11-8A. A question of Ethics: Revocation. Scotwood Industries, Inc.,
sells calcium chloride flake for use in ice melt products. Between July
and September 2004, Scotwood delivered thirty-seven shipments of flake
to Frank Miller & Sons, Inc. After each delivery, Scotwood billed
Miller, which paid thirty-five of the invoices and processed 30 to 50
percent of the flake. In August, Miller began complaining about the
product’s quality. Scotwood assured Miller that it would remedy the
situation. Finally, in October, Miller told Scotwood, “This is totally
unacceptable. We are willing to discuss Scotwood picking up the
material. “ Miller claimed that the flake was substantially defective
because it was chunked. Calcium chloride maintains its purity for up to
five years, but if it is exposed to and absorbs moisture, it chunks and
becomes unusable. In response to Scotwood’s suit to collect payment in
the unpaid invoices, Miller filed a counterclaim in a federal district
court for breach of contract, seeking to recover based on revocation of
acceptance, among other things. [Scotwood Industries, Inc . v. Frank
Miller & Sons, Inc., 435 F. Supp.2d 1160 (D.Kan.2006)]
(a) What is revocation of acceptance? How does a buyer effectively
exercise this option? Do the facts in this case support this theory as a
ground for Miller to recover damages? Why or why not?
(b) Is there an ethical basis for allowing a buyer to revoke acceptance
of goods and recover damages? If so, is there an ethical limit to this
right? Discuss.
Click here for the solution: Scotwood Industries, Inc., sells calcium chloride flake for use in ice melt products
