Manufacturing & Supply Quality Breach Demand Letters

📤 Buyer's Demand for Non-Conforming Goods

When a manufacturer or supplier delivers goods that don't match the contract specifications, quality standards, or sample, the Uniform Commercial Code (UCC) Article 2 provides buyers with powerful remedies. A properly structured demand letter preserves these rights and creates settlement leverage.

⚖️ UCC Article 2 Foundation for Buyer Claims

Perfect Tender Rule (UCC § 2-601): If goods or delivery fail to conform to the contract in any respect, buyer may reject the whole, accept the whole, or accept any units and reject the rest.

Right to Inspect (UCC § 2-513): Buyer has right to inspect goods before acceptance and payment, unless otherwise agreed (e.g., C.O.D. terms).

Rejection of Goods (UCC § 2-602): Rejection must be within reasonable time and buyer must notify seller. Rejected goods must be held with reasonable care for seller's disposition.

Revocation of Acceptance (UCC § 2-608): Even after accepting goods, buyer can revoke if non-conformity substantially impairs value and buyer accepted on reasonable assumption defect would be cured or without discovery of defect.

Cover Damages (UCC § 2-712): Buyer may purchase substitute goods and recover difference between cover price and contract price, plus incidental and consequential damages.

When to Send Buyer's Non-Conformity Demand

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Material Non-Conformity Goods differ substantially from contract specifications, sample, or quality standards. Minor cosmetic defects may not support rejection if goods are merchantable.

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Timely Inspection and Notice You inspected goods promptly upon delivery and notified seller of defects within reasonable time (usually days to weeks, not months).

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Clear Contract Specifications Purchase order, sales contract, or accepted quote clearly defines specifications, quality standards, or references samples or prior shipments.

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Goods Not Yet Used or Resold If you've used the goods in production or resold them to customers, your right to reject may be lost. Revocation of acceptance requires different showing.

✅

Seller Failed to Cure If seller had right to cure (before contract deadline or by offering reasonable substitute), you gave notice and reasonable time to cure, and seller failed.

Structuring Buyer's Non-Conformity Demand Letter

📝 Essential Components for Buyer

Contract Terms and Specifications: Reference purchase order, sales contract, or quote. Quote specification sections verbatim. Attach relevant portions as exhibits.
Delivery and Inspection: State date of delivery, when inspection occurred, and what defects were discovered. Reference UCC § 2-513 inspection rights.
Notice of Non-Conformity: Detail specific ways goods fail to conform—wrong dimensions, materials, colors, quality, functionality. Include photos, test results, or third-party inspection reports.
Rejection or Revocation: Clearly state whether you are rejecting goods (if not yet accepted) or revoking acceptance (if already accepted). Cite UCC § 2-602 or § 2-608.
Seller's Right to Cure: If applicable, note that you offered seller opportunity to cure and seller failed or refused. Include dates and correspondence.
Buyer's Remedies: State what remedy you're seeking: (1) return and refund; (2) price reduction; (3) replacement goods; or (4) cover damages if you purchased substitute goods.
Cover Damages Calculation: If you purchased substitute goods, show contract price vs. cover price differential, plus incidental damages (inspection, shipping, storage costs) and consequential damages (lost profits, production delays).
Holding Goods for Disposition: State that you are holding rejected goods at seller's disposal and seller must arrange pickup within reasonable time. Note any storage fees accruing.
Deadline: Give seller 10-15 business days to respond and arrange remedy.
Preservation of Rights: Note that you reserve all rights and remedies under UCC Article 2 and the contract.

⚠️ Acceptance Waives Rejection Rights

Under UCC § 2-606, acceptance occurs when buyer: (1) signifies acceptance after inspection; (2) fails to reject after reasonable opportunity to inspect; or (3) does any act inconsistent with seller's ownership (like reselling or using goods in production).

Once you accept, you lose the right to reject. You may still revoke acceptance under § 2-608, but the standard is higher—non-conformity must "substantially impair value" and you must show why you didn't discover the defect earlier.

Strategy: Inspect promptly, document defects immediately, and send rejection notice within days of delivery. Don't use or modify the goods if you plan to reject.

Cover and Consequential Damages

If you purchased substitute goods from another supplier after rejecting non-conforming goods, UCC § 2-712 allows recovery of:

Cover price differential: Difference between what you paid for substitute goods and what you would have paid under the original contract.
Incidental damages (UCC § 2-715(1)): Costs of inspection, transportation, storage, and arranging cover purchase.
Consequential damages (UCC § 2-715(2)): Lost profits, production delays, customer penalties, or other losses that seller had reason to know would result from breach. These must be proven with reasonable certainty.

