2019 New Mexico Statutes
Chapter 55 - Uniform Commercial Code
Article 2 - Sales
Part 6 - BREACH, REPUDIATION AND EXCUSE
Section 55-2-602 - Manner and effect of rightful rejection.

Universal Citation: NM Stat § 55-2-602 (2019)

(1) Rejection of goods must be within a reasonable time after their delivery or tender. It is ineffective unless the buyer seasonably notifies the seller.

(2) Subject to the provisions of the two following sections on rejected goods (Sections 2-603 [55-2-603 NMSA 1978] and 2-604 [55-2-604 NMSA 1978]):

(a) after rejection any exercise of ownership by the buyer with respect to any commercial unit is wrongful as against the seller; and

(b) if the buyer has before rejection taken physical possession of goods in which he does not have a security interest under the provisions of this article (Subsection (3) of Section 2-711 [55-2-711 NMSA 1978]), he is under a duty after rejection to hold them with reasonable care at the seller's disposition for a time sufficient to permit the seller to remove them; but

(c) the buyer has no further obligations with regard to goods rightfully rejected.

(3) The seller's rights with respect to goods wrongfully rejected are governed by the provisions of this article on seller's remedies in general (Section 2-703 [55-2-703 NMSA 1978]).

History: 1953 Comp., § 50A-2-602, enacted by Laws 1961, ch. 96, § 2-602.

ANNOTATIONS

OFFICIAL COMMENTS

UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.

Prior uniform statutory provision. — Section 50, Uniform Sales Act.

Changes. — Rewritten.

Purposes of changes. — To make it clear that:

1. A tender or delivery of goods made pursuant to a contract of sale, even though wholly non-conforming, requires affirmative action by the buyer to avoid acceptance. Under Subsection (1), therefore, the buyer is given a reasonable time to notify the seller of his rejection, but without such seasonable notification his rejection is ineffective. The sections of this article dealing with inspection of goods must be read in connection with the buyer's reasonable time for action under this subsection. Contract provisions limiting the time for rejection fall within the rule of the section on "Time" and are effective if the time set gives the buyer a reasonable time for discovery of defects. What constitutes a due "notifying" of rejection by the buyer to the seller is defined in Section 1-201.

2. Subsection (2) lays down the normal duties of the buyer upon rejection, which flow from the relationship of the parties. Beyond his duty to hold the goods with reasonable care for the buyer's [seller's] disposition, this section continues the policy of prior uniform legislation in generally relieving the buyer from any duties with respect to them, except when the circumstances impose the limited obligation of salvage upon him under the next section.

3. The present section applies only to rightful rejection by the buyer. If the seller has made a tender which in all respects conforms to the contract, the buyer has a positive duty to accept and his failure to do so constitutes a "wrongful rejection" which gives the seller immediate remedies for breach. Subsection (3) is included here to emphasize the sharp distinction between the rejection of an improper tender and the non-acceptance which is a breach by the buyer.

4. The provisions of this section are to be appropriately limited or modified when a negotiation is in process.

Point 1: Sections 1-201, 1-204(1) and (3), 2-512(2), 2-513(1) and 2-606(1) (b).

Point 2: Section 2-603(1).

Point 3: Section 2-703.

"Buyer". Section 2-103.

"Commercial unit". Section 2-105.

"Goods". Section 2-105.

"Merchant". Section 2-104.

"Notifies". Section 1-201.

"Reasonable time". Section 1-204.

"Remedy". Section 1-201.

"Rights". Section 1-201.

"Seasonably". Section 1-204.

"Security interest". Section 1-201.

"Seller". Section 2-103.

Burden is on buyers to make timely and unequivocal rejection if they do not intend to accept goods as delivered. Woods v. Van Wallis Trailer Sales Co., 1966-NMSC-230, 77 N.M. 121, 419 P.2d 964.

Actions of buyer inconsistent with rejection. — Buyer's claims that it had rejected or revoked acceptance of juniper plants by telephone statement that plants were not "up to snuff" was refuted by the fact that four months after receiving them it had removed them from their five gallon containers and had planted them in fulfillment of its contract with a third party. Oda Nursery, Inc. v. Garcia Tree & Lawn, Inc., 1985-NMSC-098, 103 N.M. 438, 708 P.2d 1039.

Buyer's acts amounting to ownership prohibited after rejection. — A buyer, after having given seller notice of a rejection of goods within a reasonable time, may not then exercise acts over the property amounting to dominion or ownership, and a buyer who does not have a security interest in such property is under a duty after rejection to hold the goods with reasonable care for a time sufficient to permit the seller to remove them. O'Shea v. Hatch, 1982-NMCA-013, 97 N.M. 409, 640 P.2d 515.

Except to extent of security interest therein. — Where the buyer rightfully rejects goods in his possession, it necessarily follows that he has a security interest in the goods pursuant to Section 55-2-711(3) NMSA 1978, in the entire amount spent for the goods, and he should not be required to return them for an amount less than the entire amount. Consequently, Subsection (2)(b) of this section, which obligates a buyer without a security interest in rejected goods in his possession to hold them with reasonable care, cannot apply. Because the security interest entitles the buyer to hold the goods and resell them, such action cannot constitute a violation of Subsection (2)(a) of this section, which makes any exercise of ownership by the buyer after rejection wrongful. Deaton, Inc. v. Aeroglide Corp., 1982-NMSC-147, 99 N.M. 253, 657 P.2d 109.

Continued use of property will not negate the claim of revocation of acceptance in every case, particularly where the sellers fail to contact the buyers to arrange for removal of the property, or to show how any delay may have prejudiced them or to show that the delay could have been avoided. O'Shea v. Hatch, 1982-NMCA-013, 97 N.M. 409, 640 P.2d 515.

Three-month delay in rejection not seasonable notice. — Where buyer fails to reject the entire shipment of goods until three months after seller's salesman refused to make requested adjustments for those goods rejected by buyer, the buyer has failed to give seller seasonable and particular notice of rejection as to the entire shipment and is precluded from rejecting any goods other than those originally set aside and presented to salesman. Celebrity, Inc. v. Kemper, 1981-NMSC-084, 96 N.M. 508, 632 P.2d 743.

Reasonable to require loss claims to be made within two days. — In general, a contract provision requiring claims of loss to be made within two days of delivery is reasonable, lawful and not unconscionable. Bowlin's, Inc. v. Ramsey Oil Co., 1983-NMCA-038, 99 N.M. 660, 662 P.2d 661, cert. denied, 99 N.M. 644, 662 P.2d 645.

Comparative liability is not part of the UCC under this section. Bowlin's, Inc. v. Ramsey Oil Co., 1983-NMCA-038, 99 N.M. 660, 662 P.2d 661, cert. denied, 99 N.M. 644, 662 P.2d 645.

Law reviews. — For annual survey of New Mexico law relating to commercial law, see 13 N.M.L. Rev. 293 (1983).

For article, "New Mexico's 'Lemon Law': Consumer Protection or Consumer Frustration?", see 16 N.M.L. Rev. 251 (1986).

Am. Jur. 2d, A.L.R. and C.J.S. references. — Applicability of provision in contract of sale for return of article, where article delivered does not answer to description, 30 A.L.R. 321.

Duty of purchaser of goods "on trial" or "on approval" regarding notice of rejection, 78 A.L.R. 533.

Seller's right to retain down payment on buyer's unjustified refusal to accept goods, 11 A.L.R.2d 701.

77A C.J.S. Sales § 194 et seq.

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