/* The UCC on sales follows with comments. */

ARTICLE 2 SALES

Part 1. Short Title, General Construction and Subject Matter.

2-101. Short Title.

2-102. Scope; Certain Security and Other Transactions Excluded

From This Article.

2-103. Definitions and Index of Definitions.

2-104. Definitions: "Merchant"; "Between Merchants"; "Financing

Agency".

2-105. Definitions: Transferability; "Goods"; "Future" Goods;

"Lot"; "Commercial Unit".

2-106. Definitions: "Contract"; "Agreement"; "Contract for

Sale"; "Sale"; "Present Sale"; "Conforming" to Contract;

"Termination"; "Cancellation".

2-107. Goods to Be Severed From Reality; Recording.

PART 2. Form, Formation and Readjustment of Contract

2-201. Formal Requirements; Statute of Frauds.

2-202. Final Written Expression: Parol or Extrinsic Evidence.

2-203. Seals Inoperative.

2-204. Formation in General.

2-205. Firm Offers.

2-206. Offer and Acceptance in Formation of Contract.

2-207. Additional Terms in Acceptance or Confirmation.

2-208. Course of Performance or Practical Construction.

2-209. Modification, Rescission and Waiver.

2-210. Delegation of Performance; Assignment of Rights.

PART 3. General Obligation and Construction of Contract.

2-301. General Obligations of Parties.

2-302. Unconscionable Contract or Clause.

2-303. Allocation or Division of Risks.

2-304. Price Payable in Money, Goods, Realty or Otherwise.

2-305. Open Price Term.

2-306. Output, Requirements and Exclusive Dealings.

2-307. Delivery in Single Lot or Several Lots.

2-308. Absence of Specified Place for Delivery.

2-309. Absence of Specific Time Provisions; Notice of

Termination.

2-310. Open Time for Payment or Running of Credit; Authority to

Ship Under Reservation.

2-311. Options and Cooperation Respecting Performance.

2-312. Warranty of Title and Against Infringement; Buyer's

Obligation Against Infringement.

2-313. Express Warranties by Affirmation, Promise, Description,

Sample.

2-314. Implied Warranty; Merchantability; Usage of Trade.

2-315. Implied Warranty; Fitness for Particular Purpose.

2-316. Exclusion or Modification of Warranties.

2-317. Cumulation and Conflict of Warranties Express or Implied.

2-318. Third Party Beneficiaries of Warranties Express or

Implied.

2-319. F.O.B. and F.A.S. Terms.

2-320. C.l.F. and C. & F. Terms.

2-321. C.l.F. or C. & F. "Net Landed Weights"; Payment on

Arrival"; Warranty of Condition on Arrival.

2-322. Delivery "Ex-Ship".

2-323. Form of Bill of Lading Required in Overseas Shipment;

"Overseas".

2-324. "No Arrival, No Sale" Term.

2-325. "Letter of Credit" Term; "Confirmed Credit".

2-326. Sale on Approval and Sale or Return; Consignment Sales

and Rights of Creditors.

2-327. Special Incidents of Sale on Approval and Sale or Return.

2-328. Sale by Auction.

PART 4. TITLE, CREDITORS AND GOOD FAITH PURCHASERS

2-401. Passing of Title; Reservation for Security; Limited

Application of This Section.

2-402. Rights of Seller's Creditors Against Sold Goods.

2-403. Power to Transfer; Good Faith Purchase of Goods;

"Entrusting".

PART 5. PERFORMANCE

2-501. Insurable Interest in Goods; Manner of Identification of

Goods.

2-502. Buyer's Right to Goods on Seller's Insolvency.

2-503. Manner of Seller's Tender of Delivery.

2-504. Shipment by Seller.

2-505. Seller's Shipment Under Reservation.

2-506. Rights of Financing Agency.

2-507. Effect of Seller's Tender; Delivery on Condition.

2-508. Cure by Seller of Improper Tender or Delivery;

Replacement.

2-509. Risk of Loss in the Absence of Breach.

2-510. Effect of Breach on Risk of Loss.

2-511. Tender of Payment by Buyer; Payment by Check.

2-512. Payment by Buyer Before Inspection.

2-513. Buyer's Right to Inspection of Goods.

2-514. When Documents Deliverable on Acceptance; When on

Payment.

2-515. Preserving Evidence of Goods in Dispute.

PART 6. BREACH, REPUDIATION AND EXCUSE

2-601. Buyer's Rights on Improper Delivery.

2-602. Manner and Effect of Rightful Rejection.

2-603. Merchant Buyer's Duties as to Rightfully Rejected Goods.

2-604. Buyer's Options as to Salvage of Rightfully Rejected

Goods.

2-605. Waiver of Buyer's Objections by Failure to Particularize.

2-606. What Constitutes Acceptance of Goods.

2-607. Effect of Acceptance; Notice of Breach; Burden of

Establishing Breach After Acceptance; Notice of Claim or

Litigation to Person Answerable Over.

2-608. Revocation of Acceptance in Whole or in Part.

2-609. Right to Adequate Assurance of Performance.

2-610. Anticipatory Repudiation.

2-611. Retraction of Anticipatory Repudiation.

