38 Years Since Fablok Mills

New Jersey caselaw under the Uniform Commercial Code is relatively undeveloped compared to New York’s decisional law.  On this date in 1973, however, the Appellate Division issued one of New Jersey’s leading UCC decisions, Fablok Mills v. Cocker Mach. Co., 125 N.J. Super. 351 (App. Div. 1973), certif. denied, 64 N.J. 317 (1973).  Judge Trautwein wrote the opinion, for himself and Judges Fritz and Lynch. 

The case centered on issues of acceptance and revocation of acceptance of goods, rescission, breach of warranty, and fraud.  Judge Trautwein’s opinion took a very practical and realistic view of a purchaser’s dilemma when goods delivered are not complying, but the goods (in this case, knitting machines) are needed for the purchaser’s business and may be, to an extent, usable even in their non-complying condition. 

The buyer waited two years to revoke acceptance of the machines.  During that time, the seller had made numerous attempts to remedy the defects in the machines.  The panel found that the seller’s conduct “may have reasonably induced the buyer to continue to use the goods and to make payments in the belief that the defects complained of would be cured by these repairs.”  As a result, Judge Trautwein held that “what is a reasonable time” for revocation of acceptance was for the jury in these circumstances.

Similarly, the opinion declined to hold that plaintiff’s “continued use of the machines after revocation of acceptance constitutes a waiver or bar to the remedy of rescission.”  There might be situations in which “continued use of the goods by the buyer may be the most appropriate means of achieving mitigation” of damages.  The issue was one to be solved by reference to “the overriding requirement of reasonableness which pervades the [Uniform Commercial] Code,” and was for the jury.

The court’s decisions on other issues raised on the appeal, and on a cross-appeal, were equally pragmatic and sound.  As a result, according to WestlawNext, this decision has been cited favorably in 47 opinions in state and federal courts, in New Jersey and elsewhere.  The case continues to be good law, as evidenced by the Supreme Court of New Jersey’s reliance on it earlier this year in Pomerantz Paper Corp. v. New Community Corp., 207 N.J. 344, 366 (2011).