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Commercial Ordinance1

Table of Contents

CHAPTER 1. GENERAL COMMERCIAL PROVISIONS ...................................................... 1

PART 1: SHORT TITLE, CONSTRUCTION, APPLICATION AND SUBJECT

MATTER OF THIS ORDINANCE ...................................................................... 1

Section 1. Short Title. ............................................................................................................. 1

Section 2. No Waiver of Sovereign Immunity.. ..................................................................... 1

Section 3. Purposes; Rules of Construction; Variation by Agreement. ................................. 1

Section 4. Supplementary General Principles of Law Applicable. . ...................................... 1

Note of Adoption: Note of Amendment: The Community Council adopted this Commercial Code, numbered Title 4

of the Judicial Code, on January 9, 1996, by Resolution Number 96-1-9-4. The 1996 Title 4: Commercial Code replaced

the Interim Commercial Code adopted on March 6, 1990, by Resolution Number 90-14. The Community Council

amended the 1996 Title 4: Commercial Code on September 14, 2022, by Resolution Number 22-9-14-154 to add Notes

of Amendment summarizing the legislative history of this Title. The notes of amendment are for convenience only and

should not be relied on as mandatory authority. That resolution also renumbered the Commercial Code as Title 6 of the

Judicial Code, standardized subsection-numbering throughout this Title, and corrected spelling errors. These technical

changes were intended to increase usability and is not intended to affect any content of this Title. The Community

Council reformatted the ordinance on January 25, 2023, by Resolution Number 23-1-25-14 to increase the usability of this

ordinance and of tribal law, and renamed the Ordinance the Prairie Island Indian Community Commercial Ordinance.

Section 5.

Section 6.

Construction Against Implicit Repeal.. ................................................................. 2

Territorial Application of This Ordinance; Parties’ Power to Choose Applicable

Law. ....................................................................................................................... 2

Section 7. Remedies to Be Liberally Administered. .............................................................. 2

Section 8. Waiver or Renunciation of Claim or Right After Breach. . ................................... 2

Section 9. Severability.. .......................................................................................................... 2

Section 10.

Section Captions. . .............................................................................................. 2

Section 11.

Application to Pre-Existing Transactions. . ........................................................ 2

Section 12.

Internal References. . .......................................................................................... 2

PART 2:

Section 1.

Section 2.

Section 3.

Section 4.

Section 5.

Section 6.

Section 7.

Section 8.

Section 9.

GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION ........ 3

General Definitions. ............................................................................................... 3

Prima Facie Evidence by Third Party Documents. . ............................................. 7

Obligation of Good Faith. . .................................................................................... 7

Time; Reasonable Time; Seasonably. ................................................................... 7

Course of Dealing and Usage of Trade. ................................................................ 7

[RESERVED] ........................................................................................................ 8

Performance or Acceptance Under Reservation of Rights. . ................................. 8

Option to Accelerate At Will. . .............................................................................. 8

Subordinated Obligations.. .................................................................................... 8

CHAPTER 2. SALES .............................................................................................................. 8

PART 1: SHORT TITLE, GENERAL CONSTRUCTION AND SUBJECT MATTER .... 8

Section 1. Short Title. . ........................................................................................................... 8

Section 2. Scope; Certain Security and Other Transactions Excluded From This Chapter. .. 8

Section 3. Definitions and Index of Definitions. .................................................................... 9

Section 4. Definitions: “Merchant”; “Between Merchants”; “Financing Agency”. .............. 9

Section 5. Definitions: Transferability; “Goods”; “Future” Goods; “lot”; “Commercial

Unit”. ..................................................................................................................... 9

Section 6. Definitions: “Contracts”; “Agreement”; “Contract for Sale”; “Sale”;

“Conforming” to Contract; “Termination”; “Cancellation” ................................ 10

Section 7. Goods to Be Severed From Realty: Recording. .................................................. 10

PART 2:

Section 1.

Section 2.

Section 3.

FORM, FORMATION AND READJUSTMENT OF CONTRACT ................. 11

Formal Requirements; Statute of Frauds. ............................................................ 11

Final Written Expression: Parol or Extrinsic Evidence. ...................................... 12

Seals Inoperative. ................................................................................................. 12

Section 4.

Section 5.

Section 6.

Section 7.

Section 8.

Section 9.

Section 10.

Formation in General. .......................................................................................... 12

Firm Offers. ......................................................................................................... 12

Offer and Acceptance in Formation of Contract. ................................................ 12

Additional Terms in Acceptance or Confirmation. ............................................. 13

Course of Performance or Practical Construction. .............................................. 13

Modification, Rescission and Waiver. ................................................................. 13

Delegation of Performance; Assignment of Rights. ......................................... 14

PART 3:

Section 1.

Section 2.

Section 3.

Section 4.

Section 5.

Section 6.

Section 7.

Section 8.

Section 9.

Section 10.

GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT ........... 14

General Obligations of Parties. . .......................................................................... 14

Unconscionable Contract or Clause. ................................................................... 14

Allocation or Division of Risks.. ......................................................................... 15

Price Payable in Money, Goods, Realty, or Otherwise. ...................................... 15

Open Price Term. ................................................................................................. 15

Output, Requirements and Exclusive Dealings. .................................................. 15

Delivery in Single Lot or Several Lots.. .............................................................. 16

Absence of Specified Place for Delivery. ............................................................ 16

Absence of Specific Time Provisions; Notice of Termination ............................ 16

Open Time for Payment or Running of Credit; Authority to Ship Under

Reservation .......................................................................................................... 16

Options and Cooperation Respecting Performance. ............................................ 16

Warranty of Title and Against Infringement; Buyer’s Obligation Against

Infringement. ....................................................................................................... 17

Express Warranties by Affirmation, Promise, Description, Sample. ............... 17

Implied Warranty: Merchantability; Usage of Trade. ...................................... 18

Implied Warranty: Fitness for Particular Purpose.. .......................................... 18

Exclusion or Modification of Warranties. ........................................................ 18

Cumulation and Conflict of Warranties Express or Implied. ........................... 19

Third Party Beneficiaries of Warranties Express of Implied.. ......................... 19

F.O.B. and F.A.S. Terms. ................................................................................. 19

C.I.F. and C. & F. Terms. ................................................................................. 20

C.I.F. or C. & F.: “Net Landed Weights;” “Payment on Arrival;” Warranty

of Condition on Arrival. ................................................................................... 21

Delivery “Ex-Ship”........................................................................................... 21

“No Arrival, No Sale” Term. ............................................................................ 22

“Letter of Credit” Term; “Confirmed Credit”. ................................................. 22

Sale on Approval and Sale or Return; Consignment Sales and Rights of

Section 11.

Section 12.

Section 13.

Section 14.

Section 15.

Section 16.

Section 17.

Section 18.

Section 19.

Section 20.

Section 21.

Section 22.

Section 23.

Section 24.

Section 25.

iii

Creditors. ............................................................................................................. 22

Section 26.

Special Incident of Sale on Approval and Sale or Return. ............................... 23

Section 27.

Sale by Auction. ............................................................................................... 23

PART 4:

Section 1.

Section 2.

Section 3.

TITLE, CREDITORS AND GOOD FAITH PURCHASERS ............................ 24

Passing of Title; Reservation for Security; Limited Application of This

Section. ............................................................................................................... 24

Rights of Seller’s Creditors Against Sold Goods. ............................................... 24

Power to Transfer; Good Faith Purchase or Goods; “Entrusting”. ..................... 25

PART 5:

Section 1.

Section 2.

Section 3.

Section 4.

Section 5.

Section 6.

Section 7.

Section 8.

Section 9.

Section 10.

Section 11.

Section 12.

Section 13.

Section 14.

Section 15.

PERFORMANCE ................................................................................................ 25

Insurable Interest in Goods; Manner of Identification of Goods......................... 25

Buyer’s Right to Goods on Seller’s Insolvency. ................................................. 26

Manner of Seller’s Tender of Delivery................................................................ 26

Shipment by Seller............................................................................................... 27

Seller’s Shipment Under Reservation.................................................................. 27

Right of Financing Agency.................................................................................. 28

Effect of Seller’s Tender; Delivery on Condition. .............................................. 28

Cure by Seller of Improper Tender or Delivery; Replacement. .......................... 28

Risk of Loss In the Absence of Breach. .............................................................. 28

Effect of Breach on Risk of Loss...................................................................... 29

Tender of Payment by Buyer; Payment by Check. .......................................... 29

Payment by Buyer Before Inspection. .............................................................. 29

Buyer’s Right to Inspection of Goods. ............................................................. 30

When Documents Deliverable on Acceptance; When on Payment. ................ 30

Preserving Evidence of Goods in Dispute. ....................................................... 30

PART 6:

Section 1.

Section 2.

Section 3.

Section 4.

Section 5.

Section 6.

Section 7.

BREACH, REPUDIATION AND EXCUSE ...................................................... 30

Buyer’s Rights on Improper Delivery. ................................................................ 30

Manner and Effect of Rightful Rejection. ........................................................... 31

Merchant Buyer’s Duties as to Rightfully Rejected Goods. ............................... 31

Buyer’s Options as to Salvage of Rightfully Rejected Goods. ........................... 31

Waiver of Buyer’s Objections by Failure to Particularize. ................................. 32

What Constitutes Acceptance of Goods. ............................................................. 32

Effect of Acceptance; Notice of Breach; Burden of Establishing Breach After

Acceptance; Notice of Claim of Litigation to Person Answerable Over. ........... 32

Section 8. Revocation of Acceptance in Whole or in Part. .................................................. 33

Section 9. Right to Adequate Assurance of Performance. ................................................... 33

Section 10.

Anticipatory Repudiation. ................................................................................ 34

Section 11.

Retraction of Anticipatory Repudiation. .......................................................... 34

Section 12.

“Installment Contract”; Breach. ....................................................................... 34

Section 13.

Casualty to Identified Goods ............................................................................ 34

Section 14.

Substituted Performance. .................................................................................. 35

Section 15.

Excuse by Failure of Presupposed Conditions. ................................................ 35

Section 16.

Procedure On Notice Claiming Excuse. ........................................................... 35

PART 7:

Section 1.

Section 2.

Section 3.

Section 4.

Section 5.

Section 6.

Section 7.

Section 8.

Section 9.

Section 10.

Section 11.

Section 12.

Section 13.

Section 14.

Section 15.

Section 16.

Section 17.

Section 18.

Section 19.

Section 20.

Section 21.

Section 22.

Section 23.

Section 24.

