Question

Brumeister Industries needed steel pipe to build furnaces for a customer. Brumeister sent Greene Steel an order for a certain quantity of “A 106 Grade B” steel. Greene confirmed the order and created a contract by sending an invoice to Brumeister, stating that it would send “A 106 Grade B” steel, as ordered. Greene delivered the steel and Brumeister built the furnaces, but they leaked badly and required rebuilding. Tests demonstrated that the steel was not, in fact, “A 106 Grade B,” but an inferior steel. Brumeister sued. Who wins?

Answer 1

Brumeister made a steel "A 106 Grade B" order. Greene confirmed the order and sent an invoice for the order. Greene delivered the steel that had leaked badly and had to be rebuilt. Tests have shown that steel is not "A 106 Grade B" but inferior steel.

As per UCC 2-510, where the purchaser accepts goods but then legally revokes acceptance, the risk remains with the seller to the extent that the purchaser's insurance does not cover the loss.

Greene will therefore have to pay damages to Brumeister for the sale of inferior quality steel.

Please refer to the UCC 2-510

UCC 2-510 says:

• Where a tender or delivery of goods does not comply with the contract in such a way that the risk of their loss remains on selleruntil cure or acceptance gives a right of rejection.
• Where the purchaser rightly revokes acceptance, he may treat the risk of loss as having rested on the seller from the outset to the extent of any deficiency in his effective insurance coverage.
• Where the purchaser repudiates or otherwise fails to comply with the goods already identified in the contract for sale before the risk of their loss has been passed on to the purchaser, the seller may treat the risk of loss for a commercially reasonable time to the extent of any deficiency in his effective insurance coverage.

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