## Facts

- A car dealer agreed to sell a purportedly new 1966 Chevrolet Biscayne to the buyer, who paid a $124 deposit and later tendered a check for the remaining price plus fees.
- The buyer’s wife took delivery, receiving keys and a factory packet containing a manufacturer-dealer warranty; neither she nor the buyer read the materials, and their terms were not explained or specifically agreed to.
- Within minutes of leaving the dealership, the car repeatedly stalled and soon could not be driven in “drive,” requiring “low-low” gear at approximately 5–10 mph to reach home.
- After the car arrived home, the buyer immediately stopped payment on the check and promptly notified the dealer that the sale was cancelled due to the car being a “lemon.”
- The dealer retrieved the car, found a defective automatic transmission, and replaced it with a transmission taken from another new car on the showroom floor.
- The buyer refused to accept the vehicle after the transmission replacement, maintained that he had cancelled the sale, and sought a different new car.
- The dealer relied on printed purchase-order terms and warranty materials purporting to disclaim or limit warranties and to limit the buyer’s remedy to repair or replacement of defective parts.
- The dealer sued to recover the unpaid balance and incidental damages; the buyer counterclaimed for return of the deposit and incidental damages.

## Issues

1. Whether the buyer timely and effectively rejected the vehicle as nonconforming under U.C.C. §§ 2-601 and 2-602.
2. Whether the dealer’s transmission replacement was an effective cure under U.C.C. § 2-508 that required the buyer to accept the car.
3. Whether warranty disclaimers and remedy limitations in the dealer’s forms and warranty materials were enforceable under U.C.C. §§ 2-316 and 2-719.
4. What remedies and restitution were available to each party after the buyer’s rejection.

## Decision

- The court entered judgment for the buyer.
- The buyer was justified in rejecting the automobile because the vehicle, as delivered, was substantially defective and did not conform to the contract.
- The dealer’s attempted cure by installing a different transmission did not obligate the buyer to accept the car.
- The disclaimers and limitations of warranty and remedy were not enforceable against the buyer under the circumstances.
- The dealer could not recover the contract balance or claimed incidental damages; the buyer was entitled to return of his deposit and incidental damages.

## Legal Principles

- Under U.C.C. § 2-601, a buyer may reject goods that fail to conform to the contract; severe mechanical failure immediately upon delivery can constitute a substantial nonconformity for a “new” car sale.
- Under U.C.C. § 2-602, rejection must be within a reasonable time and with seasonable notice; prompt notice and immediate steps to stop payment supported a finding of timely, unequivocal rejection.
- A seller’s right to cure under U.C.C. § 2-508 is not unlimited; replacing a major component after an immediate, serious failure may be an insufficient cure where it alters the buyer’s “new car” bargain and destroys buyer confidence in trouble-free operation.
- Warranty disclaimers and limitations must be effectively communicated and form part of the bargain to be enforced; providing boilerplate warranty limitations at delivery without explanation or meaningful assent weighs against enforcement.
- Under U.C.C. § 2-719(2), a limitation of remedy to repair or replacement is ineffective when it fails of its essential purpose; in that event, the buyer may use the Code’s standard remedies, including rejection and restitution.

## Conclusion

The court held that a buyer who promptly rejects a newly delivered car that becomes nearly inoperable almost immediately is not required to accept a post-delivery repair consisting of a major component substitution, and boilerplate warranty disclaimers or repair-only limitations will not bar the buyer’s U.C.C. remedies when they were not meaningfully assented to and do not provide the expected benefit of a new-car purchase.


Zabriskie Chevrolet, Inc. v. Smith, 99 N.J. Super. 441, 240 A.2d 195 (N.J. Super. Ct. Law Div. 1968)