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TITLE 33.

UNIFORM COMMERCIAL

CODE

MATVWV NESKV–WIKV VHAKA

Chapter

Section

GENERAL PROVISIONS.TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT 1–101

SALES. TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT 2–101

2A. LEASES. TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT2A–101

NEGOTIABLE INSTRUMENTS.TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT 3–101

BANK DEPOSITS AND COLLECTIONS. TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT 4–101

4A. FUNDS TRANSFERS. TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT4A–101

LETTERS OF CREDIT. TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT 5–101

BULK SALES [RESERVED]

WAREHOUSE RECEIPTS, BILLS OF LADING, AND OTHER

DOCUMENTS OF TITLE. TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT 7–101

INVESTMENT SECURITIES. TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT 8–101

SECURED TRANSACTIONS.TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT 9–101

10 to 14. RESERVED

15.

UNIFORM ELECTRONIC TRANSACTIONS ACT. TTTTTTTTTTTTTTTTTTTTTTT 15–101

Historical and Statutory Notes

NCA 07–107, § 2, provides:

‘‘Findings: There is a compelling need for

establishment of a Uniform Commercial Code

(UCC) within the Muscogee (Creek) Nation to

promote sustainable and diversified economic

development. This UCC helps create an environment that encourages lenders and non-tribal

businesses to do business, not only with the

Nation, but also with tribal citizens and nontribally owned Indian businesses, while protecting the interests of all parties engaged in business and financial transactions. This UCC is

key to establishment of a governing legal infrastructure that not only supports and strengthens

the effective exercise of tribal sovereignty, but

also satisfies the fears that are often expressed

by prospective lenders, business people and investors. Lacking a UCC, lenders are less likely

to lend, businesses are less inclined to do business, and investors are less likely to invest.

This comprehensive UCC, carefully drafted to

incorporate important elements which protect

tribal sovereign immunity while encouraging

business, will provide the certainty and predictability the business and lending community require to invest in the future of the Muscogee

(Creek) Nation.’’

Cross References

Office of Secretary of Nation, duties and responsibilities, see Title 16, § 8–103.

CHAPTER 1.

GENERAL PROVISIONS

Subchapter

1. Titles, Construction, Application, and Subject Matter of Act

2. General Definitions and Principles of Interpretation

3. Territorial Applicability and General Rules

SUBCHAPTER 1. TITLES, CONSTRUCTION, APPLICATION,

AND SUBJECT MATTER OF ACT

Section

1–101. Short titles.

191

Title 33, § 1–101

UNIFORM COMMERCIAL CODE

Section

1–102. Scope of chapter.

1–103. Construction of Uniform Commercial Code to promote its purposes and policies; applicability of supplemental principles of law.

1–104. Construction against implicit repeal.

1–105. Severability.

1–106. Use of singular and plural; gender.

1–107. Section captions.

1–108. Electronic signatures in Global and National Commerce Act superseded, modified, and limited.

§ 1–101. Short titles

(a) The sovereign immunity of neither this Nation or any of its agencies or

instrumentalities is waived with respect to any provision of any transaction

subject to this Title, absent a recorded, properly ratified, express waiver of

sovereign immunity.

(b) This Title does not apply to any property interest that is subject to federal

restrictions regarding its sale, transfer or encumbrance.

cited as the ‘‘Uniform Commercial Code’’. With the exception of Title 33,

Section 1–301, and Chapter 9 (Secured Transactions), this Title is coextensive

with Title 12A, Sections 1–101 through 11–107 of the Oklahoma Statutes

Annotated and interpretation of this Title shall generally comport with Oklahoma cases interpreting those statutes, except those that conflict with Muscogee (Creek) Nation law, but not unwritten Mvskoke traditional law and customs.

(d) Chapters, subchapters, section numbers and subject matter of this Title

shall generally correspond to articles, parts and section numbers appearing in

the Oklahoma Statutes Annotated in order to facilitate ease of use and crossreference of notes, official comments and pertinent case law, except as indicated in paragraph (c) of this section.

(e) This chapter shall be known and may be cited as ‘‘Uniform Commercial

Code—General Provisions’’.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Statutes O116.

Westlaw Topic No. 361.

C.J.S. Statutes §§ 217 to 220, 238, 240, 242.

§ 1–102. Scope of chapter

This chapter applies to a transaction to the extent that it is governed by

another chapter of the Uniform Commercial Code.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Statutes O179.

Westlaw Topic No. 361.

C.J.S. Statutes §§ 306, 308 to 309.

192

Title 33, § 1–105

GENERAL PROVISIONS

§ 1–103. Construction of Uniform Commercial Code to promote its purposes and policies; applicability of supplemental principles of

law

(a) The Uniform Commercial Code shall be liberally construed and applied to

promote its underlying purposes and policies, which are:

(1) to simplify, clarify and modernize the law governing commercial transactions;

(2) to permit the continued expansion of commercial practices through

custom, usage and agreement of the parties; and

(3) to make uniform the law among the various jurisdictions.

(b) Unless displaced by the particular provisions of the Uniform Commercial

Code, the principles of law and equity, including the law merchant and the law

relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating cause shall supplement its provisions.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Statutes O179, 226.

Westlaw Topic No. 361.

C.J.S. Statutes §§ 306, 308 to 309, 358 to 361.

§ 1–104. Construction against implicit repeal

The Uniform Commercial Code being a general act intended as a unified

coverage of its subject matter, no part of it shall be deemed to be impliedly

repealed by subsequent legislation if such construction can reasonably be

avoided.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Statutes O159.

Westlaw Topic No. 361.

C.J.S. Statutes § 287.

§ 1–105. Severability

If any provision or clause of this Commercial Code, or its application to any

person or circumstance is held invalid, the invalidity does not affect other

provisions or applications of the Commercial Code which can be given effect

without the invalid provision or application, and to this end the provisions of

the Commercial Code are severable.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Statutes O64(2).

Westlaw Topic No. 361.

C.J.S. Statutes §§ 83, 87, 89 to 90, 94 to 97,

99, 102 to 104, 107.

193

Title 33, § 1–106

UNIFORM COMMERCIAL CODE

§ 1–106. Use of singular and plural; gender

In the Uniform Commercial Code, unless the statutory context otherwise

requires:

(1) words in the singular number include the plural, and in the plural include

the singular; and

(2) words of any gender include any other gender.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Statutes O188.

Westlaw Topic No. 361.

C.J.S. Statutes §§ 306, 321, 324 to 326, 330,

334.

§ 1–107. Section captions

Section captions are part of the Commercial Code.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Uniform Electronic Transactions Act, applicability of this section, see Title 33, § 15–103.

Library References

Statutes O211.

Westlaw Topic No. 361.

C.J.S. Statutes § 306.

§ 1–108. Electronic signatures in Global and National Commerce Act superseded, modified, and limited

Chapter 1 of the Uniform Commercial Code modifies, limits, and supersedes

the federal Electronic Signatures in Global and National Commerce Act, 15

U.S.C., Section 7001 et seq., except that nothing in this article modifies, limits

or supersedes Section 7001(c) of that Act or authorizes electronic delivery of

any of the notices described in Section 7003(b) of that Act.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Contracts O35.

Signatures O1.

Westlaw Topic Nos. 95, 355.

C.J.S. Contracts § 75.

C.J.S. Signatures §§ 1 to 16.

SUBCHAPTER 2. GENERAL DEFINITIONS AND

PRINCIPLES OF INTERPRETATION

Section

1–201. General definitions and principles of interpretation.

1–202. Notice; knowledge.

1–203. Lease distinguished from security interest.

1–204. Value.

1–205. Reasonable time; seasonableness.

1–206. Presumptions.

194

GENERAL PROVISIONS

Title 33, § 1–201

§ 1–201. General definitions and principles of interpretation

(a) Unless the context otherwise requires, words or phrases defined in this

section, or in the additional definitions contained in other articles of the

Uniform Commercial Code that apply to particular articles or parts thereof,

have the meanings stated.

(b) Subject to definitions contained in other articles of the Uniform Commercial Code that apply to particular articles or parts thereof:

(1) ‘‘Action’’ in the sense of a judicial proceeding includes a recoupment,

counterclaim, setoff, suit in equity, and any other proceedings in which rights

are determined.

(2) ‘‘Aggrieved party’’ means a party entitled to pursue a remedy.

(3) ‘‘Agreement’’, as distinguished from ‘‘contract’’, means the bargain of the

parties in fact as found in their language or inferred from other circumstances

including course of performance, course of dealing, or usage of trade as

provided in Section 1–303 of this Title.

(4) ‘‘Bank’’ means a person engaged in the business of banking and includes

a savings bank, savings and loan association, credit union, and trust company.

(5) ‘‘Bearer’’ means a person in control of a negotiable electronic document

of title or a person in possession of an instrument, negotiable tangible document of title, or certificated security payable to bearer or endorsed in blank.

(6) ‘‘Bill of lading’’ means a document of title evidencing the receipt of goods

for shipment issued by a person engaged in the business of directly or indirectly

transporting or forwarding goods. The term does not include a warehouse

receipt.

(7) ‘‘Branch’’ includes a separately incorporated foreign branch of a bank.

(8) ‘‘Burden of establishing’’ means the burden of persuading the trier of fact

that the existence of the fact is more probable than its nonexistence.

(9) ‘‘Buyer in ordinary course of business’’ means a person that buys goods

in good faith, without knowledge that the sale violates the rights of another

person in the goods, and in the ordinary course from a person, other than a

pawnbroker, in the business of selling goods of that kind. A person buys goods

in the ordinary course if the sale to the person comports with the usual or

customary practices in the kind of business in which the seller is engaged or

with the seller’s own usual or customary practices. A person that sells oil, gas,

or other minerals at the wellhead or minehead is a person in the business of

selling goods of that kind. A buyer in ordinary course of business may buy for

cash, by exchange of other property, or on secured or unsecured credit, and

may acquire goods or documents of title under a preexisting contract for sale.

Only a buyer that takes possession of the goods or has a right to recover the

goods from the seller under Chapter 2 may be a buyer in ordinary course of

business. ‘‘Buyer in ordinary course of business’’ does not include a person

that acquires goods in a transfer in bulk or as security for or total or partial

satisfaction of a money debt.

195

Title 33, § 1–201

UNIFORM COMMERCIAL CODE

(10) ‘‘Conspicuous’’, with reference to a term means so written, displayed, or

presented that a reasonable person against whom it is to operate ought to have

noticed it. Whether a term is ‘‘conspicuous’’ or not is a decision for the court.

Conspicuous terms include the following:

(A) a heading in capitals equal to or greater in size than the surrounding text,

or in contrasting type, font, or color to the surrounding text of same or lesser

size; and

(B) language in the body of a record or display in larger type than the

surrounding text of the same size, or set off from surrounding text of the same

size by symbols or other marks that call attention to the language.

(11) ‘‘Consumer’’ means an individual who enters into a transaction primarily for personal, family, or household purposes.

(12) ‘‘Contract’’, as distinguished from ‘‘agreement’’, means the total legal

obligation that results from the parties’ agreement as determined by the

provisions of the Uniform Commercial Code as supplemented by any other

applicable laws.

(13) ‘‘Creditor’’ includes a general creditor, a secured creditor, a lien creditor, and any representative of creditors, including an assignee for the benefit of

creditors, a trustee in bankruptcy, a receiver in equity, and an executor or

administrator of an insolvent debtor’s or assignor’s estate.

(14) ‘‘Defendant’’ includes a person in the position of defendant in a counterclaim, cross-claim, or third-party claim.

(15) ‘‘Delivery’’ with respect to an electronic document of title means voluntary transfer of control and with respect to an instrument, a tangible document

of title, or chattel paper means voluntary transfer of possession.

(16) ‘‘Document of title’’ means a record that in the regular course of

business or financing is treated as adequately evidencing that the person in

possession or control of the record is entitled to receive, control, hold, and

dispose of the record and the goods the record covers and that purports to be

issued by or addressed to a bailee and to cover goods in the bailee’s possession

which are either identified or are fungible portions of an identified mass. The

term includes a bill of lading, transport document, dock warrant, dock receipt,

warehouse receipt, and order for delivery of goods. An electronic document of

title means a document of title evidenced by a record consisting of information

stored in an electronic medium. A tangible document of title means a document of title evidenced by a record consisting of information that is inscribed

on a tangible medium.

(17) ‘‘Fault’’ means a default, breach, or wrongful act or omission.

(18) ‘‘Fungible goods’’ means:

(A) goods of which any unit, by nature or usage of trade, is the equivalent of

any other like unit; or

(B) goods that by agreement are treated as equivalent.

(19) ‘‘Genuine’’ means free of forgery or counterfeiting.

196

GENERAL PROVISIONS

Title 33, § 1–201

(20) ‘‘Good faith’’, except as otherwise provided in Chapter 5 of this Title,

means honesty in fact and the observance of reasonable commercial standards

of fair dealing.

(21) ‘‘Holder’’ means:

(A) the person in possession of a negotiable instrument that is payable either

to bearer or to an identified person that is the person in possession;

(B) the person in possession of a document of title if the goods are deliverable either to bearer or to the order of the person in possession; or

(22) ‘‘Insolvency proceeding’’ includes any assignment for the benefit of

creditors or other proceeding intended to liquidate or rehabilitate the estate of

the person involved.

(23) ‘‘Insolvent’’ means:

(A) having generally ceased to pay debts in the ordinary course of business

other than as a result of bona fide dispute;

(B) being unable to pay debts as they become due; or

(24) ‘‘Money’’ means a medium of exchange authorized or adopted by a

domestic or foreign government. The term includes a monetary unit of account

established by an intergovernmental organization or by agreement between two

or more countries.

(25) ‘‘Nation’’ means the Muscogee (Creek) Nation

(26) ‘‘Organization’’ means a person other than an individual.

(27) ‘‘Party’’, as distinguished from ‘‘third party’’, means a person who has

engaged in a transaction or made an agreement subject to the Uniform

Commercial Code.

(28) ‘‘Person’’ means an individual, corporation, business trust, estate, trust,

partnership, limited liability company, association, joint venture, government,

governmental subdivision, agency, or instrumentality, public corporation, or

any other legal or commercial entity.

(29) ‘‘Present value’’ means the amount as of a date certain of one or more

sums payable in the future, discounted to the date certain by use of either an

interest rate specified by the parties if that rate is not manifestly unreasonable

at the time the transaction is entered into or, if an interest rate is not so

specified, a commercially reasonable rate that takes into account the facts and

circumstances at the time the transaction is entered into.

(30) ‘‘Purchase’’ means taking by sale, discount, negotiation, mortgage,

pledge, lien, security interest, issue or reissue, gift, or any other voluntary

transaction creating an interest in property.

(31) ‘‘Purchaser’’ means a person who takes by purchase.

(32) ‘‘Record’’ means information that is inscribed on a tangible medium or

that is stored in an electronic or other medium and is retrievable in perceivable

form.

197

Title 33, § 1–201

UNIFORM COMMERCIAL CODE

(33) ‘‘Remedy’’ means any remedial right to which an aggrieved party is

entitled with or without resort to a tribunal.

(34) ‘‘Representative’’ means a person empowered to act for another, including an agent, an officer of a corporation or association, and a trustee, executor,

or administrator of an estate.

(35) ‘‘Right’’ includes remedy.

(36) ‘‘Security interest’’ means an interest in personal property or fixtures

which secures payment or performance of an obligation. ‘‘Security interest’’

includes any interest of a consignor and a buyer of accounts, chattel paper, a

payment intangible, or a promissory note in a transaction that is subject to

Chapter 9 of this Title. ‘‘Security interest’’ does not include the special property

interest of a buyer of goods on identification of those goods to a contract for

sale under Section 2–401 of this Title, but a buyer may also acquire a ‘‘security

interest’’ by complying with the provisions of Chapter 9 of this Title. Except as

otherwise provided in Section 2–505 of this Title, the right of a seller or lessor

of goods under Chapter 2 or 2A of this Title to retain or acquire possession of

the goods is not a ‘‘security interest’’, but a seller or lessor may also acquire a

‘‘security interest’’ by complying with Chapter 9 of this Title. The retention or

reservation of title by a seller of goods notwithstanding shipment or delivery to

the buyer under Section 2–401 of this Title is limited in effect to a reservation of

a ‘‘security interest’’. Whether a transaction in the form of a lease creates

security interest is determined pursuant to Section 1–203 of this Title.