REMEDIES ......................................................................................................... 36

Remedies for Breach of Collateral Contracts Not Impaired................................ 36

Seller’s Remedies on Discovery of Buyer’s Insolvency.. ................................... 36

Seller’s Remedies in General. ............................................................................. 36

Seller’s Right to Identify Goods to the Contract Notwithstanding Breach or to

Salvage Unfinished Goods. ................................................................................. 37

Seller’s Stoppage of Delivery in Transit or Otherwise........................................ 37

Seller’s Resale Including Contract for Resale. .................................................... 37

“Person in the Position of a Seller”. .................................................................... 38

Seller’s Damages for Non-acceptance or Repudiation. ....................................... 39

Action for the Price. ............................................................................................. 39

Seller’s Incidental Damages. . .......................................................................... 39

Buyer’s Remedies in General; Buyer’s Security Interest in Rejected Goods. . 39

“Cover”; Buyer’s Procurement of Substitute Goods. ....................................... 40

Buyer’s Damages for Non-Delivery or Repudiation. ....................................... 40

Buyer’s Damages for Breach in Regard to Accepted Goods. .......................... 40

Buyer’s Incidental and Consequential Damages. ............................................. 41

Buyer’s Right to Specific Performance or Replevin. ....................................... 41

Deduction of Damages From the Price. ........................................................... 41

Liquidation or Limitation of Damages; Deposits. ............................................ 41

Contractual Modifications of Limitation of Remedy. ...................................... 42

Effect of “Cancellation” or “Rescission” on Claims for Antecedent Breach. . 42

Remedies for Fraud. ......................................................................................... 42

Who Can Sue Third Parties for Injury to Goods. ............................................. 42

Proof of Market Price: Time and Place. ........................................................... 43

Admissibility of Market Quotations. ................................................................ 43

Section 25.

Statute of Limitations in Contracts for Sale. .................................................... 43

CHAPTERS 3 - 8 [RESERVED] ............................................................................................. 44

CHAPTER 9. SECURED TRANSACTIONS ......................................................................... 44

PART 1: SHORT TITLE, APPLICABILITY AND DEFINITIONS ................................. 44

Section 1. Short Title. .......................................................................................................... 44

Section 2. Purpose.. .............................................................................................................. 44

Section 3. No Application to Property Not Alienable.. ........................................................ 44

Section 4. General Definitions. ............................................................................................. 44

Section 5. Notice; Knowledge .............................................................................................. 54

Section 6. Value. ................................................................................................................... 55

Section 7. Lease Distinguished from Security Interest......................................................... 55

Section 8. General Scope. ..................................................................................................... 56

Section 9. Excluded Transactions. ........................................................................................ 57

Section 10.

[RESERVED] ................................................................................................... 57

Section 11.

Obligation of Good Faith .................................................................................. 57

Section 12.

Course of Performance, Course of Dealing, and Usage of Trade. ................... 58

Section 13.

Purchase-Money Security Interest. ................................................................... 59

Section 14.

Sufficiency of Description. ............................................................................... 60

Section 15.

Parties’ Power to Choose Applicable Law. ...................................................... 61

PART 2:

Section 1.

Section 2.

Section 3.

Section 4.

Section 5.

Section 6.

Section 7.

PART 3:

Section 1.

EFFECTIVENESS, ATTACHMENT AND RIGHTS OF PARTIES ................ 61

General Effectiveness of Security Agreement..................................................... 61

Attachment and Enforceability of Security Interest; Proceeds; Formal

Requisites. ............................................................................................................ 61

After-Acquired Collateral; Future Advances. ..................................................... 62

Rights and Duties When Collateral is in Secured Party’s Possession or

Control ................................................................................................................. 63

Additional Duties of Certain Secured Parties. ..................................................... 63

No Interest Retained in Right to Payment That is Sold; Retained Power of Seller

of Account or Chattel Paper. ............................................................................... 63

Request for Accounting; Request Regarding List of Collateral or Statement of

Account. ............................................................................................................... 64

PERFECTION AND PRIORITY ........................................................................ 64

Law Governing Perfection and Priority of Security Interests. ............................ 64

Section 2.

Section 3.

[RESERVED] ...................................................................................................... 65

Law Governing Perfection and Priority of Security Interests in Goods covered by

Certificate of Title. .............................................................................................. 65

Section 4. [RESERVED] ...................................................................................................... 65

Section 5. [RESERVED] ...................................................................................................... 65

Section 6. [RESERVED] ...................................................................................................... 65

Section 7. [RESERVED] ...................................................................................................... 65

Section 8. When Security Interest or Agricultural Lien is Perfected; Continuity of

Perfection. ............................................................................................................ 65

Section 9. Security Interest Perfected Upon Attachment. .................................................... 66

Section 10. When Filing Required to Perfect Security Interest or Agricultural Lien; Security

Interests and Agricultural Liens to Which Filing Provisions Do Not Apply. ..... 66

Section 11. Perfection of Security Interests in Property Subject to Certain Ordinances,

Regulations, and Treaties. ................................................................................... 67

Section 12. Perfection of Security Interests in Chattel Paper, Document, Goods Covered by

Documents, Instruments, and Money; Perfection by Permissive Filing;

Temporary Perfection Without Filing or Transfer of Possession. ....................... 68

Section 13.

When Possession by Secured Party Perfects Security Interest Without Filing. 69

Section 14.

Perfection by Control........................................................................................ 70

Section 15.

Secured Party’s Rights on Disposition of Collateral and in Proceeds.............. 70

Section 16. Continued Perfection of Security Interest Following Change in Governing

Law. .................................................................................................................. 71

Section 17.

Interests That Take Priority Over Security Interest or Agricultural Lien. ....... 72

Section 18.

Particular Priority Rules. .................................................................................. 74

Section 19.

Priority of Security Interests in Fixtures and Crops. ........................................ 77

Section 20.

Accessions. ....................................................................................................... 79

Section 21.

Commingled Goods. ......................................................................................... 79

Section 22.

Priority of Security Interests in Goods Covered by Certificate of Title. .......... 80

Section 23.

Priority Subject to Subordination.. ................................................................... 80

PART 4:

Section 1.

Section 2.

Section 3.

Section 4.

RIGHTS OF THIRD PARTIES .......................................................................... 80

Alienability of Debtor’s Rights.. ......................................................................... 80

Secured Party Not Obligated on Contract of Debtor or in Tort. ......................... 80

Rights of Assignee. .............................................................................................. 80

Restrictions on Assignment. ................................................................................ 82

vii

PART 5:

FILING ................................................................................................................ 83

Section 1. Filing Requirements. ........................................................................................... 83

Section 2. Place of Filing for Fixtures on Trust or Restricted Land.. ................................... 83

PART 6: DEFAULT ................................................................................................................ 83

Section 1. Rights after Default; Judicial Enforcement; Consignor or Buyer of Accounts,

Chattel Paper, Payment Intangibles, or Promissory Notes. ................................. 83

Section 2. Waiver and Variance of Rights and Duties. ........................................................ 84

Section 3. Agreement on Standards Concerning Rights and Duties. ................................... 85

Section 4. Procedure if Security Agreement Covers Real Property or Fixtures. ................. 85

Section 5. Unknown Debtor or Secondary Obligor. ............................................................. 86

Section 6. Time of Default for Agricultural Lien.. ............................................................... 86

Section 7. Collection and Enforcement by Secured Party. ................................................... 86

Section 8. Application of Proceeds of Collection or Enforcement; Liability for Deficiency

and Right to Surplus. ........................................................................................... 87

Section 9. Secured Party’s Limited Right to Take Possession After Default. ..................... 87

Section 10.

Disposition of Collateral After Default. ........................................................... 88

Section 11.

Notification Before Disposition of Collateral. ................................................. 89

Section 12.

Timeliness of Notification Before Disposition of Collateral. .......................... 90

Section 13.

Contents and Form of Notification Before Disposition of Collateral. ............. 90

Section 14.

[RESERVED] ................................................................................................... 91

Section 15. Application of Proceeds of Disposition; Liability for Deficiency and Right to

Surplus. ................................................................................................................ 91

Section 16.

Explanation of Calculation of Surplus or Deficiency. ...................................... 92

Section 17.

Rights of Transferee of Collateral. ................................................................... 92

Section 18.

Rights and Duties of Certain Secondary Obligors. .......................................... 93

Section 19.

Transfer of Record or Legal Title. .................................................................... 93

Section 20. Acceptance of Collateral in Full or Partial Satisfaction of Obligation;

Notification of Proposal; Effect of Acceptance; Compulsory Disposition of

Collateral. ............................................................................................................ 94

Section 21.

[RESERVED] ................................................................................................... 95

Section 22.

[RESERVED] ................................................................................................... 95

Section 23.

Right to Redeem Collateral. ............................................................................. 95

Section 24.

Waiver. ............................................................................................................. 95

Section 25.

Remedies for Secured Party’s Failure to Comply with Chapter. ..................... 95

Section 26.

Action in which Deficiency or Surplus is an Issue. .......................................... 97

Section 27.

Determination of Whether Conduct was Commercially Reasonable. .............. 97

viii

Section 28. Nonliability and Limitation on Liability of Secured Party; Liability of Secondary

Obligor. ................................................................................................................ 98

Section 29.

Attorneys Fees in Certain Transactions. ........................................................... 99

PART 7: MISCELLANEOUS PROVISIONS ........................................................................... 99

Section 1. Severability .......................................................................................................... 99

CHAPTER 1. GENERAL COMMERCIAL PROVISIONS

PART 1:

SHORT TITLE, CONSTRUCTION, APPLICATION AND SUBJECT

MATTER OF THIS ORDINANCE

Section 1.

Short Title. This Ordinance shall be known and may be cited as the Prairie

Island Indian Community Commercial Ordinance and consists of the following chapters:

General Commercial Provisions, Sales, and Secured Transactions.

Section 2.

No Waiver of Sovereign Immunity. The sovereign immunity of neither the

Community, nor of any of its agencies or instrumentalities, is waived with respect to any

provision of any transaction subject to this Ordinance, absent a recorded, properly ratified,

express waiver of sovereign immunity.

Section 3.