Key requirement: Cover must be made in good faith and without unreasonable delay. You can't wait months, buy at inflated prices, and then claim full cover damages.

💡 Seller's Right to Cure (UCC § 2-508)

If delivery deadline hasn't passed or seller had reasonable grounds to believe goods would be acceptable (e.g., you accepted similar goods before), seller has right to cure by delivering conforming goods within reasonable time.

Strategy: In your demand letter, acknowledge seller's cure right if applicable, give reasonable time to cure (7-15 days), and state that if cure isn't offered or completed by deadline, you will pursue cover and damages. This strengthens your position by showing you acted in good faith.

📨 Seller's Demand for Payment or Wrongful Rejection

As a manufacturer or supplier, you have UCC Article 2 remedies when buyers refuse to accept conforming goods, reject goods wrongfully, or fail to pay for accepted goods. Here's how to structure seller-side demands.

⚖️ UCC Article 2 Seller Remedies

Action for Price (UCC § 2-709): Seller may sue for contract price if buyer accepted goods or if goods cannot be resold at reasonable price.

Resale and Damages (UCC § 2-706): Seller may resell goods and recover difference between resale price and contract price, plus incidental damages.

Market Price Damages (UCC § 2-708): If resale isn't practical, seller may recover difference between contract price and market price at time/place of tender.

Lost Profit (UCC § 2-708(2)): For "lost volume sellers" (manufacturers who could have made both the original sale and the resale), may recover lost profit.

Wrongful Rejection Defense: If buyer rejects conforming goods or rejects improperly (e.g., after acceptance, without timely notice, or for pretextual reasons), seller can demand full contract price.

When to Send Seller's Payment Demand

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Goods Conform to Contract You delivered goods matching contract specifications, quality standards, or approved samples. Any deviations are minor and don't materially impair value.

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Buyer Accepted Goods Buyer took possession, used goods in production, resold them, or failed to reject within reasonable time after inspection opportunity.

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Payment Terms Expired Net 30, Net 60, or other payment deadline has passed. Buyer hasn't paid or proposed legitimate dispute resolution.

✅

Buyer's Rejection Was Improper If buyer rejected goods, the rejection was untimely, inadequately noticed, or based on pretextual reasons (buyer's remorse, market price drop, not actual defects).

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You Offered Cure If Needed If there were minor defects, you offered to cure by repair, replacement, or price adjustment, and buyer refused unreasonably.

Structuring Seller's Demand Letter

📝 Essential Components for Seller

Contract and Specifications: Reference purchase order, sales contract, or quote confirming buyer's order and specifications.
Conforming Delivery: State that goods delivered conform to contract specifications. Include manufacturing records, quality control reports, and shipping documentation.
Buyer's Acceptance: Show that buyer accepted goods under UCC § 2-606—took possession without timely rejection, used goods, or failed to reject after reasonable inspection opportunity.
Payment Obligation: State contract price and payment terms. Note that payment is due regardless of buyer's later dissatisfaction if goods were conforming at delivery.
Rejection Defense: If buyer attempted to reject, explain why rejection was improper—untimely, inadequate notice, goods actually conforming, or acceptance already occurred.
Cure Efforts: If buyer raised quality concerns, detail your offers to cure through repair, replacement, or price adjustment, and buyer's unreasonable refusal.
Demand Amount: Contract price plus interest (if contract allows), storage or holding costs if goods were returned, and any resale losses if you had to resell at discount.
Alternative Remedy Calculation: If goods were returned and you resold them, calculate damages as contract price minus resale price under UCC § 2-706.
Deadline: 10-15 business days for payment or good-faith response.
Mitigation: Note that you have duty to mitigate (resell goods if possible) and that you've done so or explained why resale isn't feasible.

⚠️ Lost Volume Seller Doctrine

Standard rule: If you resell rejected goods to another buyer, your damages are contract price minus resale price. But if you're a manufacturer or volume dealer who could have made both sales (the breaching buyer's and the resale buyer's), you may be entitled to full lost profit under UCC § 2-708(2).

Requirements: You must prove you had capacity to make both sales and would have made the resale anyway. This doctrine protects manufacturers from losing profit when buyer breaches.