(37) ‘‘Send’’ in connection with any writing, record, or notice means:

(A) to deposit in the mail or deliver for transmission by any other usual

means of communication with postage or cost of transmission provided for and

properly addressed and, in the case of an instrument, to an address specified

thereon or otherwise agreed, or if there be none, to any address reasonable

under the circumstances; or

(B) in any other way to cause to be received any record or notice within the

time at which it would have arrived if properly sent.

(38) ‘‘Signed’’ includes any symbol executed or adopted with present intention to adopt or accept a writing.

(39) ‘‘State’’ means a state of the United States, the District of Columbia,

Puerto Rico, the United States Virgin Islands, or any territory or insular

possession subject to the jurisdiction of the United States.

(40) ‘‘Surety’’ includes guarantor or other secondary obligor.

(41) ‘‘Term’’ means a portion of an agreement which relates to a particular

matter.

(42) ‘‘Unauthorized signature’’ means a signature made without actual, implied or apparent authority. The term includes a forgery.

(43) ‘‘Warehouse receipt’’ means a document of title issued by a person

engaged in the business of storing goods for hire.

198

Title 33, § 1–202

GENERAL PROVISIONS

(44) ‘‘Writing’’ includes printing, typewriting, or any other intentional reduction to tangible form. ‘‘Written’’ has a corresponding meaning.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Prove defined, see Title 33, § 4A–105.

Uniform Electronic Transactions Act, transferable records, see Title 33, § 15–116.

Library References

Statutes O179.

Westlaw Topic No. 361.

C.J.S. Statutes §§ 306, 308 to 309.

§ 1–202. Notice; knowledge

Subject to subsection F, a person has ‘‘notice’’ of a fact if the person:

(1) has actual knowledge of it;

(2) has received a notice or notification of it; or

(3) from all the facts and circumstances known to the person at the time in

question, has reason to know it exists.

B. ‘‘Knowledge’’ means actual knowledge. ‘‘Knows’’ has a corresponding

meaning.

C. ‘‘Discover’’, learn or words of similar import refer to knowledge rather

than to reason to know.

D. A person ‘‘notifies’’ or ‘‘gives’’ a notice or notification to another person

by taking such steps as may be reasonably required to inform the other person

in ordinary course, whether or not the other person actually comes to know of

it.

E. Subject to subsection F, a person ‘‘receives’’ a notice or notification

when:

(1) it comes to that persons attention; or

(2) it is duly delivered in a form reasonable under the circumstances at the

place of business through which the contract was made or at another location

held out by that person as the place for receipt of such communications.

F. Notice, knowledge or a notice or notification received by an organization

is effective for a particular transaction from the time it is brought to the

attention of the individual conducting that transaction and, in any event, from

the time it would have been brought to the individuals attention if the organization had exercised due diligence. An organization exercises due diligence if it

maintains reasonable routines for communicating significant information to the

person conducting the transaction and there is reasonable compliance with the

routines. Due diligence does not require an individual acting for the organization to communicate information unless the communication is part of the

individuals regular duties or the individual has reason to know of the transaction and that the transaction would be materially affected by the information.

[Added by NCA 07–251, § 1, eff. Oct. 10, 2007.]

199

Title 33, § 1–202

UNIFORM COMMERCIAL CODE

Cross References

Time payment order is received, see Title 33, § 4A–106.

Library References

Notice O1 to 12.

Westlaw Topic No. 277.

C.J.S. Notice §§ 2 to 10, 12 to 34.

§ 1–203. Lease distinguished from security interest

(a) Whether a transaction in the form of a lease creates a lease or security

interest is determined by the facts of each case.

(b) A transaction creates a security interest if the consideration that the

lessee is to pay the lessor for the right to possession and use of the goods is an

obligation for the term of the lease not subject to termination by the lessee, and:

(1) the original term of the lease is equal to or greater than the remaining

economic life of the goods;

(2) the lessee is bound to renew the lease for the remaining economic life of

the goods or is bound to become the owner of the goods;

(3) the lessee has an option to renew the lease for the remaining economic

life of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement; or

(4) the lessee has an option to become the owner of the goods for no

additional consideration or for nominal additional consideration upon compliance with the lease agreement.

merely because:

(1) the present value of the consideration the lessee is obligated to pay the

lessor for the right to possession and use of the goods is substantially equal to

or is greater than the fair market value of the goods at the time the lease is

entered into;

(2) the lessee assumes risk of loss of the goods;

(3) the lessee agrees to pay, with respect to the goods, taxes, insurance, filing,

recording, or registration fees, or service or maintenance costs;

(4) the lessee has an option to renew the lease or to become the owner of the

goods;

(5) the lessee has an option to renew the lease for a fixed rent that is equal to

or greater than the reasonably predictable fair market rent for the use of the

goods for the term of the renewal at the time the option is to be performed; or

(6) the lessee has an option to become the owner of the goods for a fixed

price that is equal to or greater than the reasonably predictable fair market

value of the goods at the time the option is to be performed.

(d) Additional consideration is nominal if it is less than the lessee’s reasonably predictable cost of performing under the lease agreement if the option is

not exercised. Additional consideration is not nominal if:

200

Title 33, § 1–205

GENERAL PROVISIONS

(1) when the option to renew the lease is granted to the lessee, the rent is

stated to be the fair market rent for the use of the goods for the term of the

renewal determined at the time the option is to be performed, or

(2) when the option to become the owner of the goods is granted to the

lessee, the price is stated to be the fair market value of the goods determined at

the time the option is to be performed.

(e) The ‘‘remaining economic life of the goods’’ and ‘‘reasonably predictable’’

fair market rent, fair market value, or cost of performing under the lease

agreement must be determined with reference to the facts and circumstances at

the time the transaction is entered into.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Secured Transactions O10.

Westlaw Topic No. 349A.

C.J.S. Secured Transactions §§ 2, 6, 20 to 27.

§ 1–204. Value

Except as otherwise provided in Chapters 3, 4 and 5 of the Uniform

Commercial Code, a person gives value for rights if the person acquires them:

(1) in return for a binding commitment to extend credit or for the extension

of immediately available credit, whether or not drawn upon and whether or not

a charge-back is provided for in the event of difficulties in collection;

(2) as security for, or in total or partial satisfaction of, a preexisting claim;

(3) by accepting delivery under a preexisting contract for purchase; or

(4) in return for any consideration sufficient to support a simple contract.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Contracts O49.

Sales O19.

Secured Transactions O22.

Westlaw Topic Nos. 95, 343, 349A.

C.J.S. Contracts §§ 87 to 88, 90.

C.J.S. Sales §§ 31 to 34.

C.J.S. Secured Transactions § 29.

§ 1–205. Reasonable time; seasonableness

(a) Whether a time for taking an action required by the Uniform Commercial

Code is reasonable depends on the nature, purpose, and circumstances of the

action.

(b) An action is taken seasonably if it is taken at or within the time agreed or,

if no time is agreed, at or within a reasonable time.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Contracts O212.

Westlaw Topic No. 95.

C.J.S. Contracts §§ 581 to 582.

201

Title 33, § 1–206

UNIFORM COMMERCIAL CODE

§ 1–206. Presumptions

Whenever the Uniform Commercial Code creates a ‘‘presumption’’ with

respect to a fact, or provides that a fact is ‘‘presumed’’, the trier of fact must

find the existence of the fact unless and until evidence is introduced that

supports a finding of its nonexistence.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Uniform Electronic Transactions Act, applicability of this section, see Title 33, § 15–103.

Library References

Evidence O87.

Westlaw Topic No. 157.

C.J.S. Evidence §§ 201, 206 to 210, 212 to

214, 234 to 237, 239, 263.

SUBCHAPTER 3. TERRITORIAL APPLICABILITY

AND GENERAL RULES

Section

1–301. Territorial applicability; parties power to choose applicable law.

1–302. Variation by agreement.

1–303. Course of performance, course of dealing, and usage of trade.

1–304. Obligation of good faith.

1–305. Remedies to be liberally administered.

1–306. Waiver or renunciation of claim or right after breach.

1–307. Prima facie evidence by third party documents.

1–308. Performance or acceptance under reservation of rights.

1–309. Option to accelerate at will.

1–310. Subordination of obligations.

§ 1–301. Territorial applicability; parties power to choose applicable law

(a) In this section:

(1) ‘‘Domestic transaction’’ means a transaction other than an international

transaction.

(2) ‘‘International transaction’’ means a transaction that bears a reasonable

relation to a country other than the United States.

(b) This section applies to a transaction to the extent that it is governed by

another chapter of the Commercial Code.

reasonable relation to this Nation and also to another state, Indian Tribe or

country, the parties may agree that the law either of this Nation or of such

other state, Indian Tribe or country shall govern their rights and duties. In the

absence of such agreement and except as provided in subsections (e), (f) and

(g), the rights and obligations of the parties are determined by the law that

would be selected by this Nations conflict of laws principles.

(d) An agreement by parties to a domestic or international transaction that

any or all of their rights and obligations are to be determined by the laws of the

Nation, another Indian Tribe, state or country is effective, whether or not the

202

Title 33, § 1–301

GENERAL PROVISIONS

transaction bears a relation to the Nation, Indian Tribe, state or country

designated.

(e) If one of the parties to a transaction is a consumer, the following rules

apply:

(1) An agreement referred to in subsection (d) is not effective unless the

transaction bears a reasonable relation to the Nation, another Indian Tribe,

state or country designated.

(2) Application of the law of the Nation, another Indian Tribe, state or

country under subsections (d) and (g) may not deprive the consumer of the

protection of any rule of law governing a matter within the scope of this

section, which is both protective of consumers and may not be varied by

agreement:

(i) of the Nation, another Indian Tribe, state or country in which the

consumer principally resides, unless paragraph (c) applies; or

(ii) if the transaction is a sale of goods, and the Nation, another Indian Tribe,

state or country in which the consumer both makes the contract and takes

delivery of those goods, is not the Nation, another Indian Tribe, state or country

in which the consumer principally resides.

(f) An agreement otherwise effective under subsection (d) is not effective to

the extent that application of the law of the Nation, another Indian Tribe, state

or country designated would be contrary to a fundamental policy of the Nation,

another Indian Tribe, state or country whose law would govern in the absence

of such an agreement .

(g) To the extent that the Uniform Commercial Code governs a transaction, if

one of the following provisions of the Uniform Commercial Code specifies the

applicable law, that provision governs and a contrary agreement is effective

only to the extent permitted by the law so specified:

(1) Section 2–402 of this Title;

(2) Sections 2A–105 and 2A–106 of this Title;

(3) Section 4–102 of this Title;

(4) Section 4A–507 of this Title;

(5) Section 5–116 of this Title;

(6) Section 8–110 of this Title; and

(7) Sections 9–301 through 9–307 of this Title.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Action O17.

Contracts O2, 101(1), 129(1), 144, 206.

Westlaw Topic Nos. 13, 95.

C.J.S. Actions §§ 41 to 53.

C.J.S. Conflict of Laws §§ 2 to 3, 12, 15, 20,

23, 27 to 32, 34 to 40, 42 to 48, 50 to 65, 86

203

to 87, 91 to 93, 96 to 97, 100, 102, 105 to

107.

C.J.S. Contracts §§ 13 to 23, 25, 229 to 230,

238 to 240, 359.

C.J.S. Federal Civil Procedure § 306.

C.J.S. Joint Ventures § 10.

Title 33, § 1–302

UNIFORM COMMERCIAL CODE

§ 1–302. Variation by agreement

(a) Except as otherwise provided in subsection (b) of this section or elsewhere in the Uniform Commercial Code, the effect of the Uniform Commercial

Code may be varied by agreement.

(b) The obligations of good faith, diligence, reasonableness, and care prescribed by the Uniform Commercial Code may not be disclaimed by agreement.

The parties, by agreement, may determine the standards by which the performance of those obligations is to be measured if those standards are not manifestly

unreasonable. Whenever the Uniform Commercial Code requires an action to

be taken within a reasonable time, a time that is not manifestly unreasonable

may be fixed by agreement.

the phrase ‘‘unless otherwise agreed’’ or words of similar import does not imply

that the effect of other provisions may not be varied by agreement under this

section.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Contracts O1, 7, 103, 210.

Westlaw Topic No. 95.

C.J.S. Contracts §§ 2 to 3, 9, 12, 34, 195 to

200, 213 to 214, 374, 376.

§ 1–303. Course of performance, course of dealing, and usage of trade

(a) A ‘‘course of performance’’ is a sequence of conduct between the parties

to a particular transaction that exists if:

(1) the agreement of the parties with respect to the transaction involves

repeated occasions for performance by a party; and

(2) the other party, with knowledge of the nature of the performance and

opportunity for objection to it, accepts the performance or acquiesces in it

without objection.

(b) A ‘‘course of dealing’’ is a sequence of conduct concerning previous

transactions between the parties to a particular transaction that is fairly to be

regarded as establishing a common basis of understanding for interpreting

their expressions and other conduct.

regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question. The

existence and scope of such a usage must be proved as facts. If it is established

that such a usage is embodied in a trade code or similar record, the interpretation of the record is a question of law.

(d) A course of performance or course of dealing between the parties or

usage of trade in the vocation or trade in which they are engaged or of which

they are or should be aware is relevant in ascertaining the meaning of the

agreement of the parties, may give particular meaning to specific terms of the

agreement, and may supplement or qualify the terms of the agreement. A

usage of trade applicable in the place in which part of the performance under

the agreement is to occur may be so utilized as to that part of the performance.

204

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GENERAL PROVISIONS

(e) Except as otherwise provided in subsection (f) of this section, the express

terms of an agreement and any applicable course of performance, course of

dealing, or usage of trade must be construed whenever reasonable as consistent

with each other. If such a construction is unreasonable:

(1) express terms prevail over course of performance, course of dealing, and

usage of trade;

(2) course of performance prevails over course of dealing and usage of trade;

and

(3) course of dealing prevails over usage of trade.

(f) Subject to Section 2–209 of Title 33 of the Muscogee (Creek) Nation Code,

a course of performance is relevant to show a waiver or modification of any

term inconsistent with the course of performance.

(g) Evidence of a relevant usage of trade offered by one party is not

admissible unless that party has given the other party notice that the court finds

sufficient to prevent unfair surprise to the other party.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Agreement defined, see Title 33, § 1 –201.

Library References

Contracts O170.

Customs and Usages O1, 9.

Westlaw Topic Nos. 95, 113.

C.J.S. Contracts §§ 338 to 340.

C.J.S. Customs and Usages §§ 1, 7 to 11, 15

to 41.

§ 1–304. Obligation of good faith

Every contract of duty within the Uniform Commercial Code imposes an

obligation of good faith in its performance and enforcement.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Contracts O168.

Westlaw Topic No. 95.

C.J.S. Contracts §§ 346 to 347.

§ 1–305. Remedies to be liberally administered

(a) The remedies provided by the Uniform Commercial Code must be liberally administered to the end that the aggrieved party may be put in as good a

position as if the other party had fully performed but neither consequential or

special nor penal damages may be had except as specifically provided in the

Uniform Commercial Code or by other rule of law.

(b) Any right or obligation declared by the Uniform Commercial Code is

enforceable by action unless the provision declaring it specifies a different and

limited effect.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

205

Title 33, § 1–305

UNIFORM COMMERCIAL CODE

Library References

Action O3, 34.

Westlaw Topic No. 13.

C.J.S. Actions §§ 30, 56 to 57, 62 to 64, 67.

C.J.S. Railroads § 1080.

§ 1–306. Waiver or renunciation of claim or right after breach

A claim or right arising out of an alleged breach may be discharged in whole

or in part without consideration by agreement of the aggrieved party in an

authenticated record.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Contracts O316.

Westlaw Topic No. 95.

C.J.S. Contracts §§ 557 to 560, 596 to 597.

§ 1–307. Prima facie evidence by third party documents

A document in due form purporting to be a bill of lading, policy or certificate

of insurance, official weigher’s or inspector’s certificate, consular invoice, or

any other document authorized or required by the contract to be issued by a

third party is prima facie evidence of its own authenticity and genuineness and

of the facts stated in the document by the third party.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Evidence O370, 383.

Westlaw Topic No. 157.

C.J.S. Evidence §§ 1083 to 1084, 1086 to

1089, 1092 to 1093, 1095, 1181 to 1193,

1198, 1202, 1205 to 1207, 1213 to 1214,

1219, 1286 to 1305.

C.J.S. Patents § 179.

§ 1–308. Performance or acceptance under reservation of rights

(a) A party that with explicit reservation of rights performs or promises

performance or assents to performance in a manner demanded or offered by

the other party does not thereby prejudice the rights reserved. Such words as

‘‘without prejudice’’, ‘‘under protest’’ or the like are sufficient.