Purposes; Rules of Construction; Variation by Agreement.

a. This Ordinance shall be liberally construed and applied to promote its underlying

purposes and policies.

b. Underlying purposes and polices of this Ordinance are

1. To simplify, clarify and modernize the law governing commercial transactions on

the Prairie Island Indian Community Reservation, and

2. To permit the continued expansion of commercial practices through custom, usage

and agreement of the parties.

c. The effect of provisions of this Ordinance may be varied by agreement, except as

otherwise provided in this Ordinance and except that the obligations of good faith,

diligence, reasonableness and care prescribed by this Ordinance may not be disclaimed

by agreement but the parties may by agreement determine the standards by which the

performance of such obligations is to be measured if such standards are not manifestly

unreasonable.

d. The presence in certain provisions of this Ordinance of the words “unless otherwise

agreed” or words of similar import does not imply that the effect of other provisions

may not be varied by agreement under subsection c.

e. In this Ordinance unless the context otherwise requires

1. Words in the singular number include the plural, and in the plural include the

singular, and

2. Words of the masculine gender include the feminine and the neuter, and when the

sense so indicates words of the neuter gender may refer to any gender.

Section 4.

Supplementary General Principles of Law Applicable. Unless displaced by

the particular provisions of this Ordinance, 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.

Section 5.

Construction Against Implicit Repeal. This Ordinance being a general law

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.

Section 6.

Territorial Application of This Ordinance; Parties’ Power to Choose

Applicable Law.

a. Except as provided hereafter in this section, when a transaction bears a reasonable

relation to this Reservation and also to another reservation, state or nation the parties

may agree that the law either of this Reservation or of such other reservation, state or

nation shall govern their rights and duties. Failing such agreement this Ordinance

applies to transactions bearing an appropriate relation to this Reservation.

b. Where one of the following provisions of this Ordinance specifies the applicable law,

that provision governs and a contrary agreement is effective only to the extent permitted

by the law (including the conflict of laws rules) so specified:

1. Rights of creditors against sold goods. Chapter 2, Part 4, Section 2.

2. Perfection provisions of the Chapter on Secured Transactions.

Section 7.

Remedies to Be Liberally Administered.

a. The remedies provided by this Ordinance shall 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 this Ordinance or by other rule of law.

b. Any right or obligation declared by this Ordinance is enforceable by action unless the

provision declaring it specifies a different and limited effect.

Section 8.

Waiver or Renunciation of Claim or Right After Breach. Any claim or right

arising out of an alleged breach can be discharged in whole or in part without consideration by

a written waiver or renunciation signed and delivered by the aggrieved party.

Section 9.

Severability. If any provision or clause of this Ordinance or application thereof

to any person or circumstances is held invalid, such invalidity shall not affect other provisions

or applications of the Ordinance which can be given effect without the invalid provision or

application, and to this end the provisions of this Ordinance are declared to be severable.

Section 10.

Ordinance.

Section Captions. Section captions are parts of the laws contained in this

Section 11. Application to Pre-Existing Transactions. Except as provided in this

Ordinance to the contrary, this Ordinance shall not apply to any pending disputes or legal

proceeding or any transaction entered into prior to the effective date of this Ordinance.

Section 12. Internal References.2 Unless indicated otherwise, Part and Section references

are to the Chapter in which the references are located.

Note of Amendment: The Community Council amended this section of the ordinance on January 25, 2023, by

Resolution Number 23-1-25-14 to clarify the internal references used throughout the Commercial Ordinance.

PART 2:

GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION

Section 1.

General Definitions.3 Subject to additional definitions contained in the

subsequent Chapters of this Ordinance which are applicable to specific Chapters or Parts

thereof, and unless the context otherwise requires, in this Ordinance:

a. “Action” in the sense of judicial proceeding includes recoupment, counterclaim, set-off,

suit in equity and any other proceedings in which rights are determined.

b. “Aggrieved party” means a party entitled to resort to a remedy.

c. “Agreement” means the bargain of the parties in fact as found in their language or by

implication from other circumstances including course of dealing or usage of trade or

course of performance as provided in this Ordinance (Part 2, Section 5 of this and

Chapter 2, Part 2, Section 8). Whether an agreement has legal consequences is

determined by the provisions of this Ordinance, if applicable; otherwise by the law of

contracts. (Compare “Contract.”)

d. “Appellate Court” means the Appellate Court of the Prairie Island Mdewakanton Dakota

Community Tribal Court.

e. “Bank” means any person engaged in the business of banking.

f. “Bearer” means the person in possession of an instrument, document of title, or

certificate security payable to bearer or indorsed in blank.

g. “Bill of lading” means a document evidencing the receipt of goods for shipment issued

by a person engaged in the business of transporting or forwarding goods, and includes

an airbill. “Airbill” means a document serving for air transportation as a bill of lading

does for marine or rail transportation, and includes an air consignment not or air

waybill.

h. “Branch” includes a separately incorporated foreign branch of a bank.

i. “Burden of establishing” a fact means the burden of persuading the triers of fact that the

existence of the fact is more probable than its non-existence.

j. “Buyer in ordinary course of business” means a person who in good faith and without

knowledge that the sale to him is in violation of the ownership rights or security interest

of a third party in the goods buys in ordinary course from a person in the business of

selling goods of that kind but does not include a pawnbroker. All persons who sell

minerals or the like (including oil and gas) at wellhead or minehead shall be deemed to

be persons in the business of selling goods of that kind. “Buying” may be for cash or by

exchange of other property or on secured or unsecured credit and includes receiving

goods or documents of title under a pre-existing contract for sale but does not include a

transfer in bulk or as security for or in total or partial satisfaction of a money debt.

k. “Community” means the Prairie Island Indian Community in the State of Minnesota, a

federally recognized Indian tribe.

Note of Amendment: The Community Council amended this section of the ordinance on January 25, 2023, by

Resolution Number 23-1-25-14 to remove the definition of telegraph.

l. “Community Council” means the constitutionally authorized governing body of the

Community.

m. “Conspicuous”: A term or clause is conspicuous when it is so written that a reasonable

person against whom it is to operate ought to have noticed it. A printed heading in

capitals (as: NON-NEGOTIABLE BILL OF LADING) is conspicuous. Language in the

body of form is “conspicuous” if it is in larger or other contrasting type or color.

Whether a term or clause is “conspicuous” or not is for decision by the Tribal Court.

n. “Contract” means the total legal obligation which results from the parties’ agreement as

affected by this Ordinance and any other applicable rules of law. (Compare

“Agreement.”

o. “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.

p. “Defendant” includes a person in the position of defendant in a cross-action or

counterclaim.

q. “Delivery” with respect to instruments, documents of title, chattel paper, or certificate

securities means voluntary transfer of possession.

r. “Document of title” includes bill of lading, dock warrant, dock receipt, warehouse

receipt or order for the delivery of goods, and also any other document which in the

regular course of business or financing is treated as adequately evidencing that the

person in possession of it is entitled to receive, hold and dispose of the document and

the goods it covers. To be a document of title a document must purport to be issued by

or addressed to a bailee and purport to cover goods in the bailee’s possession which are

either identified or are fungible portions of an identified mass.

s. “Fault” means wrongful act, omission or breach.

t. “Fungible” with respect to goods or securities means goods or securities of which any

unit is, by nature or usage of trade, the equivalent of any other like unit. Goods which

are not fungible shall be deemed fungible for the purposes of this Ordinance to the

extent that under a particular agreement or document unlike units are treated as

equivalents.

u. “Genuine” means free of forgery or counterfeiting.

v. “Good faith” means honesty in fact in the conduct or transaction concerned.

w. “Holder” means a person who is in possession of a document of title or an instrument or

a certificate investment security drawn, issued, or indorsed to him or his order or to

bearer or in blank.

x. To “honor” is to pay or to accept and pay, or where a credit so engages to purchase or

discount a draft complying with the terms of credit.

y. “Insolvency proceedings” includes any assignment for the benefit of creditors or other

proceedings intended to liquidate or rehabilitate the estate of the person involved.

z. A person is “insolvent” who either has ceased to pay his debts in the ordinary course of

business or cannot pay his debts as they become due or is insolvent within the meaning

of the federal bankruptcy law.

aa. “Money” means a medium of exchange authorized or adopted by a domestic or foreign

government as a part of its currency.

bb. A person has “notice” of a fact when:

1. He has actual knowledge of it,

2. He has received a notice or notification of it, or

3. From all the facts and circumstances known to him at the time in question he has

reason to know that it exists.

cc. A person “knows” or has “knowledge” of a fact when he has actual knowledge of it.

“Discover” or “learn” or a word or phrase of similar import refers to knowledge rather

than to reason to know. The time and circumstances under which a notice or notification

may cease to be effective are not determined by this Ordinance.

dd. A person “notifies” or “gives” a notice or notification to another by taking such steps as

may be reasonably required to inform the other in ordinary course whether or not such

other actually comes to know of it. A person “receives” a notice or notification when

1. It comes to his attention, or

2. It is duly delivered at the place of business through which the contract was made or

at any other place held out by him as the place for receipt of such communications.

ee. “Notice,” “knowledge” or a “notice” or “notification” received by an organization is

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

the individual conducting that transaction, and in any event from the time when it would

have been brought to his 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 such

communication is part of his regular duties or unless he has reason to know of the

transaction and that the transaction would be materially affected by the information.

ff. “Organization” includes a corporation, government or governmental subdivision or

agency, business trust, estate, trust, partnership or association, two or more persons

having a joint or common interest, or any other legal or commercial entity.

gg. “Party,” as distinct from “third party,” means a person who has engaged in a transaction

or made an agreement within this Ordinance.

hh. “Person” includes an individual or an organization.

ii. “Presumption” or “presumed” means that the trier of fact must find the existence of the

fact presumed unless and until evidence is introduced which would support a finding of

its non- existence.

jj. “Purchase” includes taking by sale, discount, negotiation, mortgage, pledge, lien, issue

or re-issue, gift or any other voluntary transaction creating an interest in property.

kk. “Purchaser” means a person who takes by purchase

ll. “Remedy” means a remedial right to which an aggrieved party is entitled with or

without resort to a tribunal.

mm. “Representative” includes an agent, an officer of a corporation or association, and a

trustee, executor or administrator of an estate, or any other person empowered to act for

another.

nn. “Reservation” or “Prairie Island Indian Community Reservation” means all territory

subject to the Community’s jurisdiction.

oo. “Rights” includes remedies.

pp. “Security interest” means an interest in personal property or fixtures which secures

payment or performance of an obligation. The retention or reservation of title by a seller

of goods notwithstanding shipment or delivery to the buyer (Chapter 2, Part 4, Section

1) is limited in effect to a reservation of a “security interest.’’ The term also includes

any interest of a buyer of accounts or chattel paper which is subject to the Secured

Transaction Chapter. The special property interest of a buyer of goods on identification

of such goods to a contract for sale under Chapter 2, Part 4, Section 1 is not a “security

interest,” but a buyer may also acquire a “security interest’ by complying with the

Secured Transactions Chapter. Unless a lease or consignment is intended as security,

reservation of title thereunder is not a “security interest” but a consignment is in any

event subject to the provisions on consignment sales (Chapter 2, Part 3, Section 26).