2-612. "Installment Contract"; Breach.

2-613. Casualty to Identified Goods.

2-614. Substituted Performance.

2-615. Excuse by Failure of Presupposed Conditions.

2-616. Procedure on Notice Claiming Excuse.

PART 7. REMEDIES

2-701. Remedies for Breach of Collateral Contracts Not Impaired.

2-702. Seller's Remedies on Discovery of Buyer's Insolvency.

2-703. Seller's Remedies in General.

2-704. Seller's Right to Identify Goods to the Contract

Notwithstanding Breach or to Salvage Unfinished Goods.

2-705. Seller's Stoppage of Delivery in Transit or Otherwise.

2-706. Seller's Resale Including Contract for Resale.

2-707. "Person in the Position of a Seller".

2-708. Seller's Damages for Non-acceptance or Repudiation.

2-709. Action for the Price.

2-710. Seller's Incidental Damages.

2-711. Buyer's Remedies in General; Buyer's Security Interest in

Rejected Goods.

2-712. "Cover"; Buyer's Procurement of Substitute Goods.

2-713. Buyer's Damages for Non-delivery or Repudiation.

2-714. Buyer's Damages for Breach in Regard to Accepted Goods.

2-715. Buyer's Incidental and Consequential Damages.

2-716. Buyer's Right to Specific Performance or Replevin.

2-717. Deduction of Damages From the Price.

2-718. Liquidation or Limitation of Damages; Deposits.

2-719. Contractual Modification or Limitation of Remedy.

2-720. Effect of "Cancellation" or "Rescission" on Claims for

Antecedent Breach.

2-721. Remedies for Fraud.

2-722. Who Can Sue Third Parties for Injury to Goods.

2-723. Proof of Market Price: Time and Place.

2-724. Admissibility of Market Quotations.

2-725. Statute of Limitations in Contracts for Sale.

ARTICLE 2

SALES

PART 1

SHORT TITLE, GENERAL CONSTRUCTION AND SUBJECT MATTER

2-101. Short Title.

This Article shall be known and may be cited as Uniform

Commercial Code -- Sales.

2-102. Scope; Certain Security and Other Transactions

Excluded From This Article.

Unless the context otherwise requires, this Article 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 Article impair or repeal any statute

regulating sales to consumers, farmers or other specified classes

of buyers.

2-103. Definitions and Index of Definitions.

(1) In this Article unless the context otherwise requires

(a) "Buyer" means a person who buys or contracts to buy

goods.

(b) "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.

(c) "Receipt" of goods means taking physical possession of

them.

(d) "Seller" means a person who sells or contracts to sell

goods.

(2) Other definitions applying to this Article or to

specified Parts thereof, and the sections in which they appear

are:

"Acceptance". Section 2-606.

"Banker's credit". Section 2-325.

"Between merchants". Section 2-104.

"Cancellation". Section 2-106(4).

"Commercial unit". Section 2-105.

"Confirmed credit". Section 2-325.

"Conforming to contract". Section 2-106.

"Contract for sale". Section 2-106.

"Cover". Section 2-712.

"Entrusting". Section 2-403.

"Financing agency". Section 2-104.

"Future goods". Section 2-105.

"Goods". Section 2-105.

"Identification". Section 2-501.

"Installment contract". Section 2-612.

"Letter of Credit". Section 2-325.

"Lot". Section 2-105.

"Merchant". Section 2-104.

"Overseas". Section 2-323.

"Person in position

of seller". Section 2-707.

"Present sale". Section 2-106.

"Sale". Section 2-106.

"Sale on approval". Section 2-326.

"Sale or return". Section 2-326.

"Termination". Section 2-106.

(3) The following definitions in other Articles apply to

this Article:

"Check". Section 3-104.

"Consignee". Section 7-102.

"Consignor". Section 7-102.

"Consumer Goods". Section 9-109,

"Dishonor". Section 3-507.

"Draft". Section 3-104

(4) In addition Article 1 contains general definitions and

principles of construction and interpretation applicable

throughout this Article.

2-104. Definitions: "Merchant"; "Between Merchants";

"Financing Agency".

(1) "Merchant" means a person who deals in goods of the

kind or otherwise by his occupation holds out as having knowledge

or skill peculiar to the practices or goods involved in the

transaction or to whom such knowledge or skill may be attributed

by his employment of an agent or broker or other intermediary who

by his occupation holds himself out as having such knowledge or

skill.

(2) "Financing agency" means a bank, finance company or

other person who in the ordinary course of business makes

advances against goods or documents of title or who by

arrangement with either the seller or the buyer intervenes in

ordinary course to make or collect payment due or claimed under

the contract for sale, as by purchasing or paying the seller's

draft or making advances against it or by merely taking it for

collection whether or not documents of title accompany the draft.

"Financing agency" includes also a bank or other person who

similarly intervenes between persons who are in the position of

Seller and buyer in respect to the goods (Section 2-707).

(3) "Between merchants" means in any transaction with

respect to which both parties are chargeable with the knowledge

or skill of merchants.

/* There frequently being differences between the rights and duties

of selling to merchants or between merchants as compared with

selling to consumers. */

2-105. Definitions: Transferability; "Goods"; "Future" Goods;

"Lot"; "Commercial Unit".

