Complete Home & Office Legal Guide/Complete Home and Office Legal Guide (Chestnut) (1993).ISO/stat/ucc/ucc2_1.asc

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/* Part two of the UCC on sales... */

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

     (1)  Except as provided in subsections (2) and (3), rights
of unsecured creditors of the seller with respect to goods which
have been identified to a contract for sale are subject to the
buyer's rights to recover the goods under this Article (Sections
2-502 and 2-716).

     (2)  A creditor of the seller may treat a sale or an
identification of goods to a contract for sale as void if as
against him a retention of possession by the seller is fraudulent
under any rule of law of the state where the goods are situated,
except that retention of possession in good faith and current
course of trade by a merchant-seller for a commercially
reasonable time after a sale or identification is not fraudulent.

     (3)  Nothing in this Article shall be deemed to impair the
rights of creditors of the seller

     (a)  under the provisions of the Article on Secured
Transactions (Article 9); or

     (b)  where identification to the contract or delivery is
made not in current course of trade but in satisfaction of or as
security for a pre-existing claim for money, security or the like
and is made under circumstances which under any rule of law of
the state where the goods are situated would apart from this
Article constitute the transaction a fraudulent transfer or
voidable preference.

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

     (1)  A purchaser of goods acquires all title which his
transferor had or had power to transfer except that a purchaser
of a limited interest acquires rights only to the extent of the
interest purchased. A person with voidable title has power to
transfer a good title to a good faith purchaser for value. When
goods have been delivered under a transaction of purchase the
purchaser has such power even though

     (a)  the transferor was deceived as to the Identity of the
purchaser, or

     (b)  the delivery was in exchange for a check which is later
dishonored, or

     (c)  it was agreed that the transaction was to be a "cash
sale", or

     (d)  the delivery was procured through fraud punishable as
larcenous under the criminal law.

     (2)  Any entrusting of possession of goods to a merchant who
deals in goods of that kind gives him power to transfer all
rights of the entruster to a buyer in ordinary course of
business.

     (3)  "Entrusting" includes any delivery and any acquiescence
in retention of possession regardless of any condition expressed
between the parties to the delivery or acquiescence and
regardless of whether the procurement of the entrusting or the
possessor's disposition of the goods have been such as to be
larcenous under the criminal law.

     (4)  The rights of other purchasers of goods and of lien
creditors are governed by the Articles on Secured Transactions
(Article 9), [Bulk Sales (Article 6) and Documents of Title
(Article 7).

Note: If a state adopts the repealer of Article 6-Bulk Transfers
(Alternative A), the bracketed language should be deleted.


PART 5
PERFORMANCE

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

     (1)  The buyer obtains a special property and an insurable
interest in goods by identification of existing goods as goods to
which the contract refers even though the goods so identified are
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 the parties. In the absence of explicit
agreement identification occurs

     (a)  when the contract is made if it is for the sale of
goods already existing and identified;

     (b)  if the contract is for the sale of future goods other
than those described in paragraph (c), when goods are shipped,
marked or otherwise designated by the seller as goods to which
the contract refers;

     (c)  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.

     (2)  The seller retains an insurable interest in goods so
long as title to or any security interest in the goods remains in
him and where the identification is by the seller alone he may
until default or insolvency or notification to the buyer that the
identification is final substitute other goods for those
identified.

     (3)  Nothing in this section impairs any insurable interest
recognized under any other statute or rule of law.

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

     (1)  Subject to subsection (2) 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.

     (2)  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.

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

     (1)  Tender of delivery requires that the seller put and
hold conforming goods at the buyer's disposition and give the
buyer any notification reasonably necessary to enable him to take
delivery. The manner, time and place for tender are determined by
the agreement and this Article, and in particular

(a)  tender must be at a reasonable hour, and if it is of goods
they must be kept available for the period reasonably necessary
to enable the buyer to take possession; but

(b)  unless otherwise agreed the buyer must furnish facilities
reasonably suited to the receipt of the goods.

     (2)  Where the case is within the next section respecting
shipment tender requires that the seller comply with its
provisions.

     (3)  Where the seller is required to deliver at a particular
destination tender requires that he comply with subsection (1)
and also in any appropriate case tender documents as described in
subsections (4) and (5) of this section.

     (4)  Where goods are in the possession of a bailee and are
to be delivered without being moved

     (a)  tender requires that the seller either tender a
negotiable document of title covering such goods or procure
acknowledgment by the bailee of the buyer's right to possession
of the goods; but

     (b)  tender to the buyer of a 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 document of title or to obey the
direction remains on the seller until the buyer has had a
reasonable time to present the document or direction, and a
refusal by the bailee to honor the document or to obey the
direction defeats the tender.