Whether a lease is intended as security is to be determined by the facts of each case;

however, 1. the inclusion of an option to purchase does not of itself make the lease one

intended for security, and 2. an agreement that upon compliance with the terms of the

lease the lessee shall become or has the option to become the owner of the property for

no additional consideration or for a nominal consideration does make the lease one

intended for security.

qq. “Send” in connection with any writing or notice means 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. The receipt of any writing or notice within the time

at which it would have arrived if properly sent has the effect of a proper sending.

rr. “Signed” includes any symbol executed or adopted by a party with present intention to

authenticate a writing.

ss. “Term” means that portion of an agreement which relates to a particular matter.

tt. “Tribal Court” means the Prairie Island Mdewakanton Dakota Community Tribal Court.

uu. A person gives “value” for rights if he 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 pre-existing claim,

3. By accepting delivery pursuant to a pre-existing contract for purchase, or

4. Generally, in return for any consideration, sufficient to support a simple contract.

vv. “Warehouse receipt” means a receipt issued by a person engaged in the business of

storing goods for hire.

ww. “Written” or “writing” includes printing, typewriting or any other intentional

reduction to tangible form.

Section 2.

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 shall be prima facie evidence of its own authenticity and

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

Section 3.

Obligation of Good Faith. Every contract or duty within this Ordinance

imposes an obligation of good faith in its performance or enforcement.

Section 4.

Time; Reasonable Time; Seasonably.

a. Whenever this Act requires any action to be taken within a reasonable time, any time

which is not manifestly unreasonable may be fixed by agreement.

b. What is a reasonable time for taking any action depends on the nature, purpose and

circumstances of such action.

c. An action is taken “seasonably” when it is taken at or within the time agreed, or if no

time is agreed, at or within a reasonable time.

Section 5.

Course of Dealing and Usage of Trade.

a. A course of dealing is a sequence of previous conduct between the parties to a particular

transaction which is fairly to be regarded as establishing a common basis of

understanding for interpreting their expressions and other conduct.

b. A usage of trade is any practice or method of dealing having such 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 are to be proved as facts. If it is established that such a usage is embodied in a

written trade code or similar writing the interpretation of the writing is for the Tribal

Court.

c. A course of dealing between parties, and any usage of trade in the vocation or trade in

which they are engaged or of which they are or should be aware, give particular

meaning to and supplement or qualify terms of an agreement.

d. the express terms of an agreement and an applicable course of dealing or usage of trade

shall be construed wherever reasonable as consistent with each other; but when such

construction is unreasonable express terms control both course of dealing and usage of

trade and course of dealing controls usage of trade.

e. An applicable usage of trade in the place where any part of performance is to occur shall

be used in interpreting the agreement as to that part of the performance.

f. Evidence of a relevant usage of trade offered by one party is not admissible unless and

until he has given the other party such notice as the Tribal Court finds sufficient to

prevent unfair surprise to the latter.

Section 6.

[RESERVED]

Section 7.

Performance or Acceptance Under Reservation of Rights. A party who 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 protect” or the like are sufficient.

Section 8.

Option to Accelerate At Will. A term providing that one party or his successor

in interest may accelerate payment or performance or require collateral or additional collateral

“at will” or “when he deems himself insecure” or in words of similar import shall be construed

to mean that he shall have power to do so only if he in 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.

Section 9.

Subordinated Obligations. An obligation may be issued as subordinated to

payment of another obligation of the person obligated, or a creditor may subordinate his right

to payment 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. This section shall be construed as

declaring the law as it existed prior to the enactment of this section and not as modifying it.

CHAPTER 2. SALES

PART 1:

SHORT TITLE, GENERAL CONSTRUCTION AND SUBJECT MATTER

Section 1.

Short Title. This Chapter shall be known and may be cited as the Prairie Island

Indian Community Commercial Ordinance - Sales Chapter.

Section 2.

Scope; Certain Security and Other Transactions Excluded From This

Chapter.

a. 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.

b. In the absence of other applicable law, the provisions of this Chapter may be applied by

analogy to a transaction which is primarily or totally a sale of services rather than

goods, if the Tribal Court determines that:

1. The policies underlying the provisions apply to the transaction, and

2. Application of provisions is:

A. Commercially reasonable, and

B. Not contrary to the reasonable expectations of the parties.

Section 3.

Definitions and Index of Definitions.

a. In this Chapter unless the context otherwise requires:

1. “Buyer” means a person who buys or contracts to buy goods.

2. “Good faith” in the case of a merchant means honesty in fact and the observance of

reasonable commercial standards of fair dealing in the trade.

3. “Receipt” of goods means taking physical possession of them.

4. “Seller” means a person who sells or contracts to sell goods.

b. Other definitions applying to this Chapter or to specified Parts thereof, and the sections

in which they appear are: “Acceptance.” Part 6, Section 6. “Banker’s Credit.” Part 3,

Section 25. “Between Merchants.” Part 1, Section 4. “Cancellation.” Part 1, Section 6.d.

Section 4.

Definitions: “Merchant,” “Between Merchants,” and “Financing Agency.”

a. “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 of

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.

b. “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 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 (Part 7, Section 7).

c. “Between merchants” means in any transaction with respect to which both parties are

chargeable with the knowledge or skill of merchants.

Section 5.

Definitions: Transferability; “Goods,” “Future” Goods, “Lot,” and

“Commercial Unit.”

a. “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 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 (Part 1, Section 7).

1. 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.

2. There may be a sale of a part interest in existing identified goods.

3. 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

when then becomes an owner in common.

b. “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.

c. “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 single

whole.

Section 6.

Definitions: “Contracts,” “Agreement,” “Contract for Sale,” “Sale,”

“Conforming” to Contract, “Termination, and “Cancellation.”

a. In this Chapter, 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. A

“sale” consists in the passing of title from the seller to the buyer for a price (Part 4,

Section 1). A “present sale” means a sale which is accomplished by the making of the

contract.

b. 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.

c. “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.

d. “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.

Section 7.

Goods to Be Severed From Realty; Recording.

a. 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

contract to sell.

b. 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 a. 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.

c. 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.

d. Nothing in this Chapter shall be construed as affecting the responsibilities of the parties

to comply with Tribal laws and regulations concerning the use of land or federal laws

and regulations concerning the sale of goods such as timber, minerals, oil or gas from

land which is held in trust or which is subject to restrictions against alienation.

PART 2:

FORM, FORMATION AND READJUSTMENT OF CONTRACT

Section 1.

Formal Requirements; Statute of Frauds.

a. Except as otherwise provided in this section a contract for the sale of goods for the price

of $500 or more is not enforceable by way of action or defense unless there is some

writing sufficient to indicate 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.

b. 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 a. against such party unless

written notice of objection to its contents is given within 10 days after it is received.

c. A contract which does not satisfy the requirements of subsection a. but which is valid in

other respects is enforceable:

1. 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,

2. 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

3. With respect to goods for which payment has been made and accepted or which

have been received and accepted (Part 6, Section 6).

Section 2.

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 dealing or usage of trade (Part 2, Section 5) or by course of performance

(Part 2, Section 8), and

b. By evidence of consistent additional term unless the Tribal Court finds the writing to have

been intended also as a complete and exclusive statement of the terms of the agreement.

Section 3.

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.

Section 4.

Formation in General.

a. 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.

b. An agreement sufficient to constitute a contract for sale may be found even though the

moment of its making is undetermined.

c. 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.

Section 5.

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.

Section 6.

Offer and Acceptance in Formation of Contract.

a. Unless otherwise unambiguously indicated by the language or context:

1. An offer to make a contract shall be construed as inviting acceptance in any manner

and by any medium reasonable in the circumstances.

2. 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 non-conforming 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.

b. Where the beginning of a requested performance is a reasonable mode of acceptance an

offeror who is not noticed of acceptance within a reasonable time may treat the offer as

having lapsed before acceptance.

Section 7.

Additional Terms in Acceptance or Confirmation.

a. 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.

b. The additional terms are to be construed as proposals for addition to the contract.

Between merchants such terms become part of the contract unless:

1. The offer expressly limits acceptance to the terms of the offer,

2. They materially alter it, or

3. Notification of objection to them has already been given or is given within a

reasonable time after notice of them is received.

c. 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 Ordinance.

Section 8.

Course of Performance or Practical Construction.

a. 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.

b. 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 (Part 2, Section 5).

c. 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.

Section 9.

Modification, Rescission and Waiver.

a. An agreement modifying a contract with this Chapter needs no considerations to be

binding.

b. 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.

c. The requirements of the statute of frauds section of this Chapter (Part 2, Section 1) must

be satisfied if the contract as modified is within its provisions.

d. Although an attempt at modification or rescission does not satisfy the requirements of

subsection b. or c. it can operate as a waiver.

e. 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.

Section 10.

Delegation of Performance; Assignment of Rights.

a. 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.

b. 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.

c. Unless the circumstances indicate the contrary a prohibition of assignment of “the

contract” is to be construed as barring only the delegation of the assignee of the

assignor’s performance.

d. 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.

e. 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 (Part 6, Section 9).

PART 3:

GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT

Section 1.

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.

Section 2.

Unconscionable Contract or Clause.

a. If the Tribal Court as a matter of law finds the contract or any clause of contract to have

been unconscionable at the time it was made, the Court may refuse to enforce the

contract, or it may enforce the remainder of the contract without the unconscionable

clause, or it may so limit the application of any unconscionable clause as to avoid any

unconscionable result.

b. When it is claimed or appears to the Court that the contract or any clause thereof may be

unconscionable the parties shall be afforded a reasonable opportunity to present

evidence as to its commercial setting, purpose and effect to aid the Court in making the

determination.

Section 3.

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.

Section 4.

Price Payable in Money, Goods, Realty, or Otherwise.

a. 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.

b. 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.

Section 5.

Open Price Term.

a. The parties if they so intend can conclude a contract for sale even though the price is not

settled. In such a case the price is a reasonable price at the time for delivery if:

1. Nothing is said as to price,

2. The price is left to be agreed by the parties and they fail to agree, or

3. The price is to be fixed in terms of some agreed market or other standard as set or

recorded by a third person or agency and it is not so set or recorded.

b. A price to be fixed by the seller or by the buyer means a price for him to fix in good

faith.

c. When a price left to be fixed otherwise than by agreement of the parties fails to be fixed

through fault of one party the other may at his option treat the contract as canceled or

himself fix a reasonable price.

d. Where, however, the parties intend not to be bound unless the price be fixed or agreed

and it is not fixed or agreed there is not contract. In such a case the buyer must return

any goods already received or if unable so to do must pay their reasonable value at the

time of delivery and the seller must return any portion of the price on account.

