Delivery of Goods Law in New York: Tender, Acceptance, and Remedies

Delivery of goods law in New York is governed by Article 2 of the state’s Uniform Commercial Code, which decides when ownership passes from seller to buyer, who absorbs the loss if goods are damaged in transit, what a buyer can refuse to accept, and what each side can recover when the other fails to perform. The rules apply to almost every sale of tangible goods in the state, from bulk industrial shipments to a single online purchase. Several of the protections built into the code come with short notice deadlines, and missing one can wipe out an otherwise valid claim.

When Title and Risk of Loss Shift to the Buyer

The most consequential question in any delivery dispute is who owned the goods, and who bore the risk of losing them, at the moment something went wrong. The answer usually turns on whether the contract is a shipment contract or a destination contract.

Shipment Contracts

In a shipment contract, the seller finishes the delivery obligation by handing the goods over to a carrier, arranging reasonable transportation, and promptly notifying the buyer that the shipment is on its way.¹²³ If the truck crashes halfway to the buyer, the loss is the buyer’s problem.

Destination Contracts

In a destination contract, the seller carries risk and expense all the way to the specified delivery point.⁴ Title and risk transfer only when the goods arrive and are properly tendered there.³

When a contract does not make its type clear, New York courts generally treat it as a shipment contract. That default catches buyers off guard, because many assume the seller stays on the hook until the goods reach the buyer’s door.

F.O.B. Terms

Contracts often use shorthand to fix these questions. “F.O.B. place of shipment” makes the deal a shipment contract: the seller bears cost and risk only to the loading point. “F.O.B. place of destination” makes it a destination contract: the seller must transport the goods to the buyer’s location at its own expense and risk. When the term also specifies “F.O.B. vessel” or “F.O.B. car,” the seller must additionally load the goods aboard at its own risk.⁵

Goods Held by a Third Party

When goods are sitting in a warehouse and will change hands without being moved, risk passes to the buyer in one of three ways: when the buyer receives a negotiable document of title, when the warehouse acknowledges the buyer’s right to possession, or after the buyer receives a non-negotiable document or delivery instruction.³

The Merchant Seller Rule

For deals that involve neither a carrier nor a warehouse, one distinction matters more than any other. If the seller is a merchant, risk stays with the seller until the buyer physically receives the goods. If the seller is not a merchant, risk transfers as soon as the seller tenders delivery.³ Buying from a business that carries inventory gives you more protection than buying from a private individual.

When Breach Changes the Answer

Any breach can shift risk back. If a seller ships nonconforming goods that the buyer has a right to reject, risk stays with the seller until the defect is cured or the buyer accepts anyway. If a buyer rightfully revokes acceptance, the buyer can treat risk as having been on the seller from the start, but only to the extent the buyer’s own insurance falls short. And when a buyer breaches before risk has passed, the seller can push risk onto the buyer for a commercially reasonable time, again limited by any insurance shortfall.⁶

Inspecting and Rejecting a Delivery

Before paying or formally accepting, you have the right to inspect goods at any reasonable time, place, and manner. When goods are shipped, inspection can happen after they arrive. The buyer pays inspection costs up front, but those costs shift to the seller if the goods turn out to be nonconforming.⁷

Two exceptions matter. If the contract calls for C.O.D. delivery or payment against documents of title, the buyer must pay before inspecting. Paying under those terms is not acceptance, so the buyer can still reject afterward, but it does mean the buyer carries the burden of chasing a refund rather than simply refusing to hand over money.⁷

The Perfect Tender Rule

New York follows the “perfect tender” rule: if the goods or the delivery fail to conform to the contract in any respect, the buyer can reject the entire shipment, accept all of it, or accept some commercial units and reject the rest.⁸ A shipment of 1,000 widgets where 50 have cosmetic defects technically gives the buyer the right to reject the whole lot.

The rule is not quite as absolute as it sounds. Installment contracts, where goods arrive in separate lots, use a different standard: the defect must substantially impair the value of that installment. Contracts can also include clauses limiting a buyer’s rejection rights. For single-delivery deals without such clauses, though, perfect tender applies, and sellers who cut corners take real risk.

