solution

John ordered twenty “Metro Star” garbage compactors from Sam’s Appliance City

which included installation at his multi family apartment house in Flushing. Although John

was offered a “service contract”, he rejected same due to the cost. After the garbage contractors

were installed in each apartment, he received an invoice for$ 6,500; $ 3,500 for the units and

$3,000 for installation. At the bottom of the invoice it stated: “Payment is due net fourteen ( 14)

days from delivery and installation. Customer has 72 hours from date of installation to make any

complaints regarding labor or goods or otherwise, all complaints are waived.” Ten days later,

tenants called John to complain that the compactors were not working properly. John called

Sam’s Appliance City to request service and the salesperson said: “Read your invoice; the time

to complain has long since passed and you did not purchase a service contract.” When John did

not make the payment due, he received a letter threatening litigation. He consults you about his

rights. Does the UCC apply? What options, if any does he have? Discuss the rights of the parties.

ISSUE 1 : Does the UCC apply? What is a hybrid contract? What is the pre-dominant factor

test? Apply law to facts and draw conclusion.

ISSUE 2: What is a latent defect? What is a patent defect? If buyer discovers a latent defect

after his time to complain expires, what can he do? What is substantive unconscionability?

What may a court do under 2-302 ? See Wilson Trading Corp. v. Ferguson Corp.

ISSUE 3: what is doctrine of CURE? 2-508 What must buyer do if it discovers defect? If

seller opts NOT to cure, what may buyer do? What is revocation of acceptance? 2-608? How

does it apply? Apply law to facts and draw conclusion.

ISSUE 4: What is implied warranty of merchantability? Who makes it? How created? How

breached? Did seller breach? Apply law to facts and draw conclusion.