2301. 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.
2303. Where this division 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.
2304. (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 division, but not the
transfer of the interest in realty or the transferor's obligations in
connection therewith.
2305. (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 canceled 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.
2306. (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.
2307. 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.
2308. 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.
2309. (1) The time for shipment or delivery or any other action
under a contract if not provided in this division 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.
2310. 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 2513); and
(c) If delivery is authorized and made by way of documents of
title otherwise than by subdivision (b) then payment is due
regardless of where the goods are to be received (i) at the time and
place at which the buyer is to receive delivery of the tangible
documents or (ii) at the time the buyer is to receive delivery of the
electronic documents and at the seller's place of business or if
none, the seller's residence; and
(d) Where the seller is required or authorized to ship the goods
on credit the credit period runs from the time of shipment but
postdating the invoice or delaying its dispatch will correspondingly
delay the starting of the credit period.
2311. (1) An agreement for sale which is otherwise sufficiently
definite (subdivision (3) of Section 2204) 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 subdivisions (1)(c) and (3) of Section 2319
specifications or arrangements relating to shipment are at the seller'
s option.
(3) Where such specification would materially affect the other
party's performance but is not seasonably made or where one party's
co-operation is necessary to the agreed performance of the other but
is not seasonably forthcoming, the other party in addition to all
other remedies
(a) Is excused for any resulting delay in his own performance; and
(b) May also either proceed to perform in any reasonable manner or
after the time for a material part of his own performance treat the
failure to specify or to co-operate as a breach by failure to deliver
or accept the goods.
2312. (1) Subject to subdivision (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 subdivision (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.
2313. (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.
2314. (1) Unless excluded or modified (Section 2316), 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 promises or affirmations of fact made on the
container or label if any.
(3) Unless excluded or modified (Section 2316) other implied
warranties may arise from course of dealing or usage of trade.
2315. 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.
2316. (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 division on parol or extrinsic
evidence (Section 2202) negation or limitation is inoperative to the
extent that such construction is unreasonable.
(2) Subject to subdivision (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 subdivision (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 division on liquidation or limitation of
damages and on contractual modification of remedy (Sections 2718 and
2719).
2317. 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 displaced inconsistent implied warranties
other than an implied warranty of fitness for a particular purpose.
2319. (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 division
(Section 2504) 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
division (Section 2503);
(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 division on the form of bill of
lading (Section 2323).
(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 subdivision
(1)(a) or (c) or subdivision (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 co-operation under
this division (Section 2311). 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.
2320. (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.
2321. 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 subdivision (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.
2322. (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.
2323. (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 on board or, in the case of a term
C.I.F. or C. & F., received for shipment.
(2) Where in a case within subdivision (1) a tangible bill of
lading has been issued in a set of parts, unless otherwise agreed if
the documents are not to be sent from abroad the buyer may demand
tender of the full set; otherwise only one part of the bill of lading
need be tendered. Even if the agreement expressly requires a full
set
(a) Due tender of a single part is acceptable within the
provisions of this division on cure of improper delivery (subdivision
(1) of Section 2508); 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 deepwater commerce.
2324. Under a term "no arrival, no sale" or terms of like meaning,
unless otherwise agreed,
(a) The seller must properly ship conforming goods and if they
arrive by any means he must tender them on arrival but he assumes no
obligation that the goods will arrive unless he has caused the
nonarrival; and
(b) Where without fault of the seller the goods are in part lost
or have so deteriorated as no longer to conform to the contract or
arrive after the contract time, the buyer may proceed as if there had
been casualty to identified goods (Section 2613).
2325. (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.
2326. (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 division (Section 2201) and as contradicting the sale aspect
of the contract within the provisions of this division on parol or
extrinsic evidence (Section 2202).
(4) If a person delivers or consigns for sale goods which the
person used or bought for use for personal, family, or household
purposes, these goods do not become the property of the deliveree or
consignee unless the deliveree or consignee purchases and fully pays
for the goods. Nothing in this subdivision shall prevent the
deliveree or consignee from acting as the deliverer's agent to
transfer title to these goods to a buyer who pays the full purchase
price. Any payment received by the deliveree or consignee from a
buyer of these goods, less any amount which the deliverer expressly
agreed could be deducted from the payment for commissions, fees, or
expenses, is the property of the deliverer and shall not be subject
to the claims of the deliveree's or consignee's creditors.
2327. (1) Under 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.
2328. (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
subdivision shall not apply to any bid at a forced sale.