(1) "Goods" means all things (including specially

manufactured goods) which are movable at the time of

identification to the contract for sale other than the money in

which the price is to be paid, investment securities (Article 8)

and things in action. "Goods" also includes the unborn young of

animals and growing crops and other identified things attached to

realty as described in the Section on goods to be severed from

realty (Section 2-107).

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

interest in them can pass. Goods which are not both existing and

identified are "future" goods. A purported present sale of future

goods or of any interest therein operates as a contract to sell.

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

identified goods.

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

goods is sufficiently identified to be sold although the quantity

of the bulk is not determined. Any agreed proportion of such a

bulk or any quantity thereof agreed upon by number, weight or

other measure may to the extent of the seller's interest in the

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

(5) "lot" means a parcel or a single article which is the

subject matter of a separate sale or delivery, whether or not it

is sufficient to perform the contract.

(6) "Commercial unit" means such a unit of goods as by

commercial usage is a single whole for purposes of sale and

division of which materially impairs its character or value on

the market or in use. A commercial unit may be a single article

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

an assortment of sizes) or a quantity (as a bale, gross, or

carload) or any other unit treated in use or in the relevant

market as a single whole.

2-106. Definitions: "Contract"; "Agreement"; "Contract for

Sale"; "Sale"; "Present Sale"; "Conforming" to Contract;

"Termination"; "Cancellation".

(1) In this Article unless the context otherwise requires

"contract" and "agreement" are limited to those relating to the

present or future sale of goods. "Contract for sale" includes

both a present sale of goods and a contract to sell goods at a

future time. A "sale" consists in the passing of title from the

seller to the buyer for a price (Section 2-401). A "present sale"

means a sale which is accomplished by the making of the contract.

(2) Goods or conduct including any part of a performance

are "conforming" or conform to the contract when they are in

accordance with the obligations under the contract.

(3) "Termination" occurs when either party pursuant to a

power created by agreement or law puts an end to the contract

otherwise than for its breach. On "termination" all obligations

which are still executory on both sides are discharged but any

right based on prior breach or performance survives.

(4) "Cancellation" occurs when either party puts an end to

the contract for breach by the other and its effect is the same

as that of "termination" except that the cancelling party also

retains any remedy for breach of the whole contract or any

unperformed balance.

2-107. Goods to Be Severed From Realty: Recording.

(1) A contract for the sale of minerals or the like

(including oil and gas) or a structure or its materials to be

removed from realty is a contract for the sale of goods within

this Article if they are to be severed by the seller but until

severance a purported present sale thereof which is not effective

as a transfer of an interest in land is effective only as a

contract to sell.

(2) A contract for the sale apart from the land of growing

crops or other things attached to realty and capable of severance

without material harm thereto but not described in subsection (1)

or of timber to be cut is a contract for the sale of goods within

this Article whether the subject matter is to be severed by the

buyer or by the seller even though it forms part of the realty at

the time of contracting, and the parties can by identification

effect a present sale before severance.

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

party rights provided by the law relating to realty records, and

the contract for sale may be executed and recorded as a document

transferring an interest in land and shall then constitute notice

to third parties of the buyer's rights under the contract for

sale.

PART 2

FORM, FORMATION AND READJUSTMENT OF CONTRACT

2-201. Formal Requirements; Statute of Frauds.

(1) Except as otherwise provided in this section a contract

for the sale of goods for the price of $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.

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

in confirmation of the contract and sufficient against the sender

is received and the party receiving it has reason to know its

contents, it satisfies the requirements of subsection (1) against

such party unless written notice of objection to its contents is

given within 10 days after it is received.

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

subsection (1) but which is valid in other respects is

enforceable

(a) if the goods are to be specially manufactured for the

buyer and are not suitable for sale to others in the ordinary

course of the seller's business and the seller, before notice of

repudiation is received and under circumstances which reasonably

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

substantial beginning of their manufacture or commitments for

their procurement; or

(b) if the party against whom enforcement is sought admits

in his pleading, testimony or otherwise in court that a contract

for sale was made, but the contract is not enforceable under this

provision beyond the quantity of goods admitted; or

(c) with respect to goods for which payment has been made

and accepted or which have been received and accepted (Section 2-

606).

2-202. Final Written Expression: Parol or Extrinsic Evidence.

Terms with respect to which the confirmatory memoranda of

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

intended by the parties as a final expression of their agreement

with respect to such terms as are included therein may not be

contradicted by evidence of any prior agreement or of a

contemporaneous oral agreement but may be explained or

supplemented

(a) by course of dealing or usage of trade (Section 1-205)

or by course of performance (Section 2-208); and

(b) by evidence of consistent additional terms unless the

court finds the writing to have been intended also as a complete

and exclusive statement of the terms of the agreement

2-203. Seals Inoperative.

The affixing of a seal to a writing evidencing a contract

for sale or an offer to buy or sell goods does not constitute the

writing a sealed instrument and the law with respect to sealed

instruments does not apply to such a contract or offer.

2-204. Formation in General.

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

sufficient to show agreement, including conduct by both parties

which recognizes the existence of such a contract.