(b) Subsection (a) of this section does not apply to an accord and satisfaction.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Accord and Satisfaction O11(1).

Contracts O305, 316.

Estoppel O90.

Westlaw Topic Nos. 8, 95, 156.

C.J.S. Accord and Satisfaction §§ 32, 51 to

55, 58, 60.

C.J.S. Contracts §§ 557 to 560, 587 to 588,

596 to 597.

C.J.S. Estoppel and Waiver §§ 88 to 89, 175

to 180.

§ 1–309. Option to accelerate at will

A term providing that one party or that party’s successor in interest may

accelerate payment or performance or require collateral or additional collateral

‘‘at will’’ or when the party ‘‘deems itself insecure’’, or in words of similar

import, means that the party shall have power to do so only if that party in

206

Title 33, § 1–310

GENERAL PROVISIONS

good faith believes that the prospect of payment or performance is impaired.

The burden of establishing lack of good faith is on the party against whom the

power has been exercised.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Bills and Notes O129.

Contracts O213, 214.

Secured Transactions O221.

Westlaw Topic Nos. 56, 95, 349A.

C.J.S. Bills and Notes; Letters of Credit §§ 97,

117 to 138.

C.J.S. Contracts §§ 578 to 579, 581, 584.

C.J.S. Secured Transactions §§ 179, 181 to

183, 190.

§ 1–310. Subordination of obligations

An obligation may be issued as subordinated to performance of another

obligation of the person obligated, or a creditor may subordinate its right to

performance of an obligation by agreement with either the person obligated or

another creditor of the person obligated. Such a subordination does not create

a security interest as against either the common debtor or a subordinated

creditor.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Secured Transactions O147.

Westlaw Topic No. 349A.

C.J.S. Secured Transactions § 116.

207

CHAPTER 2.

SALES

Subchapter

1. Short Title, General Construction, and Subject Matter

2. Form, Formation, and Readjustment of Contract

3. General Obligation and Construction of Contract

4. Creditors, Title, and Good Faith Purchasers

5. Performance

6. Breach, Repudiation, and Excuse

7. Remedies

SUBCHAPTER 1. SHORT TITLE,

GENERAL CONSTRUCTION,

AND SUBJECT MATTER

Section

2–101. Short title.

2–102. Scope; certain security and other transactions excluded from this article.

2–103. Definitions and index of definitions.

2–104. Definitions: ‘‘Merchant’’; ‘‘financing agency’’; ‘‘between merchants’’.

2–105. Definitions: Transferability; ‘‘goods’’; ‘‘future goods’’; ‘‘lot’’; ‘‘commercial

unit’’.

2–106. Definitions: ‘‘Contract’’; ‘‘agreement’’; ‘‘contract for sale’’; ‘‘sale’’; ‘‘present

sale’’; ‘‘conforming to contract’’; ‘‘termination’’; ‘‘cancellation’’.

2–107. Goods to be severed from realty; recording.

§ 2–101. Short title

This chapter shall be known and may be cited as Uniform Commercial

Code—Sales.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Statutes O116.

Westlaw Topic No. 361.

C.J.S. Statutes §§ 217 to 220, 238, 240, 242.

§ 2–102. Scope; certain security and other transactions excluded from this

article

Unless the context otherwise requires, this chapter applies to transactions in

goods; it does not apply to any transaction which although in the form of an

unconditional contract to sell or present sale is intended to operate only as a

security transaction nor does this chapter impair or repeal any statute regulating sales to consumers, farmers or other specified classes of buyers.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O3.

Westlaw Topic No. 343.

C.J.S. Agency § 15.

C.J.S. Bailments §§ 9 to 12.

C.J.S. Sales §§ 6 to 9, 12 to 14.

208

SALES

Title 33, § 2–103

§ 2–103. Definitions and index of definitions

(1) In this chapter unless the context otherwise requires:

(a) ‘‘Buyer’’ means a person who buys or contracts to buy goods.

(b) ‘‘Receipt’’ of goods means taking physical possession of them.

(2) Other definitions applying to this article or to specified parts thereof, and

the sections in which they appear are:

‘‘Acceptance’’. Section 2–606 of this Title.

‘‘Banker’s credit’’. Section 2–325 of this Title.

‘‘Between merchants’’. Section 2–104 of this Title.

‘‘Cancellation’’. Section 2–106 of this Title.

‘‘Commercial unit’’. Section 2–105 of this Title.

‘‘Confirmed credit’’. Section 2–325 of this Title.

‘‘Conforming to contract’’. Section 2–106 of this Title.

‘‘Contract for sale’’. Section 2–106 of this Title.

‘‘Cover’’. Section 2–712 of this Title.

‘‘Entrusting’’. Section 2–403 of this Title.

‘‘Financing agency’’. Section 2–104 of this Title.

‘‘Future goods’’. Section 2–105 of this Title.

‘‘Goods’’. Section 2–105 of this Title.

‘‘Identification’’. Section 2–501 of this Title.

‘‘Installment contract’’. Section 2–612 of this Title.

‘‘Letter of credit’’. Section 2–325 of this Title.

‘‘Lot’’. Section 2–105 of this Title.

‘‘Merchant’’. Section 2–104 of this Title.

‘‘Overseas’’. Section 2–323 of this Title.

‘‘Person in position of seller’’. Section 2–707 of this Title.

‘‘Present sale’’. Section 2–106 of this Title.

‘‘Sale’’. Section 2–106 of this Title.

‘‘Sale on approval’’. Section 2–326 of this Title.

‘‘Sale or return’’. Section 2–326 of this Title.

‘‘Termination’’. Section 2–106 of this Title.

(3) ‘‘Control’’ as provided in Section 7–106 of this Title and the following

definitions in other articles apply to this article:

‘‘Check’’. Section 3–104 of this Title.

‘‘Consignee’’. Section 7–102 of this Title.

‘‘Consignor’’. Section 7–102 of this Title.

209

Title 33, § 2–103

UNIFORM COMMERCIAL CODE

‘‘Consumer goods’’. Section 9–106 of this Title.

‘‘Dishonor’’. Section 3–502 of this Title.

‘‘Draft’’. Section 3–104 of this Title.

(4) In addition, Chapter 1 of this Title contains general definitions and

principles of construction and interpretation applicable throughout this chapter.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O1, 54.

Statutes O179.

Westlaw Topic Nos. 343, 361.

C.J.S. Sales §§ 1 to 2, 26 to 27, 35, 38 to 39,

76, 115 to 117, 130 to 145, 149 to 152, 259.

C.J.S. Statutes §§ 306, 308 to 309.

§ 2–104. Definitions: ‘‘Merchant’’; ‘‘financing agency’’; ‘‘between merchants’’

(1) ‘‘Merchant’’ means a person who deals in goods of the kind or otherwise

by his occupation holds himself out as having knowledge or skill peculiar to the

practices or goods involved in the transaction or to whom such knowledge or

skill may be attributed by his employment of an agent or broker or other

intermediary who by his occupation holds himself out as having such knowledge or skill.

(2) ‘‘Financing agency’’ means a bank, finance company or other person who

in the ordinary course of business makes advances against goods or documents

of title or who by arrangement with either the seller or the buyer intervenes in

ordinary course to make or collect payment due or claimed under the contract

for sale, as by purchasing or paying the seller’s draft or making advances

against it or by merely taking it for collection whether or not documents of title

accompany or are associated with the draft. ‘‘Financing agency’’ includes also

a bank or other person who similarly intervenes between persons who are in

the position of seller and buyer in respect to the goods (Section 2–707).

(3) ‘‘Between merchants’’ means in any transaction with respect to which

both parties are chargeable with the knowledge or skill of merchants.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O1, 15.1.

Statutes O179.

Westlaw Topic Nos. 343, 361.

C.J.S. Sales §§ 1 to 2, 5, 26 to 28, 35, 38 to

39, 76, 115 to 117, 259.

C.J.S. Statutes §§ 306, 308 to 309.

§ 2–105. Definitions: Transferability; ‘‘goods’’; ‘‘future goods’’; ‘‘lot’’;

‘‘commercial unit’’

(1) ‘‘Goods’’ means all things (including specially manufactured goods)

which are movable at the time of identification to the contract for sale other

than the money in which the price is to be paid, investment securities (Chapter

8) and things in action. ‘‘Goods’’ also includes the unborn young of animals

and growing crops and other identified things attached to realty as described in

the section on goods to be severed from realty (Section 2–107) but does not

include information.

210

Title 33, § 2–106

SALES

(2) Goods must be both existing and identified before any interest in them

can pass. Goods which are not both existing and identified are ‘‘future’’ goods.

A purported present sale of future goods or of any interest therein operates as a

contract to sell.

(3) There may be a sale of a part interest in existing identified goods.

(4) An undivided share in an identified bulk of fungible goods is sufficiently

identified to be sold although the quantity of the bulk is not determined. Any

agreed proportion of such a bulk or any quantity thereof agreed upon by

number, weight or other measure may to the extent of the seller’s interest in the

bulk be sold to the buyer who then becomes an owner in common.

(5) ‘‘Lot’’ means a parcel or a single article which is the subject matter of a

separate sale or delivery, whether or not it is sufficient to perform the contract.

(6) ‘‘Commercial unit’’ means such a unit of goods as by commercial usage is

a single whole for purposes of sale and division of which materially impairs its

character or value on the market or in use. A commercial unit may be a single

article (as a machine) or a set of articles (as a suite of furniture or an

assortment of sizes) or a quantity (as a bale, gross, or carload) or any other unit

treated in use or in the relevant market as a single whole.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O9.

Statutes O179.

Westlaw Topic Nos. 343, 361.

C.J.S. Sales §§ 3 to 4, 11 to 12, 15 to 17, 29 to

30.

C.J.S. Statutes §§ 306, 308 to 309.

§ 2–106. Definitions: ‘‘Contract’’; ‘‘agreement’’; ‘‘contract for sale’’;

‘‘sale’’; ‘‘present sale’’; ‘‘conforming to contract’’; ‘‘termination’’; ‘‘cancellation’’

(1) In this article unless the context otherwise requires ‘‘contract’’ and

‘‘agreement’’ are limited to those relating to the present or future sale of goods.

‘‘Contract for sale’’ includes both a present sale of goods and a contract to sell

goods at a future time but does not include a license of information. A ‘‘sale’’

consists in the passing of title from the seller to the buyer for a price (Section

2–401). A ‘‘present sale’’ means a sale which is accomplished by the making of

the contract.

(2) Goods or conduct including any part of a performance are ‘‘conforming’’

or conform to the contract when they are in accordance with the obligations

under the contract.

(3) ‘‘Termination’’ occurs when either party pursuant to a power created by

agreement or law puts an end to the contract otherwise than for its breach. On

‘‘termination’’ all obligations which are still executory on both sides are

discharged but any right based on prior breach or performance survives.

(4) ‘‘Cancellation’’ occurs when either party puts an end to the contract for

breach by the other and its effect is the same as that of ‘‘termination’’ except

that the canceling party also retains any remedy for breach of the whole

contract or any unperformed balance.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

211

Title 33, § 2–106

UNIFORM COMMERCIAL CODE

Library References

Sales O3, 84.

Westlaw Topic No. 343.

C.J.S. Agency § 15.

C.J.S. Bailments §§ 9 to 12.

C.J.S. Sales §§ 6 to 9, 12 to 14, 145, 182 to

184.

§ 2–107. Goods to be severed from realty; recording

(1) A contract for the sale of minerals or the like, including oil and gas, or a

structure or its materials to be removed from realty is a contract for the sale of

goods within this chapter if they are to be severed by the seller, but until

severance, a purported present sale thereof which is not effective as a transfer

of an interest in land is effective only as a contract to sell.

(2) A contract for the sale, apart from the land of growing crops or other

things attached to realty and capable of severance without material harm

thereto, but not described in subsection (1) of this section or of timber to be cut

is a contract for the sale of goods within this chapter whether the subject

matter is to be severed by the buyer or by the seller even though it forms part of

the realty at the time of contracting, and the parties can by identification effect

a present sale before severance.

(3) The provisions of this section are subject to any third party rights

provided by the law relating to realty records, and the contract for sale may be

executed and recorded as a document transferring an interest in land and shall

then constitute notice to third parties of the buyer’s rights under the contract

for sale.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O10, 11.

Westlaw Topic No. 343.

C.J.S. Sales §§ 3 to 4, 11 to 12, 15 to 17, 29.

SUBCHAPTER 2. FORM, FORMATION, AND

READJUSTMENT OF CONTRACT

Section

2–201. Formal requirements; statute of frauds.

2–202. Final written expression; parol or extrinsic evidence.

2–203. Seals inoperative.

2–204. Formation in general.

2–205. Firm offers.

2–206. Offer and acceptance in formation of contract.

2–207. Additional terms in acceptance or confirmation.

2–208. Course of performance or practical construction.

2–209. Modification, rescission and waiver.

2–210. Delegation of performance; assignment of rights.

§ 2–201. Formal requirements; statute of frauds

(1) Except as otherwise provided in this section a contract for the sale of

goods for the price of five hundred dollars ($500.00) or more is not enforceable

by way of action or defense unless there is some writing sufficient to indicate

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Title 33, § 2–202

SALES

that a contract for sale has been made between the parties and signed by the

party against whom enforcement is sought or by his authorized agent or broker.

A writing is not insufficient because it omits or incorrectly states a term agreed

upon but the contract is not enforceable under this paragraph beyond the

quantity of goods shown in such writing.

(2) Between merchants if within a reasonable time a writing in confirmation

of the contract and sufficient against the sender is received and the party

receiving it has reason to know its contents, it satisfies the requirements of

subsection (1) against such party unless written notice of objection to its

contents is given within ten (10) days after it is received.

(3) A contract which does not satisfy the requirements of subsection (1) but

which is valid in other respects is enforceable

(a) if the goods are to be specially manufactured for the buyer and are not

suitable for sale to others in the ordinary course of the seller’s business and the

seller, before notice of repudiation is received and under circumstances which

reasonably indicate that the goods are for the buyer, has made either a

substantial beginning of their manufacture or commitments for their procurement; or

(b) if the party against whom enforcement is sought admits in his pleading,

testimony or otherwise in court that a contract for sale was made, but the

contract is not enforceable under this provision beyond the quantity of goods

admitted; or

which have been received and accepted (Section 2–606).

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Sale on approval and sale or return, see Title 33, § 2–326.

Library References

Frauds, Statute Of O81 to 96.

Westlaw Topic No. 185.

C.J.S. Sales §§ 106 to 108, 111.

§ 2–202. Final written expression; parol or extrinsic evidence

Terms with respect to which the confirmatory memoranda of the parties

agree or which are otherwise set forth in a writing intended by the parties as a

final expression of their agreement with respect to such terms as are included

therein may not be contradicted by evidence of any prior agreement or of a

contemporaneous oral agreement but may be explained or supplemented:

(a) by course of performance, course of dealing or usage of trade and

(b) by evidence of consistent additional terms unless the court finds the

writing to have been intended also as a complete and exclusive statement of the

terms of the agreement.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

213

Title 33, § 2–202

UNIFORM COMMERCIAL CODE

Cross References

Exclusion or modification of warranties, negation or limitation, see Title 33, § 2–316.

Sale on approval and sale or return, see Title 33, § 2–326.

Library References

Evidence O384 to 469.

Westlaw Topic No. 157.

C.J.S. Evidence §§ 1401 to 1614.

§ 2–203. Seals inoperative

The affixing of a seal to a writing evidencing a contract for sale or an offer to

buy or sell goods does not constitute the writing a sealed instrument and the

law with respect to sealed instruments does not apply to such a contract or

offer.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O28.

Seals O1.

Westlaw Topic Nos. 343, 347.

C.J.S. Sales §§ 106 to 108, 112 to 114.

C.J.S. Seals §§ 1 to 2.

§ 2–204. Formation in general

(1) A contract for sale of goods may be made in any manner sufficient to

show agreement, including conduct by both parties which recognizes the

existence of such a contract.

(2) An agreement sufficient to constitute a contract for sale may be found

even though the moment of its making is undetermined.

(3) Even though one or more terms are left open a contract for sale does not

fail for indefiniteness if the parties have intended to make a contract and there

is a reasonably certain basis for giving an appropriate remedy.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Options and cooperation respecting performance, see Title 33, § 2–311.

Library References

Sales O1, 22, 23.

Westlaw Topic No. 343.

C.J.S. Sales §§ 1 to 2, 26 to 27, 35, 38 to 39,

42 to 65, 69, 76, 115 to 117, 259.