     (5)  Where the contract requires the seller to deliver
documents

     (a)  he must tender all such documents in correct form,
except as provided in this Article with respect to bills of
lading in a set (subsection (2) of Section 2- 323); and

     (b)  tender through customary banking channels is sufficient
and dishonor of a draft accompanying the documents constitutes
non-acceptance or rejection.

 2-504. Shipment by Seller.

     Where the seller is required or authorized to send the goods
to the buyer and the contract does not require him to deliver
them at a particular destination, then unless otherwise agreed he
must

     (a)  put the goods in the possession of such a carrier and
make such a contract for their transportation as may be
reasonable having regard to the nature of the goods and other
circumstances of the case; and

     (b)  obtain and promptly deliver or tender in due form any
document necessary to enable the buyer to obtain Possession of
the goods or otherwise required by the agreement or by usage of
trade; and

     (c)  promptly notify the buyer of the shipment.
Failure to notify the buyer under paragraph (c) or to make a
proper contract under Paragraph (a) is a ground for rejection
only if material delay or loss ensues.

 2-505. Seller's Shipment Under Reservation.

     (1)  Where the seller has identified goods to the contract
by or before shipment:

     (a)  his procurement of a negotiable bill of lading to his
own order or otherwise reserves in him a security interest in the
goods. His procurement of the bill to the order of a financing
agency or of the buyer indicates in addition only the seller's
expectation of transferring that interest to the person named.

     (b) a non-negotiable bill of lading to himself or his
nominee reserves possession of the goods as security but except
in a case of conditional delivery (subsection (2) of Section 2-
507) a 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.

     (2)  When shipment by the seller with reservation of a
security interest is in violation of the contract for sale it
constitutes an improper contract for transportation within the
preceding section but impairs neither the rights given to the
buyer by shipment and identification of the goods to the contract
nor the seller's powers as a holder of a negotiable document.

 2-506. Rights of Financing Agency.

     (1)  A financing agency by paying or purchasing for value a
draft which relates to a shipment of goods acquires to the extent
of the payment or purchase and in addition to its own rights
under the draft and any document of title securing it any rights
of the shipper in the goods including the right to stop delivery
and the shipper's right to have the draft honored by the buyer.

/* The right to stop shipment being the legal right to stop
delivery if one learns that the purchaser is insolvent or
bankrupt. */

     (2)  The right to reimbursement of a financing agency which
has in good faith honored or purchased the draft under commitment
to or authority from the buyer is not impaired by subsequent
discovery of defects with reference to any relevant document
which was apparently regular on its face.

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

     (1)  Tender of delivery is a condition to the buyer's duty
to accept the goods and, unless otherwise agreed, to his duty to
pay for them. Tender entitles the seller to acceptance of the
goods and to payment according to the contract.

     (2)  Where payment is due and demanded on the delivery to
the buyer of goods or documents of title, his right as against
the seller to retain or dispose of them is conditional upon his
making the payment due.

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

     (1)  Where any tender or delivery by the seller is rejected
because nonconforming and the time for performance has not yet
expired, the seller may seasonably notify the buyer of his
intention to cure and may then within the contract time make a
conforming delivery.

     (2)  Where the buyer rejects a non-conforming tender which
the seller had reasonable grounds to believe would be acceptable
with or without money allowance the seller may if he seasonably
notifies the buyer have a further reasonable time to substitute a
conforming tender.

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

     (1)  Where the contract requires or authorizes the seller to
ship the goods by carrier

     (a)  if it does not require him to deliver them at a
particular destination, the risk of loss passes to the buyer when
the goods are duly delivered to the carrier even though the
shipment is under reservation (Section 2-505); but

     (b)  if it does require him to deliver them at a particular
destination and the goods are there duly tendered while in the
possession of the carrier, the risk of loss passes to the buyer
when the goods are there duly so tendered as to enable the buyer
to take delivery.

     (2)  Where the goods are held by a bailee to be delivered
without being moved, the risk of loss passes to the buyer
(a)  on his receipt of a negotiable document of title covering
the goods; or on acknowledgment by the bailee of the buyer's
right to possession of the goods; or

     (c)  after his receipt of a non-negotiable document of title
or other written direction to deliver, as provided in subsection
(4)(b) of Section 2-503.

     (3)  In any case not within subsection (1) or (2), the risk
of loss passes to the buyer on his receipt of the goods if the
seller is a merchant; otherwise the risk passes to the buyer on
tender of delivery.

     (4)  The provisions of this section are subject to contrary
agreement of the parties and to the provisions of this Article on
sale on approval (Section 2-327) and on effect of breach on risk
of loss (Section 2-510).

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

     (1)  Where a tender or delivery of goods so fails to conform
to the contract as to give a right of rejection the risk of their
loss remains on the seller until cure or acceptance.

