Legal Question in Business Law in California

Re: product shipped

After doing a modest amount of research, both in the Commercial Code and on WestLaw, I did not find either a statute or a case on point. I'm sure there must be one (or more), and if the amount of money involved here is large, I would recommend hiring an attorney to do further research.

I would say, however, that the general common-law principle regarding overpayments of money would also apply where the "overpayment" is receipt of goods with a significantly higher value than ordered and paid.

That principle is that when you are overpaid by mistake, you must refund the excess payment unless (1) you genuinely didn't know you were getting too much money at the time, AND (2) you have irrevocably changed your financial position in reliance on the correctness of the remittance.

The application of the principle to the mistaken shipment of goods is that you must notify the seller and offer to return the goods (at the seller's expense) unless you didn't notice their mistake before reselling, using up, installing or modifying the goods. The failure to notice and your changes to the goods must be innocent and non-negligent to relieve you of responsibility for allowing the seller to correct its mistake.

The answer is very fact-sensitive, but I think the general principle is that you must afford the seller an opportunity to correct the mistake at its expense if it wants to and if the correction can still be carried out. Further, the seller is still bound under the original contract and must ship the correct replacement goods within the time specified in the contract, or the contract will be breached.

Whether the seller will, in real life, want to re-ship is another question. Quite possibly, the seller will simply tell you its too expensive, too late, etc. to correct the mistake, just keep the goods. Depends upon many factors, of course, However, the general principle remains that a buyer is not allowed to take advantage of a seller's mistake if and while the error is ascertainable and can be corrected.

At least that's what I think is the right answer based on general legal principles and inconclusive research on the specific facts.