The Seller’s Right to Cure

A rejection does not automatically kill the deal. If the deadline for performance has not yet passed, the seller can notify the buyer of an intent to fix the problem and then make a conforming delivery within the original contract period.⁹

Even after the deadline, a seller who had reasonable grounds to believe the original tender would be acceptable gets a further reasonable time to substitute conforming goods, provided the seller promptly notifies the buyer. This usually comes up when a seller ships something slightly different from what was ordered, genuinely believing the buyer would take it, often because the buyer has accepted similar substitutions before.

Acceptance and the Notice Deadline That Kills Claims

The seller’s job is to deliver conforming goods, and the buyer’s job is to accept and pay according to the contract.¹⁰ Unless the contract says otherwise, payment is due when the seller tenders delivery.¹¹

Acceptance happens in one of three ways: the buyer inspects the goods and signals satisfaction (or agrees to keep them despite a defect), the buyer fails to reject within a reasonable time after having a chance to inspect, or the buyer does something inconsistent with the seller’s ownership, such as reselling the goods or incorporating them into a finished product.¹² Accepting part of a commercial unit counts as accepting the whole unit. Use half a pallet of materials, and legally you have accepted the full pallet.

Here is where buyers most often lose their rights without realizing it. Once you have accepted goods, you must notify the seller of any defect within a reasonable time after you discover or should have discovered it. Miss that notice, and you are barred from any remedy.¹³ The code does not fix “reasonable time” at a specific number of days. Courts weigh the type of goods, how obvious the defect should have been, and what the buyer did once the problem surfaced.

The notice itself does not need to be a formal legal document. A phone call, email, or letter identifying the problem is generally enough. What matters is that the seller learns of the issue early enough to investigate, offer a remedy, or limit further loss. Sitting on a known defect for months and then filing suit without ever telling the seller almost guarantees losing the case.

Revoking Acceptance

Acceptance is not always final. A buyer can revoke acceptance of goods whose defects substantially impair their value, but only in narrow circumstances: the buyer accepted expecting the defect to be fixed and it was not, or the buyer did not discover the defect at the time of acceptance because it was hard to detect or because the seller’s assurances masked it.¹⁴

Revocation must happen within a reasonable time after the buyer discovers or should have discovered the defect, and before any substantial change in the goods’ condition that is not caused by the defect itself. The buyer must also notify the seller. A buyer who successfully revokes has the same rights as one who rejected in the first place, including cancellation and recovery of payments made.¹⁴

What a Buyer Can Recover

When a seller fails to deliver, delivers nonconforming goods, or repudiates the contract, the buyer can cancel the contract and get back any payments already made.¹⁵ On top of cancellation, damages follow one of two main formulas.

Under cover damages, the buyer buys substitute goods from another source and sues for the difference between the cover price and the original contract price, plus incidental or consequential damages. Under market-price damages, a buyer who does not cover recovers the difference between the market price at the time the buyer learned of the breach and the contract price.¹⁵

For unique or hard-to-replace goods, such as custom-manufactured products, the buyer may be able to obtain a court order requiring the seller to actually deliver the goods rather than just pay damages.

Incidental damages for buyers include reasonable costs of inspecting, transporting, and storing rejected goods, and expenses connected to finding substitutes. Consequential damages can go much further: any losses the seller had reason to know about at contracting that the buyer could not reasonably prevent. If a seller knew a manufacturer needed raw materials by a certain date to fill its own customer orders, a late delivery that cost those orders could produce recoverable lost profits.¹⁶

What a Seller Can Recover

When a buyer wrongfully rejects, revokes acceptance without justification, or refuses to pay, the seller can withhold delivery of any unshipped goods, stop goods already in transit, resell the goods, or sue for damages.¹⁷

A seller who resells the goods in a commercially reasonable manner recovers the difference between the contract price and the resale price, plus incidental damages.¹⁸ The resale can be public or private, but the seller must give the buyer reasonable notice of a private resale. A good-faith purchaser at the resale takes free of any claims by the original buyer.

