The Illinois Supreme Court Clarifies the Notice Requirement Under the UCC and the “Actual Knowledge” Exception

Written by: William G. Beatty, Chicago

Introduction

On May 22, 2025, the Illinois Supreme Court issued its opinion in the case of Andrews v Carbon on 26th, LLC, 2025 IL 130862 (2025), clarifying the nature and scope of the “actual knowledge” exception to the notice requirement of § 2-607(3)(a) of the Uniform Commercial Code (UCC), 810 ILCS 5/2-607(3)(a).

The preceding section of the UCC requires an aggrieved buyer to provide timely pre-suit notice to the seller of a defect in goods whose tender has been accepted or be barred from any remedy. One of the court-created exceptions to the notice requirement occurs when the seller has “actual knowledge” of the defect. This means more than awareness of problems with a particular product line since “the notice requirement of section 2-607 is satisfied only where the manufacturer is somehow apprised of the trouble with the particular product purchased by a particular buyer.” See Connick v. Suzuki Motor Co., Ltd. 174 Ill. 2d 482, 494 (1996) (emphasis added).

As will be seen below, the importance of the Andrews case lies in the fact that it expanded the means by which “actual knowledge” of the defect can be imparted on the seller.

Procedural History

The appeal did not actually involve either of the named parties, but instead was between a produce distributor, Martin Produce, Inc., and two produce wholesalers, Jack Tuchten Wholesale Produce, Inc. and La Galera Produce, Inc. (collectively, the wholesalers).

The latter group had sold cilantro contaminated with E. coli to the distributor who, in turn, sold the contaminated produce to restaurants who served it to their patrons. Several of the sickened customers filed suits against the restaurants and eventually joined the wholesalers and distributor in their personal injury actions. Third-party actions were filed by the restaurants against the distributor and wholesalers and the latter parties then filed contribution claims against each other.

All claims were settled on the eve of trial except the claims filed between the distributor and wholesalers seeking contribution from each other under a theory of breach of implied warranty of merchantability for recovery of the money paid in settlement of the various personal injury claims in which all parties in the chain of distribution of the contaminated produce had been named.

The wholesalers responded to the contribution claims of the distributor by raising the defense that the distributor had failed to provide them with timely pre-suit notice of their claimed breach of warranty as is required by § 2-607(3)(a) of the UCC, 810 ILCS 5/2-607(3)(a).

The wholesalers moved for summary judgment on the distributor’s contribution claim on that basis, which the circuit court initially denied, finding that genuine issues of material fact remained on the notice issue even though the court commented that common sense, combined with over five years of litigation from over 70 of the restaurants’ customers, would dictate that the notice requirement had been satisfied by actual knowledge of the breach on the part of the wholesalers. Andrews, 2025 IL 130862, ¶ 15.

The wholesalers filed a motion to reconsider the circuit court’s denial of their summary judgment motion which the court granted, reversing its prior order, and granting the wholesalers’ summary judgment motion saying that it had erred, and recognizing that “Illinois law is clear that the defendant-sellers [the wholesalers] must be provided with ‘direct notice’ [of the breach of warranty] from the plaintiff-buyer [the distributor] or that buyer cannot pursue a claim for breach of implied warranty.” Id., citing Connick, 174 Ill. 2d at 493. The distributor admitted that it had not provided any direct, pre-suit notice of the defective cilantro to the wholesalers. Andrews, 2025 IL 130862, ¶ 15.

The distributor appealed the summary judgment order that the circuit court had granted to the wholesalers, and on appeal the First District Illinois appellate court reversed the summary judgment order and remanded the case for further proceedings saying that even though the consumers’ lawsuits could not directly satisfy the notice requirement that the distributor owed to the wholesalers (nor could the distributor’s own complaint satisfy the notice requirement since under Connick only a pleading alleging personal injury is sufficient, in itself, to provide the required notice), the litigation in which the wholesalers had been engaged for over five years could serve as the vehicle by which the wholesalers had been provided with actual knowledge of the claimed defect, thus rendering it unnecessary for the distributor to notify the wholesalers that the transaction involving the sale of the produce was, in the words of the UCC, “‘troublesome and must be watched.’” Id. ¶¶ 42-43, quoting 810 ILCS 5/2-607(3)(a), Official Comment 4.

The appellate court, having reversed the summary judgment order, then remanded the case to the circuit court for further proceedings. Andrews, 2025 IL 130862, ¶ 49. The wholesalers thereafter filed separate petitions for leave to appeal to the Illinois Supreme Court pursuant to Il. S. Ct. R. 315(a), which were granted and considered for review. Id. ¶ 18.

