7. Which of the following best states the buyer's rights and duties upon delivery of the peaches?

Some offers are ambiguous about if they invite acceptance through a return promise or through performance (thus forming a unilateral contract). This commonly occurs when the offer is a request that the goods be shipped. In this situation, the Uniform Commercial Code (UCC) states that an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt shipment of conforming OR non-conforming goods, OR a prompt promise to ship. See UCC § 2-206(1)(b).

Under the UCC, when a seller sends a prompt shipment of non-conforming goods, he is accepting the offer and breaching the contract simultaneously. The buyer may respond in multiple ways, including accepting the non-conforming goods or rejecting them. If the buyer decided to reject the non-conforming goods, he can then sue for breach.

However, if a seller seasonably notifies the buyer that the shipment of non-conforming goods is being offered only as an accommodation to the buyer, the seller's shipment of those non-conforming goods will NOT result in a breach. UCC § 2-206(1)(b). The buyer can choose to accept the accommodation shipment, which is NOT considered an official acceptance, but rather a counter-offer of the goods that have shipped as they are. If the buyer does accept the accommodation shipment, a contract for the goods as they are will be formed. If the buyer chooses to reject the accommodation shipment, no contract will be found to have formed at all, and the buyer may not sue the seller for breach.

D is correct. The seller promptly shipped non-conforming goods, which means he was both accepting the buyer's offer and breaching the contract simultaneously. There is no indication that the seller seasonably notified the buyer that the goods were non-conforming or that he offered them as an accommodation shipment. Thus, the buyer has two choices: accept or reject the non-conforming 500 bushels of Royal Fuzz peaches that were No. 2 (rather than No. 1).

A is incorrect. This is an incorrect application of the law to the facts. The seller's shipment of non-conforming goods is a breach of the contract. However, in the event that there has been a prompt shipment of non-conforming goods, AND the seller seasonably notifies the buyer and offers them as an accommodation, IF the buyer chooses to accept the accommodation, THAT action is considered a counter-offer to purchase the goods as they are. Thus, the seller's shipment of the non-conforming peaches alone is not a counter-offer but is instead a breach, and the buyer can reject them, as stated above.

B is incorrect. As explained above, the prompt shipment of non-conforming goods is not a counter-offer, but a simultaneous acceptance and breach. Moreover, the UCC states that if the non-conforming goods are perishable, the buyer is only obligated to follow any directions the seller gave for protecting the goods and selling them to mitigate losses for the seller, not ship them back.

C is incorrect. Although a contract was formed when the seller shipped the non-conforming goods (which constituted an acceptance of the buyer's offer to purchase), the buyer still has the right to reject non-conforming goods.