§ 2–205. Firm offers

An offer by a merchant to buy or sell goods in a signed writing which by its

terms gives assurance that it will be held open is not revocable, for lack of

consideration, during the time stated or if no time is stated for a reasonable

time, but in no event may such period of irrevocability exceed three (3) months;

but any such term of assurance on a form supplied by the offeree must be

separately signed by the offeror.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

214

Title 33, § 2–207

SALES

Library References

Sales O22(2), 22(5), 23(2), 23(5).

Westlaw Topic No. 343.

C.J.S. Sales §§ 46 to 49, 53, 61, 63, 69.

§ 2–206. Offer and acceptance in formation of contract

(1) Unless otherwise unambiguously indicated by the language or circumstances

(a) an offer to make a contract shall be construed as inviting acceptance in

any manner and by any medium reasonable in the circumstances;

(b) an order or other offer to buy goods for prompt or current shipment shall

be construed as inviting acceptance either by a prompt promise to ship or by

the prompt or current shipment of conforming or nonconforming goods, but

such a shipment of non-conforming goods does not constitute an acceptance if

the seller seasonably notifies the buyer that the shipment is offered only as an

accommodation to the buyer.

(2) Where the beginning of a requested performance is a reasonable mode of

acceptance an offeror who is not notified of acceptance within a reasonable

time may treat the offer as having lapsed before acceptance.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O22, 23.

Westlaw Topic No. 343.

C.J.S. Sales §§ 42 to 65, 69.

§ 2–207. Additional terms in acceptance or confirmation

(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even

though it states terms additional to or different from those offered or agreed

upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

(2) The additional terms are to be construed as proposals for addition to the

contract. Between merchants such terms become part of the contract unless:

(a) the offer expressly limits acceptance to the terms of the offer;

(b) they materially alter it; or

a reasonable time after notice of them is received.

(3) Conduct by both parties which recognizes the existence of a contract is

sufficient to establish a contract for sale although the writings of the parties do

not otherwise establish a contract. In such case the terms of the particular

contract consist of those terms on which the writings of the parties agree,

together with any supplementary terms incorporated under any other provisions of this act.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

215

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Library References

Sales O22(4), 23(4).

Westlaw Topic No. 343.

C.J.S. Sales §§ 59 to 65, 69.

§ 2–208. Course of performance or practical construction

(1) Where the contract for sale involves repeated occasions for performance

by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or

acquiesced in without objection shall be relevant to determine the meaning of

the agreement.

(2) The express terms of the agreement and any such course of performance,

as well as any course of dealing and usage of trade, shall be construed

whenever reasonable as consistent with each other; but when such construction is unreasonable, express terms shall control course of performance and

course of performance shall control both course of dealing and usage of trade.

(3) Subject to the provisions of the next section on modification and waiver,

such course of performance shall be relevant to show a waiver or modification

of any term inconsistent with such course of performance.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O54.

Westlaw Topic No. 343.

C.J.S. Sales §§ 130 to 145, 149 to 152.

§ 2–209. Modification, rescission and waiver

(1) An agreement modifying a contract within this chapter needs no consideration to be binding.

(2) A signed agreement which excludes modification or rescission except by a

signed writing cannot be otherwise modified or rescinded, but except as

between merchants such a requirement on a form supplied by the merchant

must be separately signed by the other party.

(3) The requirements of the statute of frauds section of this Chapter (Section

2–201) must be satisfied if the contract as modified is within its provisions.

(4) Although an attempt at modification or rescission does not satisfy the

requirements of subsection (2) or (3) it can operate as a waiver.

(5) A party who has made a waiver affecting an executory portion of the

contract may retract the waiver by reasonable notification received by the other

party that strict performance will be required of any term waived, unless the

retraction would be unjust in view of a material change of position in reliance

on the waiver.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Course of performance, relevance to show waiver or modification of inconsistent terms, see Title

33, § 1–303.

216

Title 33, § 2–210

SALES

Library References

Frauds, Statute Of O131(1).

Sales O89.

Westlaw Topic Nos. 185, 343.

C.J.S. Frauds, Statute Of §§ 181 to 183.

C.J.S. Sales §§ 162 to 174, 179.

§ 2–210. Delegation of performance; assignment of rights

(1) A party may perform his duty through a delegate unless otherwise agreed

or unless the other party has a substantial interest in having his original

promisor perform or control the acts required by the contract. No delegation of

performance relieves the party delegating of any duty to perform or any liability

for breach.

(2) Except as otherwise provided in Chapter 9 of this Title, unless otherwise

agreed all rights of either seller or buyer can be assigned except where the

assignment would materially change the duty of the other party, or increase

materially the burden or risk imposed on him by his contract, or impair

materially his chance of obtaining return performance. A right to damages for

breach of the whole contract or a right arising out of the assignor’s due

performance of his entire obligation can be assigned despite agreement otherwise.

(3) The creation, attachment, perfection, or enforcement of a security interest

in the seller’s interest under a contract is not a transfer that materially changes

the duty of or increases materially the burden or risk imposed on the buyer or

impairs materially the buyer’s chance of obtaining return performance within

the purview of paragraph (2) of this section unless, and then only to the extent

that enforcement actually results in a delegation of material performance of the

seller. Even in that event, the creation, attachment, perfection, and enforcement of the security interest remain effective, but

(i) the seller is liable to the buyer for damages caused by the delegation to the

extent that the damages could not reasonably be prevented by the buyer, and

(ii) a court having jurisdiction may grant other appropriate relief, including

cancellation of the contract for sale or an injunction against enforcement of the

security interest or consummation of the enforcement.

(4) Unless the circumstances indicate the contrary a prohibition of assignment of ‘‘the contract’’ is to be construed as barring only the delegation to the

assignee of the assignor’s performance.

(5) An assignment of ‘‘the contract’’ or of ‘‘all my rights under the contract’’

or an assignment in similar general terms is an assignment of rights and unless

the language or the circumstances (as in an assignment for security) indicate

the contrary, it is a delegation of performance of the duties of the assignor and

its acceptance by the assignee constitutes a promise by him to perform those

duties. This promise is enforceable by either the assignor or the other party to

the original contract.

(6) The other party may treat any assignment which delegates performance

as creating reasonable grounds for insecurity and may without prejudice to his

rights against the assignor demand assurances from the assignee (Section

2–609).

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

217

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Library References

Sales O86, 220.

Westlaw Topic No. 343.

C.J.S. Sales §§ 139 to 140, 409.

SUBCHAPTER 3. GENERAL OBLIGATION

AND CONSTRUCTION OF CONTRACT

Section

2–301. General obligations of parties.

2–302. Reserved.

2–303. Allocation or division of risks.

2–304. Price payable in money, goods, realty, or otherwise.

2–305. Reserved.

2–306. Output, requirements and exclusive dealings.

2–307. Delivery in single lot or several lots.

2–308. Absence of specified place for delivery.

2–309. Absence of specific time provisions; notice of termination.

2–310. Open time for payment or running of credit; authority to ship under reservation.

2–311. Options and cooperation respecting performance.

2–312. Warranty of title and against infringement; buyer’s obligation against infringement.

2–313. Express warranties by affirmation, promise, description, sample.

2–314. Implied warranty: merchantability; usage of trade.

2–315. Implied warranty: fitness for particular purpose.

2–316. Exclusion or modification of warranties.

2–317. Cumulation and conflict of warranties express or implied.

2–318. Third party beneficiaries of warranties express or implied.

2–319. F.O.B. and F.A.S. terms.

2–320. C.I.F. and C. and F. terms.

2–321. C.I.F. or C. and F.

2–322. Delivery.

2–323. Form of bill of lading required in overseas shipment.

2–324. Provisions for ‘‘no arrival, no sale’’.

2–325. Letter of credit.

2–326. Sale on approval and sale or return; consignment sales and rights of creditors.

2–327. Special incidents of sale on approval and sale or return.

2–328. Sale by auction.

§ 2–301. General obligations of parties

The obligation of the seller is to transfer and deliver and that of the buyer is

to accept and pay in accordance with the contract.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O150, 177, 183.

Westlaw Topic No. 343.

C.J.S. Sales §§ 236 to 237, 259 to 260, 279 to

282, 324 to 325, 327 to 328, 344 to 347, 349

to 351, 368, 371.

218

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§ 2–302. Reserved

§ 2–303. Allocation or division of risks

Where this chapter allocates a risk or a burden as between the parties

‘‘unless otherwise agreed’’, the agreement may not only shift the allocation but

may also divide the risk or burden.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O217.

Westlaw Topic No. 343.

§ 2–304. Price payable in money, goods, realty, or otherwise

(1) The price can be made payable in money or otherwise. If it is payable in

whole or in part in goods each party is a seller of the goods which he is to

transfer.

(2) Even though all or part of the price is payable in an interest in realty the

transfer of the goods and the seller’s obligations with reference to them are

subject to this chapter, but not the transfer of the interest in realty or the

transferor’s obligations in connection therewith.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O189.

Westlaw Topic No. 343.

C.J.S. Sales §§ 370 to 371.

§ 2–305. Reserved

§ 2–306. Output, requirements and exclusive dealings

(1) A term which measures the quantity by the output of the seller or the

requirements of the buyer means such actual output or requirements as may

occur in good faith, except that no quantity unreasonably disproportionate to

any stated estimate or in the absence of a stated estimate to any normal or

otherwise comparable prior output or requirements may be tendered or demanded.

(2) A lawful agreement by either the seller or the buyer for exclusive dealing

in the kind of goods concerned imposes unless otherwise agreed an obligation

by the seller to use best efforts to supply the goods and by the buyer to use best

efforts to promote their sale.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O71(4).

Westlaw Topic No. 343.

C.J.S. Sales §§ 303 to 307.

219

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§ 2–307. Delivery in single lot or several lots

Unless otherwise agreed all goods called for by a contract for sale must be

tendered in a single delivery and payment is due only on such tender but where

the circumstances give either party the right to make or demand delivery in lots

the price if it can be apportioned may be demanded for each lot.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O163.

Westlaw Topic No. 343.

C.J.S. Sales § 298.

§ 2–308. Absence of specified place for delivery

Unless otherwise agreed

(a) the place for delivery of goods is the seller’s place of business or if he has

none his residence; but

(b) in a contract for sale of identified goods which to the knowledge of the

parties at the time of contracting are in some other place, that place is the place

for their delivery; and

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O79.

Westlaw Topic No. 343.

C.J.S. Sales §§ 279 to 280.

§ 2–309. Absence of specific time provisions; notice of termination

(1) The time for shipment or delivery or any other action under a contract if

not provided in this chapter or agreed upon shall be a reasonable time.

(2) Where the contract provides for successive performances but is indefinite

in duration it is valid for a reasonable time but unless otherwise agreed may be

terminated at any time by either party.

(3) Termination of a contract by one party except on the happening of an

agreed event requires that reasonable notification be received by the other

party and an agreement dispensing with notification is invalid if its operation

would be unconscionable.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O81(2), 84, 107, 127.

Westlaw Topic No. 343.

C.J.S. Sales §§ 145, 182 to 184, 223 to 225,

284 to 285, 359 to 360.

§ 2–310. Open time for payment or running of credit; authority to ship

under reservation

Unless otherwise agreed:

(a) payment is due at the time and place at which the buyer is to receive the

goods even though the place of shipment is the place of delivery; and

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(b) if the seller is authorized to send the goods he may ship them under

reservation, and may tender the documents of title, but the buyer may inspect

the goods after their arrival before payment is due unless such inspection is

inconsistent with the terms of the contract (Section 2–513); and

than by subsection (b) then payment is due regardless of where the goods are to

be received

(i) at the time and place at which the buyer is to receive delivery of the

tangible documents or

(ii) at the time the buyer is to receive delivery of the electronic documents

and at the seller’s place of business or if none, the seller’s residence; and

(d) where the seller is required or authorized to ship the goods on credit the

credit period runs from the time of shipment but post-dating the invoice or

delaying its dispatch will correspondingly delay the starting of the credit

period.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O82.

Westlaw Topic No. 343.

C.J.S. Sales § 369.

§ 2–311. Options and cooperation respecting performance

(1) An agreement for sale which is otherwise sufficiently definite (subsection

(3) of Section 2–204) to be a contract is not made invalid by the fact that it

leaves particulars of performance to be specified by one of the parties. Any

such specification must be made in good faith and within limits set by

commercial reasonableness.

(2) Unless otherwise agreed specifications relating to assortment of the goods

are at the buyer’s option and except as otherwise provided in subsections (1)(c)

and (3) of Section 2–319 specifications or arrangements relating to shipment

are at the seller’s option.

(3) Where such specification would materially affect the other party’s performance but is not seasonably made or where one party’s co-operation is

necessary to the agreed performance of the other but is not seasonably forthcoming, the other party in addition to all other remedies

(a) is excused for any resulting delay in his own performance; and

(b) may also either proceed to perform in any reasonable manner or after the

time for a material part of his own performance treat the failure to specify or to

cooperate as a breach by failure to deliver or accept the goods.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O1(4), 64, 83, 154.

Westlaw Topic No. 343.

C.J.S. Sales §§ 115 to 117, 130, 259.

221

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§ 2–312. Warranty of title and against infringement; buyer’s obligation

against infringement

(1) Subject to subsection (2) there is in a contract for sale a warranty by the

seller that

(a) the title conveyed shall be good, and its transfer rightful; and

(b) the goods shall be delivered free from any security interest or other lien

or encumbrance of which the buyer at the time of contracting has no knowledge.

(2) A warranty under subsection (1) will be excluded or modified only by

specific language or by circumstances which give the buyer reason to know that

the person selling does not claim title in himself or that he is purporting to sell

only such right or title as he or a third person may have.

(3) Unless otherwise agreed a seller who is a merchant regularly dealing in

goods of the kind warrants that the goods shall be delivered free of the rightful

claim of any third person by way of infringement or the like but a buyer who

furnishes specifications to the seller must hold the seller harmless against any

such claim which arises out of compliance with the specifications.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Effect of acceptance of tender, notice of claim or litigation to person answerable over, see Title 33,

§ 2–607.

Library References

Sales O263.

Westlaw Topic No. 343.

C.J.S. Sales §§ 457, 472.

§ 2–313. Express warranties by affirmation, promise, description, sample

(1) Express warranties by the seller are created as follows:

(a) Any affirmation of fact or promise made by the seller to the buyer which

relates to the goods and becomes part of the basis of the bargain creates an

express warranty that the goods shall conform to the affirmation or promise.

(b) Any description of the goods which is made part of the basis of the

bargain creates an express warranty that the goods shall conform to the

description.

creates an express warranty that the whole of the goods shall conform to the

sample or model.

(2) It is not necessary to the creation of an express warranty that the seller

use formal words such as ‘‘warrant’’ or ‘‘guarantee’’ or that he have a specific

intention to make a warranty, but an affirmation merely of the value of the

goods or a statement purporting to be merely the seller’s opinion or commendation of the goods does not create a warranty.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

222

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SALES

Library References

Sales O259.

Westlaw Topic No. 343.

C.J.S. Sales §§ 430 to 437, 464.

§ 2–314. Implied warranty: merchantability; usage of trade

(1) Unless excluded or modified (Section 2–316), a warranty that the goods

shall be merchantable is implied in a contract for their sale if the seller is a

merchant with respect to goods of that kind. Under this section the serving for

value of food or drink to be consumed either on the premises or elsewhere is a

sale.

(2) Goods to be merchantable must be at least such as

(a) pass without objection in the trade under the contract description; and

(b) in the case of fungible goods, are of fair average quality within the

description; and

(d) run, within the variations permitted by the agreement, of even kind,

quality and quantity within each unit and among all units involved; and

(e) are adequately contained, packaged, and labeled as the agreement may

require; and

(f) conform to the promises or affirmations of fact made on the container or

label if any.

(3) Unless excluded or modified (Section 2–316) other implied warranties

may arise from course of dealing or usage of trade.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O272.

Westlaw Topic No. 343.

C.J.S. Sales §§ 444 to 450.

§ 2–315. Implied warranty: fitness for particular purpose

Where the seller at the time of contracting has reason to know any particular

purpose for which the goods are required and that the buyer is relying on the

seller’s skill or judgment to select or furnish suitable goods, there is unless

excluded or modified under the next section an implied warranty that the goods

shall be fit for such purpose.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O273.

Westlaw Topic No. 343.

C.J.S. Sales §§ 453 to 456.

§ 2–316. Exclusion or modification of warranties

(1) Words or conduct relevant to the creation of an express warranty and

words or conduct tending to negate or limit warranty shall be construed

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wherever reasonable as consistent with each other; but, subject to the provisions of this chapter on parol or extrinsic evidence (Section 2–202) negation or

limitation is inoperative to the extent that such construction is unreasonable.

