On September 13, 1985, the seller, James Lancaster, advertised a1974 John Deere tractor-loader for sale in a local newspaper. The buyer, Donald Kesner, responded and arranged to see the machine. The buyer inspected the freshly painted two-track loader, noting that the undercarriage was in good condition. The seller started the motor, which ran well. The buyer needed the loader to dig a ditch for a septic system. Although the buyer requested to operate the machine, the seller indicated that attachments would need changing, which would take too much time. On September 16, 1985, the buyer agreed to purchase the loader, and the seller continued to assure him of its good condition. Kesner presented Lancaster with a personal check of $9,000 and hauled it away. There was no written contract. The next day the buyer transported the loader to his job to install the septic system. Kesner began removing the topsoil. Within minutes, the machine stopped and would not move. Kesner believed there was a defective steering clutch. Kesner decided to fix the steering clutch himself. When he began the repair, he noticed that the transmission had pulled away from its housing. Kesner removed the floorboards to get a closer look, where he saw that the bolts securing the transmission were rusted and stripped. Other parts were rusted with cracked frame rails, and other parts welded together shoddily. Kesner took the loader to a mechanic, who indicated that it would take at least 36 hours to repair at $20.00 per hour for a total of $720. Other inspections would be necessary, which the mechanic could not estimate. Believing the repairs were necessary, Kesner contacted Lancaster to return the loader and get his money back. Lancaster refused. The appeals court discussed the right of a buyer to rescind a contract if they can establish a "material" breach. When rescission occurs, notice must be provided to the seller within a reason-able period of time after the sale. Thus, a buyer can revoke acceptance when: (1) the nonconformity must have substantially impaired the value of the goods to the buyer; (2) the goods must have been accepted on the reasonable assumption that the nonconformity would be cured, and it was not, or accepted without discovery of the nonconformity, either because of the difficulty of discovery or because of the seller's assurances; (3) the revocation must have occurred within a reasonable time after discovery of the defect and before any substantial change in the condition of the goods; and (4) the revocation is not effective until the buyer has notified the seller. Id. at 653. Under this remedy, a "buyer making a revocation after acceptance on these terms has the same rights and duties under the U.C.C. as one who had rejected the goods originally." The question is whether the loader's defects could have been reasonably discovered and whether the loader was substantially impaired as a good. (Note: the court discussed the applicability of the U.C.C. to these parties under the definition of "seller" and found that the U.C.C. applied.) The focus of this case is "substantial impairment" in that the value of the goods to the buyer has been so diminished to not meet the needs or expectations of that buyer. Both an objective and subjective test are applied; but most importantly, whether objectively the value of the goods to the buyer has been substantially impaired is a question a jury can decide. In this case, a jury could find that the value of the loader had been substantially impaired within the meaning of the U.C.C. The loader was inoperable and needed major repairs. The mechanic's estimate of $720 did not include the cost of disassembling the transmission or the repair of any internal damage. From the time he purchased the loader, the buyer has been unable to use it. From an objective standpoint, the machine's value has been substantially impaired. The next issue involves the defect and whether Kesner could have discovered the defect from his inspection. In this case, the visual inspection did not reveal the defect and could not have been discovered through a visual inspection. Therefore, Kesner has satisfied the "difficulty of discovery" test, making his later rejection of the loader proper. Had the defects been obvious, Kesner would have been foreclosed from revoking his acceptance. This was not the case, and Kesner was allowed to revoke his acceptance.

What facts supported the finding of "substantial impairment" to the buyer? If Lancaster had allowed Kesner to operate the loader prior to purchasing it, would the results of the court have changed? Why or why not?

Answer rating: 100% (QA)

Several key facts supported the finding of substantial impairment to the buyer 1 Immediate failure T... View the full answer