     (2)  Where the buyer rightfully revokes acceptance he may to
the extent of any deficiency in his effective insurance coverage
treat the risk of loss as having rested on the seller from the
beginning.

     (3)  Where the buyer as to conforming goods already
identified to the contract for sale repudiates or is otherwise in
breach before risk of their loss has passed to him, the seller
may to the extent of any deficiency in his effective insurance
coverage treat the risk of loss as resting on the buyer for a
commercially reasonable time.

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

     (1)  Unless otherwise agreed tender of payment is a
condition to the seller's duty to tender and complete any
delivery.

     (2)  Tender of payment is sufficient when made by any means
or in any manner current in the ordinary course of business
unless the seller demands payment in legal tender and gives any
extension of time reasonably necessary to procure it.

     (3)  Subject to the provisions of this Act on the effect of
an instrument on an obligation (Section 3-310), payment by check
is conditional and is defeated as between the parties by dishonor
of the check on due presentment.

S 2-S12. Payment by Buyer Before Inspection.

     (1)  Where the contract requires payment before inspection
nonconformity of the goods does not excuse the buyer from so
making payment unless

     (a)  the nonconformity appears without inspection; or

     (b)  despite tender of the required documents the
circumstances would justify injunction against honor under the
provisions of this Act (Section 5-114).

     (2)  Payment pursuant to subsection (1) does not constitute
an acceptance of goods or impair the buyer's right to inspect or
any of his remedies.

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

     (1)  Unless otherwise agreed and subject to subsection (3),
where goods are tendered or delivered or identified to the
contract for sale, the buyer has a right before payment or
acceptance to inspect them at any reasonable place and time and
in any reasonable manner. When the seller is required or
authorized to send the goods to the buyer, the inspection may be
after their arrival.

     (2)  Expenses of inspection must be borne by the buyer but
may be recovered from the seller if the goods do not conform and
are rejected.

     (3)  Unless otherwise agreed and subject to the provisions
of this Article on C.I.F.  contracts (subsection (3) of Section 2-
321), the buyer is not entitled to inspect the goods before
payment of the price when the contract provides

     (a)  for delivery "C.O.D." or on other like terms; or

     (b)  for payment against documents of title, except where
such payment is due only after the goods are to become available
for inspection.

     (4)  A place or method of inspection fixed by the parties is
presumed to be exclusive but unless otherwise expressly agreed it
does not postpone identification or shift the place for delivery
or for passing the risk of loss. If compliance becomes
impossible, inspection shall be as provided in this section
unless the place or method fixed was clearly intended as an
indispensable condition failure of which avoids the contract.

 2-514. When Documents Deliverable on Acceptance; When on
Payment.  Unless otherwise agreed documents against which a draft
is drawn are to be delivered to the drawee on acceptance of the
draft if it is payable more than three days after presentment;
otherwise, only on payment.

  2-515. Preserving Evidence of Goods in Dispute.

     In furtherance of the adjustment of any claim or dispute

     (a)  either party on reasonable notification to the other
and for the purpose of ascertaining the facts and preserving
evidence has the right to inspect, test and sample the goods
including such of them as may be in the possession or control of
the other; and

     (b)  the parties may agree to a third party inspection or
survey to determine the conformity or condition of the goods and
may agree that the findings shall be binding upon them in any
subsequent litigation or adjustment.

/* A built in "discovery" and "arbitration" provision. */

PART 6
BREACH, REPUDIATION AND EXCUSE

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

     Subject to the provisions of this Article on breach in
installment contracts (Section 2-612) and unless otherwise agreed
under the sections on contractual limitations of remedy (Sections
2-718 and 2-719), if the goods or the tender of delivery fail in
any respect to conform to the contract, the buyer may

     (a)  reject the whole; or

     (b)  accept the whole; or

     (c)  accept any commercial unit or units and reject the
rest.

2-602. Manner and Effect of Rightful Rejection.

     (1)  Rejection of goods must be within a reasonable time
after their delivery or tender. It is ineffective unless the
buyer seasonably notifies the seller.

     (2)  Subject to the provisions of the two following sections
on rejected goods (Sections 2-603 and 2-604),

     (a)  after rejection any exercise of ownership by the buyer
with respect to any commercial unit is wrongful as against the
seller; and

     (b)  if the buyer has before rejection taken physical
possession of goods in which he does not have a security interest
under the provisions of this Article (subsection (3) of Section 2-
711), he is under a duty after rejection to hold them with
reasonable care at the seller's disposition for a time sufficient
to permit the seller to remove them; but

     (c)  the buyer has no further obligations with regard to
goods rightfully rejected.