Defending Against Buyer Quality Claims

When buyer claims goods were non-conforming:

Industry standards and merchantability: Argue that goods met industry standards and were merchantable even if not perfect. UCC requires goods be "fit for ordinary purposes," not custom perfection.
Prior course of dealing: If buyer accepted similar goods before without objection, this course of dealing defines the standard. "You accepted these specs 10 times—why object now?"
Buyer-caused defects: If buyer's mishandling, improper storage, or misuse caused defects, buyer can't reject. Document proper packaging and handling instructions.
Economic waste: If buyer used or resold goods, rejecting them now would cause economic waste. Courts disfavor rejection after buyer extracted value.

💡 The "Perfect Tender" Trap

UCC § 2-601's "perfect tender rule" seems to let buyers reject for any deviation from contract. But courts and the UCC have limited this:

Substantial performance: Many courts apply substantial performance doctrine for commercial transactions—buyer can't reject if goods substantially conform and defects are minor.
Rejection must be in good faith: Buyers can't use trivial defects as pretext to escape bad bargain when market price drops.
Seller's cure right: If time remains or seller had reason to believe goods would be acceptable, seller can cure, limiting buyer's rejection right.

📋 Evidence Checklist for Goods Quality Disputes

For Buyers (Non-Conformity Claims)

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Contract and Specifications Purchase order, sales contract, quote, or email confirmation defining product specifications, quality standards, tolerances, and delivery terms.

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Delivery Documentation Bill of lading, packing slip, shipping receipt, and delivery date records. Note any notations made at delivery (e.g., "damaged box," "contents not inspected").

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Inspection Records Internal inspection reports, photos of defects, measurements showing non-conformity, and dates of inspection. The sooner after delivery, the stronger your case.

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Third-Party Testing Independent lab test results, quality certification failures, or third-party inspection reports showing non-conformity. Extremely valuable for technical disputes.

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Notice to Seller Email or letter sent to seller within reasonable time of discovery, detailing defects and requesting cure or refund. Include seller's response or non-response.

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Cover Purchase Documentation If you bought substitute goods, provide quotes or invoices showing cover price, comparison to original contract price, and proof you acted promptly and reasonably.

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Consequential Damages Evidence Production stoppage records, lost sales documentation, customer penalties or lost contracts caused by non-conforming goods, and quantification of losses.

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Non-Use Evidence Records showing you did not use, modify, or resell the goods after discovering non-conformity. Critical to preserving rejection rights.

For Sellers (Conformity Defense / Payment Claims)

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Contract and Specifications Your records showing what buyer ordered, what specs were agreed to, and any modifications or clarifications during order process.

✅

Manufacturing and Quality Control Production records, quality control checklists, inspection reports, and test results showing goods met specifications before shipment.

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Shipping and Delivery Records Proof of conforming packaging, proper labeling, and delivery in good condition. Photos of goods before shipment are valuable.

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Prior Course of Dealing Records of prior shipments to same buyer showing buyer accepted similar goods without objection. Invoices, acceptance emails, and repeat orders establish standards.

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Buyer Acceptance Evidence Delivery receipts signed by buyer, buyer's payment (even partial), buyer's use of goods in production, or buyer's resale to customers—all show acceptance.

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Cure Offers Your offers to repair, replace, or reduce price if buyer raised concerns, showing good-faith efforts to resolve and buyer's unreasonable refusal.

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Timeline Documentation Dates showing buyer's rejection was untimely (months after delivery), buyer used goods before rejecting, or buyer failed to give proper notice.

💡 Sample Retention Is Critical

In goods quality disputes, physical samples are the best evidence. Both buyers and sellers should:

Buyers: Retain samples of non-conforming goods, unopened packaging, and photographs. Don't return everything—keep representative samples even after rejection.
Sellers: Retain samples from the same production run or lot. If buyer claims defects, you can test retained samples to verify conformity.

Courts give significant weight to physical evidence and third-party testing. "He said, she said" quality disputes are weak; lab reports and retained samples are strong.

💰 Settlement Dynamics in Goods Quality Disputes

Goods quality disputes under UCC Article 2 create strong settlement pressure because both sides face risk: buyers risk paying for non-conforming goods, sellers risk losing sale and profit. Understanding UCC remedies framework helps predict settlement ranges.

