U.C.C. - ARTICLE 2 - SALES

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U.C.C. - ARTICLE 2 - SALES
Copyright 1978, 1987, 1988, 1990, 1991, 1992 by The American Law Institute and the National
Conference of Commissioners on Uniform State Laws; reproduced, published and distributed with the
permission of the Permanent Editorial Board for the Uniform Commercial Code for the limited
purposes of study, teaching, and academic research.

Published by the Legal Information Institute , Cornell Law School, Jan. 2003. For the version of this
article (and other uniform laws) adopted by a particular state visit the LII"s Uniform Commercial
Code Locator page at: http://www.law.cornell.edu/uniform/ucc.html

Decisions and related materials in the commercial law field generally are available at:
http://www.law.cornell.edu/topics/commercial.html

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) [Reserved.]
(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 9-102.
"Dishonor". Section 3-502.
"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 himself out as having knowledge or skill peculiar to the practices or goods involved in the
transaction or to whom such knowledge or skill may be attributed by his employment of an agent
or broker or other intermediary who by his occupation holds himself out as having such knowledge
or skill.

(2) "Financing agency" means a bank, finance company or other person who in the ordinary course
of business makes advances against goods or documents of title or who by arrangement with either
the seller or the buyer intervenes in ordinary course to make or collect payment due or claimed
under the contract for sale , as by purchasing or paying the seller"s draft or making advances
against it or by merely taking it for collection whether or not documents of title accompany 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 .

§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.



[History]

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 (Sec. 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 performance, course of dealing, or usage of trade (Section 1-303 ); 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.

(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.

§2-205. 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; but 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 non-conforming goods, but such a shipment of non-conforming goods does not
constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only
as an accommodation to the buyer.

(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.

§ 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) Except as otherwise provided in Section 9-406 , 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.
(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.

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.

§ 2-303. 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 post-dating 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.

(2) Unless otherwise agreed specifications relating to assortment of the goods are at the buyer"s
option and except as otherwise provided in subsections (1)(c) and (3) of Section 2-319 specifications
or arrangements relating to shipment are at the seller"s option.

(3) Where such specification would materially affect the other party"s performance but is not
seasonably made or where one party"s 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
(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 model.

(2) It is not necessary to the creation of an express warranty that the seller use formal words such
as "warrant" or "guarantee" or that he have a specific intention to make a warranty, but an
affirmation merely of the value of the goods or a statement purporting to be merely the seller"s
opinion or commendation of the goods does not create a warranty.

§ 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.

(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 the circumstances to have revealed to him; and
(c) 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 ).

§ 2-316. 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 the circumstances to have revealed to him; and
(c) 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.
[Note]
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.

[History]


§ 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.I.F. term except the obligation as to insurance.

(4) Under the term C.I.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.I.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 parts, unless
otherwise agreed if the documents are not to be sent from abroad the buyer may demand tender of
the full set; otherwise only one part of the bill of lading need be tendered. Even if the agreement
expressly requires a full set

(a) due tender of a single part is acceptable within the provisions of this Article on cure of
improper delivery (subsection (1) of Section 2-508 ); and

(b) even though the full set is demanded, if the documents are sent from abroad the person
tendering an incomplete set may nevertheless require payment upon furnishing an indemnity which
the buyer in good faith deems adequate.

(3) A shipment by water or by air or a contract contemplating such shipment is "overseas" insofar
as by usage of trade or agreement it is subject to the commercial, financing or shipping practices
characteristic of international deep water commerce.

§ 2-324. "No Arrival, No sale" Term.
Under a term, "no sale no arrival" 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
(b) a "sale or return" if the goods are delivered primarily for resale.

(2) Goods held on approval are not subject to the claims of the buyer"s creditors until acceptance;
goods held on sale or return are subject to such claims while in the buyer"s possession.

(3) Any "or return" term of a contract for sale is to be treated as a separate contract for sale
within the statute of frauds section of this 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
(b) use of the goods consistent with the purpose of trial is not acceptance but failure seasonably to
notify the seller of election to return the goods is acceptance, and if the goods conform to the
contract acceptance of any part is acceptance of the whole; and
(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".

