T. W. Oil, Inc. v. Consol. Edison Co. - 57 N.Y.2d 574, 457 N.Y.S.2d 458, 443 N.E.2d 932 (1982)

Rule:

Where any tender or delivery by the seller is rejected because it is non-conforming and the time for performance has not yet expired, the seller may seasonably notify the buyer of his intention to cure and may then within the contract time make a conforming delivery. Where the buyer rejects a non-conforming tender which the seller had reasonable grounds to believe would be acceptable with or without money allowance the seller may, if he seasonably notifies the buyer, have a further reasonable time to substitute a conforming tender. N.Y. U.C.C. Law § 2-508.

Facts:

Plaintiff contracted to deliver an oil cargo to defendant between January 24 and 30, 1974. On February 14, defendant rejected the nonconforming cargo, which plaintiff tendered without notice of any defect. However, the oil was usable by defendant. Prompt negotiations to adjust the price followed and, on February 20, defendant rejected plaintiff's price reduction offer. On February 21, plaintiff offered to cure the defect with a substitute shipment of conforming oil scheduled to arrive on February 28. On February 22, defendant rejected the offer to cure. The two cargos were subsequently sold to third parties at the best price obtainable. Plaintiff then commenced the instant action for breach of contract. The trial court awarded judgment in favor of plaintiff, holding that plaintiff's reasonable and timely offer to cure was improperly rejected. The Appellate Division affirmed. The defendant appealed, asserting that the trial court erred in ruling that the verdict on a special question submitted for determination by a jury was irrelevant to the decision of this case, (b) in failing to interpret subdivision (2) of section 2-508 of the Uniform Commercial Code to limit the availability of the right to cure after date of performance to cases in which the seller knowingly made a nonconforming tender. 

Issue:

1. Was the verdict on a special question submitted for determination by a jury irrelevant to the decision of the instant case? 
2. Under section 2-508 of the Uniform Commercial Code, should the availability of the right to cure after date of performance be limited to cases in which the seller knowingly made a nonconforming tender? 

Answer:

1) Yes. 2) No.

Conclusion:

On appeal, the court disagreed with the contention that the trial court erred in ignoring the jury's determination of the defendant's reasonable rejection of the plaintiff's offer to cure a nonconforming oil shipment. As the word "reasonable" was employed only to qualify a seller's conduct once the seller invoked N.Y. U.C.C. Law § 2-508(2), a finding by the jury that the buyer's conduct was reasonable was irrelevant to application of § 2-508(2). Thus, it was not error to ignore the jury's answer to the question. A fair interpretation of § 2-508(2) required the defendant to accept the substitute shipment of conforming oil. Once the oil supplier gave seasonable notice, it was permitted to cure the defect within a reasonable time beyond the time the contract was to be performed, as it had acted in good faith and with a reasonable expectation that the original oil shipment was acceptable to the buyer. Section 2-508(2) was not limited to cases in which the seller knowingly made a nonconforming tender it believed the buyer would accept.