When resale is impractical, the seller can measure damages by the difference between the market price at tender and the unpaid contract price. If that formula still falls short, as it often does for “lost volume” sellers who could have sold to both the breaching buyer and the replacement buyer, the seller can recover lost profits instead.¹⁹

If the buyer accepted goods but has not paid, the seller can sue for the full contract price.²⁰ Sellers also recover incidental damages, including reasonable costs of stopping delivery, storing or transporting goods after the breach, and arranging a resale.²¹

How Long You Have to Sue

A lawsuit for breach of a sales contract must be filed within four years after the breach occurs.²² The clock starts when the breach happens, not when you discover it. For delivery problems, that usually means the date the goods should have arrived or the date nonconforming goods were tendered. For warranty claims, the breach occurs at delivery unless the warranty explicitly covers future performance, in which case the clock starts when the defect is or should have been discovered.

Parties can agree in the original contract to shorten this period to as little as one year, but not to extend it beyond four. Shortened windows are common in commercial supply agreements, so check the contract before assuming you have the full four years. If a timely-filed lawsuit is dismissed on procedural grounds, you generally get six months after the dismissal to refile, even if the original four-year period has expired.²²

One Note on Whether You Have an Enforceable Contract

Delivery rules only matter if a contract exists. A contract for the sale of goods worth $500 or more is generally unenforceable in New York unless it is in writing and signed by the party you want to hold to the deal. The writing does not need to capture every negotiated term, but it must state a quantity.²³

Between merchants, a written confirmation of an oral deal binds both sides if the recipient knows what it says and does not object within ten days. If you receive a purchase confirmation you disagree with, object in writing within that window or risk being bound by its terms.²³

1
New York State Senate. New York Code UCC 2-504 – Shipment by Seller
2
New York State Senate. New York Code UCC 2-401 – Passing of Title Reservation for Security Limited Application of This Section
3
New York State Senate. New York Code 2-509 – Risk of Loss in the Absence of Breach
4
New York State Senate. New York Code UCC 2-503 – Manner of Seller’s Tender of Delivery
5
New York State Senate. New York Code UCC 2-319 – F.O.B. and F.A.S. Terms
6
New York State Senate. New York Code UCC 2-510 – Effect of Breach on Risk of Loss
7
New York State Senate. New York Code UCC 2-513 – Buyer’s Right to Inspection of Goods
8
New York State Senate. New York Code UCC 2-601 – Buyer’s Rights on Improper Delivery
9
New York State Senate. New York Code UCC 2-508 – Cure by Seller of Improper Tender or Delivery Replacement
10
New York State Senate. New York Uniform Commercial Code 2-301 – General Obligations of Parties
11
New York State Senate. New York Code UCC 2-507 – Effect of Seller’s Tender Delivery on Condition
12
New York State Senate. New York Code UCC 2-606 – What Constitutes Acceptance of Goods
13
New York State Senate. New York Code UCC 2-607 – Effect of Acceptance Notice of Breach
14
New York State Senate. New York Code UCC 2-608 – Revocation of Acceptance
15
New York State Senate. New York Code UCC 2-711 – Buyer’s Remedies in General Buyer’s Security Interest in Rejected Goods
16
New York State Senate. New York Code UCC 2-715 – Buyer’s Incidental and Consequential Damages
17
New York State Senate. New York Code 2-703 – Seller’s Remedies in General
18
New York State Senate. New York Code UCC 2-706 – Seller’s Resale Including Contract for Resale
19
New York State Senate. New York Code UCC 2-708 – Seller’s Damages for Non-Acceptance or Repudiation
20
Legal Information Institute. Uniform Commercial Code 2-709 – Action for the Price
21
New York State Senate. New York Code UCC 2-710 – Seller’s Incidental Damages
22
Legal Information Institute. Uniform Commercial Code 2-725 – Statute of Limitations in Contracts for Sale
23
Legal Information Institute. Uniform Commercial Code 2-201 – Formal Requirements Statute of Frauds