## Facts

- During the 1974 oil embargo, a fuel-oil seller bought a specific cargo represented as having sulfur content no greater than 1% and received a refinery certificate stating 0.52% sulfur.
- The seller contracted in writing to sell that cargo to a public utility; delivery was due within a short window, and payment depended on independent testing.
- The contract described sulfur content as 0.5%, reflecting an industry custom of rounding sulfur specifications to standard figures.
- The seller understood the buyer was permitted to burn oil up to 1% sulfur and could blend oils to meet that limit.
- After the cargo was discharged into the buyer’s storage tanks, independent testing reported 0.92% sulfur.
- The buyer timely rejected the cargo as nonconforming to the 0.5% contract specification.
- The seller seasonably offered to cure by supplying conforming oil within a reasonable additional time, but the buyer refused.
- The seller resold the oil at a lower price in a declining market and sued the buyer for breach of contract.

## Issues

1. Whether a seller who tenders nonconforming goods in good faith, and without knowledge of the defect, may invoke U.C.C. § 2-508(2) to cure after the contract time for performance has passed.
2. Whether the seller had “reasonable grounds to believe” the original tender would be acceptable, and whether it gave seasonable notice and proposed substitution within a further reasonable time.
3. Whether the buyer’s refusal to accept a proper cure constitutes breach despite an otherwise rightful rejection under the perfect tender rule.

## Decision

- The court affirmed judgment for the seller.
- A buyer’s right to reject under U.C.C. § 2-601 is limited by the seller’s statutory right to cure under U.C.C. § 2-508(2).
- The seller could cure beyond the contract delivery period because it acted in good faith, had reasonable grounds to expect acceptance, and seasonably offered a conforming substitute within a reasonable time.
- The buyer’s refusal of the offered cure was improper and constituted breach.

## Legal Principles

- Under U.C.C. § 2-601, a buyer may reject goods that fail in any respect to conform to the contract, but that remedy is subject to U.C.C. § 2-508.
- Under U.C.C. § 2-508(2), if a buyer rejects a nonconforming tender and the seller had reasonable grounds to believe the tender would be acceptable, the seller may, upon seasonable notice, obtain a further reasonable time to substitute conforming goods.
- “Reasonable grounds” may be shown by trade usage and the parties’ known practices or regulatory constraints bearing on acceptability.
- The cure doctrine functions to prevent forfeiture and opportunistic rejection based on nonconformity when a timely, reasonable substitute performance is available.

## Conclusion

The court held that a good-faith seller who reasonably expected a nonconforming tender to be acceptable may cure after rejection under U.C.C. § 2-508(2) by seasonably notifying the buyer and substituting conforming goods within a reasonable additional time; a buyer’s refusal of such a cure is a breach.


T.W. Oil, Inc. v. Consolidated Edison Co. of N.Y., 57 N.Y.2d 574 (1982)