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[10 FSM Intrm. 483]

COURT'S OPINION

YOSIWO P. GEORGE, Chief Justice:

     This matter was called for trial on November 28, 2001. Plaintiff was represented by Sasaki L. George, MLSC. Chang B. William represented the Defendant. Brian Rodgers was present at the trial, as representative of Defendant True Value Store. The following persons testified at the trial: Plaintiff Hudson F. Edwin, Plaintiff's wife Naimi Hudson, and Alik Taulung, store clerk employee of the Defendant. Trial concluded on November 28, 2001 and closing arguments were heard on December 3, 2001. Following trial and presentation of closing arguments, this matter was taken under advisement. This Memorandum sets forth the Court's decision and reasoning.

1. Findings of Fact.

     Plaintiff purchased a new washing machine from the Defendant on Friday, June 16, 2001. The Plaintiff paid $475 in cash to the Defendant for purchase of the washing machine. The Defendant's employee, store clerk Alik Taulung, assisted the Plaintiff in loading the washing machine in Plaintiff's pickup truck. The washing machine was packaged in the original cardboard container.

     Plaintiff took the new washing machine to his home in his truck. The Plaintiff's son assisted the Plaintiff in off-loading the washing machine from the truck and taking the washer into Plaintiff's home. Plaintiff then unpacked the washing machine from its cardboard packaging. Plaintiff installed the washing machine, according to the directions in the instructional manual that came with the washing machine, including removal of the shipping bolt. In the course of installation of the washing machine, Plaintiff removed the shipping bolt from the washing machine.

     Plaintiff then turned on the washing machine. Immediately, the washing machine made a strange noise. Despite the strange noise coming from the washer, Plaintiff's wife used the washing machine to complete a load of laundry. After the washing cycle finished, the washer did not drain properly. There was still water present in the bottom of the washer after the cycle had been completed.

      The next day, Saturday, June 17, 2001, Plaintiff went to the Defendant and met with Mr. Brian Rodgers, a representative of True Value Store. Plaintiff described to Mr. Rodgers the noise coming from the newly purchased washing machine. Mr. Rodgers assured Plaintiff that such a noise was not unusual.

    Several days later, Plaintiff travelled to Pohnpei. While in Pohnpei, Mrs. Edwin again used the new washing machine. The washing machine continued to make the same strange noise. During the second load of wash, the machine suddenly stopped. Mrs. Edwin called Plaintiff in Pohnpei and informed him about the problem with the washing machine. Plaintiff instructed his wife not to use the washing machine any more. Plaintiff returned to Kosrae several days later and informed the Defendant that the washing machine had stopped working completely.

     The Defendant dispatched two repairmen to Plaintiff's home to inspect the washing machine. The repairmen found a broken belt in the washing machine. Plaintiff purchased a new belt, which was then installed by the repairmen to replace the broken belt. Even after installation of the new belt, the problem with the washing machine continued. The washing machine did not work. It did not operate.

     In the past, the Defendant has allowed the return of items due to a customer's dissatisfaction. The returned items were replaced by the Defendant. There is no monetary limit on the value of goods that are returned and replaced. Generally, the replacement of returned items is completed by the store

[10 FSM Intrm. 484]

clerk. However, in this case, the store clerk referred the Plaintiff and his washing machine problem, to Mr. Brian Rodgers.

2. Issues Presented.

     Whether the Defendant breached his contract with the Plaintiff, and if so, whether the Defendant is liable for damages resulting from the washing machine?

3. Legal Analysis.

     The Plaintiff and Defendant entered into a contract on June 16, 2001, for the purchase of a new, working washing machine. Plaintiff paid the Defendant the sum of $475 as consideration for the purchase of the washing machine. Defendant promised to sell a new, working washing machine to the Plaintiff. See Malem v. Kosrae, 9 FSM Intrm. 233 (Kos. S. Ct. Tr. 1999). The Plaintiff was not able to inspect the working condition of the washing machine at the store, as the washer was packaged in its original cardboard container. Any defect or problem with the washing machine, if one existed, could not be determined at the Defendant's store at the time of the purchase transaction. Plaintiff was only able to inspect the working condition of the washer only after taking the washer home and installing it.

     A new washing machine is expected to work properly to wash clothes. The washing machine sold by the Defendant to the Plaintiff did not work properly to wash clothes. The problem with the washer was discovered only after the washing machine was installed by the Plaintiff in his home. During the first time the washer was used, the water did not drain out of the machine completely, as it should have. Shortly thereafter, during the next cycle of washing, the washer broke down completely and did not perform at all. The Defendant did not fulfill its promise to provide a new, working washing machine to the Plaintiff. When one has party failed to perform their promise, there is a breach of contract. Malem v. Kosrae, 9 FSM 233 (Kos. S. Ct. Tr. 1999). Defendant breached the contract by failing to provide a new working washer to the Plaintiff.

