Nebraska Uniform Commercial Code 2-607

UCC 2-607

2-607.

Effect of acceptance; notice of breach; burden of establishing breach after acceptance; notice of claim or litigation to person answerable over.

(1) The buyer must pay at the contract rate for any goods accepted.

(2) Acceptance of goods by the buyer precludes rejection of the goods accepted and if made with knowledge of a nonconformity cannot be revoked because of it unless the acceptance was on the reasonable assumption that the nonconformity would be seasonably cured but acceptance does not of itself impair any other remedy provided by this article for nonconformity.

(3) Where a tender has been accepted

(a) 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; and

(b) if the claim is one for infringement or the like (subsection (3) of section 2-312) and the buyer is sued as a result of such a breach he must so notify the seller within a reasonable time after he receives notice of the litigation or be barred from any remedy over for liability established by the litigation.

(4) The burden is on the buyer to establish any breach with respect to the goods accepted.

(5) Where the buyer is sued for breach of a warranty or other obligation for which his seller is answerable over

(a) he may give his seller written notice of the litigation. If the notice states that the seller may come in and defend and that if the seller does not do so he will be bound in any action against him by his buyer by any determination of fact common to the two litigations, then unless the seller after seasonable receipt of the notice does come in and defend he is so bound.

(b) if the claim is one for infringement or the like (subsection (3) of section 2-312) the original seller may demand in writing that his buyer turn over to him control of the litigation including settlement or else be barred from any remedy over and if he also agrees to bear all expense and to satisfy any adverse judgment, then unless the buyer after seasonable receipt of the demand does turn over control the buyer is so barred.

(6) The provisions of subsections (3), (4) and (5) apply to any obligation of a buyer to hold the seller harmless against infringement or the like (subsection (3) of section 2-312).

Source

  • Laws 1963, c. 544, Art. II, § 2-607, p. 1748.

Annotations

  • Pursuant to subsection (3)(a) of this section, whether the notice given is satisfactory and whether it is given within a reasonable time are generally questions of fact to be measured by all the circumstances of the case. Fitl v. Strek, 269 Neb. 51, 690 N.W.2d 605 (2005).

  • Pursuant to subsection (4) of this section, the burden is on the buyer to show a breach with respect to the goods accepted. Fitl v. Strek, 269 Neb. 51, 690 N.W.2d 605 (2005).

  • The notice requirement set forth in subsection (3)(a) of this section serves three purposes. It provides the seller with an opportunity to correct any defect, to prepare for negotiation and litigation, and to protect itself against stale claims asserted after it is too late for the seller to investigate them. Fitl v. Strek, 269 Neb. 51, 690 N.W.2d 605 (2005).

  • In regard to the notice contemplated by the section, in the case of the principal-agency relationship, the apparent authority of an agent may exist beyond termination of the principal-agency relationship when notice of the termination has not been given; this is particularly the case if the principal affirmatively, intentionally, or by lack of ordinary care causes third persons to act upon the apparent agency. Moore v. Puget Sound Plywood, 214 Neb. 14, 332 N.W.2d 212 (1983).

  • This section, including its notice provisions, does not apply to sales of real estate. Fink v. Denbeck, 206 Neb. 462, 293 N.W.2d 398 (1980).

  • Buyer of defective machine failed to make effective rejection, and by his actions accepted nonconforming goods. Alliance Tractor & Implement Co. v. Lukens Tool & Die Co., 199 Neb. 489, 260 N.W.2d 193 (1977).

  • Purchaser who relies on breach of warranty must plead that he gave timely notice of the breach. Timmerman v. Hertz, 195 Neb. 237, 238 N.W.2d 220 (1976).

  • Discussed in opinion holding Uniform Commercial Code applicable rather than strict tort liability in case involving damage to all property. Hawkins Constr. Co. v. Matthews Co., Inc., 190 Neb. 546, 209 N.W.2d 643 (1973).

  • Rejection of a proffered breach of warranty instruction in personal injury case, where rejection was based on view that warranty action was barred by failure to meet notice requirement, held not prejudicial, without reaching notice issue, because negligence and strict liability instructions sufficiently placed same factual issues before jury. Brassette v. Burlington Northern Inc., 687 F.2d 153 (8th Cir. 1982).

  • City, by accepting sewage processing plant when it denied access to the plant to personnel of the contractor, which was also to operate the plant, became obligated to pay contract rate, less any damages allotted to it. Omaha Pollution Control Corp. v. Carver-Greenfield Corp., 413 F.Supp. 1069 (D. Neb. 1976).