(2) An agreement sufficient to constitute a contract for

sale may be found even though the moment of its making is

undetermined.

(3) Even though one or more terms are left open a contract

for sale does not fail for indefiniteness if the parties have

intended to make a contract and there is a reasonably certain

basis for giving an appropriate remedy.

2-205. Firm Offers.

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

writing which by its terms gives assurance that it will be held

open is not revocable, for lack of consideration, during the time

stated or if no time is stated for a reasonable time, but in no

event may such period of irrevocability exceed three months; hut

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

be separately signed by the offeror.

2-206. Offer and Acceptance in Formation of Contract.

(1) Unless otherwise unambiguously indicated by the

language or circumstances

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

inviting acceptance in any manner and by any medium reasonable in

the circumstances;

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

current shipment shall be construed as inviting acceptance either

by a prompt promise to ship or by the prompt or current shipment

of conforming or nonconforming goods, but such a shipment of non-

conforming goods does not constitute an acceptance if the seller

seasonably notifies the buyer that the shipment is offered only

as an accommodation to the buyer.

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

reasonable mode of acceptance an offeror who is not notified of

acceptance within a reasonable time may treat the offer as having

lapsed before acceptance.

2-207. Additional Terms in Acceptance or Confirmation.

(1) A definite and seasonable expression of acceptance or a

written confirmation which is sent within a reasonable time

operates as an acceptance even though it states terms additional

to or different from those offered or agreed upon, unless

acceptance is expressly made conditional on assent to the

additional or different terms.

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

for addition to the contract. Between merchants such terms become

part of the contract unless:

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

the offer;

(b) they materially alter it; or

(c) notification of objection to them has already been

given or is given within a reasonable time after notice of them

is received.

(3) Conduct by both parties which recognizes the existence

of a contract is sufficient to establish a contract for sale

although the writings of the parties do not otherwise establish a

contract. In such case the terms of the particular contract

consist of those terms on which the writings of the parties

agree, together with any supplementary terms incorporated under

any other provisions of this Act.

/* This is part of the "battle of the forms." Sellers have

agreemetns that state that there is no guarantee. Buyer's

purchase orders state that there are full guarantees, and in the

classic sense of "contracts" that is, offer and acceptance, there

is no one "contract." The UCC tries to make sense of all of this.

*/

2-208. Course of Performance or Practical Construction.

(1) Where the contract for sale involves repeated occasions

for performance by either party with knowledge of the nature of

the performance and opportunity for objection to it by the other,

any course of performance accepted or acquiesced in without

objection shall be relevant to determine the meaning of the

agreement.

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

of performance, as well as any course of dealing and usage of

trade, shall be construed whenever reasonable as consistent with

each other; but when such construction is unreasonable, express

terms shall control course of performance and course of

performance shall control both course of dealing and usage of

trade (Section 1-205).

(3) Subject to the provisions of the next section on

modification and waiver, such course of performance shall be

relevant to show a waiver or modification of any term

inconsistent with such course of performance.

2-209. Modification, Rescission and Waiver.

(1) An agreement modifying a contract within this Article

needs no consideration to be binding.

(2) A signed agreement which excludes modification or

rescission except by a signed writing cannot be otherwise

modified or rescinded, but except as between merchants such a

requirement on a form supplied by the merchant must be separately

signed by the other party.

(3) The requirements of the statute of frauds section of

this Article (Section 2- 201) must be satisfied if the contract

as modified is within its provisions.

(4) Although an attempt at modification or rescission does

not satisfy the requirements of subsection (2) or (3) it can

operate as a waiver.

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

portion of the contract may retract the waiver by reasonable

notification received by the other party that strict performance

will be required of any term waived, unless the retraction would

be unjust in view of a material change of Position in reliance on

the waiver.

2-210. Delegation of Performance; Assignment of Rights.

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

otherwise agreed or unless the other party has a substantial

interest in having his original promisor perform or control the

acts required by the contract. No delegation of performance

relieves the party delegating of any duty to perform or any

liability for breach.

(2) Unless otherwise agreed all rights of either seller or

buyer can be assigned except where the assignment would

materially change the duty of the other party, or increase

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

impair materially his chance of obtaining return performance. A

right to damages for breach of the whole contract or a right

arising out of the assignor's due performance of his entire

obligation can be assigned despite agreement otherwise.

(3) Unless the circumstances indicate the contrary a

prohibition of assignment of "the contract" is to be construed as

barring only the delegation to the assignee of the assignor's

performance.

(4) 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.

(5) The other party may treat any assignment which

delegates performance as creating reasonable grounds for

insecurity and may without prejudice to his rights against the

assignor demand assurances from the assignee (Section 2-609).

PART 3

GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT

2-301. General Obligations of Parties.

The obligation of the seller is to transfer and deliver and

that of the buyer is to accept and pay in accordance with the

contract.

2-302. Unconscionable Contract Or Clause.

(1) If the court as a matter of law finds the contract or

any clause of the 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.

/* Again the UCC mandates which issues are to be tried by the

court and the ones which a jury may hear. */

(2) 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.

2-303. Allocation or Division of Risks.

Where this Article 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.