(2) Subject to subsection (3), to exclude or modify the implied warranty of

merchantability or any part of it the language must mention merchantability

and in case of a writing must be conspicuous, and to exclude or modify any

implied warranty of fitness the exclusion must be by a writing and conspicuous.

Language to exclude all implied warranties of fitness is sufficient if it states, for

example, that ‘‘There are no warranties which extend beyond the description on

the face hereof.’’

(3) Notwithstanding subsection (2)

(a) unless the circumstances indicate otherwise, all implied warranties are

excluded by expressions like ‘‘as is’’, ‘‘with all faults’’ or other language which

in common understanding calls the buyer’s attention to the exclusion of

warranties and makes plain that there is no implied warranty; and

(b) when the buyer before entering into the contract has examined the goods

or the sample or model as fully as he desired or has refused to examine the

goods there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him; and

dealing or course of performance or usage of trade; and

(d) the implied warranties of merchantability and fitness do not apply to the

sale or barter of livestock or its unborn young, provided that seller offers

sufficient evidence that all state and federal regulations pertaining to the health

of such animals were complied with; provided, however, that the implied

warranties of merchantability and fitness shall apply to the sale or barter of

horses.

(4) Remedies for breach of warranty can be limited in accordance with the

provisions of this chapter on liquidation or limitation of damages and on

contractual modification of remedy (Sections 2–718 and 2–719).

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O260, 267.

Westlaw Topic No. 343.

C.J.S. Sales §§ 424, 430, 435 to 437, 459 to

469.

§ 2–317. Cumulation and conflict of warranties express or implied

Warranties whether express or implied shall be construed as consistent with

each other and as cumulative, but if such construction is unreasonable the

intention of the parties shall determine which warranty is dominant. In ascertaining that intention the following rules apply:

(a) Exact or technical specifications displace an inconsistent sample or

model or general language of description.

(b) A sample from an existing bulk displaces inconsistent general language of

description.

224

Title 33, § 2–319

SALES

an implied warranty of fitness for a particular purpose.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O277.

Westlaw Topic No. 343.

C.J.S. Sales §§ 424, 427 to 429, 438 to 439.

§ 2–318. Third party beneficiaries of warranties express or implied

(1) A seller’s warranty whether express or implied extends to any natural

person who is in the family or household of his buyer or who is a guest in his

home if it is reasonable to expect that such person may use, consume or be

affected by the goods and who is injured in person by breach of the warranty.

(2) This section does not displace principles of law and equity that extend a

warranty to or for the benefit of a buyer to other persons.

(3) The operation of this section may not be excluded, modified, or limited by

a seller, but an exclusion, modification, or limitation of the warranty, including

any with respect to rights and remedies, effective against the buyer is also

effective against any beneficiary designated under this section.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Contracts O187.

Sales O255, 278.

Westlaw Topic Nos. 95, 343.

C.J.S. Contracts §§ 602, 610 to 629.

C.J.S. Sales §§ 426 to 429, 439.

§ 2–319. F.O.B. and F.A.S. terms

(1) Unless otherwise agreed the term F.O.B. (which means ‘‘free on board’’)

at a named place, even though used only in connection with the stated price, is

a delivery term under which

(a) when the term is F.O.B. the place of shipment, the seller must at that

place ship the goods in the manner provided in this chapter (Section 2–504)

and bear the expense and risk of putting them into the possession of the carrier;

(b) when the term is F.O.B. the place of destination, the seller must at his

own expense and risk transport the goods to that place and there tender

delivery of them in the manner provided in this chapter (Section 2–503);

vehicle, the seller must in addition at his own expense and risk load the goods

on board. If the term if F.O.B. vessel the buyer must name the vessel and in an

appropriate case the seller must comply with the provisions of this chapter on

the form of bill of lading (Section 2–323).

(2) Unless otherwise agreed the term F.A.S. vessel (which means ‘‘free

alongside’’) at a named port, even though used only in connection with the

stated price, is a delivery term under which the seller must

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(a) at his own expense and risk deliver the goods alongside the vessel in the

manner usual in that port or on a dock designated and provided by the buyer;

and

(b) obtain and tender a receipt for the goods in exchange for which the

carrier is under a duty to issue a bill of lading.

(3) Unless otherwise agreed in any case falling within subsection (1)(a) or (c)

or subsection (2) the buyer must seasonably give any needed instructions for

making delivery, including when the term is F.A.S. or F.O.B. the loading berth

of the vessel and in an appropriate case its name and sailing date. The seller

may treat the failure of needed instructions as a failure of cooperation under

this chapter (Section 2–311). He may also at his option move the goods in any

reasonable manner preparatory to delivery or shipment.

(4) Under the term F.O.B. vessel or F.A.S. unless otherwise agreed the buyer

must make payment against tender of the required documents and the seller

may not tender nor the buyer demand delivery of the goods in substitution for

the documents.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O77, 79, 83, 161, 201(4).

Westlaw Topic No. 343.

C.J.S. Sales §§ 155 to 156, 259, 275, 279 to

280, 288, 290 to 291, 404.

§ 2–320. C.I.F. and C. and F. terms

(1) The term C.I.F. means that the price includes in a lump sum the cost of

the goods and the insurance and freight to the named destination. The term C.

and F. or C.F. means that the price so includes cost and freight to the named

destination.

(2) Unless otherwise agreed and even though used only in connection with

the stated price and destination, the term C.I.F. destination or its equivalent

requires the seller at his own expense and risk to

(a) put the goods into the possession of a carrier at the port for shipment and

obtain a negotiable bill or bills of lading covering the entire transportation to

the named destination; and

(b) load the goods and obtain a receipt from the carrier (which may be

contained in the bill of lading) showing that the freight has been paid or

provided for; and

(c) obtain a policy or certificate of insurance, including any war risk insurance, of a kind and on terms then current at the port of shipment in the usual

amount, in the currency of the contract, shown to cover the same goods

covered by the bill of lading and providing for payment of loss to the order of

the buyer or for the account of whom it may concern; but the seller may add to

the price the amount of the premium for any such war risk insurance; and

(d) prepare an invoice of the goods and procure any other documents

required to effect shipment or to comply with the contract; and

(e) forward and tender with commercial promptness all the documents in

due form and with any endorsement necessary to perfect the buyer’s rights.

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(3) Unless otherwise agreed the term C. and F. or its equivalent has the same

effect and imposes upon the seller the same obligations and risks as a C.I.F.

term except the obligation as to insurance.

(4) Under the term C.I.F. or C. and F. unless otherwise agreed the buyer

must make payment against tender of the required documents and the seller

may not tender nor the buyer demand delivery of the goods in substitution for

the documents.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O77(2).

Westlaw Topic No. 343.

C.J.S. Sales §§ 155 to 156.

§ 2–321. C.I.F. or C. and F.

Under a contract containing a term C.I.F. or C. and F.

(1) Where the price is based on or is to be adjusted according to ‘‘net landed

weights’’, ‘‘delivered weights’’, ‘‘out turn’’ quantity or quality or the like, unless

otherwise agreed the seller must reasonably estimate the price. The payment

due on tender of the documents called for by the contract is the amount so

estimated, but after final adjustment of the price a settlement must be made

with commercial promptness.

(2) An agreement described in subsection (1) or any warranty of quality or

condition of the goods on arrival places upon the seller the risk of ordinary

deterioration, shrinkage and the like in transportation but has no effect on the

place or time of identification to the contract for sale or delivery or on the

passing of the risk of loss.

(3) Unless otherwise agreed where the contract provides for payment on or

after arrival of the goods the seller must before payment allow such preliminary

inspection as is feasible; but if the goods are lost delivery of the documents and

payment are due when the goods should have arrived.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Buyer’s right to inspection of goods, see Title 33, § 2–513.

Library References

Sales O168, 183, 201(4).

Westlaw Topic No. 343.

C.J.S. Sales §§ 236 to 237, 316 to 317, 319 to

322, 344 to 347, 349 to 351, 368, 371, 404.

§ 2–322. Delivery

(1) Unless otherwise agreed a term for delivery of goods ‘‘ex-ship’’ (which

means from the carrying vessel) or in equivalent language is not restricted to a

particular ship and requires delivery from a ship which has reached a place at

the named port of destination where goods of the kind are usually discharged.

(2) Under such a term unless otherwise agreed

(a) the seller must discharge all liens arising out of the carriage and furnish

the buyer with a direction which puts the carrier under a duty to deliver the

goods; and

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(b) the risk of loss does not pass to the buyer until the goods leave the ship’s

tackle or are otherwise properly unloaded.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O77(2), 83, 161, 201(4).

Westlaw Topic No. 343.

C.J.S. Sales §§ 155 to 156, 259, 275, 288, 290

to 291, 404.

§ 2–323. Form of bill of lading required in overseas shipment

(1) Where the contract contemplates overseas shipment and contains a term

C.I.F. or C. and F. or F.O.B. vessel, the seller unless otherwise agreed must

obtain a negotiable bill of lading stating that the goods have been loaded on

board or, in the case of a term C.I.F. or C. and F., received for shipment.

(2) Where in a case within subsection (1) a tangible bill of lading has been

issued in a set of parts, unless otherwise agreed if the documents are not to be

sent from abroad the buyer may demand tender of the full set; otherwise only

one part of the bill of lading need be tendered. Even if the agreement expressly

requires a full set.

(a) due tender of a single part is acceptable within the provisions of this

article on cure of improper delivery (subsection (1) of Section 2–508); and

(b) even though the full set is demanded, if the documents are sent from

abroad the person tendering an incomplete set may nevertheless require payment upon furnishing an indemnity which the buyer in good faith deems

adequate.

(3) A shipment by water or by air or a contract contemplating such shipment

is ‘‘overseas’’ insofar as by usage of trade or agreement it is subject to the

commercial, financing or shipping practices characteristic of international deep

water commerce.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Tender of documents by seller in correct form, exception, see Title 33, § 2–503.

Library References

Sales O161, 162, 201(4).

Shipping O106.

Westlaw Topic Nos. 343, 354.

C.J.S. Sales §§ 275, 288 to 291, 404.

C.J.S. Shipping §§ 256 to 265.

§ 2–324. Provisions for ‘‘no arrival, no sale’’

Under a term ‘‘no arrival, no sale’’ or terms of like meaning, unless otherwise

agreed.

(a) the seller must properly ship conforming goods and if they arrive by any

means he must tender them on arrival but he assumes no obligation that the

goods will arrive unless he has caused the nonarrival; and

(b) where without fault of the seller the goods are in part lost or have so

deteriorated as no longer to conform to the contract or arrive after the contract

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time, the buyer may proceed as if there had been casualty to identified goods

(Section 2–613 ).

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Casualty to identified goods, see Title 33, § 2–613.

Library References

Sales O83, 150, 197, 217, 224.

Westlaw Topic No. 343.

C.J.S. Sales §§ 236 to 237, 259 to 260, 279 to

282, 382 to 383, 385 to 387, 393, 396, 403

to 404.

§ 2–325. Letter of credit

(1) Failure of the buyer seasonably to furnish an agreed letter of credit is a

breach of the contract for sale.

(2) The delivery to seller of a proper letter of credit suspends the buyer’s

obligation to pay. If the letter of credit is dishonored, the seller may on

seasonable notification to the buyer require payment directly from him.

(3) Unless otherwise agreed the term ‘‘letter of credit’’ or ‘‘banker’s credit’’

in a contract for sale means an irrevocable credit issued by a financing agency

of good repute and, where the shipment is overseas, of good international

repute. The term ‘‘confirmed credit’’ means that the credit must also carry the

direct obligation of such an agency which does business in the seller’s financial

market.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Banks and Banking O191.

Sales O191.

Westlaw Topic Nos. 52, 343.

C.J.S. Bills and Notes; Letters of Credit

§§ 377 to 415.

C.J.S. Sales § 370.

§ 2–326. Sale on approval and sale or return; consignment sales and rights

of creditors

(1) Unless otherwise agreed, if delivered goods may be returned by the buyer

even though they conform to the contract, the transaction is

(a) a ‘‘sale on approval’’ if the goods are delivered primarily for use, and

(b) a ‘‘sale or return’’ if the goods are delivered primarily for resale.

(2) Goods held on approval are not subject to the claims of the buyer’s

creditors until acceptance; goods held on sale or return are subject to such

claims while in the buyer’s possession.

(3) Any ‘‘or return’’ term of a contract for sale is to be treated as a separate

contract for sale within the statute of frauds section of this chapter (Section

2–201 of this Title) and as contradicting the sale aspect of the contract within

the provisions of this chapter on parole or extrinsic evidence (Section 2–202 of

this Title).

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

229

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Library References

Factors O1, 64, 65.

Sales O8, 168.5, 204 to 206, 222.

Westlaw Topic Nos. 167, 343.

C.J.S. Agriculture §§ 198, 202 to 203.

C.J.S. Bailments § 11.

C.J.S. Factors §§ 1 to 5, 85 to 87, 91, 96.

C.J.S. Sales §§ 9, 276 to 278, 390 to 392, 395,

406.

§ 2–327. Special incidents of sale on approval and sale or return

(1) Under a sale on approval unless otherwise agreed

(a) although the goods are identified to the contract the risk of loss and the

title do not pass to the buyer until acceptance; and

(b) use of the goods consistent with the purpose of trial is not acceptance but

failure seasonably to notify the seller of election to return the goods is acceptance, and if the goods conform to the contract acceptance of any part is

acceptance of the whole; and

and expense but a merchant buyer must follow any reasonable instructions.

(2) Under a sale or return unless otherwise agreed

(a) the option to return extends to the whole or any commercial unit of the

goods while in substantially their original condition, but must be exercised

seasonably, and

(b) the return is at the buyer’s risk and expense.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Risk of loss in the absence of breach, see Title 33, § 2–509.

Library References

Sales O168.5, 204, 205.

Westlaw Topic No. 343.

C.J.S. Sales §§ 276 to 278, 390 to 391, 406.

§ 2–328. Sale by auction

(1) In a sale by auction if goods are put up in lots each lot is the subject of a

separate sale.

(2) A sale by auction is complete when the auctioneer so announces by the

fall of the hammer or in other customary manner. Where a bid is made while

the hammer is falling in acceptance of a prior bid the auctioneer may in his

discretion reopen the bidding or declare the goods sold under the bid on which

the hammer was falling.

(3) Such a sale is with reserve unless the goods are in explicit terms put up

without reserve. In an auction with reserve the auctioneer may withdraw the

goods at any time until he announces completion of the sale. In an auction

without reserve, after the auctioneer calls for bids on an article or lot, that

article or lot cannot be withdrawn unless no bid is made within a reasonable

time. In either case a bidder may retract his bid until the auctioneer’s

announcement of completion of the sale, but a bidder’s retraction does not

revive any previous bid.

230

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(4) If the auctioneer knowingly receives a bid on the seller’s behalf or the

seller makes or procures such a bid, and notice has not been given that liberty

for such bidding is reserved, the buyer may at his option avoid the sale or take

the goods at the price of the last good faith bid prior to the completion of the

sale. This subsection shall not apply to any bid at a forced sale.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Auctions and Auctioneers O7, 8.

Westlaw Topic No. 47.

C.J.S. Auctions and Auctioneers §§ 1, 12, 16

to 55.

SUBCHAPTER 4. CREDITORS, TITLE,

AND GOOD FAITH PURCHASERS

Section

2–401. Passing of title; reservation for security; limited application of this section.

2–402. Rights of seller’s creditors against sold goods.

2–403. Power to transfer; good faith purchase of goods.

§ 2–401. Passing of title; reservation for security; limited application of

this section

Each provision of this chapter with regard to the rights, obligations and

remedies of the seller, the buyer, purchasers or other third parties applies

irrespective of title to the goods except where the provision refers to such title.

Insofar as situations are not covered by the other provisions of this chapter and

matters concerning title become material the following rules apply:

(1) Title to goods cannot pass under a contract for sale prior to their

identification to the contract (Section 2–501), and unless otherwise explicitly

agreed the buyer acquires by their identification a special property as limited by

this act. Any retention or reservation by the seller of the title (property) in

goods shipped or delivered to the buyer is limited in effect to a reservation of a

security interest. Subject to these provisions and to the provisions of the

chapter on Secured Transactions (Chapter 9), title to goods passes from the

seller to the buyer in any manner and on any conditions explicitly agreed on by

the parties.