The Illinois Supreme Court’s Opinion

The Supreme Court began its analysis of the case with a review of its prior decision in the Connick case, supra, in which it had discussed the parameters of the UCC’s notice requirement. Connick, 174 Ill. 2d 482. There, a group of purchasers of Suzuki Samuri sport utility vehicles claimed that the SUVs were unsafe because of excessive rollover risks that had been published in various studies, brought a class action against the SUV manufacturer for breach of warranty. Damages were premised on the diminished value of the SUVs since none of the class action plaintiffs had actually sustained personal injuries in a rollover incident. One of the questions presented was whether the complaint adequately alleged that the class plaintiffs had provided pre-trial notice to Suzuki of the claimed breach of warranty as required by the UCC.

The Court recognized two exceptions to the direct notice requirement, the first of which occurs when the seller had “actual knowledge” of the defect, which would make notice by the buyer redundant and unnecessary. Id. at 492, citing Malawy v. Richard’s Manufacturing Co., 150 Ill. App. 3d 549 (1986). The second exception allowed a complaint filed by a consumer-plaintiff who had sustained person injuries to serve as the 2-607 notice to the seller. Connick, 174 Ill. 2d at 494-95.

Since the second exception didn’t apply to the Connick plaintiffs because none of them had suffered personal injuries, the question became whether the first exception applied, i.e., whether Suzuki could be said to have actual knowledge of the alleged defect in the SUVs. In the application of this exception, the Supreme Court applied very strict standards. In order for the actual knowledge exception to apply, the seller had to have knowledge of the specific defect in a specific product and a specific transaction. The bar that the Connick plaintiffs failed to meet, the Court deemed to be satisfied in the Andrews litigation, thus excusing the distributor from giving direct notice of the claimed defect to the wholesalers. Andrews, 2025 IL 130862, ¶ 26.

Evidence sufficiently demonstrated that the wholesalers “knew that the specific shipments of cilantro they sold to [the distributor] during the relevant period in 2016 were allegedly contaminated with E. coli, and they knew that the cilantro was the suspected cause of the E. coli outbreak that caused person injuries to consumers and economic losses to [the restaurants]. This is all the notice that section 2-607 requires.” Id. ¶ 27.

The wholesalers raised three final arguments in an attempt to salvage their summary judgments. First, they contested that they had no actual knowledge of a product defect from the personal injury actions of the restaurant patrons because the “mere allegations” in the personal injury complaints were claimed to be insufficient to confer actual knowledge of a defect. The Court rejected this argument on grounds that the Connick case held that the seller must only be “somehow apprised” of the particular problem, which the underlying litigation was deemed to provide. Andrews, 2025 IL 130862, ¶ 28 (emphasis in the original), citing Connick, 174 Ill. 2d at 494.

Secondly, the wholesalers claimed they had no actual knowledge of an alleged defect in the produce because they “did not have the opportunity to personally observe and inspect the defect”, citing cases in which the seller gained actual knowledge by personally observing evidence of a defect. Andrews, 2025 IL 130862, ¶ 29. The Court rejected this second argument saying that “there is no Illinois caselaw holding, as a matter of law, that a seller must have the opportunity to observe or inspect the defect [in order] to have actual knowledge of the defect.” Id. ¶ 29.

The Court said that by virtue of being named as parties to the personal injury actions filed by the sickened consumers, that “the wholesalers were aware of the buyer, the particular product, the alleged defects, and the specific transactions at issue. . .” Id.

 Lastly, the wholesalers referenced that since the second exception to the notice requirement from the Connick case, i.e., notice by lawsuit, did not apply to the distributor’s complaint, notice certainly could not have been provided by lawsuits filed by other parties. Again, the Court rejected this third and last argument by accusing the wholesalers of conflating the two Connick exceptions, which operate independently of each other. While it is true that notice could not have been provided by the distributor’s own lawsuit, the involvement of the wholesalers in the personal injury claims of the restaurant patrons provided the means that imparted actual knowledge of the defect. Andrews, 2025 IL 130862, ¶ 30.

Conclusion

The Supreme Court’s affirmance of the appellate court decision reversing the district court’s summary judgment order also affirmed the appellate court’s observation that while a lawsuit by a buyer which does not allege personal injury cannot, in itself, suffice as adequate notice, nor be the source of actual knowledge of the defect imparted on the seller, lawsuits filed by others could serve as the vehicle by which actual knowledge to the seller is conveyed, thereby expanding the means by which a seller can be put on notice of an alleged breach of warranty.

About the Author

William G. Beatty recently retired from the Chicago law firm of Johnson & Bell, Ltd. where he practiced for 45 years, primarily in product liability and employment law. Mr. Beatty is a past member of the IDC’s Board of Directors and is a past recipient of the IDC’s Presidents Award. He was instrumental in the formation of the Employment Law Committee, has chaired the annual meeting and has written frequently for the IDC Quarterly.

About the IDC

The Illinois Defense Counsel (IDC) is the premier association of attorneys in Illinois who devote a substantial portion their practice to the representation of business, corporate, insurance, professional and other individual defendants in civil litigation. For more information on the IDC, visit us on the web at www.IDC.law or contact us at PO Box 588, Rochester, IL 62563-0588, 217-498-2649, 800-232-0169, admin@IDC.law.