     (3)  The seller's rights with respect to goods wrongfully
rejected are governed by the provisions of this Article on
Seller's remedies in general (Section 2-703).

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

     (1)  Subject to any security interest in the buyer
(subsection (3) of Section 2-711), when the seller has no agent
or place of business at the market of rejection a merchant buyer
is under a duty after rejection of goods in his possession or
control to follow any reasonable instructions received from the
seller with respect to the goods and in the absence of such
instructions to make reasonable efforts to sell them for the
seller's account if they are perishable or threaten to decline in
value speedily.  Instructions are not reasonable if on demand
indemnity for expenses is not forthcoming.

     (2)  When the buyer sells goods under subsection (1), he is
entitled to reimbursement from the seller or out of the proceeds
for reasonable expenses of caring for and selling them, and if
the expenses include no selling commission then to such
commission as is usual in the trade or if there is none to a
reasonable sum not exceeding ten per cent on the gross proceeds.

     (3)  In complying with this section the buyer is held only
to good faith and good faith conduct hereunder is neither
acceptance nor conversion nor the basis of an action for damages.

2-604. Buyer's Options as to Salvage of Rightfully Rejected
Goods.  Subject to the provisions of the immediately preceding
section on perishables if the seller gives 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.

/* Many woes befall the seller who delivers defective goods. The
risk of loss never passes (although the seller might think so_
and the buyer, if it does not receive any instructions, can
re-sell as best it can and bill the seller for losses
nevertheless. If the parties are fighting over who has breached,
good luck! */

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

     (1)  The buyer's failure to state in connection with
rejection a particular defect which is ascertainable by
reasonable inspection precludes him from relying on the unstated
defect to justify rejection or to establish breach

     (a)  where the seller could have cured it if stated
seasonably; or

     (b)  between merchants when the seller has after rejection
made a request in writing for a full and final written statement
of all defects on which the buyer proposes to rely.

/* Thus, within the arsenal of the seller one weapon is the right
to require the specification of the breach. */

     (2)  Payment against documents made without reservation of
rights precludes recovery of the payment for defects apparent on
the face of the documents.

  2-606. What Constitutes Acceptance of Goods.

     (1)  Acceptance of goods occurs when the buyer

     (a)  after a reasonable opportunity to inspect the goods
signifies to the seller that the goods are conforming or that he
will take or retain them in spite of their nonconformity; or

     (b)  fails to make an effective rejection (subsection (1) of
Section 2-602), but such acceptance does not occur until the
buyer has had a reasonable opportunity to inspect them; or

     (c)  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.

     (2)  Acceptance of a part of any commercial unit is
acceptance of that entire unit

2-607. Effect of Acceptance; Notice of Breach; Burden of
Establishing Breach After Acceptance; Notice of Claim or
Litigation to Person Answerable Over.

     (1)  The buyer must pay at the contract rate for any goods
accepted.

     (2)  Acceptance of goods by the buyer precludes rejection of
the goods accepted and if made with knowledge of a nonconformity
cannot be revoked because of it unless the acceptance was on the
reasonable assumption that the nonconformity would be seasonably
cured but acceptance does not of itself impair any other remedy
provided by this Article for nonconformity.

     (3)  Where a tender has been accepted

     (a)  the buyer must within a reasonable time after he
discovers or should have discovered any breach notify the seller
of breach or be barred from any remedy; and

     (b)  if the claim is one for infringement or the like
(subsection (3) of Section 2- 312) and the buyer is sued as a
result of such a breach he must so notify the seller within a
reasonable time after he receives notice of the litigation or be
barred from any remedy over for liability established by the
litigation.

     (4)  The burden is on the buyer to establish any breach with
respect to the goods accepted.

     (5)  Where the buyer is sued for breach of a warranty or
other obligation for which his seller is answerable over

     (a)  he may give his seller written notice of the
litigation. If the notice states that the seller may come in and
defend and that if the seller does not do so he will be bound in
any action against him by his buyer by any determination of fact
common to the two litigations, then unless the seller after
seasonable receipt of the notice does come in and defend he is so
bound.

     (b)  if the claim is one for infringement or the like
(subsection (3) of Section 2- 312) the original seller may demand
in writing that his buyer turn over to him control of the
litigation including settlement or else be barred from any remedy
over and if he also agrees to bear all expense and to satisfy any
adverse judgment, then unless the buyer after seasonable receipt
of the demand does turn over control the buyer is so barred.

     (6)  The provisions of subsections (3), (4) and (5) apply to
any obligation of a buyer to hold the seller harmless against
infringement or the like (subsection (3) of Section 2-312).

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

     (1)  The buyer may revoke his acceptance of a lot or
commercial unit whose nonconformity substantially impairs its
value to him if he has accepted it

     (a)  on the reasonable assumption that its non-conformity
would be cured and it has not been seasonably cured; or

     (b)  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.