2-304. Price Payable in Money, Goods, Realty, or Otherwise

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

it is payable in whole or in part in goods each party is a seller

of the goods which he is to transfer.

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

interest in realty the transfer of the goods and the seller's

obligations with reference to them are subject to this Article,

but not the transfer of the interest in realty or the

transferor's obligations in connection therewith.

2-305. Open Price Term.

(1) 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

(a) nothing is said as to price; or

(b) the price is left to be agreed by the parties and they

fail to agree; or

(c) 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.

(2) A price to be fixed by the seller or by the buyer means

a price for him to fix in good faith.

(3) 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 cancelled

or himself fix a reasonable price.

(4) 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 no 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 paid on account.

2-306. Output, Requirements and Exclusive Dealings.

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

seller or the requirements of the buyer means such actual output

or requirements as may occur in good faith, except that no

quantity unreasonably disproportionate to any stated estimate or

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

comparable prior output or requirements may be tendered or

demanded.

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

for exclusive dealing in the kind of goods concerned imposes

unless otherwise agreed an obligation by the seller to use best

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

to promote their sale.

2-307. Delivery in Single Lot or Several Lots.

Unless otherwise agreed all goods called for by a contract

for sale must be tendered in a single delivery and payment is due

only on such tender but where the circumstances give either party

the right to make or demand delivery in lots the price if it can

be apportioned may be demanded for each lot.

2-308. Absence of Specified Place for Delivery.

Unless otherwise agreed

(a) the place for delivery of goods is the seller's place

of business or if he has none his residence; but

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

knowledge of the parties at the time of contracting are in some

other place, that place is the place for their delivery; and

(c) documents of title may be delivered through customary

banking channels.

2-309. Absence of Specific Time Provisions; Notice of

Termination.

(1) The time for shipment or delivery or any other action

under a contract if not provided in this Article or agreed upon

shall be a reasonable time.

(2) Where the contract provides for successive performances

but is indefinite in duration it is valid for a reasonable time

but unless otherwise agreed may be terminated at any time by

either party.

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

happening of an agreed event requires that reasonable

notification be received by the other party and an agreement

dispensing with notification is invalid if its operation would be

unconscionable.

2-310. Open Time for Payment or Running of Credit;

Authority to Ship Under Reservation.

Unless otherwise agreed

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

is to receive the goods even though the place of shipment is the

place of delivery; and

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

ship them under reservation, and may tender the documents of

title, but the buyer may inspect the goods after their arrival

before payment is due unless such inspection is inconsistent with

the terms of the contract (Section 2-513); and

(c) if delivery is authorized and made by 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 postdating the invoice or delaying its dispatch will

correspondingly delay the starting of the credit period.

2-311. Options and Cooperation Respecting Performance.

(1) An agreement for sale which is otherwise sufficiently

definite (subsection (3) of Section 2-204) to be a contract is

not made invalid by the fact that it leaves particulars of

performance to be specified by one of the parties. Any such

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

commercial reasonableness.

/* For example, the old law school hypothetical of a painter

agreeing to paint a portrait and the buyer agreeing to buy if

they are satisified does not result in an "illusory" contract.

Instead this section sets out the parameters for such type

agreements. */

(2) Unless otherwise agreed specifications relating to

assortment of the goods are at the buyer's option and except as

otherwise provided in subsections (i)(c) and (3) of Section 2-319

specifications or arrangements relating to shipment are at the

seller's option.

(3) Where such specification would materially affect the

other party's performance but is not seasonably made or where one

party's cooperation is necessary to the agreed performance of the

other but is not seasonably forthcoming, the other party in

addition to all other remedies

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

performance; and

(b) may also either proceed to perform in any reasonable

manner or after the time for a material part of his own

performance treat the failure to specify or to cooperate as a

breach by failure to deliver or accept the goods.

2-312. Warranty of Title and Against infringement; Buyer's

Obligation Against infringement.

(1) Subject to subsection (2) there is in a contract for

sale a warranty by the seller that

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

rightful; and

/* Note that it does not say "marketable"- the standard then is a

clean title. */

(b) the goods shall be delivered free from any security

interest or other lien or encumbrance of which the buyer at the

time of contracting has no knowledge.

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

modified only by specific language or by circumstances which give

the buyer reason to know that the person selling does not claim

title in himself or that he is purporting to sell only such right

or title as he or a third person may have.

(3) Unless otherwise agreed a seller who is a merchant

regularly dealing in goods of the kind warrants that the goods

shall be delivered free of the rightful claim of any third person

by way of infringement or the like but a buyer who furnishes

specifications to the seller must hold the seller harmless

against any such claim which arises out of compliance with the

specifications.

2-313. Express Warranties by Affirmation, Promise,

Description, Sample

(1) Express warranties by the seller are created as

follows:

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

to the buyer which relates to the goods and becomes part of the

basis of the bargain creates an express warranty that the goods

shall conform to the affirmation or promise.

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

basis of the bargain creates an express warranty that the goods

shall conform to the description.

(c) 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

(2) it is not necessary to the creation of an express

warranty that the seller use formal words such as "warrant" or

"guarantee" or that he have a specific intention to make a

warranty, but an affirmation merely of the value of the goods or

a statement purporting to be merely the seller's opinion or

commendation of the goods does not create a warranty.

