CHAPTER 2. SALES
IC 26-1-2
Chapter 2. Sales
IC 26-1-2-101
Short title
Sec. 101. IC 26-1-2 shall be known and may be cited as UniformCommercial Code . Sales.
(Formerly: Acts 1963, c.317, s.2-101.) As amended by P.L.152-1986,SEC.119.
IC 26-1-2-102
Scope; certain security and other transactions excluded from thischapter
Sec. 102. Unless the context otherwise requires, IC 26-1-2 appliesto transactions in goods. It does not apply to any transaction whichalthough in the form of an unconditional contract to sell or presentsale is intended to operate only as a security transaction, nor doesIC 26-1-2 impair or repeal any statute regulating sales to consumers,farmers, or other specified classes of buyers. IC 26-1-2 does notimpair or repeal IC 9-14, IC 9-17, or IC 9-22-5.
(Formerly: Acts 1963, c.317, s.2-102.) As amended by P.L.152-1986,SEC.120; P.L.2-1991, SEC.86.
IC 26-1-2-103
Definitions and index of definitions
Sec. 103. (1) In IC 26-1-2, unless the context otherwise requires:
(a) "Buyer" means a person who buys or contracts to buy goods.
(b) "Good faith" in the case of a merchant means honesty in factand observance of reasonable commercial standards of fairdealing in the trade.
(c) "Receipt" of goods means taking physical possession ofthem.
(d) "Seller" means a person who sells or contracts to sell goods.
(2) Other definitions applying to IC 26-1-2, or to specified partsthereof, and the sections in which they appear are:
"Acceptance". IC 26-1-2-606.
"Banker's credit". IC 26-1-2-325.
"Between merchants". IC 26-1-2-104.
"Cancellation". IC 26-1-2-106(4).
"Commercial unit". IC 26-1-2-105.
"Confirmed credit". IC 26-1-2-325.
"Conforming to contract". IC 26-1-2-106.
"Contract for sale". IC 26-1-2-106.
"Cover". IC 26-1-2-712.
"Entrusting". IC 26-1-2-403.
"Financing agency". IC 26-1-2-104.
"Future goods". IC 26-1-2-105.
"Goods". IC 26-1-2-105.
"Identification". IC 26-1-2-501.
"Installment contract". IC 26-1-2-612. "Letter of credit". IC 26-1-2-325.
"Lot". IC 26-1-2-105.
"Merchant". IC 26-1-2-104.
"Overseas". IC 26-1-2-323.
"Person in the position of seller". IC 26-1-2-707.
"Present sale". IC 26-1-2-106.
"Sale". IC 26-1-2-106.
"Sale on approval". IC 26-1-2-326.
"Sale or return". IC 26-1-2-326.
"Termination". IC 26-1-2-106.
(3) "Control" as provided in IC 26-1-7-106 and the followingdefinitions apply to IC 26-1-2:
"Check". IC 26-1-3.1-104.
"Consignee". IC 26-1-7-102.
"Consignor". IC 26-1-7-102.
"Consumer goods". IC 26-1-9.1-102.
"Dishonor". IC 26-1-3.1-502.
"Draft". IC 26-1-3.1-104.
(4) In addition, IC 26-1-1 contains general definitions andprinciples of construction and interpretation applicable throughoutIC 26-1-2.
(Formerly: Acts 1963, c.317, s.2-103.) As amended by P.L.152-1986,SEC.121; P.L.222-1993, SEC.3; P.L.57-2000, SEC.15;P.L.143-2007, SEC.7.
IC 26-1-2-104
"Merchant"; "between merchants"; "financing agency"
Sec. 104. (1) "Merchant" means a person who deals in goods ofthe kind or otherwise by his occupation holds himself out as havingknowledge or skill peculiar to the practices or goods involved in thetransaction or to whom such knowledge or skill may be attributed byhis employment of an agent or broker or other intermediary who byhis occupation holds himself out as having such knowledge or skill.
(2) "Financing agency" means a bank, finance company, or otherperson who in the ordinary course of business makes advancesagainst goods or documents of title or who by arrangement witheither the seller or the buyer intervenes in ordinary course to makeor collect payment due or claimed under the contract for sale, as bypurchasing or paying the seller's draft or making advances against itor by merely taking it for collection whether or not documents of titleaccompany or are associated with the draft. "Financing agency"includes also a bank or other person who similarly intervenesbetween persons who are in the position of seller and buyer inrespect to the goods (IC 26-1-2-707).
(3) "Between merchants" means in any transaction with respect towhich both parties are chargeable with the knowledge or skill ofmerchants.
(Formerly: Acts 1963, c.317, s.2-104.) As amended by P.L.152-1986,SEC.122; P.L.143-2007, SEC.8.
