Acceptance. OSHI Global Co designs and sells novelty items, including a small plastic toy for children referred to as the "Number 89 Frog," a realistic replica of a frog that squeaks when it is squeezed. At a trade show in Chicago, Michael Osaraprasop,

Question

the owner of OSHI, sold a quantity of the frogs to Jay Gilbert, the president of S.A.M. Electronics, Inc Gilbert asked Osaraprasop to design, make, and sell to S.A.M. a larger version of the frog with a motion sensor that would activate a "ribbit" sound. Osaraprasop agreed. OSHI delivered fourteen containers of the frogs, a number of which S.A.M. resold to its customers. When some of the buyers complained that the frogs were defective, S.A.M. had them repaired. S.A.M. refused to pay OSHI for any of the frogs and wrote a letter claiming to revoke acceptance of them. S.A.M. filed a suit in a federal district court against OSHI and others, alleging in part breach of contract, to which OSHI responded with a similar claim against S.A.M. OSHI argued that by reselling some of the frogs from the fourteen containers, S.A.M. had accepted all of them and must pay. In whose favor will the court rule? Discuss fully.

Answer 1

Acceptance
The court concluded that "by reselling frogs from the 14 containers, S.A.M. accepted them as ‘keepers' under the contract." UCC 2-607(1) states that "the buyer must pay at the contract rate for any goods accepted by it." Under UCC 2-606(1), "[a]cceptance of goods occurs when the buyer . . . (b) fails to make an effective rejection; or (c) does any act inconsistent with the seller's ownership." The court pointed out that "resale of goods is ‘an act inconsistent with the seller's ownership.' Therefore, even if S.A.M. rejected the allegedly defective frogs in a timely manner, its subsequent sale of the frogs negated this rejection and amounted to an acceptance." In other words, S.A.M.'s "actions, (1) were inconsistent with its rejection of the goods, and (2) constituted legal acceptance of those goods. Although S.A.M. did not resell all of the frogs, resale of even part of a commercial unit renders a buyer liable for the entire unit."