  • COMMENT

  • Prior Uniform Statutory Provision: Subsection (1) — section 41, Uniform Sales Act; subsections (2) and (3) — sections 49 and 69, Uniform Sales Act.

  • Changes: Rewritten.

  • Purposes of Changes:

  • To continue the prior basic policies with respect to acceptance of goods while making a number of minor though material changes in the interest of simplicity and commercial convenience so that:

  • 1. Under subsection (1), once the buyer accepts a tender the seller acquires a right to its price on the contract terms. In cases of partial acceptance, the price of any part accepted is, if possible, to be reasonably apportioned, using the type of apportionment familiar to the courts in quantum valebat cases, to be determined in terms of "the contract rate", which is the rate determined from the bargain in fact (the agreement) after the rules and policies of this article have been brought to bear.

  • 2. Under subsection (2) acceptance of goods precludes their subsequent rejection. Any return of the goods thereafter must be by way of revocation of acceptance under the next section. Revocation is unavailable for a nonconformity known to the buyer at the time of acceptance, except where the buyer has accepted on the reasonable assumption that the nonconformity would be seasonably cured.

  • 3. All other remedies of the buyer remain unimpaired under subsection (2). This is intended to include the buyer's full rights with respect to future installments despite his or her acceptance of any earlier nonconforming installment.

  • 4. The time of notification is to be determined by applying commercial standards to a merchant buyer. "A reasonable time" for notification from a retail consumer is to be judged by different standards so that in his or her case it will be extended, for the rule of requiring notification is designed to defeat commercial bad faith, not to deprive a good faith consumer of his or her remedy.

  • The content of the notification need merely be sufficient to let the seller know that the transaction is still troublesome and must be watched. There is no reason to require that the notification which saves the buyer's rights under this section must include a clear statement of all the objections that will be relied on by the buyer, as under the section covering statements of defects upon rejection (section 2-605). Nor is there reason for requiring the notification to be a claim for damages or of any threatened litigation or other resort to a remedy. The notification which saves the buyer's rights under this article need only be such as informs the seller that the transaction is claimed to involve a breach, and thus opens the way for normal settlement through negotiation.

  • 5. Under this article various beneficiaries are given rights for injuries sustained by them because of the seller's breach of warranty. Such a beneficiary does not fall within the reason of the present section in regard to discovery of defects and the giving of notice within a reasonable time after acceptance, since he or she has nothing to do with acceptance. However, the reason of this section does extend to requiring the beneficiary to notify the seller that an injury has occurred. What is said above, with regard to the extended time for reasonable notification from the lay consumer after the injury is also applicable here; but even a beneficiary can be properly held to the use of good faith in notifying, once he or she has had time to become aware of the legal situation.

  • 6. Subsection (4) unambiguously places the burden of proof to establish breach on the buyer after acceptance. However, this rule becomes one purely of procedure when the tender accepted was nonconforming and the buyer has given the seller notice of breach under subsection (3). For subsection (2) makes it clear that acceptance leaves unimpaired the buyer's right to be made whole, and that right can be exercised by the buyer not only by way of cross-claim for damages, but also by way of recoupment in diminution or extinction of the price.

  • 7. Subsections (3)(b) and (5)(b) give a warrantor against infringement an opportunity to defend or compromise third-party claims or be relieved of his or her liability. Subsection (5)(a) codifies for all warranties the practice of voucher to defend. Compare section 3-119. Subsection (6) makes these provisions applicable to the buyer's liability for infringement under section 2-312.

  • 8. All of the provisions of the present section are subject to any explicit reservation of rights.

  • Cross References:

  • Point 1: Section 1-201.

  • Point 2: Section 2-608.

  • Point 4: Sections 1-204 and 2-605.

  • Point 5: Section 2-318.

  • Point 6: Section 2-717.

  • Point 7: Sections 2-312 and 3-119.

  • Point 8: Section 1-207.

  • Definitional Cross References:

  • "Burden of establishing". Section 1-201.

  • "Buyer". Section 2-103.

  • "Conform". Section 2-106.

  • "Contract". Section 1-201.

  • "Goods". Section 2-105.

  • "Notifies". Section 1-201.

  • "Reasonable time". Section 1-204.

  • "Remedy". Section 1-201.

  • "Seasonably". Section 1-204.