IC 26-1-2-105
Transferability; "goods"; "future" goods; "lot"; "commercialunit"
Sec. 105. (1) "Goods" means all things (including speciallymanufactured goods) which are movable at the time of identificationto the contract for sale, other than the money in which the price is tobe paid, investment securities (IC 26-1-8.1), and things in action."Goods" also includes the unborn young of animals and growingcrops and other identified things attached to realty as described in thesection on goods to be severed from realty (IC 26-1-2-107).
(2) Goods must be both existing and identified before any interestin them can pass. Goods which are not both existing and identifiedare "future" goods. A purported present sale of future goods or of anyinterest therein operates as a contract to sell.
(3) There may be a sale of a part interest in existing identifiedgoods.
(4) An undivided share in an identified bulk of fungible goods issufficiently identified to be sold although the quantity of the bulk isnot determined. Any agreed proportion of such a bulk or any quantitythereof agreed upon by number, weight, or other measure may, to theextent of the seller's interest in the bulk, be sold to the buyer whothen becomes an owner in common.
(5) "Lot" means a parcel or a single article which is the subjectmatter of a separate sale or delivery, whether or not it is sufficient toperform the contract.
(6) "Commercial unit" means such a unit of goods as bycommercial usage is a single whole for purposes of sale and divisionof which materially impairs its character or value on the market or inuse. A commercial unit may be a single article (as a machine) or a setof articles (as a suite of furniture or an assortment of sizes) or aquantity (as a bale, gross, or carload) or any other unit treated in useor in the relevant market as a single whole.
(Formerly: Acts 1963, c.317, s.2-105.) As amended by P.L.152-1986,SEC.123; P.L.247-1995, SEC.3.
IC 26-1-2-106
"Contract"; "agreement"; "contract for sale"; "sale"; "presentsale"; "conforming" to contract; "termination"; "cancellation"
Sec. 106. (1) In IC 26-1-2, unless the context otherwise requires,"contract" and "agreement" are limited to those relating to thepresent or future sale of goods. "Contract for sale" includes both apresent 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 fora price (IC 26-1-2-401). A "present sale" means a sale which isaccomplished 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 accordancewith the obligations under the contract.
(3) "Termination" occurs when either party pursuant to a powercreated by agreement or law puts an end to the contract otherwise
than for its breach. On "termination" all obligations which are stillexecutory on both sides are discharged but any right based on priorbreach or performance survives.
(4) "Cancellation" occurs when either party puts an end to thecontract for breach by the other, and its effect is the same as that of"termination" except that the cancelling party also retains anyremedy for breach of the whole contract or of any unperformedbalance.
(Formerly: Acts 1963, c.317, s.2-106.) As amended by P.L.152-1986,SEC.124.
IC 26-1-2-107
Goods to be severed from realty; recording
Sec. 107. (1) A contract for the sale of minerals or the like(including oil and gas) or a structure or its materials to be removedfrom realty is a contract for the sale of goods within IC 26-1-2 if theyare to be severed by the seller but until severance a purported presentsale thereof which is not effective as a transfer of an interest in landis effective only as a contract to sell.
(2) A contract for the sale apart from the land of growing crops orother things attached to realty and capable of severance withoutmaterial harm thereto but not described in subsection (1) or of timberto be cut is a contract for the sale of goods within IC 26-1-2 whetherthe subject matter is to be severed by the buyer or by the seller eventhough it forms part of the realty at the time of contracting, and theparties can by identification effect a present sale before severance.
(3) The provisions of this section are subject to any third partyrights provided by the law relating to realty records, and the contractfor sale may be executed and recorded as a document transferring aninterest in land and shall then constitute notice to third parties of thebuyer's rights under the contract for sale.
(Formerly: Acts 1963, c.317, s.2-107.) As amended by P.L.93-1985,SEC.4.
IC 26-1-2-201
Formal requirements; statute of frauds
Sec. 201. (1) Except as otherwise provided in this section, acontract for the sale of goods for the price of five hundred dollars($500) or more is not enforceable by way of action or defense unlessthere is some writing sufficient to indicate that a contract for sale hasbeen made between the parties and signed by the party against whomenforcement is sought or by his authorized agent or broker. A writingis not insufficient because it omits or incorrectly states a term agreedupon, but the contract is not enforceable under this paragraph beyondthe quantity of goods shown in such writing.
(2) Between merchants, if within a reasonable time a writing inconfirmation of the contract and sufficiently against the sender isreceived and the party receiving it has reason to know its contents,it satisfies the requirements of subsection (1) against such partyunless written notice of objection to its contents is given within ten
(10) days after it is received.
