Also known as: UCC 2-602 · 2-602 · manner and effect of rejection
Written by attorneys — see sources below.
A statutory rule in Article 2 of the Uniform Commercial Code that prescribes the manner and effect of a buyer's rejection of goods. Rejection must occur within a reasonable time after delivery or tender and requires seasonable notice to the seller. After a rightful rejection the buyer must hold the goods with reasonable care for a sufficient time to permit removal but incurs no further contractual obligations regarding the goods.
Silver Flight received sealed boxes of titanium fasteners on June 1 and placed them in a climate-controlled storeroom. The company performed no inspection for two and a half months. When laboratory testing finally revealed plating defects, Silver Flight attempted to reject the goods. Because the buyer failed to inspect within a reasonable time, the attempted rejection was ineffective and acceptance occurred under the governing standard.
A software buyer purchased a package containing a shrink-wrap license that limited use to a single computer. After installing the software on multiple machines, the buyer attempted to reject the product and demanded a refund. The court held that the buyer's conduct after delivery constituted acceptance, so the rejection was ineffective and the license terms remained binding.
ProCD, Inc. compiled information from more than 3,000 telephone directories into a computer database. The database cost more than $10 million to compile and is expensive to keep current. ProCD sells a version of the database called SelectPhone on CD-ROM discs. The company sold the database to the general public for personal use at a low price of approximately $150 for the set of five discs while selling information to the trade for a higher price. Every box containing its consumer product declares that the software comes with restrictions stated in an enclosed license. This license is encoded on the CD-ROM disks as well as printed in the manual and appears on a user's screen every time the software runs. The license limits use of the application program and listings to noncommercial purposes. Matthew Zeidenberg bought a consumer package of SelectPhone in 1994 from a retail outlet in Madison, Wisconsin. He formed Silken Mountain Web Services, Inc. to resell the information in the SelectPhone database. Zeidenberg purchased two additional SelectPhone packages, each with an updated version of the database. He made the latest information available over the World Wide Web for a price through his corporation. ProCD filed this suit seeking an injunction against further dissemination that exceeds the rights specified in the licenses. The district court held the licenses ineffectual because their terms do not appear on the outside of the packages. The court added that the second and third licenses stand no different from the first because they might have been different.
View caseThe buyer must reject within a reasonable time after delivery or tender and must seasonably notify the seller of the rejection. Failure to satisfy either requirement renders the rejection ineffective and may result in acceptance.
Supporting sources
The buyer must hold the goods with reasonable care at the seller's disposition for a time sufficient to permit removal. The buyer may not exercise ownership over the goods. Breach of these limited duties can expose the buyer to damages but does not revive the obligation to pay the contract price.
Supporting sources
Yes. Once goods are rightfully rejected, the buyer has no further obligations with regard to those goods for purposes of liability under the sales contract, including the obligation to pay the price. Limited post-rejection duties under §§ 2-603 and 2-604 do not restore that liability.
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The buyer must take steps that a reasonable person would take under the circumstances to protect the goods from foreseeable harm during the retrieval period. Leaving goods in an unsuitable location that causes damage can breach the duty even if the buyer gave timely notice of rejection.
Supporting sources
…contends that since there was an improper delivery of goods, the buyer has the right to reject the same under sections 2-601 and 2-602 (subd. [2], par. [c]) of the Uniform Commercial Code. He further contends that, even if the defendant had accepted delivery, he may, under section 2-608 (subd. [1], par. [b]) of the Uniform…