Section 6.

Output, Requirements and Exclusive Dealings.

a. 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.

b. 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.

Section 7.

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

Section 8.

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 non 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

c. Documents of title may be delivered through customary banking channels.

Section 9.

Absence of Specific Time Provisions; Notice of Termination.4

a. 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.

b. 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.

c. 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.

Section 10.

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,

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 (Part 5, Section 13),

c. If delivery is authorized and made way of documents of title otherwise than by

subsection b. then payment is due at the time and place at which the buyer is to receive

the documents regardless of where the goods are to be received, 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.

Section 11. Options and Cooperation Respecting Performance. An agreement for sale

which is otherwise sufficiently definite (subsection c. of Part 2, Section 4) to be a contract is

Note of Amendment: The Community Council added this section of the ordinance on January 25, 2023, by Resolution

Number 23-1-25-14 as it had inadvertently been left out.

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.

a. Unless otherwise agreed specifications relating to assortment of the goods are at the

buyer’s option and except as otherwise provided in subsection a.3. and c. of Part 3,

Section 19 specifications or arrangements relating to shipment are at the seller’s option.

b. Where such specification would materially affect the other party’s performance but is

not seasonably made or where one party’s cooperation is necessary to the agreed

performance of the other but is not seasonably forthcoming, the other party in addition

to all other remedies:

1. Is excused for any resulting delay in his own performance, and

2. 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 specific or to cooperate as a

breach by failure to deliver or accept the goods.

Section 12. Warranty of Title and Against Infringement; Buyer’s Obligation Against

Infringement.

a. Subject to subsection b. there is a contract for sale a warranty by the seller that:

1. The title conveyed shall be good, and its transfer rightful, and

2. 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.

b. A warranty under subsection a. 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.

c. Unless otherwise agreed, a seller who is a merchant regularly dealing in goods of the

kind warrants that the goods shall be delivered 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.

Section 13.

Express Warranties by Affirmation, Promise, Description, Sample.

a. Express warranties by the seller are created as follows:

1. 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.

2. Any description of the goods with is made part of the basis of the bargain creates an

express warranty that the goods shall conform to the description.

3. Any sample or model which is made part of the basis of the bargain creates an

express warranty that the whole of the goods shall conform to the sample or model.

b. 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.

Section 14.

Implied Warranty: Merchantability; Usage of Trade.

a. Unless excluded or modified (Part 3, Section 16), 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.

b. Goods to be merchantable must be at least such as:

1. Pass without objection in the trade under the contract description,

2. In the case of fungible goods, are of fair average quality within the description,

3. Are fit for the ordinary purposes for which such goods are used,

4. Run, within the variations permitted by the agreement, of even kind, quality and

quantity within each unit and among all units involved, and

5. Are adequately contained, packages of fact made on the container or label if any.

c. Unless excluded or modified (Part 3, Section 16) other implied warranties may arise

from course of dealing or usage of trade.

d. Notwithstanding this section or section 15 of this Chapter there is no implied warranty

on the sale of cattle, hogs, sheep, horses, mules, goats, poultry or rabbits that such cattle,

hogs, sheep, horses, mules, goats, poultry or rabbits are free from disease.

e. Notwithstanding this section or section 15 of this Chapter there are no implied

warranties which arise on the sale of human blood, blood plasma, or other human tissue

or organs from a blood bank, clinic, hospital or other reservoir of such blood, tissue or

organs.

Section 15. 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.

Section 16.

Exclusion or Modification of Warranties.

a. Words or conduct relevant to the creation of an express warranty and words or conduct

tending to negate or limit warranty shall be construed wherever reasonable as consistent

with each other; but subject to the provisions of this Chapter on Parol or extrinsic

evidence (Part 2, Section 2) negation or limitation is inoperative to the extent that such

construction is unreasonable.

b. Subject to subsection c., 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.”

c. Notwithstanding subsection b.:

1. 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,

2. 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

3. An implied warranty can also be excluded or modified by course of dealing or

course of performance or usage of trade.

d. 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 (Part 7, Sections 18 and 19).

Section 17. 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.

c. Express warranties displace inconsistent implied warranties other than an implied

warranty of fitness for a particular purpose.

Section 18. Third Party Beneficiaries of Warranties Express of Implied. A seller’s

warranty whether express or implied extends to any person who may reasonably be expected to

use, consume or be affected by the goods and who is injured by breach of the warranty. A seller

may not exclude or limit the operation of this section with respect to injury to the person of an

individual to whom the warranty extends.

Section 19.

F.O.B. and F.A.S. Terms.

a. 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:

1. 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 (Part 5, Section 4) and bear the

expense and risk of putting them into the possession of the carrier.

2. 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 (Part 5, Section 3).

3. When under either 1. or 2. the term is also F.O.B. vessel, care or other vehicle, the

seller must in addition at his own expense and risk load the goods on board. If the

term is 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

(Part 3, Section 23).

b. 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

1. 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

2. Obtain and tender a receipt for the goods in exchange for which the carrier is under

the duty to issue a bill of lading.

c. Unless otherwise agreed in any case falling within subsection a.1. or a.3. or subsection

b. the buyer must seasonably give any needed instructions for making delivery,

including when the term is F.A.S. or B.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 (Part 3, Section 11). He may

also at his option move the goods in any reasonable manner preparatory to delivery or

shipment.

d. 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.

Section 20.

C.I.F. and C. & F. Terms.

a. The terms 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. & F. or C.F. means that

the price so includes cost and freight to the named destination.

b. 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 this

own expense and risk to:

1. Put the goods into the possession of a carrier at the port for shipment and obtain a

negotiable bill or bills of lading covering and entire transportation to the named

destination,

2. 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,

3. 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 provided 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,

4. Prepare an invoice of the goods and procure any other documents required to effect

shipment or to comply with the contract, and

5. Forward and tender with commercial promptness all the documents in due form and

with any indorsement necessary to perfect the buyer’s rights.

c. Unless otherwise agreed the term C.& 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.

d. Under the term C.I.F. or C. & F. unless otherwise agreed the buyer must make payment

against sender of the required documents and the seller may not tender nor the buyer

demand delivery of the goods in substitution for the documents.

Section 21.

C.I.F. or C. & F.: “Net Landed Weights;” “Payment on Arrival:” Warranty

of Condition on Arrival. Under a contract containing a term C.I.F. or C. & F.:

a. 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.

b. An agreement described in subsection a. or any warranty of quality or condition of the

goods on arrival placed 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.

c. 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.

Section 22.

Delivery “Ex-Ship.”

a. 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.

b. Under such a term unless otherwise agreed:

1. 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

2. The risk of loss does not pass to the buyer until the goods leave the ship’s tackle or

are otherwise properly unloaded.

Section 23.

“No Arrival, No Sale” Term.

Under the 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 non-arrival, 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 time, the buyer may

proceed as if there had been casualty to identified goods (Part 6, Section 13).

Section 24.

“Letter of Credit” Term; “Confirmed Credit.”

a. Failure of the buyer seasonably to furnish an agreed letter of credit is a breach of the

contract for sale.

b. 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.

c. 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.

Section 25.

Sale on Approval and Sale or Return; Consignment Sales and Rights of

Creditors.

a. Unless otherwise agreed, if delivered goods may be returned by the buyer even though

they conform to the contract, the transaction is:

1. A “sale on approval” if the goods are delivered primarily for use, and

2. A “sale or return: if the goods are delivered primarily for resale.

b. Except as provided in subsection c., 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.

c. Where goods are delivered to a person for sale and such person maintains a place of

business at which he deals in goods of the kind involved, under a name other than the

name of the person making delivery, then with respect to claims of creditors of the

person conducting the business the goods are deemed to be on sale or return. The

provisions of this subsection are applicable even though an agreement purports to

reserve title to the person making delivery until payment or resale or uses such words as

“on consignment” or “on memorandum.” However, this subsection is not applicable if

the person making delivery:

1. Complies with an applicable law providing for a consignor’s interest or the like to be

evidenced by a sign,

2. Established that the person conducting the business is generally known by his

creditors to be substantially engaged in selling the goods of others, or

3. Complies with the filing provisions of the Chapter on Secured Transactions.

d. 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 (Part 2, Section 1) and as

contradicting the sale aspect of the contract within the provisions of this Chapter on

parol or extrinsic evidence (Part 2, Section 2).

Section 26.

Special Incident of Sale on Approval and Sale or Return.

a. Under a sale on approval unless otherwise agreed:

1. Although the goods are identified to the contract the risk of loss and the title do not

pass to the buyer until acceptance,

2. Use of the goods consistent with the purpose of trial is not acceptable 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

3. After due notification of election to return, the return is at the seller’s risk and

expense but a merchant buyer must follow any reasonable instructions.

b. Under a sale or return otherwise agreed:

1. The option to return extends to the whole or any commercial unit of the goods while

in substantially their original conditions, but must be exercised seasonably, and

2. The return is at the buyer’s risk and expense.

Section 27.

Sale by Auction.

a. In a sale by auction, if goods are put up in lots, each lot is the subject of a separate sale.

b. A sale by auction is complete when 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.

c. 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.

d. 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.

PART 4:

TITLE, CREDITORS AND GOOD FAITH PURCHASERS

Section 1.

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 parties applies irrespective of title to the goods except

where the provisions 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:

a. Title to goods cannot pass under a contract for sale prior to their identification to the

contract (Part 5, Section 1), and unless otherwise explicitly agreed the buyer acquires by

their identification a special property as limited by this Ordinance. 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, title to goods passes from the

seller to the buyer in any manner and on any conditions explicitly agreed on by the

parties.

b. 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

1. If the contract requires or authorizes the seller to send the goods to the buyer but

does not require him to deliver then at destination, title passes to the buyer at the

time and place of shipment; but

2. If the contract requires delivery at destination, title passes on tender there.

c. Unless otherwise explicitly agreed where delivery is to be made without moving the

goods:

1. If the seller is to deliver a document of title, title passes at the time when and the

place where he delivers such documents, or

2. 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.

d. 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.”

Section 2.

Rights of Seller’s Creditors Against Sold Goods.

a. Except as provided in subsection b. and c., 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 (Part 5, Sections 2 and Part 7,

Section 16).

b. 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 jurisdiction 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 reasonably time after a sale or identification is not fraudulent.

c. Nothing in this Chapter shall be deemed to impair the rights of creditors of the seller:

1. Under the provisions of the Chapter on Secured Transactions, or

2. 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.