(2) Unless otherwise explicitly agreed title passes to the buyer at the time and

place at which the seller completes his performance with reference to the

physical delivery of the goods, despite any reservation of a security interest and

even though a document of title is to be delivered at a different time or place;

and in particular and despite any reservation of a security interest by the bill of

lading:

(a) if the contract requires or authorizes the seller to send the goods to the

buyer but does not require him to deliver them at destination, title passes to the

buyer at the time and place of shipment; but

(b) if the contract requires delivery at destination, title passes on tender

there.

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(3) Unless otherwise explicitly agreed where delivery is to be made without

moving the goods,

(a) if the seller is to deliver a tangible document of title, title passes at the

time when and the place where he delivers such documents and if the seller is

to deliver an electronic document of title, title passes when the seller delivers

the document; or

(b) if the goods are at the time of contracting already identified and no

documents are to be delivered, title passes at the time and place of contracting.

(4) A rejection or other refusal by the buyer to receive or retain the goods,

whether or not justified, or a justified revocation of acceptance revests title to

the goods in the seller. Such revesting occurs by operation of law and is not a

‘‘sale’’.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Sale defined, see Title 33, § 2–106.

Secured party defined, see Title 33, § 9–106.

Secured transactions,

Application to security interest arising under this chapter, see Title 33, § 9–121.

Scope of chapter, see Title 33, § 9–110.

Security interest perfected upon attachment, see Title 33, § 9–309.

Security interest defined, see Title 33, § 1–201.

Library References

Sales O197 to 218.5.

Westlaw Topic No. 343.

C.J.S. Sales §§ 382 to 394, 397 to 400, 403 to

408.

§ 2–402. Rights of seller’s creditors against sold goods

(1) Except as provided in subsections (2) and (3), rights of unsecured creditors of the seller with respect to goods which have been identified to a contract

for sale are subject to the buyer’s rights to recover the goods under this chapter

(Sections 2–502 and 2–716).

(2) A creditor of the seller may treat a sale or an identification of goods to a

contract for sale as void if as against him a retention of possession by the seller

is fraudulent under any rule of law of the state where the goods are situated,

except that retention of possession in good faith and current course of trade by

a merchant-seller for a commercially reasonable time after a sale or identification is not fraudulent.

(3) Nothing this chapter shall be deemed to impair the rights of creditors of

the seller.

(a) under the provisions of the chapter on Secured Transactions (Chapter 9);

(b) where identification to the contract or delivery is made not in current

course of trade but in satisfaction of or as security for a pre-existing claim for

money, security or the like and is made under circumstances which under any

rule of law of the state where the goods are situated would apart from this

chapter constitute the transaction a fraudulent transfer or voidable preference.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

232

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SALES

Cross References

Uniform Commercial Code, applicable law provisions, see Title 33, § 1–301.

Library References

Fraudulent Conveyances O139.

Sales O230.

Westlaw Topic Nos. 186, 343.

C.J.S. Sales § 402.

§ 2–403. Power to transfer; good faith purchase of goods

(1) A purchaser of goods acquires all title which his transferor had or had

power to transfer except that a purchaser of a limited interest acquires rights

only to the extent of the interest purchased. A person with voidable title has

power to transfer a good title to a good faith purchaser for value. When goods

have been delivered under a transaction of purchase the purchaser has such

power even though

(a) the transferor was deceived as to the identity of the purchaser, or

(b) the delivery was in exchange for a check which is later dishonored, or

(d) the delivery was procured through fraud punishable as larcenous under

the criminal law.

(2) Any entrusting of possession of goods to a merchant who deals in goods

of that kind gives him power to transfer all rights of the entruster to a buyer in

ordinary course of business.

(3) ‘‘Entrusting’’ includes any delivery and any acquiescence in retention of

possession regardless of any condition expressed between the parties to the

delivery or acquiescence and regardless of whether the procurement of the

entrusting or the possessor’s disposition of the goods have been such as to be

larcenous under the criminal law.

(4) The rights of other purchasers of goods and of lien creditors are governed

by the articles on Secured Transactions (Chapter 9) and Documents of Title

(Chapter 7).

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Document of title to goods defeated in certain cases, see Title 33, § 7–503.

Rights acquired in absence of due negotiation, effect of diversion, see Title 33, § 7–504.

Secured transactions, secured party’s rights on disposition of collateral and in proceeds, see Title

33, § 9–315.

Seller’s right to reclaim on discovery of buyer’s insolvency, see Title 33, § 2–702.

Library References

Estoppel O75.

Sales O234.

Westlaw Topic Nos. 156, 343.

C.J.S. Estoppel and Waiver §§ 141, 143 to

145, 202.

C.J.S. Sales §§ 411 to 417, 419.

233

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UNIFORM COMMERCIAL CODE

SUBCHAPTER 5.

PERFORMANCE

Section

2–501. Insurable interest in goods; manner of identification of goods.

2–502. Buyer’s right to goods on seller’s insolvency.

2–503. Manner of seller’s tender of delivery.

2–504. Shipment by seller.

2–505. Seller’s shipment under reservation.

2–506. Rights of financing agency.

2–507. Effect of seller’s tender; delivery on condition.

2–508. Cure by seller of improper tender or delivery; replacement.

2–509. Risk of loss in the absence of breach.

2–510. Effect of breach on risk of loss.

2–511. Tender of payment by buyer; payment by check.

2–512. Payment by buyer before inspection.

2–513. Buyer’s right to inspection of goods.

2–514. When documents deliverable on acceptance; when on payment.

2–515. Preserving evidence of goods in dispute.

§ 2–501. Insurable interest in goods; manner of identification of goods

(1) The buyer obtains a special property and an insurable interest in goods by

identification of existing goods as goods to which the contract refers even

though the goods so identified are nonconforming and he has an option to

return or reject them. Such identification can be made at any time and in any

manner explicitly agreed to by the parties. In the absence of explicit agreement identification occurs

(a) when the contract is made if it is for the sale of goods already existing

and identified;

(b) if the contract is for the sale of future goods other than those described in

paragraph (c), when goods are shipped, marked or otherwise designated by the

seller as goods to which the contract refers;

young are conceived if the contract is for the sale of unborn young to be born

within twelve (12) months after contracting or for the sale of crops to be

harvested within twelve (12) months or the next normal harvest season after

contracting whichever is longer.

(2) The seller retains an insurable interest in goods so long as title to or any

security interest in the goods remains in him and where the identification is by

the seller alone he may until default or insolvency or notification to the buyer

that the identification is final substitute other goods for those identified.

(3) Nothing in this section impairs any insurable interest recognized under

any other statute or rule of law.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Passing of title to goods, see Title 33, § 2–401.

Library References

Insurance O1779, 1790.

Sales O208.

234

Title 33, § 2–503

SALES

Westlaw Topic Nos. 217, 343.

C.J.S. Insurance §§ 317 to 321, 324 to 346,

379 to 386.

C.J.S. Sales §§ 397 to 400.

§ 2–502. Buyer’s right to goods on seller’s insolvency

(1) Subject to paragraphs (2) and (3) of this section and even though the

goods have not been shipped a buyer who has paid a part or all of the price of

goods in which the buyer has a special property under the provisions of Section

2–501 of this Title may on making and keeping good a tender of any unpaid

portion of their price recover them from the seller if:

(a) in the case of goods bought for personal, family, or household purposes,

the seller repudiates or fails to deliver as required by the contract; or

(b) in all cases, the seller becomes insolvent within ten (10) days after receipt

of the first installment on their price.

(2) The buyer’s right to recover the goods under subparagraph (a) of paragraph (1) vests upon acquisition of a special property, even if the seller had not

then repudiated or failed to deliver.

(3) If the identification creating his special property has been made by the

buyer he acquires the right to recover the goods only if they conform to the

contract for sale.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Buyer’s remedies, security interest in rejected goods, see Title 33, § 2–711.

Rights of seller’s creditors against sold goods, see Title 33, § 2–402.

Library References

Sales O399.

Westlaw Topic No. 343.

C.J.S. Sales §§ 586, 594.

§ 2–503. Manner of seller’s tender of delivery

(1) Tender of delivery requires that the seller put and hold conforming goods

at the buyer’s disposition and give the buyer any notification reasonably

necessary to enable him to take delivery. The manner, time and place for

tender are determined by the agreement and this chapter, and in particular:

(a) tender must be at a reasonable hour, and if it is of goods they must be

kept available for the period reasonably necessary to enable the buyer to take

possession; but

(b) unless otherwise agreed the buyer must furnish facilities reasonably

suited to the receipt of the goods.

(2) Where the case is within the next section respecting shipment tender

requires that the seller comply with its provisions.

(3) Where the seller is required to deliver at a particular destination tender

requires that he comply with subsection (1) and also in any appropriate case

tender documents as described in subsections (4) and (5) of this section.

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Title 33, § 2–503

UNIFORM COMMERCIAL CODE

(4) Where goods are in the possession of a bailee and are to be delivered

without being moved.

(a) tender requires that the seller either tender a negotiable document of title

covering such goods or procure acknowledgment by the bailee of the buyer’s

right to possession of the goods; but

(b) tender to the buyer of a nonnegotiable document of title or of a written

direction to the bailee to deliver is sufficient tender unless the buyer seasonably

objects, and receipt by the bailee of notification of the buyer’s rights fixes those

rights as against the bailee and all third persons; but risk of loss of the goods

and of any failure by the bailee to honor the nonnegotiable document of title or

to obey the direction remains on the seller until the buyer has had a reasonable

time to present the document or direction, and a refusal by the bailee to honor

the document or to obey the direction defeats the tender.

(5) Where the contract requires the seller to deliver documents

(a) he must tender all such documents in correct form, except as provided in

this chapter with respect to bills of lading in a set (subsection (2) of Section

2–323); and

(b) tender through customary banking channels is sufficient and dishonor of

a draft accompanying or associated with the documents constitutes nonacceptance or rejection.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

F.O.B. and F.A.S. terms, see Title 33, § 2–319.

Library References

Sales O153.

Westlaw Topic No. 343.

C.J.S. Sales §§ 263 to 275, 308 to 311.

§ 2–504. Shipment by seller

Where the seller is required or authorized to send the goods to the buyer and

the contract does not require him to deliver them at a particular destination,

then unless otherwise agreed he must,

(a) put the goods in the possession of such a carrier and make such a

contract for their transportation as may be reasonable having regard to the

nature of the goods and other circumstances of the case; and

(b) obtain and promptly deliver or tender in due form any document necessary to enable the buyer to obtain possession of the goods or otherwise required

by the agreement or by usage of trade; and

under paragraph (d) or to make a proper contract under paragraph (a) is a

ground for rejection only if material delay or loss ensues.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

236

Title 33, § 2–506

SALES

Cross References

F.O.B. and F.A.S. terms, see Title 33, § 2–319.

Library References

Sales O83, 161.

Westlaw Topic No. 343.

C.J.S. Sales §§ 259, 275, 288, 290 to 291.

§ 2–505. Seller’s shipment under reservation

(1) Where the seller has identified goods to the contract by or before

shipment:

(a) his procurement of a negotiable bill of lading to his own order or

otherwise reserves in him a security interest in the goods. His procurement of

the bill to the order of a financing agency or of the buyer indicates in addition

only the seller’s expectation of transferring that interest to the person named.

(b) a nonnegotiable bill of lading to himself or his nominee reserves possession of the goods as security but except in a case of conditional delivery

(subsection (2) of Section 2–507) a nonnegotiable bill of lading naming the

buyer as consignee reserves no security interest even though the seller retains

possession or control of the bill of lading.

(2) When shipment by the seller with reservation of a security interest is in

violation of the contract for sale it constitutes an improper contract for

transportation within the preceding section but impairs neither the rights given

to the buyer by shipment and identification of the goods to the contract nor the

seller’s powers as a holder of a negotiable document of title

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Secured party defined, see Title 33, § 9–106.

Secured transactions,

Application to security interests arising under this chapter, see Title 33, § 9–121.

Scope of chapter, see Title 33, § 9–110.

Security interest defined, see Title 33, § 1–201.

Security interest perfected upon attachment, see Title 33, § 9–309.

Library References

Carriers O54.1 to 59.

Sales O300, 316.

Shipping O106(3).

Westlaw Topic Nos. 70, 343, 354.

C.J.S. Carriers §§ 375 to 378, 384 to 390.

C.J.S. Sales §§ 536 to 538, 540, 549 to 554.

C.J.S. Shipping §§ 256 to 257, 260 to 265.

§ 2–506. Rights of financing agency

(1) A financing agency by paying or purchasing for value a draft which

relates to a shipment of goods acquires to the extent of the payment or

purchase and in addition to its own rights under the draft and any document of

title securing it any rights of the shipper in the goods including the right to stop

delivery and the shipper’s right to have the draft honored by the buyer.

(2) The right to reimbursement of a financing agency which has in good faith

honored or purchased the draft under commitment to or authority from the

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Title 33, § 2–506

UNIFORM COMMERCIAL CODE

buyer is not impaired by subsequent discovery of defects with reference to any

relevant document which was apparently regular.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O292, 309.

Westlaw Topic No. 343.

C.J.S. Sales §§ 540, 544.

§ 2–507. Effect of seller’s tender; delivery on condition

(1) Tender of delivery is a condition to the buyer’s duty to accept the goods

and, unless otherwise agreed, to his duty to pay for them. Tender entitles the

seller to acceptance of the goods and to payment according to the contract.

(2) Where payment is due and demanded on the delivery to the buyer of

goods or documents of title, his right as against the seller to retain or dispose of

them is conditional upon his making the payment due.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O153.

Westlaw Topic No. 343.

C.J.S. Sales §§ 263 to 275, 308 to 311.

§ 2–508. Cure by seller of improper tender or delivery; replacement

(1) Where any tender or delivery by the seller is rejected because nonconforming and the time for performance has not yet expired, the seller may

seasonably notify the buyer of his intention to cure and may then within the

contract time make a conforming delivery.

(2) Where the buyer rejects a nonconforming tender which the seller had

reasonable grounds to believe would be acceptable with or without money

allowance the seller may if he seasonably notifies the buyer have a further

reasonable time to substitute a conforming tender.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Form of bill of lading required in overseas shipment, due tender, see Title 33, § 2–323.

Library References

Sales O153, 165.

Westlaw Topic No. 343.

C.J.S. Sales §§ 263 to 275, 293 to 296, 308 to

311.

§ 2–509. Risk of loss in the absence of breach

(1) Where the contract requires or authorizes the seller to ship the goods by

carrier:

(a) if it does not require him to deliver them at a particular destination, the

risk of loss passes to the buyer when the goods are duly delivered to the carrier

even though the shipment is under reservation (Section 2–505); but

(b) if it does require him to deliver them at a particular destination and the

goods are there duly tendered while in the possession of the carrier, the risk of

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SALES

loss passes to the buyer when the goods are there duly so tendered as to enable

the buyer to take delivery.

(2) Where the goods are held by a bailee to be delivered without being

moved, the risk of loss passes to the buyer:

(a) on his receipt of a negotiable document of title covering the goods; or

(b) on acknowledgment by the bailee of the buyer’s right to possession of the

goods; or

title or other direction to deliver in a record, as provided in subsection (4)(b) of

Section 2–503.

(3) In any case not within subsection (1) or (2), the risk of loss passes to the

buyer on his receipt of the goods if the seller is a merchant; otherwise the risk

passes to the buyer on tender of delivery.

(4) The provisions of this section are subject to contrary agreement of the

parties and to the provisions of this chapter on sale on approval (Section 2–327)

and on effect of breach on risk of loss (Section 2–510).

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O197, 201(4), 217, 224, 232.

Westlaw Topic No. 343.

C.J.S. Sales §§ 382 to 383, 385 to 387, 393,

396, 403 to 404.

§ 2–510. Effect of breach on risk of loss

(1) Where a tender or delivery of goods so fails to conform to the contract as

to give a right of rejection the risk of their loss remains on the seller until cure

or acceptance.

(2) Where the buyer rightfully revokes acceptance he may to the extent of any

deficiency in his effective insurance coverage treat the risk of loss as having

rested on the seller from the beginning.

(3) Where the buyer as to conforming goods already identified to the contract

for sale repudiates or is otherwise in breach before risk of their loss has passed

to him, the seller may to the extent of any deficiency in his effective insurance

coverage treat the risk of loss as resting on the buyer for a commercially

reasonable time.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O197, 217, 224, 232.

Westlaw Topic No. 343.

C.J.S. Sales §§ 382 to 383, 385 to 387, 393,

396, 403 to 404.

§ 2–511. Tender of payment by buyer; payment by check

(1) Unless otherwise agreed tender of payment is a condition to the seller’s

duty to tender and complete any delivery.

