## Facts

- Gordon D. and Kathryn M. Jorgensen bought a new mobile home from Ronald Pressnall (Forest Grove Mobile Home Sales), trading in their old mobile home as a down payment and financing the balance under a retail installment contract.
- Pressnall represented that the unit was of good, sound construction, of medium quality, strong enough for frequent moves, and that factory defects would be repaired promptly.
- Pressnall assigned the installment contract to Commercial Credit Corporation.
- After delivery (Nov. 1, 1972), the Jorgensens discovered multiple defects, including water and air leaks, gaps in a “tip out,” and defective doors, cabinets, vents, and walls.
- The Jorgensens repeatedly notified Pressnall and sought repairs; they received assurances but repairs were delayed, ineffective, or attempted by workers who were unprepared.
- After concluding effective repair through Pressnall was futile, the Jorgensens retained counsel and rejected further repair attempts through Pressnall.
- Repair efforts coordinated through the manufacturer addressed some items but did not fix serious leakage, and new problems resulted; the Jorgensens refused to sign a requested release.
- The Jorgensens notified Pressnall and Commercial Credit that they were rescinding (revoking acceptance of) the purchase.
- The Jorgensens continued to live in the home for a period after notice; Commercial Credit later repossessed the unit and resold it at a loss.
- The trial court granted rescission and awarded the Jorgensens return of their down payment and consequential damages against Pressnall, and entered judgment for Commercial Credit against Pressnall based on warranties tied to the assignment.
- Pressnall appealed.

## Issues

1. Whether the buyers were entitled to revoke acceptance and rescind because nonconformities substantially impaired the mobile home’s value to them under UCC revocation principles.
2. Whether the buyers’ continued use and occupancy of the mobile home after notice of revocation barred or defeated rescission.
3. Whether Commercial Credit, as assignee, could recover from the dealer losses from repossession and resale based on the dealer’s warranty that the assigned contract would be enforceable against the buyers.

## Decision

- The Oregon Supreme Court affirmed the decree granting rescission to the Jorgensens.
- The court held that the defects and failed cure efforts substantially impaired the mobile home’s value to the buyers as a residence, justifying revocation of acceptance.
- The court held that continued use after revocation did not, on these facts, nullify revocation.
- The court affirmed judgment for Commercial Credit against Pressnall because the dealer’s warranty of enforceability was breached once rescission rendered the contract unenforceable against the buyers.

## Legal Principles

- A buyer may revoke acceptance of goods whose nonconformity substantially impairs their value to the buyer when acceptance was induced by seller assurances of cure and cure is not seasonably accomplished.
- “Substantial impairment” under UCC revocation is measured by the value of the goods to the particular buyer and the buyer’s intended use, not solely by objective market measures.
- Revocation must be made within a reasonable time after discovery of the grounds; ongoing assurances and repair efforts may make later revocation reasonable.
- Continued use of goods after notice of revocation does not automatically bar revocation; courts consider practical necessity and the buyer’s interests in the goods pending recovery (including a security interest to secure restitution).
- Where a seller assigns a retail installment contract and warrants its enforceability, the assignee may recover losses from the seller when the buyer’s rescission defeats enforceability and causes repossession and resale losses.

## Conclusion

The court upheld rescission of a mobile home sale based on serious defects that were not adequately cured, ruled that continued occupancy did not bar revocation under the circumstances, and enforced assignment warranties to shift the finance assignee’s resulting losses to the dealer.


Jorgensen v. Pressnall, 274 Or. 285, 545 P.2d 1382 (1976)