     (2)  Revocation of acceptance must occur within a reasonable
time after the buyer discovers or should have discovered the
ground for it and before any substantial change in condition of
the goods which is not caused by their own defects. It is not
effective until the buyer notifies the seller of it.

     (3)  A buyer who so revokes has the same rights and duties
with regard to the goods involved as if he had rejected them.

2-609. Right to Adequate Assurance of Performance.

     (1)  A contract for sale imposes an obligation on each party
that the other's expectation of receiving due performance will
not be impaired. When reasonable grounds for insecurity arise
with respect to the performance of either party the other may in
writing demand adequate assurance of due performance and until he
receives such assurance may if commercially reasonable suspend
any performance for which he has not already received the agreed
return.

     (2)  Between merchants the reasonableness of grounds for
insecurity and the adequacy of any assurance offered shall be
determined according to commercial standards.

     (3)  Acceptance of any improper delivery or payment does not
prejudice the aggrieved party's right to demand adequate
assurance of future performance.

     (4)  After receipt of a justified demand failure to provide
within a reasonable time not exceeding thirty days such assurance
of due performance as is adequate under the circumstances of the
particular case is a repudiation of the contract.

2-610. Anticipatory Repudiation.

     When either party repudiates the contract with respect to a
performance not yet due the loss of which will substantially
impair the value of the contract to the other, the aggrieved
party may

     (a)  for a commercially reasonable time await performance by
the repudiating party; or

     resort to any remedy for breach (Section 2-703 or Section 2-
711), even though he has notified the repudiating party that he
would await the latter's performance and has urged retraction;
and

     (c)  in either case suspend his own performance or proceed
in accordance with the provisions of this Article on the seller's
right to identify goods to the contract notwithstanding breach or
to salvage unfinished goods (Section 2-704).

2-611. Retraction of Anticipatory Repudiation.

     (1)  Until the repudiating party's next performance is due
he can retract his repudiation unless the aggrieved party has
since the repudiation cancelled or materially changed his
position or otherwise indicated that he considers the repudiation
final.

     (2)  Retraction may be by any method which clearly indicates
to the aggrieved party that the repudiating party intends to
perform, but must include any assurance justifiably demanded
under the provisions of this Article (Section 2-609).

     (3)  Retraction reinstates the repudiating party's rights
under the contract with due excuse and allowance to the aggrieved
party for any delay occasioned by the repudiation.

2-612. "Installment Contract"; Breach.

     (1) An "installment contract" is one which requires or
authorizes the delivery of goods in separate lots to be
separately accepted, even though the contract contains a clause
"each delivery is a separate contract" or its equivalent.

     (2)  The buyer may reject any installment which is non-
conforming if the nonconformity substantially impairs the value
of that installment and cannot be cured or if the nonconformity
is a defect in the required documents; but if the nonconformity
does not fall within subsection (3) and the seller gives adequate
assurance of its cure the buyer must accept that installment.

     (3)  Whenever nonconformity or default with respect to one
or more installments substantially impairs the value of the whole
contract there is a breach of the whole.  But the aggrieved party
reinstates the contract if he accepts a non-conforming install.
ment without seasonably notifying of cancellation or if he brings
an action with respect only to past installments or demands
performance as to future installments.

  2-613. Casualty to Identified Goods.

     Where the contract requires for its performance goods
identified when the contract is made, and the goods suffer
casualty without fault of either party before the risk of loss
passes to the buyer, or in a proper case under a "no arrival, no
sale" term (Section 2-324) then

     (a)  if the loss is total the contract is avoided; and

     (b)  if the loss is partial or the goods have so
deteriorated as no longer to conform to the contract the buyer
may nevertheless demand inspection and at his option either treat
the contract as avoided or accept the goods with due allowance
from the contract price for the deterioration or the deficiency
in quantity but without further right against the seller.

2-614. Substituted Performance

     (1)  Where without fault of either party the agreed
berthing, loading, or unloading facilities fail or an agreed type
of carrier becomes unavailable or the agreed mariner of delivery
otherwise becomes commercially impracticable but a commercially
reasonable substitute is available, such substitute performance
must be tendered and accepted.

     (2)  If the agreed means or manner of payment fails because
of domestic or foreign governmental regulation, the seller may
withhold or stop delivery unless the buyer provides a means or
manner of payment which is commercially a substantial equivalent.
If delivery has already been taken, payment by the means or in
the manner provided by the regulation discharges the buyer's
obligation unless the regulation is discriminatory, oppressive or
predatory.

  2-615. Excuse by Failure of Presupposed Conditions.

