Smith and Roberson's Business Law 16th Edition by Richard Mann,Barry Roberts

Exercise 7

Bain ordered from Marcum a carload of lumber, which he intended to use in the construction of small boats for the U.S. Navy pursuant to contract. The order specified that the lumber was to be free from knots, wormholes, and defects. The lumber was shipped, and immediately upon receipt Bain looked into the door of the fully loaded car, ascertained that there was a full carload of lumber, and acknowledged to Marcum that the carload had been received. On the same day Bain moved the car to his private siding and sent to Marcum full payment in accordance with the terms of the order. A day later, the car was moved to the work area and unloaded in the presence of the Navy inspector, who refused to allow three-fourths of it to be used because of excessive knots and wormholes in the lumber. Bain then informed Marcum that he was rejecting the order and requested refund of the payment and directions on disposition of the lumber. Marcum replied that because Bain had accepted the order and unloaded it, he was not entitled to return of the purchase price. Who is correct? Explain.