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Editor: D. A. Jeremy Telman
Valparaiso Univ. Law School

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Friday, September 19, 2008

Contracts Limerick of the Week: Colonial Dodge

Spare_tire The Millers bought a Dodge station wagon from Colonial Dodge and then realized that it was missing a spare tire. Apparently a strike at the tire manufacturer made it impossible to provide a spare, but the dealer promised to supply a tire as soon as possible. Mr. Miller found this unacceptable and stopped payment on the car, which had already been delivered to him. Eventually the car was impounded, and it sat in the impound lot for nine years -- until the case was finally resolved.

The trial court found for Colonial Dodge.
Michigan's Court of Appeals reversed in a split decision.
LovehandlesOn rehearing, the Court of Appeals took notice of additional facts. For example, both the salesman and Mr. Miller were stressed out at the time of the transaction, and the salesman offered to give Mr. Miller his own spare tire (illustrated at left), but Mr. Miller said, "No thanks, I've already got one." Or the spare tire didn't fit. Something like that. Having considered this additional evidence, the Court of Appeals reversed itself, as one of the judges switched sides. The Court of Appeals now found that the parties had stipulated that the Millers had accepted the car, and so the issue was whether acceptance could be revoked. Under UCC s. 2-608, such revocation is permissible only if the non-conformity of the good "substantially impairs" its value to the buyer. The Court of Appeals found no such substantial impairment. Judge Deming stuck by his guns, arguing that there was no acceptance and noting that under the UCC, "the right to reject nonconforming goods prior to acceptance is nearly absolute (citing 2-601). I wonder if Judge Deming would overturn the Seinfeld rule and permit rejection out of spite.

Michigan's Supreme Court reversed. It could not reverse the stipulation regarding acceptance, but it noted that that it was "not persuaded that, had the matter been contested in the trial court, a finding of acceptance would be warranted on this record." Instead, the court found that there was substantial impairment, since Mr. Miller's work required that he travel extensively, "sometimes in excess of 150 miles per day on Detroit freeways." The various opinions in the case make relatively little mention of the possibility of cure under UCC 2-508. This was not a case in which the Millers noticed the missing tire and the dealer chortled, "You snooze, you lose." The dealer offered to provide a spare tire as soon as the strike ended. Indeed, the Court of Appeals notes (the first time around) that a tire arrived shortly after the strike ended. Seems like an argument for cure is at least available.

Before you purchase a good,
It's best to look under the hood.
The good here is a dodge,
The case, a hodgepodge,
And the law not well understood.

[Jeremy Telman]

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