Colorado § 4-2-602 - Manner and effect of rightful rejection.

§ 4-2-602. Manner and effect of rightful rejection.

(1) Rejection of goods must be within a reasonable time after their delivery or tender. It is ineffective unless the buyer seasonably notifies the seller.

(2) Subject to the provisions of the two following sections on rejected goods (sections 4-2-603 and 4-2-604):

(a) After rejection any exercise of ownership by the buyer with respect to any commercial unit is wrongful as against the seller; and

(b) If the buyer has before rejection taken physical possession of goods in which he does not have a security interest under the provisions of this article (subsection (3) of section 4-2-711), he is under a duty after rejection to hold them with reasonable care at the seller's disposition for a time sufficient to permit the seller to remove them; but

(c) The buyer has no further obligations with regard to goods rightfully rejected.

(3) The seller's rights with respect to goods wrongfully rejected are governed by the provisions of this article on seller's remedies in general (section 4-2-703).

Source: L. 65: p. 1328, § 1. C.R.S. 1963: § 155-2-602.

ANNOTATION

Purpose of subsection (2)(a) is to insure that the seller may regain possession of the goods in order to resell the goods or utilize them in order to minimize his loss. Moeller Mfg., Inc. v. Mattis, 33 Colo. App. 300, 519 P.2d 1218 (1974); Stroh v. Am. Recreation & Mobile Home Corp., 35 Colo. App. 196, 530 P.2d 989 (1975).

What serves as effective notice of rejection depends on the nature, purpose, and circumstances of such notice. Western Conference Resorts, Inc. v. Pease, 668 P.2d 973 (Colo. App. 1983).

Notice of rejection is sufficient if it gives the seller an opportunity to correct the defect and prepare for negotiations and litigation, and if it protects the seller against claims asserted after it is too late to investigate. Western Conference Resorts, Inc. v. Pease, 668 P.2d 973 (Colo. App. 1983).

Retention of goods for an unreasonable amount of time is not justified. No more than six months can be justified as a reasonable period for inspection and testing, and retaining the goods after demand for payment and even after filing of suit is not a holding in good faith or good faith conduct. Surplus Electronics Corp. v. Gallin, 653 P.2d 752 (Colo. App. 1982).

A failure to reject is acceptance. Purchaser's failure seasonably to notify seller of the ultimate rejection of such of the goods as purchaser deemed unusable renders any claim of rejection ineffective and constitutes an acceptance. Surplus Electronics Corp. v. Gallin, 653 P.2d 752 (Colo. App. 1982).

After rejection of goods, any exercise of dominion and ownership rights is considered wrongful as against the seller. Moeller Mfg., Inc. v. Mattis, 33 Colo. App. 300, 519 P.2d 1218 (1974); Stroh v. Am. Recreation & Mobile Home Corp., 35 Colo. App. 196, 530 P.2d 989 (1975).

Buyer who asserts a right to revoke acceptance has the same duties as a buyer who asserts a right to reject goods prior to acceptance. Moeller Mfg., Inc. v. Mattis, 33 Colo. App. 300, 519 P.2d 1218 (1974).