     Except so far as a seller may have assumed a greater
obligation and subject to the preceding section on substituted
performance:

     (a)  Delay in delivery or non-delivery in whole or in part
by a seller who cornplies with paragraphs (b) and (c) is not a
breach of his duty under a contract for sale if performance as
agreed has been made impracticable by the occurrence of a
contingency the non-occurrence 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 (a) affect only
a part of the seller's capacity to perform, he must allocate
production and deliveries among his customers but may at his
option include regular customers not then under contract as well
as his own requirements for further manufacture. He may so
allocate in any manner which is fair and reasonable.

     (c)  The seller must notify the buyer seasonably that there
will be delay or nondelivery and, when allocation is required
under paragraph (b), of the estimated quota thus made available
for the buyer.

 2-616. Procedure on Notice Claiming Excuse

     (1)  Where the buyer receives notification of a material or
indefinite delay or an allocation justified under the preceding
section he may by written notification to the seller as to any
delivery concerned, and where the prospective deficiency
substantially impairs the value of the whole contract under the
provisions of this Article relating to breach of installment
contracts (Section 2-612), then also as to the whole,

     (a)  terminate and thereby discharge any unexecuted portion
of the contract; or

     (b)  modify the contract by agreeing to take his available
quota in substitution.

     (2)  If after receipt of such notification from the seller
the buyer fails so to modify the contract within a reasonable
time not exceeding thirty days the contract lapses with respect
to any deliveries affected.

     (3)  The provisions of this section may not be negated by
agreement except in so far as the seller has assumed a greater
obligation under the preceding section.


PART 7
REMEDIES

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

     Remedies for breach of any obligation or promise collateral
or ancillary to a contract for sale are not impaired by the
provisions of this Article.

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

     (1)  Where the seller discovers the buyer to be insolvent he
may refuse delivery except for cash including payment for all
goods theretofore delivered under the contract, and stop delivery
under this Article (Section 2-705).

     (2)  Where the seller discovers that the buyer has received
goods on credit while insolvent he may reclaim the goods upon
demand made within ten 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.

     (3)  The seller's right to reclaim under subsection (2) is
subject to the rights of a buyer in ordinary course or other good
faith purchaser under this Article (Section 2- 403). Successful
reclamation of goods excludes all other remedies with respect to
them.

2-703. Seller's Remedies in General.

     Where the buyer wrongfully rejects or revokes acceptance of
goods or fails to make a payment due on or before delivery or
repudiates with respect to a part or the whole, then with respect
to any goods directly affected and, if the breach is of the whole
contract (Section 2-612), then also with respect to the whole
undelivered balance, the aggrieved seller may

     (a)  withhold delivery of such goods;

     (b)  stop delivery by any bailee as hereafter provided
(Section 2-705);

     (c)  proceed under the next section respecting goods still
unidentified to the contract;

     (d)  resell and recover damages as hereafter provided
(Section 2- 706); recover damages for non-acceptance (Section
2-708) or in a proper case the price (Section 2-709);

     (f)  cancel.

  2-704. Seller's Right to Identify Goods to the Contract
Notwithstanding Breach or to Salvage Unfinished Goods.

     (1)  An aggrieved seller under the preceding section may

     (a)  identify to the contract conforming goods not already
identified if at the time he learned of the breach they are in
his possession or control;

     treat as the subject of resale goods which have demonstrably
been intended for the particular contract even though those goods
are unfinished.

     (2)  Where the goods are unfinished an aggrieved seller may
in the exercise of reasonable commercial judgment for the
purposes of avoiding loss and of effective realization either
complete the manufacture and wholly identify the goods to the
contract or cease manufacture and resell for scrap or salvage
value or proceed in any other reasonable manner.

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

     (1)  The seller may stop delivery of goods in the possession
of a carrier or other bailee when he discovers the buyer to be
insolvent (Section 2-702) and may stop delivery of carload,
truckload, planeload or larger shipments of express or freight
when the buyer repudiates or fails to make a payment due before
delivery or if for any other reason the seller has a right to
withhold or reclaim the goods.

     (2)  As against such buyer the seller may stop delivery
until

     (a)  receipt of the goods by the buyer; or

     (b)  acknowledgment to the buyer by any bailee of the goods
except a carrier that the bailee holds the goods for the buyer;
or

     (c)  such acknowledgment to the buyer by a carrier by
reshipment or as warehouseman; or

     (d)  negotiation to the buyer of any negotiable document of
title covering the goods.

(3)(a) To stop delivery the seller must so notify as to enable
the bailee by reasonable diligence to prevent delivery of the
goods.

     (b)  After such notification the bailee must hold and
deliver the goods according to the directions of the seller but
the seller is liable to the bailee for any ensuing charges or
damages.

     (c)  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.

     (d)  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.

