## Facts

- Stanley Jakowski contracted with Carole Chevrolet, Inc. to buy a new 1980 Chevrolet Camaro, to be delivered with undercoating and a polymer finish coating.
- The dealership delivered the car on May 19, 1980 without the agreed coatings.
- On May 20, 1980, the dealership contacted the buyer, admitted the nonconformity, and directed him to return the car so the coatings could be applied.
- On May 22, 1980, the buyer returned the car to the dealership for application of the coatings.
- The car was stolen from the dealership’s premises during the night of May 22 or the morning of May 23 and was never recovered.
- The dealership refused to provide a replacement vehicle or refund the purchase price, while the buyer remained obligated on the purchase loan.
- The buyer moved for summary judgment on a breach-of-contract count; the parties did not dispute the material facts, focusing on which party bore the risk of loss at the time of theft.

## Issues

1. Under U.C.C. §§ 2-509 and 2-510, who bore the risk of loss when a nonconforming automobile, returned to the seller for cure, was stolen from the seller’s premises before cure or acceptance?

## Decision

- The court granted the buyer’s motion for summary judgment on the breach-of-contract claim.
- The court held the risk of loss remained with the seller when the car was stolen.
- Because the seller had neither cured the nonconformity nor obtained the buyer’s acceptance before the theft, the seller was responsible for the loss and its contractual consequences.

## Legal Principles

- In a non-shipment sale, U.C.C. § 2-509(3) generally places risk of loss on the buyer upon receipt, but § 2-509(4) makes that rule subject to § 2-510.
- Under U.C.C. § 2-510(1), when a tender or delivery so fails to conform to the contract as to give a right of rejection, risk of loss remains on the seller until cure or acceptance.
- A missing contract-required feature is a nonconformity that can give the buyer a right to reject under the U.C.C.’s perfect tender rule.
- “Acceptance” for risk-of-loss purposes depends on U.C.C. acceptance standards (including a reasonable opportunity to inspect and the absence of an effective rejection), and is not established merely by brief possession when the seller promptly acknowledges the defect and seeks return for cure.
- If the goods are lost while still nonconforming and before cure or acceptance, the seller bears the loss even if the buyer previously took delivery and later returned the goods for the seller’s corrective work.

## Conclusion

The court allocated the loss to the dealership because the car was delivered in breach (missing agreed coatings) and was stolen while in the seller’s possession for cure, before any cure or buyer acceptance; accordingly, U.C.C. § 2-510(1) kept the risk of loss on the seller and supported summary judgment for breach of the sales contract.


Jakowski v. Carole Chevrolet, Inc., 180 N.J. Super. 122, 433 A.2d 841 (Law Div. 1981)