2-314. Implied Warranty: Merchantability; Usage of Trade.

(1) Unless excluded or modified (Section 2-316), a warranty

that the goods shall be merchantable is implied in a contract for

their sale if the seller is a merchant with respect to goods of

that kind. Under this section the serving for value of food or

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

sale.

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

(a) pass without objection in the trade under the contract

description; and

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

quality within the description; and

(c) are fit for the ordinary purposes for which such goods

are used; and

(d) run, within the variations permitted by the agreement,

of even kind, quality and quantity within each unit and among all

units involved; and

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

agreement may require; and

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

the container or label if any.

(3) Unless excluded or modified (Section 2-316) other

implied warranties may arise from course of dealing or usage of

trade.

2-315. Implied Warranty: Fitness for Particular Purpose.

Where the seller at the time of contracting has reason to

know any particular purpose for which the goods are required and

that the buyer is relying on the seller's skill or judgment to

select or furnish suitable goods, there is unless excluded or

modified under the next section an implied warranty that the

goods shall be fit for such purpose.

2-316. Exclusion or Modification of Warranties.

(1) Words or conduct relevant to the creation of an express

warranty and words or conduct tending to negate or limit warranty

shall be construed wherever reasonable as consistent with each

other; but subject to the provisions of this Article on parol or

extrinsic evidence (Section 2-202) negation or limitation is

inoperative to the extent that such construction is unreasonable.

(2) Subject to subsection (3), to exclude or modify the

implied warranty of merchantability or any part of it the

language must mention merchantability and in case of a writing

must be conspicuous, and to exclude or modify any implied

warranty of fitness the exclusion must be by a writing and

conspicuous Language to exclude all implied warranties of fitness

is sufficient if it states, for example, that "There are no

warranties which extend beyond the description on the face

hereof."

(3) Notwithstanding subsection (2)

(a) unless the circumstances indicate otherwise, all

implied warranties are excluded by expressions like "as is",

"with all faults" or other language which in common understanding

calls the buyer's attention to the exclusion of warranties and

makes plain that there is no implied warranty; and

(b) when the buyer before entering into the contract has

examined the goods or the sample or model as fully as he desired

or has refused to examine the goods there is, no implied warranty

with regard to defects which an examination ought in

circumstances to have revealed to him; and

an implied warranty can also be excluded or modified by

course of dealing or course of performance or usage of trade.

(4) Remedies for breach of warranty can be limited in

accordance with the provisions of this Article on liquidation or

limitation of damages and on contractual modification of remedy

(Sections 2-718 and 2-719).

2-317. Cumulation and Conflict of Warranties Express or Implied.

Warranties whether express or implied shall be construed as

consistent with each other and as cumulative, but if such

construction is unreasonable the intention of the parties shall

determine which warranty is dominant. In ascertaining that

intention the following rules apply:

(a) Exact or technical specifications displace an

inconsistent sample or model or general language of description.

(b) A sample from an existing bulk displaces inconsistent

general language of description.

(c) Express warranties displace inconsistent implied

warranties other than an implied warranty of fitness for a

particular purpose.

2-318. Third Party Beneficiaries of Warranties Express or

Implied.

Alternative A

A seller's warranty whether express or implied, extends to

any natural person who is in the family or household of his buyer

or who is a guest in his home if it is reasonable to expect that

such person may use, consume or be affected by the goods and who

is injured in person by breach of the warranty. A seller may not

exclude or limit the operation of this section.

Alternative B

A seller's warranty whether express or implied extends to

any natural person who may reasonably be expected to use, consume

or be affected by the goods and who is injured in person by

breach of the warranty. A seller may not exclude or limit the

operation of this section.

Alternative C

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.

/* Note that there are three different sections and only one is

to be chosen. This is again a part of the UCC which is not quite

uniform. */

2-319. F.O.B. and F.A.S. Terms.

(1) Unless otherwise agreed the term F.O.B. (which means

"free on board") at a named place, even though used only in

connection with the stated price, is a delivery term under which

(a) when the term is F.O.B. the place of shipment, the

seller must at that place ship the goods in the manner provided

in this Article (Section 2-504) and bear the expense and risk of

putting them into the possession of the carrier or

(b) when the term is F.O.B. the place of destination, the

seller must at his own expense and risk transport the goods to

that place and there tender delivery of them in the manner

provided in this Article (Section 2-503);

(c) when under either (a) or (b) the term is also F.O.B.

vessel, car 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 Article on the form of bill of lading (Section 2-323).

(2) Unless otherwise agreed the term F.A.S. vessel (which

means "free alongside") at a named port, even though used only in

connection with the stated price, is a delivery term under which

the seller must

(a) at his own expense and risk deliver the goods alongside

the vessel in the manner usual in that port or on a dock

designated and provided by the buyer; and

(b) obtain and tender a receipt for the goods in exchange

for which the carrier is under a duty to issue a bill of lading.

(3) Unless otherwise agreed in any case falling within

subsection (1)(a) or (c) or subsection (2) the buyer must

seasonably give any needed instructions for making delivery,

including when the term is F.A.S. or F.O.B. the loading berth of

the vessel and in an appropriate case its name and sailing date.