Section 3.

Power to Transfer; Good Faith Purchase or Goods; “Entrusting.”

a. 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:

1. The transferor was deceived as to the identity of the purchaser,

2. The delivery was in exchange for a check which is later dishonored,

3. It was agreed that the transaction was to be a “cash sale,” or

4. The delivery was procured through fraud punishable as larcenous under the criminal

law.

b. 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.

c. “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.

d. The rights of other purchasers of goods and of lien creditors are governed by the

Chapter on Secured Transactions, or other applicable laws.

PART 5:

PERFORMANCE

Section 1.

Insurable Interest in Goods; Manner of Identification of Goods.

a. 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 non-conforming 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 parties.

In the absence of explicit agreement identification occurs:

1. When the contract is made if it is for the sale of goods already existing and

identified,

2. If the contract is for the sale of future goods other than those described in paragraph

3., when goods are shipped, marked or otherwise designated by the seller as goods to

which the contract refers, or

3. When the crops are planted or otherwise become growing crops or the young are

conceived if the contract is for the sale of unborn young to be born within twelve

months after contracting or for the sale of crops to be harvested within twelve

months or the next normal harvest season after contracting whichever is longer.

b. 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 defaulter insolvency or notification to the buyer that the identification is final

substitute other goods for those identified.

c. Nothing in this section impairs any insurable interest recognized under any other statute

or rule of law.

Section 2.

Buyer’s Right to Goods on Seller’s Insolvency.

a. Subject to subsection b. 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 he has a special property under the

provisions of the immediately preceding section may on making and keeping good a

tender of any unpaid portion of their price recover them from the seller if the seller

becomes insolvent within ten days after receipt of the first installment on their price.

b. 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.

Section 3.

Manner of Seller’s Tender of Delivery.

a. 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:

1. 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

2. Unless otherwise agreed the buyer must furnish facilities reasonably suited to the

receipt of the goods.

b. Where the case is within the next section respecting shipment tender requires that the

seller comply with its provisions.

c. Where the seller is required to deliver at a particular destination tender requires that he

comply with subsection a. and also in any appropriate case tender documents as

described in subsection d. and e. of this section.

1. Where goods are in the possession of a bailee and are to be delivered without being

moved,

2. 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

3. Tender to the buyer of a non-negotiable 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 non-negotiable documents 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.

d. Where the contact requires the seller to deliver documents:

1. He must tender all such documents in correct form, except as provided in this

Chapter with respect to bills of lading in a set (Part 3, Section 23.b.), and

2. Tender through customary banking channels is sufficient and dishonor of a draft

accompanying the documents constitutes non-acceptance or rejection.

Section 4.

Shipment by Seller.

a. 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:

1. 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,

2. 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

3. Promptly notify the buyer of the shipment.

b. Failure to notify the buyer under paragraph 3. or to make a proper contract under

paragraph 1. is a ground for rejection only if material delay or loss ensues.

Section 5.

Seller’s Shipment Under Reservation.

a. Where the seller has identified goods to the contract by or before shipment:

1. 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.

2. A non-negotiable bill of lading to himself for his nominee reserves possession of the

goods as security but except in a case of conditional delivery (Part 5, Section 7.b.) a

non-negotiable bill of lading naming the buyer as consignee reserves no security

interest even though the seller retains possession of the bill of lading.

b. 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 or a

negotiable document.

Section 6.

Right of Financing Agency.

a. 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 nay 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.

b. 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 buyer is not impaired by

subsequent discovery of defects with reference to any relevant document which was

apparently regular on its face.

Section 7.

Effect of Seller’s Tender; Delivery on Condition.

a. 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.

b. 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.

Section 8.

Cure by Seller of Improper Tender or Delivery; Replacement.

a. Where any tender or delivery by the seller is rejected because non-conforming 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.

b. Where the buyer rejects a non-conforming tender which the seller had reasonable

grounds to believe would be acceptable with or without money allowance the seller may

if he reasonably notifies the buyer have a further reasonable time to substitute a

conforming tender.

Section 9.

Risk of Loss In the Absence of Breach.

a. Where the contract requires or authorizes the seller to ship the goods by carrier

1. 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 (Part 5, Section 5), but

2. 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 loss passes to

the buyer when the goods are there duly so tendered as to enable the buyer to take

delivery.

b. Where the goods are held by a bailee to be delivered without being moved, the risk of

loss passes to the buyer:

1. On his receipt of a negotiable document of title covering the goods,

2. On acknowledgment by the bailee of the buyer’s right to possession of the goods, or

3. After his receipt of a non-negotiable document of title or other written direction to

deliver, as provided in subsection d.2. of Part 5, Section 3.

c. In any case not within subsection a. or b., 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.

d. The provisions of this section are subject to contrary agreement of the parties and to the

provisions of this Chapter on sale on approval (Part 3, Section 27) and on effect of

breach on risk of loss (Part 5, Section 10).

Section 10.

Effect of Breach on Risk of Loss.

a. 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.

b. 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.

c. 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.

Section 11.

Tender of Payment by Buyer; Payment by Check.

a. Unless otherwise agreed tender of payment is a condition to the seller’s duty to tender

and complete any delivery.

b. 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.

c. Subject to the provisions of any applicable law on the effect of an instrument on an

obligation, payment by check is conditional and is defeated as between the parties by

dishonor of the check on due presentment.

Section 12.

Payment by Buyer Before Inspection.

a. Where the contract requires payment before inspection non-conformity of the goods

does not excuse the buyer from so making payment unless:

1. The non-conformity appears without inspection, or

2. By agreement payment is to be made pursuant to a letter of credit and, despite tender

of the required documents, under applicable law the issuer of the credit may be

excused from honoring a demand for payment.

b. Payment pursuant to subsection a. does not constitute an acceptance of goods or impair

the buyer’s right to inspect or any of his remedies.

Section 13.

Buyer’s Right to Inspection of Goods.

a. Unless otherwise agreed and subject to subsection c., 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.

b. 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.

c. Unless otherwise agreed and subject to the provisions of this Chapter on C.I.F. contracts

(Part 3, Section 21.c.), the buyer is not entitled to inspect the goods before payment of

the price when the contract provides:

1. For delivery “C.O.D.” or on other like terms, or

2. For payment against documents of title, except where such payment is due only after

the goods are to become available for inspection.

d. 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 place or method fixed was

clearly intended as an indispensable condition failure of which avoids the contract.

Section 14. When Documents Deliverable on Acceptance; When on Payment. When

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 days after presentment; otherwise, only

on payment.

Section 15. Preserving Evidence of Goods in Dispute. In furtherance of the adjustment of

any claim of 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.

PART 6:

BREACH, REPUDIATION AND EXCUSE

Section 1.

Buyer’s Rights on Improper Delivery. Subject to the provisions of this Chapter

on breach in installment contracts (Part 6, Section 12) and unless otherwise agreed under the

sections on contractual limitations of remedy (Part 7, Sections 18 and 19), if the goods or the

tender of delivery fail in any respect to conform to the contract, the buyer may:

a. Reject the whole,

b. Accept the whole, or

c. Accept any commercial unit or units and reject the rest.

Section 2.

Manner and Effect of Rightful Rejection.

a. Rejection of goods must be within a reasonable time after their delivery of tender. It is

ineffective unless the buyer seasonably notifies the seller.

b. Subject to the provisions of the two following sections on rejected goods (Part 6,

Sections 3 and 4):

1. After rejection any exercise of ownership by the buyer with respect to any

commercial unit is wrongful as against the seller, and

2. 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 (Part 7, Section

11.c.), 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

3. The buyer has no further obligations with regard to goods rightfully rejected.

c. The seller’s rights with respect to goods wrongfully rejected are governed by the

provisions of this Chapter on seller’s remedies in general (Part 7, Section 3).

Section 3.

Merchant Buyer’s Duties as to Rightfully Rejected Goods.

a. Subject to any security interest in the buyer (Part 7, Section 11.c.), 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

threatened to decline in value speedily. Instructions are not reasonable if on demand

indemnity for expenses is not forthcoming.

b. When the buyer sells goods under subsection a., 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 on the

gross proceeds.

c. 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.

Section 4.

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 no

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.

Section 5.

Waiver of Buyer’s Objections by Failure to Particularize.

a. The buyer’s failure to state in connection with rejection a particular defect which is

ascertainable by reasonable inspection preclude him from relying on the unstated defect

to justify rejection or to establish breach:

1. Where the seller could have cured it if stated seasonably, or

2. 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.

b. Payment against documents made without reservation of rights preclude recovery of the

payment for defects apparent on the face of the documents.

Section 6.

What Constitutes Acceptance of Goods.

a. Acceptance of goods occurs when the buyer:

1. 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,

2. Fails to make an effective rejection (Part 6, Section 2.a.), but such acceptance does

not occur until the buyer has had a reasonable opportunity to inspect them, or

3. Does any act inconsistent with the seller’s ownership; but if such act is wrongful as

against the seller it is an acceptance only if ratified by him.

b. Acceptance of a part of any commercial unit is acceptance of that entire unit.

Section 7.

Effect of Acceptance; Notice of Breach; Burden of Establishing Breach

After Acceptance; Notice of Claim of Litigation to Person Answerable Over.

a. The buyer must pay at the contract rate for any goods accepted.

b. Acceptance of goods by the buyer precludes rejection of the goods accepted and if made

with knowledge of a non-conformity cannot be revoked because of it unless the

acceptance was on the reasonable assumption that the non-conformity would be

seasonably cured but acceptance does not of itself impair any other remedy provided by

this Chapter for non- conformity.

c. Where a tender has been accepted:

1. 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

2. If the claim is one for infringement or the like (Part 3, Section 12.c.) 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.

d. The burden is on the buyer to establish any breach with respect to the goods accepted.

e. Where the buyer is sued for breach of a warranty or other obligation for which his seller

is answerable over:

1. 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 and determination of fact common to both

parties then, unless the seller after seasonable receipt of the notice, does come in and

defend, he is so bound.

2. If the claim is one for infringement or the like (Part 3, Section 12.c.) the original

seller may demand in writing that his buyer turn over to him control of the litigation

settlement or else be barred from any remedy over and if he also agrees to bear all

expenses 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.

f. The provisions of subsection c., d. and e. apply to any obligation of a buyer to hold the

seller harmless against infringement or the like (Part 3, Section 12.c.).

Section 8.

