Business Law 11th Edition by Kenneth Clarkson,Roger LeRoy Miller,Gaylord Jentz,Frank Cross

Exercise 21

Fitl v. Strek
Supreme Court of Nebraska, 2005. 269 Neb. 51, 690 N.W.2d 605.
WRIGHT, J. [Judge]
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In September 1995, [James] Fitl attended a sports card show in San Francisco, California, where [Mark Strek, doing business as Star Cards] was an exhibitor. Fitl subsequently purchased from Strek a 1952 Mickey Mantle Topps baseball card for $17,750. According to Fitl, Strek represented that the card was in near mint condition. After Strek delivered the card to Fitl in Omaha, Nebraska, Fitl placed it in a safe-deposit box.
In May 1997, Fitl sent the baseball card to Professional Sports Authenticators (PSA), a grading service for sports cards that is located in Newport Beach, California. PSA reported to Fitl that the baseball card was ungradable because it had been discolored and doctored.
On May 29, 1997, Fitl wrote to Strek * * *. Strek replied that Fitl should have initiated a return of the baseball card in a timely fashion so that Strek could have confronted his source and remedied the situation. Strek asserted that a typical grace period for the unconditional return of a card was from 7 days to 1 month.
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* * * Fitl sued Strek [in a Nebraska state court, which entered a judgment for Fitl. Strek appealed to the Nebraska Supreme Court.] * * *
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Strek claims that the [trial] court erred in determining that notification of the defective condition of the baseball card 2 years after the date of purchase was timely pursuant to [UCC] 2-607(3)(a).
* * * The [trial] court found that Fitl had notified Strek within a reasonable time after discovery of the breach. Therefore, our review is whether the [trial] court's finding as to the reasonableness of the notice was clearly erroneous.
Section 2-607(3)(a) states:"Where a tender has been accepted * * * the buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy."[Under UCC 1-204(2)] "[w]hat is a reasonable time for taking any action depends on the nature, purpose and circumstances of such action." [Emphasis added.]
The notice requirement set forth in Section 2-607(3)(a) serves three purposes.* * *
* * * The most important one is to enable the seller to make efforts to cure the breach by making adjustments or replacements in order to minimize the buyer's damages and the seller's liability. A second policy is to provide the seller a reasonable opportunity to learn the facts so that he may adequately prepare for negotiation and defend himself in a suit. A third policy * * * is the same as the policy behind statutes of limitation: to provide a seller with a terminal point in time for liability.
* * * [A] party is justified in relying upon a representation made to the party as a positive statement of fact when an investigation would be required to ascertain its falsity. In order for Fitl to have determined that the baseball card had been altered, he would have been required to conduct an investigation. We find that he was not required to do so. Once Fitl learned that the baseball card had been altered, he gave notice to Strek. [Emphasis added.]
* * * [O]ne of the most important policies behind the notice requirement * * * is to allow the seller to cure the breach by making adjustments or replacements to minimize the buyer's damages and the seller's liability. However, even if Fitl had learned immediately upon taking possession of the baseball card that it was not authentic and had notified Strek at that time, there is no evidence that Strek could have made any adjustment or taken any action that would have minimized his liability. In its altered condition, the baseball card was worthless.
* * * Earlier notification would not have helped Strek prepare for negotiation or defend himself in a suit because the damage to Fitl could not be repaired. Thus, the policies behind the notice requirement, to allow the seller to correct a defect, to prepare for negotiation and litigation, and to protect against stale claims at a time beyond which an investigation can be completed, were not unfairly prejudiced by the lack of an earlier notice to Strek. Any problem Strek may have had with the party from whom he obtained the baseball card was a separate matter from his transaction with Fitl, and an investigation into the source of the altered card would not have minimized Fitl's damages.
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The judgment of the district court is affirmed.
1. Suppose that Fitl and Strek had included in their deal a clause requiring Fitl to give notice of any defect in the card within "7 days to 1 month" of its receipt. Would the result have been different Why or why not
2. What might a buyer who prevails in a dispute such as the one in this case be awarded