(2) Tender of payment is sufficient when made by any means or in any

manner current in the ordinary course of business unless the seller demands

payment in legal tender and gives any extension of time reasonably necessary to

procure it.

239

Title 33, § 2–511

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(3) Subject to the provisions of this act on the effect of an instrument on an

obligation (Section 3–310), payment by check is conditional and is defeated as

between the parties by dishonor of the check on due presentment.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O185, 191.

Westlaw Topic No. 343.

C.J.S. Sales § 370.

§ 2–512. Payment by buyer before inspection

(1) Where the contract requires payment before inspection nonconformity of

the goods does not excuse the buyer from so making payment unless

(a) the nonconformity appears without inspection; or

(b) despite tender of the required documents the circumstances would justify

injunction against honor under the provisions of this act (subsection (b) of

Section 5–109 of this Title).

(2) Payment pursuant to subsection (1) of this section does not constitute an

acceptance of goods or impair the buyer’s right to inspect or any of his

remedies.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O195.

Westlaw Topic No. 343.

C.J.S. Sales §§ 372, 375, 377 to 381.

§ 2–513. Buyer’s right to inspection of goods

(1) Unless otherwise agreed and subject to subsection (3), where goods are

tendered or delivered or identified to the contract for sale, the buyer has a right

before payment or acceptance to inspect them at any reasonable place and time

and in any reasonable manner. When the seller is required or authorized to

send the goods to the buyer, the inspection may be after their arrival.

(2) Expenses of inspection must be borne by the buyer but may be recovered

from the seller if the goods do not conform and are rejected.

(3) Unless otherwise agreed and subject to the provisions of this chapter on

C.I.F. contracts (subsection (3) of Section 2–321), the buyer is not entitled to

inspect the goods before payment of the price when the contract provides

(a) for delivery ‘‘C.O.D.’’ or on other like terms; or

(b) for payment against documents of title, except where such payment is due

only after the goods are to become available for inspection.

(4) A place or method of inspection fixed by the parties is presumed to be

exclusive but unless otherwise expressly agreed it does not postpone identification or shift the place for delivery or for passing the risk of loss. If compliance

becomes impossible, inspection shall be as provided in this section unless the

240

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SALES

place or method fixed was clearly intended as an indispensable condition

failure of which avoids the contract.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Shipment of goods under reservation, inspection by buyer, see Title 33, § 2–310.

Library References

Sales O168(1) to 168(6).

Westlaw Topic No. 343.

C.J.S. Sales §§ 316 to 317, 319 to 322, 344 to

347, 349 to 351.

§ 2–514. When documents deliverable on acceptance; when on payment

Unless otherwise agreed documents against which a draft is drawn are to be

delivered to the drawee on acceptance of the draft if it is payable more than

three (3) days after presentment; otherwise, only on payment.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O146, 191, 202.

Westlaw Topic No. 343.

C.J.S. Sales §§ 370, 389, 403 to 405.

§ 2–515. Preserving evidence of goods in dispute

In furtherance of the adjustment of any claim or dispute

(a) either party on reasonable notification to the other and for the purpose of

ascertaining the facts and preserving evidence has the right to inspect, test and

sample the goods including such of them as may be in the possession or control

of the other; and

(b) the parties may agree to a third party inspection or survey to determine

the conformity or condition of the goods and may agree that the findings shall

be binding upon them in any subsequent litigation or adjustment.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O168.

Westlaw Topic No. 343.

SUBCHAPTER 6.

C.J.S. Sales §§ 316 to 317, 319 to 322, 344 to

347, 349 to 351.

BREACH, REPUDIATION, AND EXCUSE

Section

2–601. Buyer’s rights on improper delivery.

2–602. Manner and effect of rightful rejection.

2–603. Merchant buyer’s duties as to rightfully rejected goods.

2–604. Buyer’s options as to salvage of rightfully rejected goods.

2–605. Waiver of buyer’s objections by failure to particularize.

2–606. What constitutes acceptance of goods.

2–607. Effect of acceptance; notice of breach; burden of establishing breach after

acceptance; notice of claim or litigation to person answerable over.

2–608. Revocation of acceptance in whole or in part.

241

Title 33, § 2–601

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Section

2–609. Right to adequate assurance of performance.

2–610. Anticipatory repudiation.

2–611. Retraction of anticipatory repudiation.

2–612. Installment contracts.

2–613. Casualty to identified goods.

2–614. Substituted performance.

2–615. Excuse by failure of presupposed conditions.

2–616. Procedure on notice claiming excuse.

§ 2–601. Buyer’s rights on improper delivery

Subject to the provisions of this chapter on breach in installment contracts

(Section 2–612) and unless otherwise agreed under the sections on contractual

limitations of remedy (Sections 2–718 and 2–719), if the goods or the tender of

delivery fail in any respect to conform to the contract, the buyer may

(a) reject the whole; or

(b) accept the whole; or

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O177, 180.

Westlaw Topic No. 343.

C.J.S. Sales §§ 236 to 237, 260, 324 to 325,

327 to 328, 336 to 337, 344 to 347, 349 to

351.

§ 2–602. Manner and effect of rightful rejection

(1) Rejection of goods must be within a reasonable time after their delivery

or tender. It is ineffective unless the buyer seasonably notifies the seller.

(2) Subject to the provisions of the two following sections on rejected goods

(Sections 2–603 and 2–604),

(a) after rejection any exercise of ownership by the buyer with respect to any

commercial unit is wrongful as against the seller; and

(b) if the buyer has before rejection taken physical possession of goods in

which he does not have a security interest under the provisions of this chapter

(subsection (3) of Section 2–711), he is under a duty after rejection to hold them

with reasonable care at the seller’s disposition for a time sufficient to permit

the seller to remove them; but

rejected.

(3) The seller’s rights with respect to goods wrongfully rejected are governed

by the provisions of this chapter on seller’s remedies in general (Section 2–703).

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O177, 179(6).

Westlaw Topic No. 343.

C.J.S. Sales §§ 236 to 237, 324 to 325, 327 to

328, 338 to 351.

242

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§ 2–603. Merchant buyer’s duties as to rightfully rejected goods

(1) Subject to any security interest in the buyer (subsection (3) of Section

2–711), when the seller has no agent or place of business at the market of

rejection a merchant buyer is under a duty after rejection of goods in his

possession or control to follow any reasonable instructions received from the

seller with respect to the goods and in the absence of such instructions to make

reasonable efforts to sell them for the seller’s account if they are perishable or

threaten to decline in value speedily. Instructions are not reasonable if on

demand indemnity for expenses is not forthcoming.

(2) When the buyer sells goods under subsection (1), he is entitled to

reimbursement from the seller or out of the proceeds for reasonable expenses of

caring for and selling them, and if the expenses include no selling commission

then to such commission as is usual in the trade or if there is none to a

reasonable sum not exceeding ten percent (10%) on the gross proceeds.

(3) In complying with this section the buyer is held only to good faith and

good faith conduct hereunder is neither acceptance nor conversion nor the

basis of an action for damages.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O179(6).

Westlaw Topic No. 343.

C.J.S. Sales §§ 338 to 351.

§ 2–604. Buyer’s options as to salvage of rightfully rejected goods

Subject to the provisions of the immediately preceding section on perishables

if the seller gives on instructions within a reasonable time after notification of

rejection the buyer may store the rejected goods for the seller’s account or

reship them to him or resell them for the seller’s account with reimbursement

as provided in the preceding section. Such action is not acceptance or conversion.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O179(6).

Westlaw Topic No. 343.

C.J.S. Sales §§ 338 to 351.

§ 2–605. Waiver of buyer’s objections by failure to particularize

(1) The buyer’s failure to state in connection with rejection a particular

defect which is ascertainable by reasonable inspection precludes him from

relying on the unstated defect to justify rejection or to establish breach:

(a) where the seller could have cured it if stated seasonably; or

(b) between merchants when the seller has after rejection made a request in

writing for a full and final written statement of all defects on which the buyer

proposes to rely.

(2) Payment against documents made without reservation of rights precludes

recovery of the payment for defects apparent in the documents.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

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Library References

Sales O176, 179(6).

Westlaw Topic No. 343.

C.J.S. Sales §§ 261, 286, 297, 302, 316, 323,

338 to 351.

§ 2–606. What constitutes acceptance of goods

(1) Acceptance of goods occurs when the buyer

(a) after a reasonable opportunity to inspect the goods signifies to the seller

that the goods are conforming or that he will take or retain them in spite of

their nonconformity; or

(b) fails to make an effective rejection (subsection (1) of Section 2–602), but

such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them; or

wrongful as against the seller it is an acceptance only if ratified by him.

(2) Acceptance of a part of any commercial unit is acceptance of that entire

unit.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Enforceability of contract not meeting formal requirements of statute of frauds, see Title 33,

§ 2–201.

Library References

Sales O178.

Westlaw Topic No. 343.

C.J.S. Sales §§ 326, 329 to 334.

§ 2–607. Effect of acceptance; notice of breach; burden of establishing

breach after acceptance; notice of claim or litigation to person

answerable over

(1) The buyer must pay at the contract rate for any goods accepted.

(2) Acceptance of goods by the buyer precludes rejection of the goods

accepted and if made with knowledge of a nonconformity cannot be revoked

because of it unless the acceptance was on the reasonable assumption that the

nonconformity would be seasonably cured but acceptance does not of itself

impair any other remedy provided by this chapter for nonconformity.

(3) Where a tender has been accepted

(a) the buyer must within a reasonable time after he discovers or should have

discovered any breach notify the seller of breach or be barred from any remedy;

and

(b) if the claim is one for infringement or the like (subsection (3) of Section

2–312) and the buyer is sued as a result of such a breach he must so notify the

seller within a reasonable time after he receives notice of the litigation or be

barred from any remedy over for liability established by the litigation.

(4) The burden is on the buyer to establish any breach with respect to the

goods accepted.

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(5) Where the buyer is sued for breach of a warranty or other obligation for

which his seller is answerable over

(a) he may give his seller written notice of the litigation. If the notice states

that the seller may come in and defend and that if the seller does not do so he

will be bound in any action against him by his buyer by any determination of

fact common to the two litigations, then unless the seller after seasonable

receipt of the notice does come in and defend he is so bound.

(b) if the claim is one for infringement or the like (subsection (3) of Section

2–312) the original seller may demand in writing that his buyer turn over to

him control of the litigation including settlement or else be barred from any

remedy over and if he also agrees to bear all expense and to satisfy any adverse

judgment, then unless the buyer after seasonable receipt of the demand does

turn over control the buyer is so barred.

(6) The provisions of subsections (3), (4) and (5) apply to any obligation of a

buyer to hold the seller harmless against infringement or the like (subsection

(3)(b) of Section 2–312).

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Buyer’s damages for breach in regard to accepted goods, see Title 33, § 2–714.

Library References

Indemnity O40, 79.

Sales O179, 285.

Westlaw Topic Nos. 208, 343.

C.J.S. Indemnity §§ 29, 48.

C.J.S. Sales §§ 335, 338 to 351, 473 to 477.

§ 2–608. Revocation of acceptance in whole or in part

(1) The buyer may revoke his acceptance of a lot or commercial unit whose

nonconformity substantially impairs its value to him if he has accepted it

(a) on the reasonable assumption that its nonconformity would be cured and

it has not been seasonably cured; or

(b) without discovery of such nonconformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the

seller’s assurances.

(2) Revocation of acceptance must occur within a reasonable time after the

buyer discovers or should have discovered the ground for it and before any

substantial change in condition of the goods which is not caused by their own

defects. It is not effective until the buyer notifies the seller of it.

(3) A buyer who so revokes has the same rights and duties with regard to the

goods involved as if he had rejected them.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O112.

Westlaw Topic No. 343.

C.J.S. Sales §§ 186 to 194, 199 to 202, 206 to

208, 352 to 357.

245

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§ 2–609. Right to adequate assurance of performance

(1) A contract for sale imposes an obligation on each party that the other’s

expectation of receiving due performance will not be impaired. When reasonable grounds for insecurity arise with respect to the performance of either party

the other may in writing demand adequate assurance of due performance and

until he receives such assurance may if commercially reasonable suspend any

performance for which he has not already received the agreed return.

(2) Between merchants the reasonableness of grounds for insecurity and the

adequacy of any assurance offered shall be determined according to commercial standards.

(3) Acceptance of any improper delivery or payment does not prejudice the

aggrieved party’s right to demand adequate assurance of future performance.

(4) After receipt of a justified demand failure to provide within a reasonable

time not exceeding thirty (30) days such assurance of due performance as is

adequate under the circumstances of the particular case is a repudiation of the

contract.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Assignment of rights which delegates performance, see Title 33, § 2–210.

Library References

Sales O152, 184.

Westlaw Topic No. 343.

C.J.S. Sales §§ 246 to 253, 274, 338 to 343.

§ 2–610. Anticipatory repudiation

When either party repudiates the contract with respect to a performance not

yet due the loss of which will substantially impair the value of the contract to

the other, the aggrieved party may

(a) for a commercially reasonable time await performance by the repudiating

party; or

(b) resort to any remedy for breach (Section 2–703 or Section 2–711), even

though he has notified the repudiating party that he would await the latter’s

performance and has urged retraction; and

with the provisions of this chapter on the seller’s right to identify goods to the

contract notwithstanding breach or to salvage unfinished goods (Section

2–704).

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Action for the price, buyer who has wrongfully rejected or revoked acceptance or failed to make

payment or repudiated, see Title 33, § 2–709.

Library References

Sales O151, 194.

Westlaw Topic No. 343.

246

Title 33, § 2–613

SALES

C.J.S. Sales §§ 254 to 258.

§ 2–611. Retraction of anticipatory repudiation

(1) Until the repudiating party’s next performance is due he can retract his

repudiation unless the aggrieved party has since the repudiation cancelled or

materially changed his position or otherwise indicated that he considers the

repudiation final.

(2) Retraction may be by any method which clearly indicates to the aggrieved

party that the repudiating party intends to perform, but must include any

assurance justifiably demanded under the provisions of this chapter (Section

2–609).

(3) Retraction reinstates the repudiating party’s rights under the contract

with due excuse and allowance to the aggrieved party for any delay occasioned

by the repudiation.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O11, 151, 170, 194.

Westlaw Topic No. 343.

C.J.S. Sales §§ 29, 254 to 258, 281 to 282,

286, 403.

§ 2–612. Installment contracts

(1) An ‘‘installment contract’’ is one which requires or authorizes the delivery of goods in separate lots to be separately accepted, even though the contract

contains a clause ‘‘each delivery is a separate contract’’ or its equivalent.

(2) The buyer may reject any installment which is nonconforming if the

nonconformity substantially impairs the value of that installment and cannot be

cured or if the nonconformity is a defect in the required documents; but if the

nonconformity does not fall within subsection (3) and the seller gives adequate

assurance of its cure the buyer must accept that installment.

(3) Whenever nonconformity or default with respect to one or more installments substantially impairs the value of the whole contract there is a breach of

the whole. But the aggrieved party reinstates the contract if he accepts a

nonconforming installment without seasonably notifying of cancellation or if he

brings an action with respect only to past installments or demands performance

as to future installments.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Buyer’s remedies, security interest in rejected goods, see Title 33, § 2–711.

Library References

Sales O82(4), 163, 180.

Westlaw Topic No. 343.

C.J.S. Sales §§ 260, 298, 336 to 337.

§ 2–613. Casualty to identified goods

Where the contract requires for its performance goods identified when the

contract is made, and the goods suffer casualty without fault of either party

247

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before the risk of loss passes to the buyer, or in a proper case under a ‘‘no

arrival, no sale’’ term (Section 2–324) then

(a) if the loss is total the contract is avoided; and

(b) if the loss is partial or the goods have so deteriorated as no longer to

conform to the contract the buyer may nevertheless demand inspection and at

his option either treat the contract as avoided or accept the goods with due

allowance from the contract price for the deterioration or the deficiency in

quantity but without further right against the seller.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

‘‘No arrival, no sale’’ provisions, see Title 33, § 2–324.

Library References

Sales O150(2), 172, 217.

Westlaw Topic No. 343.

C.J.S. Sales §§ 375 to 378, 380 to 381.

§ 2–614. Substituted performance

(1) Where without fault of either party the agreed berthing, loading, or

unloading facilities fail or an agreed type of carrier becomes unavailable or the

agreed manner of delivery otherwise becomes commercially impracticable but

a commercially reasonable substitute is available, such substitute performance

must be tendered and accepted.

