Legal Question in Business Law in California

Return of damaged merchandise

My product is educational curriculum which I sold to a catalogue company for them to sell 10 months ago. They've just contacted me and said they want to return half of the merchandise because they've discovered the 3-ring binders are not operating properly. They want an even exchange for brand new product that is in a different format(spiral bound). I've had no control over how they've stored the product, or shipped it to customers (they said one was returned by a customer because it was damaged). Am I obligated to take it all back and replace it for free with the new spiral bound ones? It would be a loss of $2100 for me to do so. If it was damaged when they received it from me 10 months ago, I would have gladly replaced it..but I no longer have any binders in stock since I went to the new spiral printing. Our original contract states they can return unsold merchandise for up to a year - IF it is in saleable condition with a restocking fee. These do not fit that criteria. What should I tell them? What is my legal obligation, if any?


Asked on 3/23/07, 7:17 pm

2 Answers from Attorneys
Timothy J. Walton Internet Attorney

Re: Return of damaged merchandise

The answers to your questions require an analysis of the facts specific to your situation. That means that you are seeking legal advice, not merely legal information.

That said, if you are truly looking at $2100 in losses if you give in to your business partner, then perhaps it would make sense to hire an attorney to negotiate some sort of compromise.

I have not seen the contract, so it is difficult for me to assess whether they have breached it. Their breach would be a key issue in any negotiation.

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Answered on 3/23/07, 11:11 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Return of damaged merchandise

It seems to me this is less of a breach of contract issue than it is a matter of possible breach of implied warranty under the Uniform Commercial Code.

I suggest getting a copy of the California enactment of the UCC, and reviewing the sections relating to warranties (especially sections 2313 through 2315) and on acceptance and inspection of goods sold, sections 2606 and 2607.

I'm not saying that the contract is irrelevant, but in the absence of contract terms modifying the Code provisions, the parties; rights will largely be determined by the Code, and a basic understanding of the UCC (taught to Biz School students in Business Law classes) will be useful in straightening this dispute out cheaply and effectively.

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Answered on 3/26/07, 1:30 pm


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