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

     (1)  Under the conditions stated in Section 2-703 on
seller's remedies, the seller may resell the goods concerned or
the undelivered balance thereof. Where the resale is made in good
faith and in a commercially reasonable manner the seller may
recover the difference between the resale price and the contract
price together with any incidental damages allowed under the
provisions of this Article (Section 2-710), but less expenses
saved in consequence of the buyer's breach.

     (2)  Except as otherwise provided in subsection (3) or
unless otherwise agreed resale may be at public or private sale
including sale by way of one or more contracts to sell or of
identification to an existing contract of the seller. Sale may be
as a unit or in parcels and at any time and place and on any
terms but every aspect of the sale including the method, manner,
time, place and terms must be commercially reasonable. The resale
must be reasonably identified as referring to the broken
contract, but it is not necessary that the goods be in existence
or that any or all of them have been identified to the contract
before the breach.

     (3)  Where the resale is at private sale the seller must
give the buyer reasonable notification of his intention to
resell.

     (4)  Where the resale is at public sale

     (a)  only identified goods can be sold except where there is
a recognized market for a public sale of futures in goods of the
kind; and

     (b)  it must be made at a usual place or market for public
sale if one is reasonably available and except in the case of
goods which are perishable or threaten to decline in value
speedily the seller must give the buyer reasonable notice of the
time and place of the resale; and

     (c)  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

     (d)  the seller may buy.

     (5)  A purchaser who buys in good faith at a resale takes
the goods free of any rights of the original buyer even though
the seller fails to comply with one or more of the requirements
of this section.

     (6)  The seller is not accountable to the buyer for any
profit made on any resale. A person in the position of a seller
(Section 2-707) or a buyer who has rightfully rejected or
justifiably revoked acceptance must account for any excess over
the amount of his security interest, as hereinafter defined
(subsection (3) of Section 2-711).

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

     (1)  A "person in the position of a seller" includes as
against a principal an agent who has paid or become responsible
for the price of goods on behalf of his principal or anyone who
otherwise holds a security interest or other right in goods
similar to that of a seller.

     (2)  A person in the position of a seller may as provided in
this Article withhold or stop delivery (Section 2-705) and resell
(Section 2-706) and recover incidental damages (Section 2-710).

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

     (1)  Subject to subsection (2) and to the provisions of this
Article with respect to proof of market price (Section 2-723),
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 Article (Section 2-710), but
less expenses saved in consequence of the buyer's breach.

     (2)  If the measure of damages provided in subsection (1) is
inadequate to put the seller in as good a position as performance
would have done then the measure of damages is the profit
(including reasonable overhead) which the seller would have made
from full performance by the buyer, together with any incidental
damages provided in this Article (Section 2-710), due allowance
for costs reasonably incurred and due credit for payments or
proceeds of resale.

 2-709. Action for the Price

     (1)  When the buyer fails to pay the price as it becomes due
the seller may recover, together with any incidental damages
under the next section, the price

     (a)  of goods accepted or of conforming goods lost or
damaged within a commercially reasonable time after risk of their
loss has passed to the buyer; and

     (b)  of goods identified to the contract If the seller is
unable after reasonable effort to resell them at a reasonable
price or the circumstances reasonably indicate that such effort
will be unavailing.

     (2)  Where the seller sues for the price he must hold for
the buyer any goods which have been identified to the contract
and are still in his control except that if resale becomes
possible he may resell them at any time prior to the collection
of the judgment. The net proceeds of any such resale must be
credited to the buyer and payment of the judgment entitles him to
any goods not resold.

     (3)  After the buyer has wrongfully rejected or revoked
acceptance of the goods or has failed to make a payment due or
has repudiated (Section 2-610), a seller who is held not entitled
to the price under this section shall nevertheless be awarded
damages for non-acceptance under the preceding section.

  2-710. Seller's Incidental Damages.

     Incidental damages to an aggrieved seller include any
commercially reasonable charges, expenses or commissions incurred
in stopping delivery, in the transportation, care and custody of
goods after the buyer's breach, in connection with return or
resale of the goods or otherwise resulting from the breach.

/* The battle of the forms always includes the seller insisting
on having incidental damages and the buyer's forms always
rejecting them. */


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

     (1)  Where the seller fails to make delivery or repudiates
or the buyer rightfully rejects or justifiably revokes acceptance
then with respect to any goods involved, and with respect to the
whole if the breach goes to the whole contract (Section 2-612),
the buyer may cancel and whether or not he has done so may in
addition to recovering so much of the price as has been paid

     (a)  "cover" and have damages under the next section as to
all the goods affected whether or not they have been identified
to the contract; or

     (b)  recover damages for non-delivery as provided in this
Article (Section 2- 713).

