Prior Uniform Statutory Provision: Section 47(2) and (3), Uniform Sales Act.
Changes: Rewritten, subsections (2) and (3) being new.
Purposes of Changes and New Matter:
To correspond in substance with the prior uniform statutory provision and to incorporate in addition some of the results of the better case law so that:
1. The buyer is entitled to inspect goods as provided in subsection (1) unless it has been otherwise agreed by the parties. The phrase "unless otherwise agreed" is intended principally to cover such situations as those outlined in subsections (3) and (4) and those in which the agreement of the parties negates inspection before tender of delivery. However, no agreement by the parties can displace the entire right of inspection except where the contract is simply for the sale of "this thing". Even in a sale of boxed goods "as is" inspection is a right of the buyer, since if the boxes prove to contain some other merchandise altogether the price can be recovered back; nor do the limitations of the provision on effect of acceptance apply in such a case.
2. The buyer's right of inspection is available to him or her upon tender, delivery, or appropriation of the goods with notice to him or her. Since inspection is available to him or her on tender, where payment is due against delivery he or she may, unless otherwise agreed, make his or her inspection before payment of the price. It is also available to him or her after receipt of the goods and so may be postponed after receipt for a reasonable time. Failure to inspect before payment does not impair the right to inspect after receipt of the goods unless the case falls within subsection (4) on agreed and exclusive inspection provisions. The right to inspect goods which have been appropriated with notice to the buyer holds whether or not the sale was by sample.
3. The buyer may exercise his or her right of inspection at any reasonable time or place and in any reasonable manner. It is not necessary that he or she select the most appropriate time, place, or manner to inspect or that his or her selection be the customary one in the trade or locality. Any reasonable time, place, or manner is available to him or her and the reasonableness will be determined by trade usages, past practices between the parties, and the other circumstances of the case.
The last sentence of subsection (1) makes it clear that the place of arrival of shipped goods is a reasonable place for their inspection.
4. Expenses of an inspection made to satisfy the buyer of the seller's performance must be assumed by the buyer in the first instance. Since the rule provides merely for an allocation of expense there is no policy to prevent the parties from providing otherwise in the agreement. Where the buyer would normally bear the expenses of the inspection but the goods are rightly rejected because of what the inspection reveals, demonstrable and reasonable costs of the inspection are part of his or her incidental damage caused by the seller's breach.
5. In the case of payment against documents, subsection (3) requires payment before inspection, since shipping documents against which payment is to be made will commonly be tendered while the goods are still in transit. This article recognizes no exception in any peculiar case in which the goods happen to arrive before the documents are tendered. However, where by the agreement payment is to await the arrival of the goods, inspection before payment becomes proper since the goods are then "available for inspection".
Where by the agreement the documents are to be tendered after arrival of the goods, the buyer is entitled to inspect before payment since the goods are then "available for inspection". Proof of usage is not necessary to establish this right, but if inspection before payment is disputed the contrary must be established by usage or by an explicit contract term to that effect.
For the same reason, that the goods are available for inspection, a term calling for payment against storage documents or a delivery order does not normally bar the buyer's right to inspection before payment under subsection (3)(b). This result is reinforced by the buyer's right under subsection (1) to inspect goods which have been appropriated with notice to him or her.
6. Under subsection (4) an agreed place or method of inspection is generally held to be intended as exclusive. However, where compliance with such an agreed inspection term becomes impossible, the question is basically one of intention. If the parties clearly intend that the method of inspection named is to be a necessary condition without which the entire deal is to fail, the contract is at an end if that method becomes impossible. On the other hand, if the parties merely seek to indicate a convenient and reliable method but do not intend to give up the deal in the event of its failure, any reasonable method of inspection may be substituted under this article.
Since the purpose of an agreed place of inspection is only to make sure at that point whether or not the goods will be thrown back, the "exclusive" feature of the named place is satisfied under this article if the buyer's failure to inspect there is held to be an acceptance with the knowledge of such defects as inspection would have revealed within the section on waiver of buyer's objections by failure to particularize. Revocation of the acceptance is limited to the situations stated in the section pertaining to that subject. The reasonable time within which to give notice of defects within the section on notice of breach begins to run from the point of the "acceptance".
7. Clauses on time of inspection are commonly clauses which limit the time in which the buyer must inspect and give notice of defects. Such clauses are therefor governed by the section of this article which requires that such a time limitation must be reasonable.
8. Inspection under this article is not to be regarded as a "condition precedent to the passing of title" so that risk until inspection remains on the seller. Under subsection (4) such an approach cannot be sustained. Issues between the buyer and seller are settled in this article almost wholly by special provisions and not by the technical determination of the locus of the title. Thus "inspection as a condition to the passing of title" becomes a concept almost without meaning. However, in peculiar circumstances inspection may still have some of the consequences hitherto sought and obtained under that concept.
9. "Inspection" under this section has to do with the buyer's checkup on whether the seller's performance is in accordance with a contract previously made and is not to be confused with the "examination" of the goods or of a sample or model of them at the time of contracting which may affect the warranties involved in the contract.
Generally: Sections 2-310(b), 2-321(3), and 2-606(1)(b).
Point 1: Section 2-607.
Point 2: Sections 2-501 and 2-502.
Point 4: Section 2-715.
Point 5: Section 2-321(3).
Point 6: Sections 2-606 to 2-608.
Point 7: Section 1-204.
Point 8: Comment to section 2-401.
Point 9: Section 2-316(3)(b).
Definitional Cross References:
"Buyer". Section 2-103.
"Conform". Section 2-106.
"Contract". Section 1-201.
"Contract for sale". Section 2-106.
"Document of title". Section 1-201.
"Goods". Section 2-105.
"Party". Section 1-201.
"Presumed". Section 1-201.
"Reasonable time". Section 1-204.
"Rights". Section 1-201.
"Seller". Section 2-103.
"Send". Section 1-201.
"Term". Section 1-201.