§ 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.

[Note: If a state adopts the repealer of Article 6-Bulk Transfers (Alternative A), subsec. (4) should
read as follows:]

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

[Note: If a state adopts Revised Article 6-Bulk Sales (Alternative B), subsec. (4) should read as
follows:]

(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).

[History]

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 reason 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 Repudiation, Failure to Deliver or Insolvency.
(1) Subject to subsections (2) and (3) 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:
(a) in the case of goods bought for personal, family, or household purposes, the seller repudiates or
fails to deliver as required by the contract; or
(b) in other cases, the seller becomes insolvent within ten days after receipt of the first installment
on their price.

(2) The buyer"s right to recover the goods under subsection (1)(a) vests upon acquisition of a
special property, even if the seller had not then repudiated or failed to deliver.

(3) If the identification creating his special property has been made by the buyer he acquires the
right to recover the goods only if they conform to the contract for sale .

§ 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.

(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 Un
Where the seller is required or autder 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 .

(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.

[Permanent Editorial Board Commentary ]

§2-508. Cure by Seller of Improper Tender or Delivery; Replacement.
(1) Where any tender or delivery by the seller is rejected because non-conforming and the time for
performance has not yet expired, the seller may seasonably notify the buyer of his intention to cure
and may then within the contract time make a conforming delivery.

(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
(b) 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
3-802 ), payment by check is conditional and is defeated as between the parties by dishonor of the
check on due presentment.

§ 2-512. Payment by Buyer Before Inspection.
(1) Where the contract requires payment before inspection non-conformity of the goods does not
excuse the buyer from so making payment unless

(a) the non-conformity appears without inspection; or
(b) despite tender of the required documents the circumstances would justify injunction against
honor under this Act (Section 5-109(b) ).

(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.


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.

§ 2-605. Waiver of Buyer"s Objections by Failure to Particularize.
(1) The buyer"s failure to state in connection with rejection a particular defect which is
ascertainable by reasonable inspection precludes him from relying on the unstated defect to justify
rejection or to establish breach
(a) where the seller could have cured it if stated seasonably; or
(b) between merchants when the seller has after rejection made a request in writing for a full and
final written statement of all defects on which the buyer proposes to rely.

(2) Payment against documents made without reservation of rights precludes recovery of the
payment for defects apparent 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 non-conformity; 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 non-conformity cannot be revoked because of it unless the acceptance was on the
reasonable assumption that the non-conformity would be seasonably cured but acceptance does not
of itself impair any other remedy provided by this Article for non-conformity.

(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 non-conformity
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
(b) resort to any remedy for breach (Section 2-703 or Section 2-711 ), even though he has notified
the repudiating party that he would await the latter"s performance and has urged retraction; and
(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 non-conformity
substantially impairs the value of that installment and cannot be cured or if the non-conformity is a
defect in the required documents; but if the non-conformity does not fall within subsection (3) and
the seller gives adequate assurance of its cure the buyer must accept that installment.

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

§ 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 manner of delivery otherwise becomes
commercially impracticable but a commercially reasonable substitute is available, such substitute
performance must be tendered and accepted.

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

§ 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 complies with paragraphs
(b) and (c) is not a breach of his duty under a contract for sale if performance as agreed has been
made impracticable by the occurrence of a contingency the 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 non-delivery 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.s

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.

[History]

§ 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 );
(e) 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;
(b) treat as the subject of resale goods which have demonstrably been intended for the particular
contract even though those goods are unfinished.

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

§ 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.

§ 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 ).

(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. In the case of goods bought for personal,
family, or household purposes, the buyer"s right of replevin vests upon acquisition of a special
property, even if the seller had not then repudiated or failed to deliver.

§ 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 non-conforming goods or parts; and
(b) 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.

§ 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 time before or after the time described or at
any other place which in commercial judgment or under usage of trade would serve as a reasonable
substitute for the one described may be used, making any proper allowance for the cost of
transporting the goods to or from such other place.

(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.

(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.