The seller may treat the failure of needed instructions as a

failure of cooperation under this Article (Section 2-311). He

may also at his option move the goods in any reasonable manner

preparatory to delivery or shipment.

(4) Under the term F.O.B. vessel or F.A.S. unless otherwise

agreed the buyer must make payment against tender of the required

documents and the seller may not tender nor the buyer demand

delivery of the goods in substitution for the documents.

2-320. C.I.F. and C. & F. Terms.

(1) The term C.I.F. means that the price includes in a lump

sum the cost of the goods and the insurance and freight to the

named destination. The term C. & F. or C.F. means that the price

so includes cost and freight to the named destination.

(2) Unless otherwise agreed and even though used only in

connection with the stated price and destination, the term C.I.F.

destination or its equivalent requires the seller at his own

expense and risk to

(a) put the goods into the possession of a carrier at the

port for shipment and obtain a negotiable bill or bills of lading

covering the entire transportation to the named destination; and

(b) load the goods and obtain a receipt from the carrier

(which may be contained in the bill of lading) showing that the

freight has been paid or provided for; and

(c) obtain a policy or certificate of insurance, including

any war risk insurance, of a kind and on terms then current at

the port of shipment in the usual amount, in the currency of the

contract, shown to cover the same goods covered by the bill of

lading and providing for payment of loss to the order of the

buyer or for the account of whom it may concern; but the seller

may add to the price the amount of the premium for any such war

risk insurance; and

(d) prepare an invoice of the goods and procure any other

documents required to effect shipment or to comply with the

contract; and

(e) forward and tender with commercial promptness all the

documents in due form and with any indorsement necessary to

perfect the buyer's rights.

(3) 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.l.F. term except the obligation

as to insurance.

(4) Under the term C.l.F. or C. & F. unless otherwise

agreed the buyer must make payment against tender of the required

documents and the seller may not tender nor the buyer demand

delivery of the goods in substitution for the documents.

2-321. 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.

(1) Where the price is based on or is to be adjusted

according to "net landed weights", "delivered weights", "out

turn" quantity or quality or the like, unless otherwise agreed

the seller must reasonably estimate the price. The payment due on

tender of the documents called for by the contract is the amount

so estimated, but after final adjustment of the price a

settlement must be made with commercial promptness.

(2) An agreement described in subsection (1) or any

warranty of quality or condition of the goods on arrival places

upon the seller the risk of ordinary deterioration, shrinkage and

the like in transportation but has no effect on the place or time

of identification to the contract for sale or delivery or on the

passing of the risk of loss.

(3) Unless otherwise agreed where the contract provides for

payment on or after arrival of the goods the seller must before

payment allow such preliminary inspection as is feasible; but if

the goods are lost delivery of the documents and payment are due

when the goods should have arrived.

2-322. Delivery "Ex-Ship".

(1) Unless otherwise agreed a term for delivery of goods

"ex-ship" (which means from the carrying vessel) or in equivalent

language is not restricted to a particular ship and requires

delivery from a ship which has reached a place at the named port

of destination where goods of the kind are usually discharged.

(2) Under such a term unless otherwise agreed

(a) the seller must discharge all liens arising out of the

carriage and furnish the buyer with a direction which puts the

carrier under a duty to deliver the goods; and

(b) the risk of loss does not pass to the buyer until the

goods leave the ship's tackle or are otherwise properly unloaded.

2-323. Form of Bill of Lading Required in Overseas Shipment;

"Overseas".

(1) Where the contract contemplates overseas shipment and

contains a term C.I.F. or C. & F. or F.O.B. vessel, the seller

unless otherwise agreed must obtain a negotiable bill of lading

stating that the goods have been loaded in board or, in the case

of a term C.l.F. or C. & F., received for shipment.

(2) Where in a case within subsection (1) a bill of lading

has been issued in a set of pairs, unless otherwise agreed if the

documents are not to be sent from abroad the buyer may demand

tender of the full set; otherwise only one part of the bill of

lading need be tendered. Even if the agreement expressly requires

a full set

(a) due tender of a single part is acceptable within the

provisions of this Article on cure of improper delivery

(subsection (1) of Section 2-508); and

even though the full set is demanded, if the documents are

sent from abroad the person tendering an incomplete set may

nevertheless require payment upon furnishing an indemnity which

the buyer in good faith deems adequate.

(3) A shipment by water or by air or a contract

contemplating such shipment is overseas" insofar as by usage of

trade or agreement it is subject to the commercial, financing or

shipping practices characteristic of international deep water

commerce.

2-324. "No Arrival, No Sale" Term.

Under a term "no arrival, no sale" or terms of like meaning,

unless otherwise agreed,

(a) the seller must properly ship conforming goods and if

they arrive by any means he must tender them on arrival but he

assumes no obligation that the goods will arrive unless he has

caused the 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 (Section 2-

613).

2-325. "Letter of Credit" Term; "Confirmed Credit".

(1) Failure of the buyer seasonably to furnish an agreed

letter of credit is a breach of the contract for sale.

