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Legal Staff News & Views Letter Notice of Defective Product... With the codification of the Uniform Commercial Code (UCC) most states allow a buyer to accept goods while preserving any claim for breach by giving prompt notice to the seller. This allowed for finality to transaction in which goods were accepted with the need to accommodate a buyer who, for business reasons, had to accept the tendered goods despite unsatisfactory performance by the seller. Section 2-607(3)(a) of the Illinois Statutes establishes that if a buyer wants a seller to compensate for the defect or replace the defective product, the buyer must notify the seller of the problem within a reasonable time. In order to determine whether a buyer has met its notice obligation, an attorney should as two questions: 1) Was the notice sufficient to indicate to the seller that the product was defective? and (2) Did the buyer provide notice within a reasonable time? The plain language of the statute requires an immediate buyer to give notice to a seller. The questions that often arise are whether a third-party beneficiary is a "buyer" and whether that party is required to give notice to the seller. Third-party beneficiaries, primarily associates of the individual buyer, employees of the corporation buyer, and bystanders will argue that they have no duty to notify a seller of breach because the statute only imposes that duty upon the buyer. The third-party is not a buyer because it was not a party to the sales transaction. Section 2-607, however, indicates that a third-party beneficiary should provide a seller with notice. Specifically, comment 5 states that "even a beneficiary can be properly held to the use of good faith in notifying a seller, once he has had time to become aware of the legal situation. There is an ambiguity between the plain language of the statute and the official comment. Plain language says a third-party should give notice and the official comments indicates it is not required. Another question is who exactly does the buyer notify of the defective product: The retailer, the distributor, the manufacturer, or all three? A manufacturer may sell to a distributor or wholesaler, who resells to a retailer, who resells to the ultimate buyer. The more links in the chain, the more complicated the notice requirement becomes because seller includes a number of entities. A buyer is obligated to notify the immediate seller of the product. Failure to give notice to the immediate seller is likely to preclude a warranty action, whether a retail buyer is a consumer or commercial entity. Illinois courts are split on the issue of whether by buyer must give notice to a remote seller. Under the Illinois Statute, a person has "notice" of a fact when: a) he has actual knowledge of it; or b) he has received a notice or notification of it; or c) from all the facts and circumstances known to him the time in question has reason to know that it exists. Whether sufficient notice has been provided is generally a question of fact to be determined on a case-by-case basis. Illinois does not require a buyer to provide actual written notice of a defective product. For example, a series of meetings and telephone conversations between a buyer and seller regarding the defective product. For example, a series of meetings and telephone conversations between buyer and seller regarding the defective good is sufficient to comply with the notice requirement. Nor, does Illinois require "magic words" to provide adequate notice. A buyer does not have say,"Seller take notice of this defective product. Mere actions may be enough. For example, a buyer's act of having a defective car towed to the seller's place of business and informing its employees that the car is again in need of major repairs is sufficient for notice that its implied warranties had been breached. Similarly, when a seller's employee actually observes the failure of a product, this constitutes notice to the seller. Whether a buyer gives a seller notice within a "reasonable time" is usually a question of fact. Reasonableness seems to hinge on whether the delay in notification resulted in prejudice to the defendant. If the defendant is prejudiced by the delay, the court will generally view notice as unreasonable. Only when no inference can be drawn from the evidence, other than that notification was unreasonable, can the question be decided by the court as a matter of law. Illinois courts have held the following situations to be questions of fact: Using a computer for 38 days before attempting to reject using computer equipment for 19 months before attempting to reject notifying seller of diseased pigs within a few days after observing the disease symptoms, notifying the seller several months after delivery of ready-mix concrete when the defect was undiscoverable until concrete had hardened up to 28 days after pouring, notifying the seller six months after the installation, and rejecting window frames six months after they were received. Compare these to the situations in which the Illinois courts have held that notice was not given within a reasonable time as a matter of law: 28 years after the plaintiff's mother ingested a drug during pregnancy causing plaintiff to suffer brain damage, 30 months after the deliver of a stillborn baby where the plaintiff sued her doctor and the manufacturer of the contraceptive device, and three years after a consumer suffered personal injuries due to the insertion of a defective intrauterine device. There are three cases relevant to the notice issue, Connick v. Suzuki Motor Co., Perona v. Volkswagen of America and Maldonado v. Creative Woodworking Concepts. In Connick, the Illinois Supreme Court decided for the defendant for two reasons. First, the court made clear that a seller's general knowledge of a defect is insufficient. A buyer must notify the seller of a particular defect in a particular product. Second, the court held that a buyer who suffered personal injuries satisfies the statute by simply filing a lawsuit and serving the seller with the complaint. The purchaser of a new Suzuki, Samurai SUV filed a class action lawsuit in Cook County against the manufacturers and distributors of the SUV. Plaintiffs alleged, in part, that the defendants breach an express or implied warranty based on a consumer report. According to the report, the SUV was unsafe because of an excessive risk of rollover accidents. The plaintiffs sought compensation for the diminished resale value due to the perceived safety risk. The plaintiffs argued that Suzuki had knowledge of the defect and therefore notice was not required and even if notice was required the plaintiffs provided notice by filing its breach of warranty complaint. The Illinois Supreme Court affirmed the trial