📊 Typical Settlement Outcomes

Clear non-conformity, buyer rejected promptly: 80-100% recovery for buyer (full refund or replacement goods), or seller takes goods back and resells, recovering only resale differential.
Minor non-conformity, goods still usable: 10-30% price reduction, buyer keeps goods. Reflects diminished value but avoids return/replacement costs.
Buyer accepted and used goods before complaining: 20-40% buyer recovery, reflecting that buyer extracted some value and may have forfeited rejection rights.
Disputed conformity (buyer says non-conforming, seller says conforming): 30-60% settlements, often with independent testing or expert evaluation driving compromise.
Late rejection or pretextual claims: 0-20% buyer recovery if seller proves acceptance occurred or rejection was bad faith due to market price drop.

Factors Favoring Buyer Recovery

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Detailed Specifications in Contract "Stainless steel 316L, tolerance +/- 0.05mm" is much stronger than "high-quality steel." Specific specs = specific conformity requirements.

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Prompt Inspection and Rejection Buyers who inspect within days of delivery and reject within a week have strong positions. Delays weaken rejection rights significantly.

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Third-Party Testing Independent lab reports showing non-conformity create near-irrefutable evidence, especially for technical specifications (materials, dimensions, performance).

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Reasonable Cover Purchase If buyer purchased substitute goods promptly at reasonable price, cover damages are well-supported and likely to be awarded.

Factors Favoring Seller

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Buyer Used or Resold Goods If buyer used goods in production or resold them to customers before complaining, acceptance likely occurred and rejection rights are lost.

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Prior Course of Dealing If buyer previously accepted similar goods without objection, seller can argue buyer established acceptance standards through conduct.

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Market Price Drop If buyer's rejection coincides with market price decline for the goods, seller can argue rejection is pretextual bad-faith attempt to escape bad bargain.

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Seller Offered Cure If seller promptly offered to replace goods, repair defects, or reduce price, and buyer refused unreasonably, seller's position strengthens significantly.

💡 The "Split the Baby" Price Adjustment

Many goods quality disputes settle with partial refunds or price adjustments:

Example: Buyer ordered 10,000 units at $5/unit ($50,000 total). Upon delivery, 15% of units have minor cosmetic defects. Settlement: 20% price reduction ($10,000 refund), buyer keeps all goods.
Why it works: Buyer gets compensation for diminished value, avoids hassle of return and re-procurement. Seller keeps bulk of sale, avoids return shipping and restocking costs.
When to use: Minor non-conformity that doesn't make goods unusable, both sides want to preserve ongoing business relationship.

Litigation vs. Arbitration Considerations

Many supply contracts include arbitration clauses. Key differences:

Expert evidence: Goods disputes often turn on technical specifications. Arbitrators with industry background may understand evidence better than juries.
Speed: Arbitration typically resolves in 6-12 months vs. 18-36 months for trial.
Cost sharing: Arbitration filing fees ($5k-$15k) are split, creating settlement pressure. But arbitration can still cost $50k-$150k in attorney's fees for complex cases.
Remedy limits: Some arbitration clauses limit consequential damages or cap awards, affecting settlement calculations.

⏱️ Realistic Timelines

Demand letter to response: 10-20 days
Negotiation phase: 30-90 days
Arbitration (if needed): 6-12 months from filing to award
Litigation to settlement: 12-24 months
Trial and judgment: 24-42 months from filing

✍️ UCC Goods Quality Demand Letter Snippets

Buyer Opening – Rejection of Non-Conforming Goods

This letter constitutes formal notice of rejection of non-conforming goods delivered under Purchase Order No. [PO#] dated [DATE]. On [DELIVERY DATE], you delivered [QUANTITY] units of [PRODUCT DESCRIPTION]. Upon inspection on [INSPECTION DATE], I discovered that the goods fail to conform to the contract specifications in material respects. Pursuant to UCC § 2-601, I reject the entire shipment and demand [full refund / replacement with conforming goods / price adjustment].

Specific Non-Conformity Details

The goods fail to conform to contract specifications as follows: SPECIFICATION REQUIREMENT vs. ACTUAL DELIVERED: 1. Material: Contract specified stainless steel 316L. Goods delivered are stainless steel 304 (verified by independent lab testing, attached as Exhibit A). 2. Dimensions: Contract specified 10.00mm diameter +/- 0.05mm tolerance. Actual measurements range from 9.82mm to 10.23mm (measurements attached as Exhibit B). 3. Finish: Contract specified mirror-polished finish. Goods have matte finish with visible machine marks. These deviations are not minor cosmetic issues—they render the goods unsuitable for my intended use in [DESCRIBE APPLICATION].

