New York Law Review

Tag: Tender of Delivery

  • Heller v. U.S. Suzuki Motor Corp., 64 N.Y.2d 407 (1985): Accrual of Implied Warranty Claims Against Remote Manufacturers

    Heller v. U.S. Suzuki Motor Corp., 64 N.Y.2d 407 (1985)

    For breach of implied warranty claims under UCC § 2-725 against a remote manufacturer or distributor, the cause of action accrues on the date the remote party tenders delivery of the product, not on the date of the retail sale to the plaintiff.

    Summary

    Heller sued U.S. Suzuki for injuries from a motorcycle accident, alleging breach of implied warranty. The suit was filed more than four years after Suzuki (the distributor) sold the motorcycle to a retailer but less than four years after the retailer sold it to Heller. The New York Court of Appeals addressed whether the statute of limitations began running from the date Suzuki sold the motorcycle to the retailer or from the date the retailer sold it to Heller. The Court held that the cause of action against the distributor accrued when the distributor tendered delivery to its immediate purchaser, making the suit time-barred. The decision emphasizes adherence to the UCC’s tender of delivery rule and the policy of repose underlying statutes of limitations.

    Facts

    Plaintiff Heller was injured in a motorcycle accident on July 7, 1979.
    The motorcycle was manufactured by a Japanese company and distributed in the U.S. by U.S. Suzuki Motor Corp.
    Jim Moroney’s Harley-Davidson Sales, Inc. was the retailer who sold the motorcycle to Heller.
    U.S. Suzuki sold the motorcycle to Bakers Recreational Equipment, Inc., who then sold it to Jim Moroney’s Harley-Davidson Sales, Inc. on March 30, 1978.
    Heller purchased the motorcycle from Jim Moroney’s Harley-Davidson Sales, Inc. on April 21, 1979.
    Heller filed suit against U.S. Suzuki on February 15, 1983, alleging breach of implied warranty.

    Procedural History

    Heller sued U.S. Suzuki in New York State court.
    Special Term denied Suzuki’s motion for summary judgment, holding that the cause of action accrued when the retailer sold the motorcycle to Heller.
    The Appellate Division reversed, dismissing the complaint, holding that the cause of action accrued when Suzuki tendered delivery to its immediate purchaser.
    The New York Court of Appeals granted leave to appeal.

    Issue(s)

    Whether, for an implied warranty claim under UCC § 2-725 against a remote distributor, the cause of action accrues on the date the distributor tenders delivery to its immediate purchaser or on the date of the retail sale to the plaintiff.

    Holding

    No, because UCC § 2-725 states that a cause of action accrues when the breach occurs, and a breach occurs when tender of delivery is made by the party being sued. The elimination of privity requirements in New York does not alter the accrual date.

    Court’s Reasoning

    The Court applied UCC § 2-725, which provides a four-year statute of limitations for breach of contract for sale, accruing upon tender of delivery, unless a warranty explicitly extends to future performance.
    The Court acknowledged that implied warranty actions were initially rooted in contract law, requiring privity between the plaintiff and defendant. However, New York eliminated the privity requirement for personal injury actions based on implied warranty with the adoption of a new section 2-318 of the Uniform Commercial Code (L 1975, ch 774).
    Despite the elimination of privity, the Court emphasized that the Legislature did not amend the limitations period in UCC § 2-725. The Court reasoned that the cause of action against a manufacturer or distributor still accrues on the date the party charged tenders delivery of the product, not when a third party sells it to the plaintiff.
    The Court rejected the argument that eliminating privity implicitly changed the accrual date, stating that the Legislature would have explicitly amended § 2-725 if that were the intent. “[I]nasmuch as it did not amend section 2-725 to alter the existing rules on the subject we assume it intended no change”.
    The Court highlighted the purpose of uniform acts and statutes of limitations: to eliminate jurisdictional variations and provide repose. Allowing the cause of action to accrue at the date of retail sale would create unpredictability in the period of exposure to liability.
    The Court stated, “A major purpose of the uniform acts, and for the Statutes of Limitation they contain, is to eliminate jurisdictional variations so that concerns doing business nationwide will not be governed by different periods of limitation.”
    The Court also addressed the concern that this interpretation could foreclose a plaintiff’s remedy before the cause of action accrues, noting that the plaintiff in this case waited almost four years after the injury before filing suit. The Court emphasized that a consumer who acts within three years of the accident or four years from the date of sale can still maintain actions based on warranty, negligence, or strict products liability. “[T]here is no need or occasion for us to reinterpret section 2-725 in a manner contrary to its language and past usage.”