     (2)  Where the seller fails to deliver or repudiates the
buyer may also

     (a)  if the goods have been identified recover them as
provided in this Article (Section 2-502); or

     (b)  in a proper case obtain specific performance or replevy
the goods as provided in this Article (Section 2-716).

/* "Replevy" refers to a "replevin" an equitable action to obtain
physical possession of personal property. It has other names in
other states. */

     (3)  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 (Section 2-
706).

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

     (1)  After a breach within the preceding section the buyer
may "cover" by making in good faith and without unreasonable
delay any reasonable purchase of or contract to purchase goods in
substitution for those due from the seller.

     (2)  The buyer may recover from the seller as damages the
difference between the cost of cover and the contract price
together with any incidental or consequential damages as
hereinafter defined (Section 2-715), but less expenses saved in
consequence of the seller's breach.

     (3)  Failure of the buyer to effect cover within this
section does not bar him from any other remedy.

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

     (1)  Subject to the provisions of this Article with respect
to proof of market price (Section 2-723), 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 provided in this Article (Section 2-
715), but less expenses saved in consequence of the seller's
breach.

     (2)  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.

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

     (1)  Where the buyer has accepted goods and given
notification (subsection (3) of Section 2-607) 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.

     (2)  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
had been as warranted, unless special circumstances show
proximate damages of a different amount.

     (3)  In a proper case any incidental and consequential
damages under the next section may also be recovered.

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

     (1)  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.

     (2)  Consequential damages resulting from the seller's
breach include

     (a)  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

     (b)  injury to person or property proximately resulting from
any breach of warranty.

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

     (1)  Specific performance may be decreed where the goods are
unique or in other proper circumstances.

     (2)  The decree for specific performance may include such
terms and conditions as to payment of the price, damages, or
other relief as the court may deem just.

     (3)  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.

 2-717. 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 from any part of the price still due under
the same contract.

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

     (1)  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 anticipated 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.

     (2)  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

     (a)  the amount to which the seller is entitled by virtue of
terms liquidating the seller's damages in accordance with
subsection (1), or

     (b)  in the absence of such terms, twenty per cent of the
value of the total performance for which the buyer is obligated
under the contract or $500, whichever is smaller.

     (3)  The buyer's right to restitution under subsection (2)
is subject to offset to the extent that the seller establishes

     (a)  a right to recover damages under the provisions of this
Article other than subsection (1), and

     (b)  the amount or value of any benefits received by the
buyer directly or indirectly by reason of the contract.

     (4)  Where a seller has received payment in goods their
reasonable value or the proceeds of their resale shall be treated
as payments for the purposes of subsection (2); 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 Article on resale by an aggrieved seller (Section 2-
706).

 2-719. Contractual Modification or Limitation of Remedy.

     (1)  Subject to the provisions of subsections (2) and (3) of
this section and of the preceding section on liquidation and
limitation of damages

     (a)  the agreement may provide for remedies in addition to
or in substitution for those provided in this Article and may
limit or alter the measure of damages recoverable under this
Article, as by limiting the buyer's remedies to return of the
goods and repayment of the price or to repair and replacement of
nonconforming goods or parts; and 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.

     (2)  Where circumstances cause an exclusive or limited
remedy to fail of its essential purpose, remedy may be had as
provided in this Act.

     (3)  Consequential damages may be limited or excluded unless
the limitation or exclusion is unconscionable. Limitation 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.

/* Probably a needless statement since the modern law of products
liability already says this; perhaps it is intended as a
concession that the remedies cannot be limited as to personal
injury. */

 2-720. 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.

 2-721. Remedies for Fraud.

     Remedies for material misrepresentation or fraud include all
remedies available under this Article 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.

 2-722. 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.

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

     (1)  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 (Section 2-708 or
Section 2-713) shall be determined according to the price of such
goods prevailing at the time when the aggrieved party learned of
the repudiation.

     (2)  If evidence of a price prevailing at the times or
places described in this Article is not readily available the
price prevailing within any reasonable rime 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.

     (3)  Evidence of a relevant price prevailing at a time or
place other than the one described in this Article offered by one
party is not admissible unless and until he has given the other
party such notice as the court finds sufficient to prevent unfair
surprise.

  2-724. 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.

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

     (1)  An action for breach of any contract for sale must be
commenced within four years after the cause of action has
accrued. By the original agreement the parties may reduce the
period of limitation to not less than one year but may not extend
it.

/* This section is often changed state by state to conform to
their time limit for such suits. */

     (2)  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 performance the cause of action accrues when the
breach is or should have been discovered.

     (3)  Where an action commenced within the time limited by
subsection (1) 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.

     (4)  This section does not alter the law on tolling of the
statute of limitations nor does it apply to causes of action
which have accrued before this Act becomes effective.