     Defendant attempted to repair the inoperative washing machine. Defendant dispatched two repairman to the Plaintiff's home to inspect the washing machine. The repairmen replaced a belt in the washing machine. However, even following replacement of the belt, the washing machine did not work. Defendant was not able to repair the inoperable washing machine.

     Defendant, through its cross examination of the Plaintiff, attempted to establish contributory negligence of the Plaintiff, in that his actions contributed to the breakdown of the washer. Specifically, Defendant attempted to show that the Plaintiff had failed to remove the shipping bolt, and that failure was the basis for the breakdown of the washer. However, Defendant did not sustain its burden in showing that the actions of the Plaintiff contributed to the damage to the washer.

     Defendant did not introduce any testimony or other evidence to contradict Plaintiff's testimony regarding purchase, installation, operation and breakdown of the washer. Defendant failed to show that the Plaintiff did not remove the shipping bolt. Defendant failed to show that Plaintiff took any other actions which resulted in damage to the washer. Based upon the evidence presented in this trial, I conclude that the Plaintiff's actions did not cause damage to the washer or contribute to the breakdown of the washer. Defendant's defense of Plaintiff's alleged contributory actions to the breakdown of the washer is without merit and fails. Defendant has failed to provide any meritorious defense to Plaintiff's claim of breach of contract.

     The Defendant breached its contract with the Plaintiff when Defendant failed to provide to the

[10 FSM Intrm. 485]

Plaintiff a new working washing machine in consideration of the $475 purchase price paid by the Plaintiff to the Defendant.

4. Remedy and Damages.

      This Court has wide discretion in the determination of the damages in a contract case. O'Byrne v. George, 9 FSM Intrm. 62 (Kos. S. Ct. Tr. 1999). Plaintiff, in his closing argument, urged this Court to adopt the principles of the Uniform Commercial Code, the sales provisions in Article 2, in determining the remedies in this case. See 67A Am. Jur. 2d Sales §§ 1192-1203 (rev. ed. 1985). This Court takes judicial notice that neither the Federated States of Micronesia, nor Kosrae State have yet adopted a Uniform Commercial Code (UCC) to govern sales of goods. However, the Court also recognizes that the UCC has been adopted in virtually every one of the United States jurisdictions as state law.

      The Uniform Commercial Code, Article 2, Sales, is intended to govern transactions between merchants. Merchants are persons who deal in goods of the kind involved in the transaction. UCC § 2-104. In this case, the Defendant is a merchant: the Plaintiff is not. Therefore, by its own terms, the UCC is not intended to cover the type of transaction which took place in this case: the plaintiff buyer being a consumer and the defendant seller being a merchant. Nonetheless, it is instructive to consider the remedies provided by the UCC, and as urged by the Plaintiff, to be applied in this case. This Court finds the remedies provided by the UCC, Article 2, for sales of goods to be persuasive, and appropriate to provide substantial justice in this case. Therefore the Court adopts and applies the remedy principles of the UCC, Article 2, to this case.

     Pursuant to the UCC, Section 2-608, a buyer has the right to revoke his acceptance of a unit where the unit is non-conforming and the unit's value is substantially impaired. The revocation must occur within a reasonable time. Here, the Plaintiff has revoked his acceptance of the new washing machine when the washer did not operate and its value was substantially impaired. Plaintiff's action to revoke acceptance of the washer occurred within a reasonable time as he first informed the Defendant of the washer's noisy condition the day after its purchase. Plaintiff then informed the Defendant of the inoperative condition of the washer within a few days of its breakdown, upon Plaintiff's return to the State of Kosrae from Pohnpei. The timing requirement for notice of revocation from the buyer to the seller under Section 2-608 has been satisfied.

     Revocation of acceptance by the buyer requires the buyer to return the non-conforming goods to the seller. Substantial justice requires that the goods be returned by the buyer to the seller in the same substantial condition as when accepted by the buyer. UCC § 2-608 & n.6. Therefore, the Plaintiff here must return the washing machine to the Defendant in substantially the same condition as it was accepted from the Defendant at the time of purchase. The Defendant may then pursue whatever remedies it wishes to from its supplier of the washing machine.

     The UCC, Section 2-714, establishes the buyer's measure of damages for breach in regard to accepted goods. The measure of damages is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted. The Court accepts this provision as providing a reasonable and fair method of calculation of damages in this case. Accordingly, the value of the new washer if it had been in good working condition is $475, the amount paid by the Plaintiff. The value of the washer accepted by the Plaintiff, which is not in good working condition and is unable to wash clothes, is $0. Consequently, the measure of damages for seller's breach is $475. Defendant is liable to the Plaintiff in the amount of $475.

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