What is “substantial impairment” under the UCC?

February 21, 2022

Hess Corp. v. Schlumberger Tech. Corp. notes an interesting, and seemingly unanswered, question about section 2.608 of the UCC, which says that a “buyer may revoke his acceptance of a lot or commercial unit whose non-conformity substantially impairs its value to him if he has accepted it …..” (emphasis added). One side suggested that this phrase should be read in conjunction with section 2.715, which allows a buyer to recover damages “resulting from the seller’s breach,” while another advocated looking to a line of cases that ask whether a contract breach was a “producing cause” of an injury. The Court noted a dearth of Texas authority tying either suggested approach to this specific UCC provision. No. 20-20663 (Feb. 7, 2022).

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