Condominium Warranties: W. Va. Code §§ 36B-4-101 to 36B-4-120
Structures Covered: Condominium unit and the common elements of the condominium (“common interest community”).
Eligible Buyers: Purchaser of a unit.
Warrantors: Any declarant or dealer of units.
The goal of the remedy provisions of the Uniform Commercial Code (UCC) is to place the aggrieved party “in as good a position as if the other party had fully performed.”1 Its remedies are to be liberally administered to achieve that end.2 Whether or not the buyer has canceled the sale, money damages are necessary in most cases to restore the buyer to that position.
Section 2-711 of the Uniform Commercial Code (UCC) catalogues the remedies available to a buyer who cancels, that is, a buyer who rightfully rejects the goods or revokes acceptance.13 First, a buyer who cancels is no longer obligated to pay the purchase price.14 Accordingly, section 2-711 allows a buyer to recover so much of the price as has been paid.
The buyer who cancels the sale is entitled to recover “so much of the price as has been paid.”19 A buyer who paid $14,000 for a car is entitled to recover the $14,000 upon rejection or revocation. The amount paid also includes the value of any trade-in.20 If the buyer agreed to pay $14,000 for a car, paid $13,000 in cash, and was allowed $1000 on an old car as a trade-in, the buyer would be entitled to recover $14,000.
The canceling buyer will often need substitute goods. It is unfair to require the buyer to absorb any higher cost of substitute goods because the seller precipitated the loss by delivering nonconforming goods.
The basic requirement of UCC § 2-712(1) is that the buyer “purchase goods in substitution for those due from the seller.” The substitute goods need not be identical to the contract goods.32 If the substitute goods are more expensive than the contract goods due to price increases or higher prices from substitute sources, the buyer should be recompensed.
Section 2-712 requires the buyer to act in good faith in making a reasonable cover. These standards look at the buyer’s motives, not the result.
A related requirement is that the buyer act without unreasonable delay.39 The buyer who delays unreasonably should bear the cost of that delay. However, the buyer’s actions must be closely examined before it is determined that the buyer delayed unreasonably.
Section 2-712 reduces the buyer’s damages for cover by the “expenses saved in consequence of the seller’s breach.” The formula for determining damages is cost of cover, minus the contract price, plus other damages, minus expenses saved.41 If, for example, the cost of installation was included in the price of replacement carpet, but the buyer would have had to pay an outside contractor for installation of the original carpet, these savings could be deducted from the buyer’s damages.42
Section 2-712(3) specifically provides that a buyer who does not cover is not thereby barred from any other remedy.44 The canceling buyer who does not cover still can recover damages for any increased cost of the goods, but under section 2-713 instead of section 2-712.
Section 2-711(3) gives the canceling buyer a security interest in the nonconforming goods in the buyer’s possession or control for any payments made and any expenses reasonably incurred in their inspection, receipt, transportation, care, and custody. The buyer has the option of holding such goods and reselling them.49 Section 2-715(1) allows the canceling buyer to recover the costs of inspection, receipt, transportation, care, and custody of the nonconforming goods as incidental damages.
The canceling buyer will often have used the goods for weeks or months before revoking acceptance.51 In some cases, the buyer may use the goods after revocation.52 While section 2-711(1) allows the canceling buyer to recover so much of the purchase price as has been paid, that section contains no authorization for an offset to the seller for use either before or after revocation.
Assuming that a court does assess an offset against the buyer, the court should be careful to avoid penalizing an aggrieved buyer. The articulated standard of “reasonable use value”65 provides little useful guidance.
In contrast to rejection or revocation of acceptance, an action for breach of warranty is an action affirming the contract: the buyer retains the goods and sues for damages.77 The buyer is entitled to damages for breach of warranty even if delays, inadequate notice, or other problems preclude revocation of acceptance.78 A buyer is not limited to rejection or revocation, but is entitled to accept goods with their defects and then sue for damages.79
A very useful measure of the difference in the value of goods as accepted and as warranted is the cost of repair or replacement of parts.104 The ease with which repair costs can be ascertained and proved at trial may cause courts to regard them as preferable evidence of damages as compared to more uncertain and often subjective evidence as to value.105 The cost of repair is an appropriate estimate of the diminution in value even if the buyer does not intend to make the repairs.
Several courts have suggested that the buyer must not only show the actual repair expenditures or estimates, but also that the expenditures or estimates are reasonable.123 To show that the estimate or expenditure is reasonable, the buyer may have to present evidence of two or more estimates,124 or testimony by the person who repaired the goods or made the estimate.
A second method of proving value of goods as accepted is the price secured for the goods upon resale or trade-in.
A third method of proving value is through the buyer’s opinion of the value of the goods.145 The general rule is that, unless shown to have insufficient knowledge of market value, an owner is competent to testify about value. In Vreeman v. Davis, the court allowed the jury to accept the buyer’s testimony that a defective manufactured home had a value of zero.
The buyer can secure the opinion of an expert on the value of the goods with the nonconformities.
There is an established exception to the hearsay rule for market quotations, tabulations, lists, directories, or other published compilations that are generally used and relied upon by the public or by persons in particular occupations.160 Compilations of sales data for vehicles, sometimes known as “blue books,” often differentiate between sales prices with and without certain equipment.
The buyer may be able to simplify proof of value, and minimize the costs of hiring experts and producing witnesses, by using requests for admissions. If the seller denies a request for admission, and the buyer later proves that fact, the seller can be required to pay the costs of proof, including attorney fees.169 The buyer can ask the seller to admit the value of the goods as warranted and as delivered.
The buyer should be given the opportunity to show that the value of the goods as accepted is less than their market value or the cost of repair. The owner of the lost home movies in Mieske quite properly was allowed to show that the value of the lost movies was more than the value of blank film.171 The buyer of roofing tiles that differed slightly from those ordered may not be able to recover the cost of removing and replacing the tiles but should be allowed to show the personal importance of the proper type of tile.