Timely Inspection and Notice

I exercised my right to inspect the goods under UCC § 2-513 promptly upon delivery: • Delivery occurred: [DATE] • Inspection completed: [DATE] (within [X] days of delivery) • Initial notice of non-conformity sent to you: [DATE] via email (attached as Exhibit C) • Your response (or lack thereof): [DESCRIBE] I have acted in good faith and with commercially reasonable speed in inspecting and rejecting these goods. My rejection is timely under UCC § 2-602.

Holding Goods for Seller's Disposition

The rejected goods are currently being held at [LOCATION]. Under UCC § 2-602 and § 2-604, I am holding them with reasonable care pending your instructions for disposition. You must arrange pickup of the rejected goods within [15] days of this letter. After that date, I may charge reasonable storage fees of $[AMOUNT] per day, and I reserve the right to resell the goods on your account under UCC § 2-604 if you fail to provide disposition instructions. I have not used, modified, or done any act inconsistent with your ownership of the rejected goods.

Cover Damages Calculation

Because your non-conforming delivery disrupted my production schedule, I was forced to purchase substitute goods under UCC § 2-712. COVER PURCHASE DETAILS: • Vendor: [NAME] • Quantity: [SAME AS ORIGINAL ORDER] • Cover Price: $[AMOUNT] • Original Contract Price: $[AMOUNT] • Cover Differential: $[AMOUNT] INCIDENTAL DAMAGES (UCC § 2-715(1)): • Independent inspection and testing: $[AMOUNT] • Return shipping arrangement: $[AMOUNT] • Storage pending your pickup: $[AMOUNT] • Expedited shipping for cover goods: $[AMOUNT] CONSEQUENTIAL DAMAGES (UCC § 2-715(2)): • Production stoppage (3 days at $[X]/day): $[AMOUNT] • Rush fees to meet customer deadlines: $[AMOUNT] TOTAL DAMAGES: $[AMOUNT] I demand payment of this amount within [15] business days.

Cure Opportunity (If Applicable)

While I have rejected the non-conforming goods, I note that under UCC § 2-508, you may have the right to cure by tendering conforming goods within a reasonable time. If you wish to cure, you must: • Confirm in writing within [5] business days that you will deliver conforming goods • Deliver conforming goods that meet all contract specifications by [DATE] • Arrange pickup of the rejected goods at no cost to me • Cover my incidental damages incurred due to the initial non-conforming delivery If you do not confirm cure within [5] business days, I will proceed with cover and will demand full damages as calculated above.

Seller Demand Snippets

Seller Opening – Action for Price

This letter constitutes formal demand for payment of $[AMOUNT] for goods delivered under Purchase Order No. [PO#] dated [DATE]. I delivered [QUANTITY] units of [PRODUCT] on [DATE]. The goods conform in all respects to the contract specifications. You accepted the goods under UCC § 2-606 by [taking possession without timely rejection / using the goods in your production / reselling them to your customers]. Under UCC § 2-709, I am entitled to the contract price of $[AMOUNT]. Payment is now [X] days overdue.

Defense Against Wrongful Rejection

Your attempted rejection of the goods on [DATE] is improper for the following reasons: 1. UNTIMELY: You took delivery on [DATE] but did not reject until [DATE], more than [X] days later. Under UCC § 2-602, rejection must occur within a reasonable time. [X] days is commercially unreasonable, especially given that you used the goods during this period. 2. ACCEPTANCE OCCURRED: Under UCC § 2-606(1)(c), you accepted the goods by doing acts inconsistent with my ownership. Specifically, you [used goods in production / resold units to your customers / modified the goods]. Acceptance bars rejection. 3. GOODS CONFORM: The goods delivered meet all contract specifications. Your quality complaints are pretextual. [ATTACH QUALITY CONTROL RECORDS, SPECIFICATIONS COMPLIANCE DOCUMENTATION]. Under UCC § 2-709, I am entitled to the contract price. Your purported rejection does not excuse your payment obligation.

Seller Cure Offer

Without waiving my position that the goods delivered conform to contract specifications, I offer the following cure under UCC § 2-508: OPTION 1: I will replace the [QUANTITY] units you claim are non-conforming at no charge, with delivery within [X] days. OPTION 2: I will provide a [X]% price reduction ($[AMOUNT]) in exchange for your acceptance of the goods as delivered. This offer is made in good faith to resolve this dispute efficiently. If you reject both options without reasonable basis, any subsequent litigation will show my good-faith efforts to cure, supporting my claim for full contract price and damages. You must respond to this offer within [5] business days. [SIGNATURE BLOCK]

⚖️ How I Handle UCC Goods Quality Disputes

I represent both buyers seeking remedies for non-conforming goods and sellers defending against wrongful rejection or pursuing payment. My approach focuses on UCC Article 2 mechanics and practical commercial resolution.