2301. 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.
2303. Where this division 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.
2304. (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 division, but not the
transfer of the interest in realty or the transferor's obligations in
connection therewith.
2305. (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 canceled 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.
2306. (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.
2307. 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.
2308. 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.
2309. (1) The time for shipment or delivery or any other action
under a contract if not provided in this division 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.
2310. 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 2513); and
(c) If delivery is authorized and made by way of documents of
title otherwise than by subdivision (b) then payment is due
regardless of where the goods are to be received (i) at the time and
place at which the buyer is to receive delivery of the tangible
documents or (ii) at the time the buyer is to receive delivery of the
electronic documents and at the seller's place of business or if
none, the seller's residence; and
(d) Where the seller is required or authorized to ship the goods
on credit the credit period runs from the time of shipment but
postdating the invoice or delaying its dispatch will correspondingly
delay the starting of the credit period.
2311. (1) An agreement for sale which is otherwise sufficiently
definite (subdivision (3) of Section 2204) 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 subdivisions (1)(c) and (3) of Section 2319
specifications or arrangements relating to shipment are at the seller'
s option.
(3) Where such specification would materially affect the other
party's performance but is not seasonably made or where one party's
co-operation is necessary to the agreed performance of the other but
is not seasonably forthcoming, the other party in addition to all
other remedies
(a) Is excused for any resulting delay in his own performance; and
(b) May also either proceed to perform in any reasonable manner or
after the time for a material part of his own performance treat the
failure to specify or to co-operate as a breach by failure to deliver
or accept the goods.
2312. (1) Subject to subdivision (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 subdivision (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.
2313. (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.
2314. (1) Unless excluded or modified (Section 2316), 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 promises or affirmations of fact made on the
container or label if any.
(3) Unless excluded or modified (Section 2316) other implied
warranties may arise from course of dealing or usage of trade.
2315. 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.
2316. (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 division on parol or extrinsic
evidence (Section 2202) negation or limitation is inoperative to the
extent that such construction is unreasonable.
(2) Subject to subdivision (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 subdivision (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 division on liquidation or limitation of
damages and on contractual modification of remedy (Sections 2718 and
2719).
2317. 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 displaced inconsistent implied warranties
other than an implied warranty of fitness for a particular purpose.
2319. (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 division
(Section 2504) 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
division (Section 2503);
(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 division on the form of bill of
lading (Section 2323).
(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 subdivision
(1)(a) or (c) or subdivision (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 co-operation under
this division (Section 2311). 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.
2320. (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.
2321. 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 subdivision (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.
2322. (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.
2323. (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 on board or, in the case of a term
C.I.F. or C. & F., received for shipment.
(2) Where in a case within subdivision (1) a tangible bill of
lading has been issued in a set of parts, unless otherwise agreed if
the documents are not to be sent from abroad the buyer may demand
tender of the full set; otherwise only one part of the bill of lading
need be tendered. Even if the agreement expressly requires a full
set
(a) Due tender of a single part is acceptable within the
provisions of this division on cure of improper delivery (subdivision
(1) of Section 2508); 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 deepwater commerce.
2324. Under a term "no arrival, no sale" or terms of like meaning,
unless otherwise agreed,
(a) The seller must properly ship conforming goods and if they
arrive by any means he must tender them on arrival but he assumes no
obligation that the goods will arrive unless he has caused the
nonarrival; and
(b) Where without fault of the seller the goods are in part lost
or have so deteriorated as no longer to conform to the contract or
arrive after the contract time, the buyer may proceed as if there had
been casualty to identified goods (Section 2613).
2325. (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.
2326. (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 division (Section 2201) and as contradicting the sale aspect
of the contract within the provisions of this division on parol or
extrinsic evidence (Section 2202).
(4) If a person delivers or consigns for sale goods which the
person used or bought for use for personal, family, or household
purposes, these goods do not become the property of the deliveree or
consignee unless the deliveree or consignee purchases and fully pays
for the goods. Nothing in this subdivision shall prevent the
deliveree or consignee from acting as the deliverer's agent to
transfer title to these goods to a buyer who pays the full purchase
price. Any payment received by the deliveree or consignee from a
buyer of these goods, less any amount which the deliverer expressly
agreed could be deducted from the payment for commissions, fees, or
expenses, is the property of the deliverer and shall not be subject
to the claims of the deliveree's or consignee's creditors.
2327. (1) Under 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.
2328. (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
subdivision shall not apply to any bid at a forced sale.