(2) The delivery to seller of a proper letter of credit

suspends the buyer's obligation to pay. If the letter of credit

is dishonored, the seller may on seasonable notification to the

buyer require payment directly from him.

(3) Unless otherwise agreed the term "letter of credit" or

"banker's credit" in a contract for sale means an irrevocable

credit issued by a financing agency of good repute and, where the

shipment is overseas, of good international repute. The term

"confirmed credit" means that the credit must also carry the

direct obligation of such an agency which does business in the

seller's financial market.

2-326. Sale on Approval and Sale or Return; Consignment

Sales and Rights of Creditors.

(1) Unless otherwise agreed, if delivered goods may be

returned by the buyer even though they conform to the contract,

the transaction is

(a) a "sale on approval" if the goods are delivered primarily

for use, and a "sale or return" if the goods are delivered

primarily for resale.

(2) Except as provided in subsection (3), goods held on

approval are not subject to the claims of the buyer's creditors

until acceptance; goods held on sale or return are subject to

such claims while in the buyer's possession.

(3) 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

(a) complies with an applicable law providing for a

consignor's interest or the like to be evidenced by a sign, or

(b) establishes that the person conducting the business is

generally known by his creditors to be substantially engaged in

selling the goods of others, or

(c) complies with the filing provisions of the Article on

Secured Transactions (Article 9).

(4) 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 Article (Section 2-201) and as

contradicting the sale aspect of the contract within the

provisions of this Article on parol or extrinsic evidence

(Section 2-202).

2-327. Special Incidents of Sale On Approval and Sale or

Return.

(1) Under a sale on approval unless otherwise agreed

(a) although the goods are identified to the contract the

risk of loss and the title do not pass to the buyer until

acceptance; and

use of the goods consistent with the purpose of trial is not

acceptance but failure seasonably to notify the seller of

election to return the goods is acceptance, and if the goods

conform to the contract acceptance of any part is acceptance of

the whole; and

(c) 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.

(2) Under a sale or return unless otherwise agreed

(a) the option to return extends to the whole or any

commercial unit of the goods while in substantially their

original condition, but must be exercised seasonably; and

(b) the return is at the buyer's risk and expense.

2-328. Sale by Auction.

(1) In a sale by auction if goods are put up in lots each

lot is the subject of a separate sale.

(2) A sale by auction is complete when the auctioneer so

announces by the fall of the hammer or in other customary manner.

Where a bid is made while the hammer is falling in acceptance of

a prior bid the auctioneer may in his discretion reopen the

bidding or declare the goods sold under the bid on which the

hammer was falling.

(3) Such a sale is with reserve unless the goods are in

explicit terms put up without reserve. In an auction with reserve

the auctioneer may withdraw the goods at any time until he

announces completion of the sale. In an auction without reserve,

after the auctioneer calls for bids on an article or lot, that

article or lot cannot be withdrawn unless no bid is made within a

reasonable time. In either case a bidder may retract his bid

until the auctioneer's announcement of completion of the sale,

but a bidder's retraction does not revive any previous bid.

(4) If the auctioneer knowingly receives a bid on the

seller's behalf or the seller makes or procures such a bid, and

notice has not been given that liberty for such bidding is

reserved, the buyer may at his option avoid the sale or take the

goods at the price of the last good faith bid prior to the

completion of the sale. This subsection shall not apply to any

bid at a forced sale.

PART 4

TITLE, CREDITORS AND GOOD FAITH PURCHASERS

2-401. Passing of Title; Reservation for Security; Limited

Application of This Section.

Each provision of this Article with regard to the rights,

obligations and remedies of the seller, the buyer, purchasers or

other third parties applies irrespective of title to the goods

except where the provision refers to such title. Insofar as

situations are not covered by the other provisions of this

Article and matters concerning title become material the

following rules apply:

(1) Title to goods cannot pass under a contract for sale

prior to their identification to the contract (Section 2-501),

and unless otherwise explicitly agreed the buyer acquires by

their identification a special property as limited by this Act.

Any retention or reservation by the seller of the title

(property) in goods shipped or delivered to the buyer is limited

in effect to a reservation of a security interest. Subject to

these provisions and to the provisions of the Article on Secured

Transactions (Article 9), title to goods passes from the seller

to the buyer in any manner and on any conditions explicitly

agreed on by the parties.

(2) Unless otherwise explicitly agreed title passes to the

buyer at the time and place at which the seller completes his

performance with reference to the physical delivery of the goods,

despite any reservation of a security interest and even though a

document of title is to be delivered at a different time or

place; and in particular and despite any reservation of a

security interest by the bill of lading

(a) if the contract requires or authorizes the seller to

send the goods to the buyer but does not require him to deliver

them at destination, title passes to the buyer at the time and

place of shipment; but

(b) if the contract requires delivery at destination, title

passes on tender there.

(3) Unless otherwise explicitly agreed where delivery is to

be made without moving the goods,

(a) 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

(b) if the goods are at the time of contracting already

identified and no documents are to be delivered, title passes at

the time and place of contracting.

(4) A rejection or other refusal by the buyer to receive or

retain the goods, whether or not justified, or a justified

revocation of acceptance revests title to the goods in the

seller. Such revesting occurs by operation of law and is not a

"sale".