Revocation of Acceptance in Whole or in Part.

a. The buyer may revoke his acceptance of a lot or commercial unit whose non-conformity

substantially impairs its value to him if he has accepted it:

1. On the reasonable assumption that is non-conformity would be cured and it has not

been seasonably cured, or

2. Without discovery of such non-conformity if his acceptance was reasonably induced

either by the difficulty of discovery before acceptance or by the seller’s assurances.

b. 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.

c. A buyer who so revokes has the same rights and duties with regard to the goods

involved as if he had rejected them.

Section 9.

Right to Adequate Assurance of Performance.

a. 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.

b. Between merchants the reasonableness of grounds for insecurity and the adequacy of

any assurance offered shall be determined according to commercial standards.

c. Acceptance of any improper delivery or payment does not prejudice the aggrieved

party’s right to demand adequate assurance of future performance.

d. After receipt of a justified demand failure to provide within a reasonable time not

exceeding thirty days such assurance of due performance as is adequate under the

circumstances of the particular case is a repudiation of the contract.

Section 10. 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 (Part 7, Sections 3 or 11), even though he has notified

the repudiating party that he would await the latter’s performance and has urged

retraction, and

c. In either case suspend his own performance or proceed in accordance with the

provisions of this Chapter on the seller’s right to identify goods to the contract

notwithstanding breach or to salvage unfinished goods (Part 7, Section 4).

Section 11.

Retraction of Anticipatory Repudiation.

a. Until the repudiating party’s next performance is due he can retract his repudiation

unless the aggrieved party has since the repudiation canceled or materially changed his

position or otherwise indicated that he considers the repudiation final.

b. 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 (Part 6, Section 9).

c. 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.

Section 12.

“Installment Contract;” Breach.

a. 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.

b. The buyer may reject any installment which is non-conforming if the non-conformity

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 non-conformity does not fall

within subsection c. and the seller gives adequate assurance of its cure the buyer must

accept that installment.

c. Whenever non-conformity 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 non-conforming 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.

Section 13. 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 before the risk of loss passes to the buyer, or in a proper case under a “no arrival, no sale”

term (Part 3, Section 24) 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.

Section 14.

Substituted Performance.

a. 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.

b. 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.

Section 15. 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 non-delivery in whole or in part by a seller who complies with

paragraphs 2. and 3. 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.

b. Where the causes mentioned in paragraph 1. 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.

c. The seller must notify the buyer seasonably that there will be delay or non-delivery and,

when allocation is required under paragraph 2., of the estimated quota thus made

available for the buyer.

Section 16.

Procedure On Notice Claiming Excuse.

a. 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 (Part 6, Section 12), then also as to the whole:

1. Terminate and thereby discharge any unexecuted portion of the contract, or

2. Modify the contract by agreeing to take his available quota in substitution.

b. If after receipt of such notification from the seller the buyer fails so to modify the

contract within a reasonable time not exceeding thirty days the contract lapses with

respect to any deliveries affected.

c. 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.

PART 7:

REMEDIES

Section 1.

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.

Section 2.

Seller’s Remedies on Discovery of Buyer’s Insolvency. 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 (Part

7, Section 5).

a. Where the seller discovers that the buyer has received goods on credit while the

insolvent he may reclaim the goods upon demand made within ten days after the receipt,

but if misrepresentation of solvency has been made to the particular seller in writing

within three 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.

b. The seller’s right to reclaim under subsection b. is subject to the rights of a buyer in

ordinary course or other good faith purchaser under this Chapter (Part 4, Section 3).

Successful reclamation of goods excludes all other remedies with respect to them.

Section 3.

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 (Part 6, Section 12), 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 (Part 7, Section 5),

c. Proceed under the next section respecting goods still unidentified to the contract,

d. Resell and recover damages as hereafter provided (Part 7, Section 6),

e. Recover damages for non-acceptance (Part 7, Section 8) or, in a proper case, the price

(Part 7, Section 9), or

f. Cancel.

Section 4.

Seller’s Right to Identify Goods to the Contract Notwithstanding Breach or

to Salvage Unfinished Goods.

a. An aggrieved seller under the preceding section may:

1. 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,

2. Treat as the subject of resale goods which have demonstrably been intended for the

particular contract even though those goods are unfinished.

b. 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.

Section 5.

Seller’s Stoppage of Delivery in Transit or Otherwise.

a. The seller may stop delivery of goods in the possession of a carrier or other bailee when

he discovers the buyer to be insolvent (Part 7, Section 2) 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.

b. As against such buyer the seller may stop delivery until:

1. Receipt of the goods by the buyer,

2. Acknowledgment to the buyer by any bailee of the goods except a carrier that the

bailee holds the goods for the buyer,

3. Such acknowledgment to the buyer by a carrier by reshipment or as warehouseman,

4. Negotiation to the buyer of any negotiable document of title covering the goods.

c. To stop delivery the seller must so notify as to enable the bailee by reasonable diligence

to prevent delivery of the goods.

1. 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.

2. If a negotiable document of title has been issued for goods the bailee is not obliged

to obey a notification to stop until surrender of the document.

3. A carrier who has issued a non-negotiable bill of lading is not obliged to obey a

notification to stop received from a person other than the consignor.

Section 6.

Seller’s Resale Including Contract for Resale.

a. Under the conditions stated in Part 7, Section 3 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 (Part 7, Section 10), but less

expenses saved in consequence of the buyer’s breach.

b. Except as otherwise provided in subsection c. or unless otherwise agreed resale may be

at public or private sale including sale by way of one or more 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.

c. Where the resale is at private sale the seller must give the buyer reasonable notification

of his intention to resell.

d. Where the resale is at public sale:

1. Only identified goods can be sold except where there is a recognized market for a

public sale of futures in goods of the kind,

2. 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,

3. If the goods are not to be within the view of those attending the sale the notification

of sale must state the place where the goods are located and provide for their

reasonable inspection by prospective bidders, and

4. The seller may buy.

e. 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.

f. The seller is not accountable to the buyer for any profit made on any resale. A person in

the position of a seller (Part 7, Section 7) 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 (Part 7, Section 11.c.).

Section 7.

“Person in the Position of a Seller.”

a. 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 rights in goods similar to that of a seller.

b. A person in the position of a seller may as provided in this Chapter withhold or stop

delivery (Part 7, Section 5) and resell (Part 7, Section 6) and recover incidental damages

(Part 7, Section 10).

Section 8.

Seller’s Damages for Non-acceptance or Repudiation.

a. Subject to subsection b. and to the provisions of this Chapter with respect to proof of

market price (Part 7, Section 23), the measure of damages for non-acceptance 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 (Part 7, Section 10), but less expenses saved in consequence of the

buyer’s breach.

b. If the measure of damages provided in subsection a. 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 (Part 7, Section 10), due allowance for costs reasonably incurred and due credit

for payments or proceeds of resale.

Section 9.

Action for the Price.

a. When they 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:

1. Of goods accepted or of conforming goods lost or damages within a commercially

reasonable time after risk of their loss has passed to the buyer, and

2. 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.

b. 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 payment of the judgment

entitles him to any goods not resold.

c. After the buyer has wrongfully rejected or revoked acceptance of the goods or has failed

to make payment due or has repudiated (Part 6, Section 10), a seller who is held not

entitled to the price under this section shall nevertheless be awarded damages for nonacceptance under the preceding section.

Section 10. 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.

Section 11.

Buyer’s Remedies in General; Buyer’s Security Interest in Rejected Goods.

a. 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 (Part 6, Section 12), the buyer may

cancel and whether or not he has done so may in addition to recovering so much of the

price as had been paid:

1. “Cover” and have damages under the next section as to all the goods affected

whether or not they has been identified to the contract, or

2. Recover damages for non-delivery as provided in this Chapter (Part 7, Section 13).

b. Where the seller fails to delivery or repudiates the buyer may also:

1. If the goods have been identified recover them as provided in this Chapter (Part 5,

Section 2), or

2. In a proper case obtain specific performance or replevy the goods as provided in this

Chapter (Part 7, Section 16).

c. On rightful rejection or justifiable revocation of acceptance a 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

(Part 7, Section 6).

Section 12.

“Cover;” Buyer’s Procurement of Substitute Goods.

a. 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.

b. 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 (Part 7, Section 15), but less expenses saved in consequence of the

seller’s breach.

c. Failure of the buyer to effect cover within this section does not bar him from any other

remedy.

Section 13.

Buyer’s Damages for Non-Delivery or Repudiation.

a. Subject to the provisions of this Chapter with respect to proof of market price (Part 7,

Section 23), the measure of damages for non-delivery 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 provide

in this Chapter (Part 7, Section 15), but less expenses saved in consequence of the

seller’s breach.

b. Market price is to be determined as of the place for tender or, in cases of rejection after

arrival or revocation of acceptance, as of the place of arrival.

Section 14.

Buyer’s Damages for Breach in Regard to Accepted Goods.

a. Where the buyer has accepted goods and given notification (Part 6, Section 7.c.) he may

recover as damages for any non-conformity of tender the loss resulting in the ordinary

course of events from the seller’s breach as determined in any manner which is

reasonable.

b. The measure of damages for breach of warranty is the difference at the time and place

of acceptance between the value of the goods accepted and the value they would have

had if they proximate damages of a different amount.

c. In a proper case any incidental and consequential damages under the next section may

also be recovered.

Section 15.

Buyer’s Incidental and Consequential Damages.

a. Incidental damages resulting from the seller’s breach include expenses reasonably

incurred in inspection, receipt, transportation and care and custody of goods rightfully

rejected, any commercially reasonable charges, expenses or commissions in connection

with effecting cover and any other reasonable expense incident to the delay or other

breach.

b. Consequential damages resulting from the seller’s breach include:

1. Any loss resulting from general or particular requirements and needs of which the

seller at the time of contracting had reason to know and which could not reasonably

be prevented by cover or otherwise, and

2. Injury to person or property proximately resulting from any breach of warranty.

Section 16.

Buyer’s Right to Specific Performance or Replevin.

a. Specific performance may be decreed where the goods are unique or in other proper

circumstances.

b. The decree for specific performance may include such terms and conditions as to

payment of the price, damages, or other relief as the Tribal Court may deem just.

c. The buyer has a right of replevin for goods identified to the contract if after reasonable

effort he is unable to effect cover for such goods or the circumstances reasonably

indicate that such effort will be unavailing or if the goods have been shipped under

reservation and satisfaction of the security interest in them has been made or tendered.

Section 17. Deduction of Damages From the Price. The buyer, on notifying the seller of

his intention to do so, may deduct all or any part of the damages resulting from any breach of

the contract form any part of the price still due under the same contract.

Section 18.