2301. 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.
2303. Where this division 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.
2304. (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 division, but not the
transfer of the interest in realty or the transferor's obligations in
connection therewith.
2305. (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 canceled 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.
2306. (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.
2307. 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.
2308. 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.
2309. (1) The time for shipment or delivery or any other action
under a contract if not provided in this division 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.
2310. 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 2513); and
(c) If delivery is authorized and made by way of documents of
title otherwise than by subdivision (b) then payment is due
regardless of where the goods are to be received (i) at the time and
place at which the buyer is to receive delivery of the tangible
documents or (ii) at the time the buyer is to receive delivery of the
electronic documents and at the seller's place of business or if
none, the seller's residence; and
(d) Where the seller is required or authorized to ship the goods
on credit the credit period runs from the time of shipment but
postdating the invoice or delaying its dispatch will correspondingly
delay the starting of the credit period.
2311. (1) An agreement for sale which is otherwise sufficiently
definite (subdivision (3) of Section 2204) 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 subdivisions (1)(c) and (3) of Section 2319
specifications or arrangements relating to shipment are at the seller'
s option.
(3) Where such specification would materially affect the other
party's performance but is not seasonably made or where one party's
co-operation is necessary to the agreed performance of the other but
is not seasonably forthcoming, the other party in addition to all
other remedies
(a) Is excused for any resulting delay in his own performance; and
(b) May also either proceed to perform in any reasonable manner or
after the time for a material part of his own performance treat the
failure to specify or to co-operate as a breach by failure to deliver
or accept the goods.
2312. (1) Subject to subdivision (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 subdivision (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.
2313. (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.
2314. (1) Unless excluded or modified (Section 2316), 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 promises or affirmations of fact made on the
container or label if any.
(3) Unless excluded or modified (Section 2316) other implied
warranties may arise from course of dealing or usage of trade.
2315. 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.
2316. (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 division on parol or extrinsic
evidence (Section 2202) negation or limitation is inoperative to the
extent that such construction is unreasonable.
(2) Subject to subdivision (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 subdivision (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 division on liquidation or limitation of
damages and on contractual modification of remedy (Sections 2718 and
2719).
2317. 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 displaced inconsistent implied warranties
other than an implied warranty of fitness for a particular purpose.
2319. (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 division
(Section 2504) 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
division (Section 2503);
(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 division on the form of bill of
lading (Section 2323).
(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 subdivision
(1)(a) or (c) or subdivision (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 co-operation under
this division (Section 2311). 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.
2320. (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.
2321. 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 subdivision (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.
2322. (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.
2323. (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 on board or, in the case of a term
C.I.F. or C. & F., received for shipment.
(2) Where in a case within subdivision (1) a tangible bill of
lading has been issued in a set of parts, unless otherwise agreed if
the documents are not to be sent from abroad the buyer may demand
tender of the full set; otherwise only one part of the bill of lading
need be tendered. Even if the agreement expressly requires a full
set
(a) Due tender of a single part is acceptable within the
provisions of this division on cure of improper delivery (subdivision
(1) of Section 2508); 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 deepwater commerce.
2324. Under a term "no arrival, no sale" or terms of like meaning,
unless otherwise agreed,
(a) The seller must properly ship conforming goods and if they
arrive by any means he must tender them on arrival but he assumes no
obligation that the goods will arrive unless he has caused the
nonarrival; and
(b) Where without fault of the seller the goods are in part lost
or have so deteriorated as no longer to conform to the contract or
arrive after the contract time, the buyer may proceed as if there had
been casualty to identified goods (Section 2613).
2325. (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.
2326. (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 division (Section 2201) and as contradicting the sale aspect
of the contract within the provisions of this division on parol or
extrinsic evidence (Section 2202).
(4) If a person delivers or consigns for sale goods which the
person used or bought for use for personal, family, or household
purposes, these goods do not become the property of the deliveree or
consignee unless the deliveree or consignee purchases and fully pays
for the goods. Nothing in this subdivision shall prevent the
deliveree or consignee from acting as the deliverer's agent to
transfer title to these goods to a buyer who pays the full purchase
price. Any payment received by the deliveree or consignee from a
buyer of these goods, less any amount which the deliverer expressly
agreed could be deducted from the payment for commissions, fees, or
expenses, is the property of the deliverer and shall not be subject
to the claims of the deliveree's or consignee's creditors.
2327. (1) Under 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.
2328. (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
subdivision shall not apply to any bid at a forced sale.
