Caveat Venditor: Illinois Supreme Court Clarifies Revocation of Acceptance Rights, Remedies, and Obligations for Buyers and Sellers in Landmark Decision
On September 19, 2019, the Illinois Supreme Court issued a landmark ruling affording greater protection to buyers of substantially nonconforming goods under Illinois’ adoption of the Uniform Commercial Code. In Accettura v. Vacationland (2019 IL 124285) the court faced a question of first impression: does subsection 2-608(1)(b) of the Illinois Commercial Code (the Code) require a buyer to give the seller an opportunity to cure a substantial nonconformity before revoking acceptance? The court held that, under the plan language of 810 ILCS 5/2-608(1)(b), a buyer does not. Accettura will likely have widespread application that significantly impacts future commercial transactions in Illinois.
The facts in Accettura are straightforward, and relatively commonplace. Plaintiff/buyers purchased goods (a recreational vehicle “RV”) from defendant/seller. Shortly after the purchase, buyers discovered a previously unknown defect (water leakage from the emergency exit window). Buyers brought the RV back to the seller for repair, which seller performed free of charge. The buyers retook possession of the RV. A month later water again leaked into the RV, this time causing extensive damage to the dinette area, walls, and electrical system. For a second time, buyers took the RV to the seller for repair. Both the seller and the RV manufacturer were unable to give buyers an estimate of how long the repairs would take. Frustrated with the inability to provide a timeline, the buyers verbally revoked their acceptance. Two days later the manufacturer picked up the RV from the seller to perform repairs. Several weeks passed before the seller called buyers to inform them that the RV was repaired. Buyer’s responded with a letter from their attorney confirming the earlier revocation of acceptance.
Buyers thereafter filed a complaint seeking return of their purchase price. It was undisputed that the defect substantially impaired the RV’s value to buyers. Nor was it disputed that buyers were unaware of the defect when the RV was purchased. Rather, seller argued that buyers were required to give it a reasonable opportunity to cure the defect before they could revoke acceptance, and they had not done so here. Finding this argument persuasive, the circuit court granted the seller’s motion for summary judgment, and the appellate court affirmed. While buyers originally sought recovery under four theories, ultimately only the subsection 2-608(1)(b) was at issue before the Illinois Supreme Court.
Section 2-608(1) of the Code states that a buyer may revoke his acceptance of a commercial unit whose non-conformity substantially impairs its value to him if he has accepted it either (a) on the reasonable assumption that its non-conformity would be cured and it has not been seasonably cured; or (b) without discovery of such non-conformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or the seller’s assurances.
In deciding Accettura, the Illinois Supreme Court focused on statutory interpretation principles under de novo review. The court noted that its primary objective was to give effect to the legislative intent, the most reliable indicator of which, is the plain language of the statute itself citing to Illinois Graphics Co. v. Nickum and Peoria Savings & Loan Ass’s v. Jefferson Trust & Savings Bank of Peoria. 159 Ill. 2d 469 (1994) and 81 Ill. 2d 461 (1980) respectively. “We do not” the court noted, “depart from the plain language of the statute by reading into it exceptions, limitations, or conditions that conflict with the expressed intent.” Accettura, 2019 IL124285, at ¶11, citing to Blum v. Koster, 235 Ill. 2d 21, 29 (2009).
Accordingly, the court found the statutory language here both plain and unambiguous. Most notably, while the language in subsection (1)(a) expressly mentions a cure, subsection (1)(b) does not. The court also found that the plain language of the statute evinces the General Assembly’s intention to allow a buyer to revoke acceptance of a substantially impaired commercial unit under two separate and distinct circumstances. The first circumstance (subsection (1)(a)) exists when the buyer knows of the nonconformity, but accepts the unit with the expectations that the seller will cure it. If the seller then fails to cure, the buyer can revoke acceptance after reasonable opportunity to cure. However, the second circumstance (subsection (1)(b)) exists when a buyer accepts a presumably conforming unit without knowledge of the nonconformity that substantially impairs its value, but discovers the defect post-acceptance. Both situations contemplate a nonconformity that substantially impairs the unit’s value to the buyer. The difference, however, comes from the buyer’s knowledge and expectation at the time of acceptance.
Thus, buyer argued, because subsection (1)(a) specifically mentions a cure, and subsection (1)(b) does not, the opportunity to cure is part of a (1)(a) contract, and not part of a contract formed under (1)(b). By the statute’s plain language, the court agreed. Put simply, subsection (1)(a) applies to a buyer who purchased an RV that he knew leaked and agreed that the seller would seasonably cure the leak. Here, however, it is undisputed that the buyers were unaware of the defect in the RV at the time they accepted it making (1)(a) inapplicable, and because (1)(b) does not require an opportunity to cure, no such opportunity need be given.
The seller argued that this case involves more than statutory interpretation because before buyers revoked acceptance, sellers offered, and buyers accepted, repair as their remedy for the defect. Because buyers elected that remedy, seller asserted that buyers were obligated to allow it a reasonable time to cure. The seller had, after all, offered and fixed a defect once already. Shouldn’t they be given a reasonable opportunity to fix a second defect?
Simple question. Simple answer . . . no.
The fact that buyers considered allowing seller to cure does not obligate them to accept an unreasonable cure, and nothing in the record indicated that buyers agreed to an open-ended repair timeline. Second, and most importantly, the court held that reasonable or not, previous attempts to cure or not, a buyer has no obligation to allow a seller an opportunity to cure under 2-608(1)(b). While the court noted that a situation could arise in which a buyer unreasonably revokes acceptance after requesting a seller cure a nonconformity, that was not the situation here.
The timing and sufficiency of the revocation notice were not at issue in Accettura. While the comments to the Code note that courts should consider attempts to cure when looking at whether the notice of revocation was timely and sufficiently notifies the seller of the nonconformity, such consideration is not relevant to whether the buyer is obligated to seek a cure before revoking. See Accettura, 2019 IL124285, at ¶22.
Seller next argued that because section 2-608(3) states that a “buyer who so revokes has the same rights and duties with regard to the goods involved as if he had rejected them,” section 2-608(1) should be read in conjunction with section 2-508 which allows a seller to cure a rejected nonconforming delivery if the time for performance has not yet expired. The court rejected this argument, finding that it ignores the distinction between rejection and revocation. Id. at ¶24. A buyer’s rejection may give a seller the right to cure, but in a buyer’s revocation the seller loses the right to cure but gains the benefit of the higher substantial impairment standard for revocation. The “rights and duties” referred to in section 2-608(3), the court held, are found in sections 2-602, 2-603, and 2-604, and not section 2-508. Id.
Accettura significantly impacts the rights and remedies available to buyers and sellers under Illinois’s version of the Uniform Commercial Code. Under 2-608(1)(b) a buyer has no obligation to give a seller an opportunity to cure a nonconformity that substantially impairs the value of the unit before revoking acceptance. Moreover, a buyer that allows a seller an opportunity to cure, does not waive their right to later revoke acceptance under 2-608(1)(b).
Zoe Wolkowitz is a 2L at UIC John Marshall Law School in Chicago. Edward Casmere is a partner at Riley Safer Holmes & Cancila LLP.