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Toshiba Machine Co.11/10/2005
Aluminum Line Prods. Co. v. Rolls-Royce Motors, Inc., 649 N.E.2d 887, 894 (Ohio Ct. App. 1994) (holding that buyer was not precluded from revoking acceptance of automobile after three years and 15,000 miles of use when seller made repeated attempts to repair the vehicle, and buyer's continued use after revocation did not undo revocation); N. Am. Lighting, Inc. v. Hopkins Mfg., Inc., 37 F.3d 1253, 1258-59 (7th Cir. 1994) (holding seller's repeated promises to update software for headlight testing apparatus justified buyer's use of apparatus during two-year delay in revoking acceptance); Wilk Paving, Inc. v. Southworth Milton, Inc., 649 A.2d 778, 782 (Vt. 1994) (holding buyer's continued use of asphalt paving machine after revocation of acceptance was reasonable where the seller continued to assure buyer that seller could repair machine); Four Sons Bakery, Inc. v. Dulman, 542 F.2d 829, 832 (10th Cir. 1976) (holding seller's repeated assurances that it would fix commercial oven justified continued use of oven after revocation of acceptance). As the Seventh Circuit held in North American Lighting, a "use equals acceptance" argument comes dangerously close to suggesting a rule that would allow sellers to >lock in' purchasers of goods by promising them the moon--only to bring them back to earth when they attempted to revoke the acceptance that they were persuaded to give because of their failure to fully understand a substantial defect.
N. Am. Lighting, 37 F.3d at 1258-59.
Other factors relevant to a buyer's reasonable use of nonconforming goods include the degree of economic hardship the buyer would suffer if it discontinued using the defective goods and the reasonableness of the buyer's use after revocation as a method of mitigating damages. Liarikos v. Mello, 639 N.E.2d 716, 719 (Mass. 1994) (holding that continued use of automobile after revocation of acceptance was reasonable where buyer relied on car to run her business). Use of nonconforming goods may be the most appropriate means of achieving mitigation until the buyer can obtain suitable replacements. Fablok Mills, Inc. v. Cocker Mach. & Foundry Co., 310 A.2d 491, 494 (N.J. Super. Ct. App. Div. 1973) (holding two-year delay in revocation of acceptance and extensive use by buyer of defective knitting machines was reasonable, during which seller attempted to fix the machines on many occasions); see Deere & Co. v. Johnson, 271 F.3d 613, 619-20 (5th Cir. 2001) (applying Mississippi law and holding that farmer's continued use of defective tractor after revoking acceptance was reasonable because tractor was essential to farmer's work, replacement was difficult to obtain, and farmer mitigated his damages by using the tractor).
In our case, Toshiba agreed to provide the orbit boring function with both BMC machines. SPM's president, Dan Lowrance, testified that Toshiba delivered the BMC-1000 in March 1998 without the software needed to perform orbit boring. Lowrance testified that SPM asked Toshiba about the missing orbit boring software soon after the machine arrived. According to Lowrance, Toshiba assured SPM that its programmer would travel to SPM's factory "very quickly" and install the software. Toshiba's programmer attempted but failed to install the software in April 1998 and again in May. Lowrance testified that after the programmer's first attempt, Lowrance told Toshiba's assistant general manager, Tony Tani, that SPM would return the BMC-1000 for a refund if Toshiba had any doubt about its ability to make fluid ends. Chris Wall, SPM's director of manufacturing, admitted that SPM accepted the BMC-1000 when it paid the $742,500 balance due, but Lowrance testified that SPM paid the balance only because Toshiba assured SPM t
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