(2) If the agreed means or manner of payment fails because of domestic or

foreign governmental regulation, the seller may withhold or stop delivery

unless the buyer provides a means or manner of payment which is commercially a substantial equivalent. If delivery has already been taken, payment by the

means or in the manner provided by the regulation discharges the buyer’s

obligation unless the regulation is discriminatory, oppressive or predatory.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O83, 190.

Westlaw Topic No. 343.

C.J.S. Sales §§ 259, 371.

§ 2–615. Excuse by failure of presupposed conditions

Except so far as a seller may have assumed a greater obligation and subject

to the preceding section on substituted performance:

(a) Delay in delivery or nondelivery in whole or in part by a seller who

complies with paragraphs (b) and (c) is not a breach of his duty under a

contract for sale if performance as agreed has been made impracticable by the

occurrence of a contingency the nonoccurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any

applicable foreign or domestic governmental regulation or order whether or

not it later proves to be invalid.

248

Title 33, § 2–616

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(b) Where the clauses mentioned in paragraph (a) affect only a part of the

seller’s capacity to perform, he must allocate production and deliveries among

his customers but may at his option include regular customers not then under

contract as well as his own requirements for further manufacture. He may so

allocate in any manner which is fair and reasonable.

nondelivery and, when allocation is required under paragraph (b), of the

estimated quota thus made available for the buyer.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O85(2), 172.

Westlaw Topic No. 343.

C.J.S. Sales §§ 375 to 378, 380 to 381.

§ 2–616. Procedure on notice claiming excuse

(1) Where the buyer receives notification of a material or indefinite delay or

an allocation justified under the preceding section he may by written notification to the seller as to any delivery concerned, and where the prospective

deficiency substantially impairs the value of the whole contract under the

provisions of this chapter relating to breach of installment contracts (Section

2–612), then also as to the whole,

(a) terminate and thereby discharge any unexecuted portion of the contract;

(b) modify the contract by agreeing to take his available quota in substitution.

(2) If after receipt of such notification from the seller the buyer fails so to

modify the contract within a reasonable time not exceeding thirty (30) days the

contract lapses with respect to any deliveries affected.

(3) The provisions of this section may not be negated by agreement except in

so far as the seller has assumed a greater obligation under the preceding

section.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O89, 116.

Westlaw Topic No. 343.

C.J.S. Sales §§ 162 to 174, 179, 186 to 189,

193 to 194, 199 to 202, 352 to 353, 355 to

357.

SUBCHAPTER 7.

REMEDIES

Section

2–701. Remedies for breach of collateral contracts not impaired.

2–702. Seller’s remedies on discovery of buyer’s insolvency.

2–703. Seller’s remedies in general.

2–704. Seller’s right to identify goods to the contract notwithstanding breach or to

salvage unfinished goods.

2–705. Seller’s stoppage of delivery in transit or otherwise.

249

Title 33, § 2–701

UNIFORM COMMERCIAL CODE

Section

2–706. Seller’s resale including contract for resale.

2–707. Person in position of the seller.

2–708. Seller’s damages for nonacceptance or repudiation.

2–709. Action for the price.

2–710. Seller’s incidental damages.

2–711. Buyer’s remedies in general; buyer’s security interest in rejected goods.

2–712. Cover; buyer’s procurement of substitute goods.

2–713. Buyer’s damages for nondelivery or repudiation.

2–714. Buyer’s damages for breach in regard to accepted goods.

2–715. Buyer’s incidental and consequential damages.

2–716. Buyer’s right to specific performance or replevin.

2–717. Deduction of damages from the price.

2–718. Liquidation or limitation of damages; deposit.

2–719. Contractual modification or limitation of remedy.

2–720. Effect of cancellation or rescission on claims for antecedent breach.

2–721. Remedies for fraud.

2–722. Who can sue third parties for injury to goods.

2–723. Proof of market price; time and place.

2–724. Admissibility of market quotations.

2–725. Statute of limitations in contracts for sale.

§ 2–701. Remedies for breach of collateral contracts not impaired

Remedies for breach of any obligation or promise collateral or ancillary to a

contract for sale are not impaired by the provisions of this chapter.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O369, 404, 425.

Westlaw Topic No. 343.

C.J.S. Sales §§ 423, 480 to 482, 486 to 488,

536 to 538, 574 to 575, 586 to 588, 600.

§ 2–702. Seller’s remedies on discovery of buyer’s insolvency

(1) Where the seller discovers the buyer to be insolvent he may refuse

delivery except for cash including payment for all goods theretofore delivered

under the contract, and stop delivery under this chapter (Section 2–705).

(2) Where the seller discovers that the buyer has received goods on credit

while insolvent he may reclaim the goods upon demand made within ten (10)

days after the receipt, but if misrepresentation of solvency has been made to the

particular seller in writing within three (3) months before delivery the ten-day

limitation does not apply. Except as provided in this subsection the seller may

not base a right to reclaim goods on the buyer’s fraudulent or innocent

misrepresentation of solvency or of intent to pay.

(3) The seller’s right to reclaim under subsection (2) is subject to the rights of

a buyer in ordinary course or other good faith purchaser under this chapter

(Section 2–403). Successful reclamation of goods excludes all other remedies

with respect to them.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O291, 316.

Westlaw Topic No. 343.

C.J.S. Sales §§ 536 to 538, 549 to 554.

250

Title 33, § 2–704

SALES

§ 2–703. Seller’s remedies in general

Where the buyer wrongfully rejects or revokes acceptance of goods or fails to

make a payment due on or before delivery or repudiates with respect to a part

or the whole, then with respect to any goods directly affected and, if the breach

is of the whole contract (Section 2–612), then also with respect to the whole

undelivered balance, the aggrieved seller may

(a) withhold delivery of such goods;

(b) stop delivery by any bailee as hereafter provided (Section 2–705);

contract;

(d) resell and recover damages as hereafter provided (Section 2–706);

(e) recover damages for nonacceptance (Section 2–708) or in a proper case

the price (Section 2–709);

(f) cancel.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Anticipatory repudiation, see Title 33, § 2–610.

Manner and effect of rightful rejection, see Title 33, § 2–602.

Library References

Sales O289, 300, 316, 332, 340, 369.

Westlaw Topic No. 343.

C.J.S. Sales §§ 536 to 538, 540, 543, 549 to

555, 559, 574 to 575.

§ 2–704. Seller’s right to identify goods to the contract notwithstanding

breach or to salvage unfinished goods

(1) An aggrieved seller under the preceding section may

(a) identify to the contract conforming goods not already identified if at the

time he learned of the breach they are in his possession or control;

(b) treat as the subject of resale goods which have demonstrably been

intended for the particular contract even though those goods are unfinished.

(2) Where the goods are unfinished an aggrieved seller may in the exercise of

reasonable commercial judgment for the purposes of avoiding loss and of

effective realization either complete the manufacture and wholly identify the

goods to the contract or cease manufacture and resell for scrap or salvage value

or proceed in any other reasonable manner.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Anticipatory repudiation, see Title 33, § 2–610.

Library References

Sales O332.

Westlaw Topic No. 343.

C.J.S. Sales § 555.

251

Title 33, § 2–705

UNIFORM COMMERCIAL CODE

§ 2–705. Seller’s stoppage of delivery in transit or otherwise

(1) The seller may stop delivery of goods in the possession of a carrier or

other bailee when he discovers the buyer to be insolvent (Section 2–702) and

may stop delivery of carload, truckload, planeload or larger shipments of

express or freight when the buyer repudiates or fails to make a payment due

before delivery or if for any other reason the seller has a right to withhold or

reclaim the goods.

(2) As against such buyer the seller may stop delivery until

(a) receipt of the goods by the buyer; or

(b) acknowledgement to the buyer by any bailee of the goods except a carrier

that the bailee holds the goods for the buyer; or

warehouse; or

(d) negotiation to the buyer of any negotiable document of title covering the

goods.

(3)(a) To stop delivery the seller must so notify as to enable the bailee by

reasonable diligence to prevent delivery of the goods.

(b) After such notification the bailee must hold and deliver the goods according to the directions of the seller but the seller is liable to the bailee for any

ensuing charges or damages.

not obliged to obey a notification to stop until surrender of possession or

control of the document.

(d) A carrier who has issued a nonnegotiable bill of lading is not obliged to

obey a notification to stop received from a person other than the consignor.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Obligation of bailee to deliver, excuse, see Title 33, § 7–403.

Rights acquired in absence of due negotiation, effect of diversion, see Title 33, § 7–504.

Library References

Sales O289.

Westlaw Topic No. 343.

C.J.S. Sales §§ 536 to 538, 543.

§ 2–706. Seller’s resale including contract for resale

(1) Under the conditions stated in Section 2–703 on seller’s remedies, the

seller may resell the goods concerned or the undelivered balance thereof.

Where the resale is made in good faith and in a commercially reasonable

manner the seller may recover the difference between the resale price and the

contract price together with any incidental damages allowed under the provisions of this chapter (Section 2–710), but less expenses saved in consequence of

the buyer’s breach.

(2) Except as otherwise provided in subsection (3) or unless otherwise agreed

resale may be at public or private sale including sale by way of one or more

252

Title 33, § 2–707

SALES

contracts to sell or of identification to an existing contract of the seller. Sale

may be as a unit or in parcels and at any time and place and on any terms but

every aspect of the sale including the method, manner, time, place and terms

must be commercially reasonable. The resale must be reasonably identified as

referring to the broken contract, but it is not necessary that the goods be in

existence or that any or all of them have been identified to the contract before

the breach.

(3) Where the resale is at private sale the seller must give the buyer reasonable notification of his intention to resell.

(4) Where the resale is at public sale

(a) only identified goods can be sold except where there is a recognized

market for a public sale of futures in goods of the kind; and

(b) it must be made at a usual place or market for public sale if one is

reasonably available and except in the case of goods which are perishable or

threaten to decline in value speedily the seller must give the buyer reasonable

notice of the time and place of the resale; and

notification of sale must state the place where the goods are located and

provide for their reasonable inspection by prospective bidders; and

(d) the seller may buy.

(5) A purchaser who buys in good faith at a resale takes the goods free of any

rights of the original buyer even though the seller fails to comply with one or

more of the requirements of this section.

(6) The seller is not accountable to the buyer for any profit made on any

resale. A person in the position of a seller (Section 2–707) or a buyer who has

rightfully rejected or justifiably revoked acceptance must account for any excess

over the amount of his security interest, as hereinafter defined (subsection (3) of

Section 2–711).

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O332.

Westlaw Topic No. 343.

C.J.S. Sales § 555.

§ 2–707. Person in position of the seller

(1) A ‘‘person in the position of a seller’’ includes as against a principal an

agent who has paid or become responsible for the price of goods on behalf of

his principal or anyone who otherwise holds a security interest or other right in

goods similar to that of a seller.

(2) A person in the position of a seller may as provided in this chapter

withhold or stop delivery (Section 2–705) and resell (Section 2–706) and

recover incidental damages (Section 2–710).

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

253

Title 33, § 2–707

UNIFORM COMMERCIAL CODE

Cross References

Financing agency defined, see Title 33, § 2–104.

Library References

Sales O292, 332, 370.

Westlaw Topic No. 343.

C.J.S. Sales §§ 544, 555, 574 to 575.

§ 2–708. Seller’s damages for nonacceptance or repudiation

(1) Subject to subsection (2) and to the provisions of this chapter with

respect to proof of market price (Section 2–723), the measure of damages for

nonacceptance or repudiation by the buyer is the difference between the market

price at the time and place for tender and the unpaid contract price together

with any incidental damages provided in this chapter (Section 2–710), but less

expenses saved in consequence of the buyer’s breach.

(2) If the measure of damages provided in subsection (1) is inadequate to put

the seller in as good a position as performance would have done then the

measure of damages is the profit (including reasonable overhead) which the

seller would have made from full performance by the buyer, together with any

incidental damages provided in this chapter (Section 2–710), due allowance for

costs reasonably incurred and due credit for payments or proceeds of resale.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O384.

Westlaw Topic No. 343.

C.J.S. Sales §§ 574, 576 to 577.

§ 2–709. Action for the price

(1) When the buyer fails to pay the price as it becomes due the seller may

recover, together with any incidental damages under the next section, the price

(a) of goods accepted or of conforming goods lost or damaged within a

commercially reasonable time after risk of their loss has passed to the buyer;

and

(b) of goods identified to the contract if the seller is unable after reasonable

effort to resell them at a reasonable price or the circumstances reasonably

indicate that such effort will be unavailing.

(2) Where the seller sues for the price he must hold for the buyer any goods

which have been identified to the contract and are still in his control except

that if resale becomes possible he may resell them at any time prior to the

collection of the judgment. The net proceeds of any such resale must be

credited to the buyer and the payment of the judgment entitles him to any

goods not resold.

(3) After the buyer has wrongfully rejected or revoked acceptance of the

goods or has failed to make a payment due or has repudiated (Section 2–610), a

seller who is held not entitled to the price under this section shall nevertheless

be awarded damages for nonacceptance under the preceding section.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

254

Title 33, § 2–711

SALES

Library References

Sales O340.

Westlaw Topic No. 343.

C.J.S. Sales §§ 536 to 538, 559.

§ 2–710. Seller’s incidental damages

Incidental damages to an aggrieved seller include any commercially reasonable charges, expenses or commissions incurred in stopping delivery, in the

transportation, care and custody of goods after the buyer’s breach, in connection with return or resale of the goods or otherwise resulting from the breach.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O384.

Westlaw Topic No. 343.

C.J.S. Sales §§ 574, 576 to 577.

§ 2–711. Buyer’s remedies in general; buyer’s security interest in rejected

goods

(1) Where the seller fails to make delivery or repudiates or the buyer

rightfully rejects or justifiably revokes acceptance then with respect to any

goods involved, and with respect to the whole if the breach goes to the whole

contract (Section 2–612), the buyer may cancel and whether or not he has done

so may in addition to recovering so much of the price as has been paid

(a) ‘‘cover’’ and have damages under the next section as to all the goods

affected whether or not they have been identified to the contract; or

(b) recover damages for nondelivery as provided in this chapter (Section

2–713).

(2) Where the seller fails to deliver or repudiates the buyer may also

(a) if the goods have been identified recover them as provided in this chapter

(Section 2–502 ); or

(b) in a proper case obtain specific performance or replevy the goods as

provided in this chapter (Section 2–716).

(3) On rightful rejection or justifiable revocation of acceptance of buyer has a

security interest in goods in his possession or control for any payments made

on their price and any expenses reasonably incurred in their inspection, receipt,

transportation, care and custody and may hold such goods and resell them in

like manner as an aggrieved seller (Section 2–706).

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Cross References

Anticipatory repudiation, see Title 33, § 2–610.

Manner and effect of rightful rejection, see Title 33, § 2–602.

Secured party defined, see Title 33, § 9–106.

Secured transactions,

Application to security interests arising under this chapter, see Title 33, § 9–121.

Priority of security interests in transferred collateral, see Title 33, § 9–325.

Scope of chapter, see Title 33, § 9–110.

255

Title 33, § 2–711

UNIFORM COMMERCIAL CODE

Secured transactions—Cont’d

Security interest perfected upon attachment, see Title 33, § 9–309.

Library References

Sales O113, 390, 399, 404, 425.

Westlaw Topic No. 343.

C.J.S. Sales §§ 186 to 188, 192 to 194, 201 to

202, 352 to 353, 355 to 357, 423, 480 to

482, 486 to 488, 586 to 588, 591, 594, 600.

§ 2–712. Cover; buyer’s procurement of substitute goods

(1) After a breach within the preceding section the buyer may ‘‘cover’’ by

making in good faith and without unreasonable delay any reasonable purchase

of or contract to purchase goods in substitution for those due from the seller.

(2) The buyer may recover from the seller as damages the difference between

the cost of cover and the contract price together with any incidental or

consequential damages as hereinafter defined (Section 2–715), but less expenses saved in consequence of the seller’s breach.

(3) Failure of the buyer to effect cover within this section does not bar him

from any other remedy.

[Added by NCA 07–107, § 3, eff. May 3, 2007.]

Library References

Sales O418(7).

Westlaw Topic No. 343.

C.J.S. Sales §§ 596 to 598, 608.

§ 2–713. Buyer’s damages for nondelivery or repudiation

(1) Subject to the provisions of this chapter with respect to proof of market

price (Section 2–723), the measure of damages for nondelivery or repudiation

by the seller is the difference between the market price at the time when the

buyer learned of the breach and the contract price together with any incidental

and consequential damages provided in this chapter (Section 2–715), but less

expenses saved in

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