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Fablok Mills Inc. v. Cocker Machine & Foundry Co.

Decided: October 12, 1973.


On appeal from Superior Court of New Jersey, Law Division, Essex County.

Fritz, Lynch and Trautwein. Trautwein, J.A.D.


[125 NJSuper Page 254] Plaintiff Fablok Mills, Inc. (Fablok) commenced this action with a four-count complaint involving its purchase of ten knitting machines sold by defendant Cocker Machine & Foundry Co. (Cocker) seeking rescission, damages for breach of warranties of merchant-ability and fitness for the use intended, and fraud. After filing an answer defendant Cocker moved for summary judgment which motion was denied. Thereafter an amended

motion for summary judgment was filed by defendant and granted. Fablok Mills, Inc. v. Cocker Machine & Foundry Co., 120 N.J. Super. 350 (Law Div. 1972).

Facts, here relevant, follow. Plaintiff Fablok is engaged in the business of producing knitted fabrics. Plaintiff purchased ten knitting machines from defendant for a total price of $153,550, between September 15, 1964 and June 30, 1965. Shortly after the first two machines were delivered on September 15, 1964 plaintiff notified defendant that the machines were operating slowly, producing low quality and damaged fabric, leaking oil, etc. Despite these difficulties plaintiff continued to order and accepted delivery of eight additional machines, alleging similar defects thereafter. Defendant attempted to remedy the problems plaintiff complained of but was unable to do so.

The unsuccessful efforts to repair the machines continued until May 23, 1967. On this date plaintiff wrote to defendant revoking its acceptance and requested that defendant take back the machines and refund the purchase price of $15,615 per machine. Plaintiff bottomed his revocation of acceptance on the improper performance of the machines. Defendant refused either to take the machines back or refund the purchase price. Plaintiff continued to use some of the machines, replacing others and putting them in storage.

The trial judge ruled that under N.J.S.A. 12A:2-606 plaintiff, by its conduct, had accepted the goods despite their nonconformity. Furthermore, that by delaying for two years before attempting to revoke its acceptance, plaintiff rendered such a revocation ineffective as the duration of the delay was unreasonable as a matter of law under N.J.S.A. 12A:2-602(1) in view of the circumstances, i.e., machines were subject to wear and tear. Alternatively, the trial judge ruled that even if the revocation was effective, plaintiff's continued use of the machines after the revocation was wrongful against the seller and barred the remedy of rescission, N.J.S.A. 12A:2-602(2)(a). The judge further held that the exercise of such ownership bound the plaintiff to its acceptance

and constituted a waiver of all warranties or breaches thereof. Moreover, the trial judge ruled that plaintiff's election of the remedy of rescission barred it from seeking damages on a benefit of the bargain basis. Finally, the judge dismissed the count alleging fraudulent misrepresentations on the theory that since the remedies for fraud and nonfraudulent breach are co-extensive then, where plaintiff's acceptance and continued use of goods after a purported revocation barred a claim for damages arising out of a possible breach of warranty, these same facts barred any claim for damages arising out of fraudulent misrepresentations.

There is no question but that the buyer in the present case accepted the goods as he retained the machines in spite of their nonconformity. N.J.S.A. 12A:2-606(1)(a). However, the Uniform Commercial Code also provides that a buyer may revoke his acceptance within a reasonable time where the nonconformity of the goods substantially impairs their value to him. N.J.S.A. 12A:2-608.

In the case at bar the trial judge ruled that a two-year delay was unreasonable as a matter of law. We disagree. N.J.S.A. 12A:1-204 provides that reasonableness in connection with the time within which action is taken depends on the nature, purpose and circumstances of such action. Thus, whether the buyer has lost the right to revoke his acceptance is a question of fact to be determined by the trier of fact. See 2 Anderson, Uniform Commercial Code -- Text, Cases, Commentary (2d ed. 1971), at 242.

In the present case the facts indicate that seller did attempt to remedy the defects in these machines on numerous occasions. Defendant-seller's conduct in this regard may have reasonably induced the buyer to continue to use the goods and to make payments in the belief that the defects complained of would be cured by these repairs. This question is clearly for a jury to decide as N.J.S.A. 12A:2-608 does not set forth any hard and fast rule as to whether a ...

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