subjective question in the sense that it calls for a consideration of the needs and circumstances of the plaintiff who seeks to revoke; not the needs and circumstances of an average buyer. The second inquiry is whether the nonconformity in fact substantially impairs the value of the goods to the buyer, having in mind his particular needs. This is an objective question in the sense that it calls for evidence of something more than plaintiff's assertion that the non-conformity impaired the value to him; it requires evidence from which it can be inferred that plaintiff's needs were not met because of the nonconformity. [Citation.]
*** [W]e adopt the Supreme Court of Oregon's twopart test ***.
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Mr. Waddell's testimony demonstrates that the RV's subjective value to the Waddells was based on their ability to spend two or three years driving the RV around the country. Thus, we must consider whether the RV's nonconformities substantially impaired the value of the RV based on the Waddells' particular needs.
Mr. Waddell testified that as a result of the RV's defects, he and his wife were unable to enjoy the RV as they had intended. Mr. Waddell further testified that the RV's engine would overheat within ten miles of embarking if the travel included any climbing. As a result of the overheating, the Waddells were forced to park on the side of the road and wait for the engine to cool down before continuing. Consequently, the RV spent a total of 213 days, or seven months and one day, at Wheeler's service department during the eighteen months immediately following the purchase. This testimony is sufficient to demonstrate an objective, substantial impairment of value.
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Accordingly, we conclude that substantial evidence exists to support revocation of acceptance under [U.C.C. § 2-608(1)].
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Under [U.C.C. § 2-608(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.'' ***
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The seller of nonconforming goods must generally receive an opportunity to cure the nonconformity before the buyer may revoke his acceptance. ***
Furthermore, the seller's attempts to cure do not count against the buyer regarding timely revocation. The United States District Court for the District of Nevada has held that the ''time for revocation of acceptance will be tolled while the seller attempts repairs.'' Tolling the reasonable time for revocation of acceptance is appropriate given ''the buyer's obligation to act in good faith, and to afford the seller a reasonable opportunity to cure any defect in the goods.'' [Citation.]
The Waddells gave Wheeler's several opportunities to repair the defects before revoking their acceptance. Because Wheeler's was unable to repair the defects after a total of seven months, the Waddells were entitled to say ''that's all'' and revoke their acceptance, notwithstanding Wheeler's good-faith attempts to repair the RV. Also, the reasonable time for revocation was tolled during the seven months that Wheeler's kept the RV and attempted to repair the defects. Accordingly, the district court's determination is supported by substantial evidence and is not clearly erroneous.
INTERPRETATION A buyer may revoke his acceptance if the goods suffer from a nonconformity that substantially impairs their value to him subject to the seller's right to cure the nonconformity; however, the seller's attempts to cure do not count against the buyer regarding timely revocation.
CRITICAL THINKING QUESTION Do you agree with the requirements for revocation of acceptance? Explain.