  • Television Corp. v. Neuman, 48 A.D.2d 148 (N.Y. App. Div. 1975): Anticipatory Repudiation Excuses Tender of Performance

    Television Corp. v. Neuman, 48 A.D.2d 148 (N.Y. App. Div. 1975)

    Under UCC § 2-610, a buyer’s anticipatory repudiation of a contract for the sale of goods excuses the seller from the obligation to tender delivery of the goods.

    Summary

    Television Corporation sued Carl Neuman for breach of contract after Neuman refused to accept delivery of television sets that he had agreed to lease. Neuman argued that Television Corporation had failed to tender delivery as required by the Uniform Commercial Code. The New York Appellate Division held that Television Corporation was not required to tender delivery because Neuman had anticipatorily repudiated the contract by informing Television Corporation that the sets were no longer needed. The Court of Appeals reversed the Appellate Division’s dismissal of the complaint and reinstated the trial court’s judgment for Television Corporation.

    Facts

    Television Corporation agreed to lease television sets to James Square Nursing Home, a trade name for Carl Neuman. The agreements included an option for Neuman to purchase the sets for one dollar each at the end of the lease term. The agreements stipulated that Television Corporation would not file UCC-1 forms related to the transaction. Television Corporation requested Neuman to execute UCC-1 forms, which he refused. Television Corporation then attempted to deliver the televisions, but Neuman’s representatives informed them that the sets were not needed and delivery would not be accepted. Television Corporation never physically tendered the sets.

    Procedural History

    Television Corporation sued Neuman for breach of contract. The trial court found that Television Corporation had tendered delivery and allowed recovery for a portion of the sets. Neuman’s counterclaim was dismissed. The Appellate Division reversed, finding that Television Corporation failed to prove it could supply the goods without secondary financing and charged Television Corporation with breach, remanding for a hearing on Neuman’s damages. Television Corporation appealed to the New York Court of Appeals.

    Issue(s)

    Whether a buyer’s communication that goods are no longer needed and that delivery will not be accepted constitutes an anticipatory repudiation of the contract, excusing the seller from the obligation to tender delivery under the Uniform Commercial Code.

    Holding

    Yes, because the buyer, Neuman, communicated a clear and unequivocal intention not to perform the contract, relieving the seller, Television Corporation, of its obligation to tender delivery.

    Court’s Reasoning

    The court reasoned that under UCC § 2-610(c), repudiation of a contract by the buyer eliminates the need for further performance by the seller. An anticipatory repudiation occurs when there is an “overt communication of intention” not to perform. The court found that Neuman’s communication, through his agents, that the sets were no longer needed and would not be accepted, constituted a clear and unequivocal repudiation of the contract. The court emphasized that the trial court had expressly credited the testimony regarding these communications. The court stated that “the repudiation was more than amply demonstrated by the communication to plaintiff by an administrator and a purchasing agent of defendant nursing home that the sets were no longer needed and that delivery would not be accepted.” Because of this repudiation, Television Corporation was not obligated to make a formal tender of the goods. The court cited pre-UCC cases like Windmuller v. Pope, 107 N.Y. 674 and Nichols v. Scranton Steel Co., 137 N.Y. 471 to reinforce the principle that a seller is relieved of the obligation to tender when the buyer states they will not receive or pay for the goods. The court noted it could not grant greater relief to the plaintiff than the trial court had because the plaintiff had not appealed the limitation on damages to the Appellate Division.