For Buyers (Non-Conformity Claims)

UCC Rights Analysis: I evaluate whether you properly preserved rejection rights through timely inspection and notice, or whether you must proceed under revocation of acceptance with higher burden of proof.

Damages Strategy: I help you calculate and prove cover damages, incidental costs, and consequential losses, working with your team to document business impact and replacement purchases.

Demand Letter Drafting: I draft UCC-compliant rejection notices and demand letters that cite applicable code sections, detail non-conformity, preserve all remedies, and create settlement pressure through clear damages calculations.

Negotiation and Litigation: I negotiate price adjustments, replacement terms, or refunds, and I handle arbitration or litigation when settlement isn't possible, including expert witness coordination for technical specifications disputes.

For Sellers (Conformity Defense / Payment Claims)

Acceptance Defense: I analyze whether buyer's actions constitute acceptance under UCC § 2-606, including use of goods, untimely rejection, or failure to properly notice defects.

Conformity Documentation: I help you marshal evidence that goods delivered met contract specifications—manufacturing records, quality control data, prior course of dealing, and industry standards.

Cure Strategy: I advise on when and how to offer cure under UCC § 2-508 to preserve your contract price rights and demonstrate good faith.

Payment Demands: I draft demands for contract price under UCC § 2-709 or resale/market differential damages under UCC §§ 2-706/2-708, and I represent sellers in arbitration or litigation to recover full amounts owed.

Fee Structures

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Demand letter: Flat fee $450

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Negotiation and Settlement Documentation Hourly billing for extended negotiation, technical dispute resolution, and settlement agreement drafting including price adjustment terms and mutual releases.

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Arbitration and Litigation Hourly billing for arbitration or court proceedings. For strong claims with substantial amounts in controversy, I may consider hybrid fee arrangements.

Schedule a UCC Goods Dispute Strategy Call

If you're dealing with a manufacturing or supply quality breach—whether you're a buyer with non-conforming goods or a seller facing wrongful rejection—I can help you understand your UCC Article 2 rights and develop an effective resolution strategy.

Use the Calendly link below to schedule a strategy call, or email me directly at owner@terms.law.

Schedule Strategy Call

Frequently Asked Questions

UCC § 2-602 requires rejection within a "reasonable time" after delivery. What's reasonable depends on the goods and industry—for perishables, hours or days; for complex machinery, weeks. Generally, inspect as soon as commercially feasible and reject within days to a few weeks at most. Delays of months will likely be found unreasonable and result in deemed acceptance.

Once you use goods in a way inconsistent with seller's ownership, you've accepted them under UCC § 2-606. However, you may still be able to revoke acceptance under UCC § 2-608 if non-conformity substantially impairs value and you either accepted on reasonable assumption it would be cured, or didn't discover the defect due to difficulty of inspection. Revocation is harder to prove than initial rejection.

Under UCC § 2-602 and § 2-604, you must hold rejected goods with reasonable care for a reasonable time to permit seller to remove them. If seller doesn't respond to your rejection notice within reasonable time, you can: (1) store them and charge reasonable storage fees; (2) ship them back to seller at seller's expense; or (3) resell them on seller's account after giving notice. Document all efforts and costs—these become part of your damages claim.

Seller has the right to cure under UCC § 2-508 if time for performance hasn't expired or if seller had reasonable grounds to believe goods would be acceptable. However, cure must result in conforming goods—seller can't offer "close enough" substitutes. If seller tenders conforming cure within reasonable time, you must accept it. But if seller misses the cure deadline or tenders non-conforming "cure," you can refuse and proceed with cover and damages.

Seller can recover: (1) contract price under UCC § 2-709 if goods can't be resold at reasonable price; (2) resale differential under § 2-706 if seller resells goods (contract price minus resale price); (3) market price differential under § 2-708 (contract price minus market price); or (4) lost profit under § 2-708(2) if seller is a "lost volume seller" (manufacturer who lost sale that could have been made in addition to resale). Seller must mitigate by attempting to resell if commercially reasonable.