court dismissal of the suit. First the court held, the complaint did not allege that defendants had actual knowledge of the breach of the particular products purchased by the named plaintiffs in the suit. The court acknowledged the facts that Suzuki was aware of safety concerns regarding the SUV, that Suzuki knew of the unfavorable consumer report, and that Suzuki entered settlement agreements with several states following attorney general investigations of the SUV safety risks. As in Connick, Perona v. Volkswagen of America the Illinois Supreme Court address the same issues. Perona brought a class action against Volkswagen, the manufacturer and importer/distributor in connection with sudden-acceleration problems of the Audi 5000 cars. Audi had sent letters to its customers recalling the Audi 5000 for repair, adverting the owners of the problem and instructing the drivers on certain vehicle safety procedures. Audi issued two press releases regarding the unintended acceleration but denied any mechanical or design defects. Plaintiffs did not claim any person injuries and the lawsuit was the first notice the defendants received of the defect. The defendant moved for dismissal based on required notice and had already entered into a proposed national settlement agreement. In Perona, as in Connick, the court held that generalized knowledge of a problem in a certain product line is insufficient. Consequently, recall notices and press releases do not satisfy the notice requirements. Finally, the most recent case in Illinois is Maldonado v. Creative Woodworking Concepts. The plaintiff was a waitress on a riverboat casino who was injured by a defective door at the bar counter. She filed suit against the contractor who built and installed the door. The only notice given the contractor was service of the complaint. Defendant moved for summary judgment based on failure to give proper notice. The appellate court reversed and remanded on the basis that the plaintiff had in fact, been injured and no prior notice was required. Summary Judgment was denied. The recent Illinois decisions discussing the personal injury exception to notice demonstrate the Courts' attempt to distinguish tort and contract causes of action. Illinois courts are allowing a buyer to evade the notice requirement whenever a plaintiff pleads strict liability in personal injury cases. The Illinois Supreme Court exception is grounded in the idea that if an injury has occurred, there is no reason to notify a seller pre-suit because cure of the defect is unnecessary. The Courts' recent holdings indicate that an innocent consumer has a lower standard for notice, while commercial-entity plaintiffs must give notice well before suit to eliminate any indication of bad faith. Related cases:
Bar News... As you will note by the flyer in this and last month's mailing, Eddie Wollenberg is retiring after 18 years of dedicated service to the DCBA. We look forward to celebrating with one of our own. Before becoming Executive Director of the Bar, she was a legal secretary, like so many of us. I hope you will join us in celebrating her successful career! Glenda Berg Sharp, formerly with the American Bar Association, will assume the Executive Director's duties on July 1, 2001. Glenda was with the American Bar from October, 1977 until this May when she joined the DCBA. For the past 14 years she served as the Director of the ABA Family Law Section. Glenda is a graduate of Purdue University. Glenda lives with her husband and son in Willowbrook. Belated Mother's Day... Before I was a Mom I made and ate hot meals; I had unstained clothes; I had quiet conversations on the phone. Before I was a Mom I slept as late as I wanted and never worried about how late I got into bed; I brushed may hair and my teeth everyday. Before I was a Mom I cleaned my house each day, I never tripped over toys or forgot words to lullabies. Before I was a Mom I didn't worry whether or not my plants were poisonous; I never thought about immunizations. Before I was a Mom I had never been puked on, pooped on, spit on, chewed on, peed on or pinched by tiny fingers. Before I was a Mom I had complete control of my mind, my thoughts, my body, and I slept all night. Before I was a Mom I never held down a screaming child so that doctors could do tests or give shots; I never looked into teary eyes and cried; I never got gloriously happy from a simple grin; I never sat up late hours at night watching a baby sleep. Before I was a Mom I never held a sleeping baby just because I didn't want to put it down; I never felt my heart break into a million pieces when I couldn't stop the hurt; I never knew that something so small could affect my life so much; I never knew I would love being a Mom. Before I was a Mom I didn't know the feeling of my heart outside my body; I didn't know how special it could feel to feed a hungry baby; I didn't know that bond between a Mother and her child; I didn't know that something so small could make me feel so important. Before I was a Mom I had never gotten up in the middle of the night every 10 minutes to make sure all was okay; I had never known the warmth, the joy, the love, the heartache, wonderment or the satisfaction of being a Mom; I didn't know I was capable of feeling so much before I was a Mom. What's Cookin... MILK CHOCOLATE SHEET CAKE Mix all ingredients together at once. Bake in a greased sheet pan for 20 minutes at 400 degrees. Cool cake until slightly warm. Melt 1 stick butter or margarine with 6 Tbs. milk & 4 Tbs. Cocoa. Allow to cool. Add 1 Tsp. vanilla, 1 box of powdered sugar. Frost cake while warm, but not hot. Tips & Tricks... Remember the old adage when gardening, especially around bushes, fences & trees... "Leaves of three, let it be." Poison Ivy, poison oak and poison sumac all have 3 leaves. The shape, size and form of the leaves vary from plant to plant but all are toxic. To remove dust from those skinny little places that your "Grab-it" duster doesn't fit, put an old sock over the end of a fly swatter, spray it with a product, like "Endust" and you're in business. If you drop an egg on the floor, reach for some salt before a paper towel. Pour salt over the broken egg to soak up the liquid, then you can pick it up with a paper towel without the egg residue. This trick works for spilled cooking oil, too. An old-time remedy for bee stings and
insect bites is a paste made of activated charcoal and water; apply
liberally to the sting and cover with a bandage. Activated charcoal
can be found in any natural food store or ask in your local pharmacy.
It also helps if you swallow two or three capsules. For information contact Gloria Norton at DuPage County Bar Association, 126 S. County Farm Road, Wheaton, IL 60187-4597, Telephone 630-653-7779, Fax to 630-653-7870 or E-Mail to: gnorton@dcba.org. |