Liquidation or Limitation of Damages; Deposits.

a. Damages for breach by either party may be liquidated in the agreement but only at an

amount which is reasonable in the light of the anticipates or actual harm caused by the

breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of

otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated

damages is void as a penalty.

b. Where the seller justifiably withholds delivery of goods because of the buyer’s breach,

the buyer is entitled to restitution of any amount by which the sum of his payments

exceeds:

1. The amount to which the seller is entitled by virtue of terms liquidating the seller’s

damages in accordance with subsection a., or

2. In the absence of such terms, twenty percent of the value of the total performance

for which the buyer is obligated under the contract or $500, whichever is smaller.

c. The buyer’s right to restitution under subsection b. is subject to offset to the extent that

the seller establishes:

1. a right to recover damages under the provisions of this Chapter other than subsection

a., and

2. the amount or value of any benefits received by the buyer directly or indirectly by

reason of the contract.

d. Where a seller has received payment in goods their reasonable value or the proceeds of

their resale shall be treated as payments for the purpose of subsection b.; but if the seller

has notice of the buyer’s breach before reselling goods received in part performance, his

resale is subject to the conditions laid down in this Chapter on resale by an aggrieved

seller (Part 7, Section 6).

Section 19.

Contractual Modifications of Limitation of Remedy.

a. Subject to the provisions of subsections b. and c. of this section and of the preceding

section on liquidation and limitation of damages,

1. The agreement may provide for remedies in addition to or in substitution for those

provided in this Chapter and may limit or alter the measure of damages recoverable

under this Chapter, as by limited the buyer’s remedies to return of the goods and

repayment of the price or to repair and replacement of non-conforming goods or

parts, and

2. Resort to a remedy as provided is optional unless the remedy is expressly agreed to

be exclusive, in which case it is the sole remedy.

b. Where circumstances cause an exclusive or limited remedy to fail of its essential

purpose, remedy may be held as provided in this Ordinance.

c. Consequential damages may be limited or excluded unless the limitation or exclusion is

unconscionable. Limitations of consequential damages for injury to the person in the

case of consumer goods is prima facie unconscionable but limitation of damages where

the loss is commercial is not.

Section 20. Effect of “Cancellation” or “Rescission” on Claims for Antecedent Breach.

Unless the contrary intention clearly appears, expressions of “cancellation” or “rescission” of

the contract or the like shall not be construed as a renunciation or discharge of any claim in

damages for an antecedent breach.

Section 21. Remedies for Fraud. Remedies for material misrepresentation or fraud include

all remedies available under this Chapter for non-fraudulent breach. Neither rescission or a

claim for rescission of the contract for sale nor rejection or return of the goods shall bar or be

deemed inconsistent with a claim for damages or other remedy.

Section 22. Who Can Sue Third Parties for Injury to Goods. Where a third party so

deals with goods which have been identified to a contract for sale as to cause actionable injury

to a party to that contract:

a. A right of action against the third party is in either party to the contract for sale who has

title to or a security interest or a special property or an insurable interest in the goods;

and if the goods have been destroyed or converted a right of action is also in the party

who either bore the risk of loss under the contract for sale or has since the injury

assumed that risk as against the other.

b. If at the time of the injury the party plaintiff did not bear the risk of loss as against the

other party to the contract for sale and there is no arrangement between them for

disposition of the recovery, his suit or settlement is, subject to his own interest, as a

fiduciary for the other party to the contract.

c. Either party may, with the consent of the other, sue for the benefit of whom it may

concern.

Section 23.

Proof of Market Price: Time and Place.

a. If an action based on anticipatory repudiation comes to trial before the time for

performance with respect to some or all of the goods, any damages based on market

price (Part 7, Sections 8 or Section 13) shall be determined according to the price of

such goods prevailing at the time when the aggrieved party learned of the repudiation.

b. If evidence of a price prevailing at the time or places described in this Chapter is not

readily available the price prevailing within any reasonable time before or after the time

described or at any other place which in commercial judgment or under usage of trade

would serve as a reasonable substitute for the one described may be used, making any

proper allowance for the cost of transporting the goods to or from such other place.

c. Evidence of a relevant price prevailing at a time or place other than the one described in

this Chapter offered by one party is not admissible unless and until he has given the

other party such notice as the Tribal Court finds sufficient to prevent unfair surprise.

Section 24. Admissibility of Market Quotations. Whenever the prevailing price or value of

any goods regularly bought and sold in any established commodity market is in issue, reports in

official publications or trade journals or in newspapers or periodicals of general circulation

published as the reports of such market shall be admissible in evidence. The circumstances of

the preparation of such a report may be shown to affect its weight but not its admissibility.

Section 25.

Statute of Limitations in Contracts for Sale.

a. An action for breach of any contract for sale must be commenced within four years after

the cause of action has occurred. By the original agreement the parties may reduce the

period of limitation to not less than one year but may not extend it.

b. A cause of action accrues when the breach occurs, regardless of the aggrieved party’s

lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is

made, except that where a warranty explicitly extends to future performance of the

goods and discovery of the breach must await the time of such performances the cause

of action accrues when the breach is or should have been discovered.

c. Where an action commenced within the time limited by subsection a. is so terminated as

to leave available a remedy by another action for the same breach such other action may

be commenced after the expiration of the time limited and within six months after the

termination of the first action unless the termination resulted from voluntary

discontinuance or from dismissal for failure or neglect to prosecute.

d. This section does not alter the law on tolling of the statute of limitations nor does it

apply to causes of action which accrued before this Ordinance became effective.

CHAPTERS 3 - 8 [RESERVED]5

CHAPTER 9. SECURED TRANSACTIONS6

PART 1:

SHORT TITLE, APPLICABILITY AND DEFINITIONS

Section 1.

Short Title. This Chapter shall be known and may be cited as the Prairie Island

Indian Community Commercial Ordinance - Secured Transactions.

Section 2.

Purpose. This Chapter must be liberally construed and applied to promote its

underlying purposes and policies, which are the promotion of economic development and the

continued expansion of commercial practices involving the Community.

Section 3.

No Application to Property Not Alienable. This Chapter does not apply to any

property interest that is subject to federal restrictions regarding sale, transfer, or encumbrance.

Section 4.

General Definitions. The meaning of a term not defined by this Chapter is to be

derived from the context involved, with due consideration for consistency in meaning with

uniform principles of commercial and contract law operative in the United States. In this

Chapter:

a. “Accession” means goods that are physically united with other goods in such a manner

that the identity of the original goods is not lost.

b. “Account,” except as used in “account for:”

1. Means a right to payment of a monetary obligation, whether or not earned by

performance:

A. For property that has been or is to be sold, leased, licensed, assigned, or

otherwise disposed of,

B. For services rendered or to be rendered,

C. For a policy of insurance issued or to be issued,

D. For a secondary obligation incurred or to be incurred,

E. For energy provided or to be provided,

Note of Amendment: The Community Council repealed Chapter 3 of the Ordinance on January 25, 2023, by Resolution

Number 23-1-25-14.

Note of Amendment: The Community Council amended this Chapter on January 25, 2023, by Resolution Number 231-25-14 to repeal Chapter 9, Secured Transactions, and adopt the Model Tribal Uniform Secured Transactions Act.

F. For the use or hire of a vessel under a charter or other contract,

G. Arising out of the use of a credit or charge card or information contained on or

for use with the card, or

H. As winnings in a lottery or other game of chance operated or sponsored by a

tribe, governmental unit of a tribe, a person licensed or authorized by a tribe or

governmental unit of a tribe to operate the game, a state, governmental unit of a

state, or person licensed or authorized to operate the game by a state or

governmental unit of a state,

2. Includes health-care-insurance receivables, and

3. Does not include:

A. Rights to payment evidenced by chattel paper or an instrument,

B. Commercial tort claims,

C. Deposit accounts,

D. Securities or investment accounts, including assets held in investment accounts,

E. Letter-of-credit rights or letters of credit, or

F. Rights to payment for money or funds advanced or sold, other than rights arising

out of the use of a credit or charge card or information contained on or for use

with the card.

c. “Account debtor” means a person obligated on an account, chattel paper, or general

intangible. The term does not include a person obligated to pay a negotiable instrument,

even if the instrument constitutes part of chattel paper.

d. [RESERVED]

e. “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 the section on those

terms (Part 1, Section 14).

f. “Agricultural lien” means an interest in farm products:

1. Which secures payment or performance of an obligation for:

A. Goods or services furnished in connection with a debtor’s farming operation, or

B. Rent on real property leased by a debtor in connection with its farming

operation,

2. Which is created by Ordinance in favor of a person that:

A. In the ordinary course of its business furnished goods or services to a debtor in

connection with a debtor’s farming operation, or

B. Leased real property to a debtor in connection with the debtor’s farming

operation, and

3. Whose effectiveness does not depend on the person’s possession of the personal

property.

g. “As-extracted collateral” means:

1. Oil, gas, or other minerals that are subject to a security interest that:

A. Is created by a debtor having an interest in the minerals before extraction, and

B. Attaches to the minerals as extracted, or

2. Accounts arising out of the sale at the wellhead or minehead of oil, gas, or other

minerals in which the debtor had an interest before extraction.

h. “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 other

applicable law 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 in total or partial satisfaction of a money debt.

i. “Cash proceeds” means money, checks, deposit accounts, or the like.

j. “Certificated security” means a security that is represented by a certificate.

k. “Certificate of title” means a written certificate issued by a governmental unit of a state

or tribe or other record maintained by a governmental unit of a state or tribe with respect

to which an Ordinance provides for the security interest in question to be indicated on

the certificate or record as a condition or result of the security interest’s obtaining

priority over the rights of a lien creditor with respect to the collateral.

l. “Chattel paper” means a record or records that evidence both a monetary obligation and

a security interest in specific goods, a security interest in specific goods and software

used in the goods, a security interest in specific goods and license of software used in

the goods, a lease of specific goods, or a lease of specific goods and license of software

used in the goods. In this paragraph, “monetary obligation” means an obligation

secured by the goods or owed under a lease of the goods and includes such an obligation

with respect to software used in the goods. The term does not include:

1. Charters or contracts involving the use or hire of a vessel, or

2. Records that evidence a right to payment arising out of the use of a credit or charge

card, or information contained on or for use with the card. If a transaction is

evidenced by records that include an instrument or series of instruments, the group

of records taken together constitutes chattel paper.

m. “Collateral” means the property subject to a security interest or agricultural lien. The

term includes:

1. Proceeds to which a security interest attaches,

2. Accounts, chattel paper, payment intangibles, and promissory notes that have been

sold, and

3. Goods that are the subject of a consignment.

n. “Commercial tort claim” means a claim arising in tort with respect to which:

1. The claimant i

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