Cancellation of the sale of cars or trucks Lawyer Manual

Cancellation of the sale 

There are two cancellation remedies under the Code: rejection and revocation of acceptance. 810 ILCS 5/2-601 et seq. and 5/2-701 et seq.

Differences between rejection and revocation

• Rejection is only available before acceptance of the vehicle
• The seller has a right to cure the defect before you can reject
• Rejection is available for any breach of warranty
• For rejection, the burden is on the seller to show no breach
• For rejection, do not have to show ignorance of defect or reasonable belief of repair
• Revocation is available only after acceptance
• The seller has no right to cure before you can revoke
• Can revoke only when the breach substantially impairs the value of the vehicle to the buyer
• For revocation, the burden is on the buyer to show a breach
• To revoke, the buyer must show acceptance in justifiable ignorance of the nonconformity or knowing of it, but reasonably believing it would be fixed

Cancellation is a self-help remedy

Cancellation is exercised by the buyer notifying the seller and making the vehicle available to the seller to pick up. If all goes well, the seller takes back the car, returns any money paid toward the purchase price and cancels the buyer's outstanding obligations. If the seller fails to do any of these things, the buyer may seek judicial relief under the Code in the form of damages.

When rejection is available as a remedy

Since it is available only before acceptance, the key is whether the buyer accepted the car. Acceptance occurs when the buyer, by words, conduct, or silence, manifests an intention to accept the car. 

810 ILCS 5/2-606 provides three methods by which the buyer can manifest the intent to accept: a) the buyer fails to reject after a reasonable opportunity to inspect; b) the buyer signifies acceptance or signifies that goods are conforming, after a reasonable opportunity to inspect, or c) the buyer performs any act inconsistent with the seller's ownership. 

Important: The buyer does not accept goods merely because s/he has obtained title to them, has paid for them, or has possession of the goods. To properly reject the buyer must not only inspect and reject within a reasonable time, but must also give "seasonable" notification, that is notification of rejection to the seller within the time specified in the contract or, otherwise within a reasonable time. There is no prescribed method of notification in the Code, but merely returning the goods to the seller is insufficient.

When a revocation is available as a remedy

Once the buyer has accepted the goods, s/he can cancel the sale only by revoking that acceptance. 810 ILCS 5/2-608 establishes five conditions: a) the defect must substantially impair the value of the car to the buyer; b) the buyer must have been justifiably unaware of the defect when acceptance occurred, or if known, reasonably assumed seller would cure; c) the revocation must occur within a reasonable time after the buyer discovers or should have discovered the defect;  d) the car must be in essentially the same condition as when delivered, except for damage caused by the defect; and e) the buyer must notify the seller of the revocation.