Signal Sets Company contracts to deliver one hundred 52-inch plasma high-definition television sets to a new retail customer, Tuner TV Store, on May 1, with payment to be made on delivery. Signal tenders delivery in its own truck. Tuner's manager
notices that some of the cartons have scrape marks. Tuner's owner phones Signal's office and asks whether the sets might have been damaged as they were being loaded. Signal assures Tuner that the sets are in perfect condition. Tuner tenders Signal a check, which Signal refuses, claiming that the first delivery to new customers is always for cash. Tuner promises to pay the cash within two days. Signal leaves the sets with Tuner, which stores them in its warehouse pending its "Grand Opening Sale" on May 15. Two days later, Tuner's stocker opens some of the cartons and discovers that a number of the sets are damaged beyond ordinary repair. Signal claims Tuner has accepted the sets and is in breach by not paying on delivery. Will Signal succeed on these claims? Explain.
Signal will lose on both claims. Acceptance of the goods by a buyer takes place when the buyer either signifies that the goods are conforming after inspection or fails to reject af-ter a reasonable time for inspection or acts inconsistently with the seller's ownership. Once the goods are accepted, the buyer loses the right to revoke acceptance of noncon-forming goods unless acceptance was based on a reasonable assurance that the goods were conforming.
In this case, although Tuner accepted the goods, it did so on Signal's assurance that the sets were in perfect condition. Thus, on discovery of the damaged sets, Tuner can revoke acceptance on the basis of substantial im-pairment of value.
In addition, although the contract called for payment on delivery, no method of payment was specified. Therefore, tender of payment is sufficient if it is by any means currently used in the ordinary course of business-a check is such a means. Signal does have a right to demand cash but must give Tuner a reasonable extension of time in which to procure the cash. Thus, Signal's claim of Tuner's breach for non-payment on delivery is not valid.
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