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Revocation of Acceptance

In: Business and Management

Submitted By poroggi
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Chapter 20.3
Revocation of Acceptance Roy E. Farrar Produce Company (Farrar) was a packer and shipper of tomatoes in Rio Arribon County, New Mexico. Farrar contacted Wilson, an agent and salesman for International Paper Company (International), and ordered 21,500 tomato boxes for $0.64 per box. The boxes were to each hold between 20 and 30 pounds of tomatoes for shipping. When the boxes arrived at Farrar’s plant, 3,624 of them were immediately used to pack tomatoes. When the boxes were stacked, they began to collapse and crush the tomatoes contained within them. The produce company was forced to repackage the tomatoes and store the unused tomato boxes. Farrar contacted International and informed it that it no longer wanted the boxes because they could not perform as promised. International claimed that Farrar had accepted the packages and must pay for them. Who wins? International Paper Co. v. Farrar, 102 N.M. 739, 700 P.2d 642, Web 1985 N.M. Lexis 2000 (Supreme Court of New Mexico)
Farrar contracted Wilson for an order of 21,500 boxes capable of holding twenty to thirty pounds each used to ship Farrars’ tomatoes. Farrar used 3,624 boxes upon arrival to pack tomatoes which according to Farrar failed crushed the packed tomatoes. Farrar reacted by attempted to cancel the contract. International(Wilson) thinks that Farrar already accepted the boxes and should be held to pay for them. For revocation of acceptance we must confirm that the goods are nonconforming or the nonconformity substantially impairs the value of the goods to the buyer or lessee or one of the following factors is shown: (a) the seller’s or lessor’s promise to timely cure of the nonconformity is not met, (b) the goods were accepted before the nonconformity was discovered and the nonconformity was difficult to discover, or (c) the goods were accepted before the nonconformity was discovered and the seller or lessor assured the buyer or lessee that the goods were conforming. (Cheseman, 2010)
First, stated in the contract Farrar was assured of the boxes capabilities and purpose that they could hold twenty to thirty pounds for tomato shipping. This capability of the boxes could only be verified through use by Farrar. Through use most of Farrars’ goods were damaged or made unsellable. While this would indicate a structural or manufacturing flaw in the boxes shipped to Farrar again the nonconformity could not be easily discovered.
Secondly, Farrar almost immediately notified International of the incident and proceeded to terminate the contract by refusing to accept the boxes as they were subpar in performance and could not fulfill the contract terms. This could be seen as rejection within a reasonable amount of time and certainly an inability for both parties to uphold the terms of the contract. In fact Farrar may proceed to sue for the cost of the damaged goods.

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