(3) A contract which does not satisfy the requirements ofsubsection (1) but which is valid in other respects is enforceable:
(a) if the goods are to be specially manufactured for the buyerand are not suitable for sale to others in the ordinary course ofthe seller's business and the seller, before notice of repudiationis received and under circumstances which reasonably indicatethat the goods are for the buyer, has made either a substantialbeginning of their manufacture or commitments for theirprocurement; or
(b) if the party against whom enforcement is sought admits inhis pleading, testimony, or otherwise in court that a contract forsale was made, but the contract is not enforceable under thisprovision beyond the quantity of goods admitted; or
(c) with respect to goods for which payment has been made andaccepted or which have been received and accepted (IC26-1-2-606).
(Formerly: Acts 1963, c.317, s.2-201.) As amended by P.L.152-1986,SEC.125.
IC 26-1-2-202
Final written expression; parol or extrinsic evidence
Sec. 202. Terms with respect to which the confirmatorymemoranda of the parties agree or which are otherwise set forth ina writing intended by the parties as a final expression of theiragreement with respect to such terms as are included therein may notbe contradicted by evidence of any prior agreement or of acontemporaneous oral agreement but may be explained orsupplemented:
(a) by course of dealing or usage of trade (IC 26-1-1-205) or bycourse of performance (IC 26-1-1-205); and
(b) by evidence of consistent additional terms, unless the courtfinds the writing to have been intended also as a complete andexclusive statement of the terms of the agreement.
(Formerly: Acts 1963, c.317, s.2-202.) As amended by P.L.152-1986,SEC.126; P.L.143-2007, SEC.9.
IC 26-1-2-203
Seals inoperative
Sec. 203. The affixing of a seal to a writing evidencing a contractfor sale or an offer to buy or sell goods does not constitute thewriting a sealed instrument and the law with respect to sealedinstruments does not apply to such a contract or offer.
(Formerly: Acts 1963, c.317, s.2-203.)
IC 26-1-2-204
Formation in general
Sec. 204. (1) A contract for sale of goods may be made in anymanner sufficient to show agreement, including conduct by bothparties which recognizes the existence of such a contract. (2) An agreement sufficient to constitute a contract for sale maybe found even though the moment of its making is undetermined.
(3) Even though one or more terms are left open a contract forsale does not fail for indefiniteness if the parties have intended tomake a contract and there is a reasonably certain basis for giving anappropriate remedy.
(Formerly: Acts 1963, c.317, s.2-204.)
IC 26-1-2-205
Firm offers
Sec. 205. An offer by a merchant to buy or sell goods in a signedwriting which by its terms gives assurance that it will be held openis not revocable, for lack of consideration, during the time stated orif no time is stated for a reasonable time, but in no event may suchperiod of irrevocability exceed three (3) months; but any such termof assurance on a form supplied by the offeree must be separatelysigned by the offeror.
(Formerly: Acts 1963, c.317, s.2-205.)
IC 26-1-2-206
Offer and acceptance in formation of contract
Sec. 206. (1) Unless otherwise unambiguously indicated by thelanguage or circumstances
(a) an offer to make a contract shall be construed as invitingacceptance in any manner and by any medium reasonable in thecircumstances;
(b) an order or other offer to buy goods for prompt or currentshipment shall be construed as inviting acceptance either by a promptpromise to ship or by the prompt or current shipment of conformingor non-conforming goods, but such a shipment of non-conforminggoods does not constitute an acceptance if the seller seasonablynotifies the buyer that the shipment is offered only as anaccommodation to the buyer.
(2) Where the beginning of a requested performance is areasonable mode of acceptance an offeror who is not notified ofacceptance within a reasonable time may treat the offer as havinglapsed before acceptance.
(Formerly: Acts 1963, c.317, s.2-206.)
IC 26-1-2-207
Additional terms in acceptance or confirmation
Sec. 207. (1) A definite and seasonable expression of acceptanceor a written confirmation which is sent within a reasonable timeoperates as an acceptance even though it states terms additional to ordifferent from those offered or agreed upon, unless acceptance isexpressly made conditional on assent to the additional or differentterms.
(2) The additional terms are to be construed as proposals foraddition to the contract. Between merchants such terms become partof 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 isgiven within a reasonable time after notice of them is received.
(3) Conduct by both parties which recognizes the existence of acontract is sufficient to establish a contract for sale although thewritings of the parties do not otherwise establish a contract. In suchcase the terms of the particular contract consist of those terms onwhich the writings of the parties agree, together with anysupplementary terms incorporated under any other provisions of thisAct.
(Formerly: Acts 1963, c.317, s.2-207.)
IC 26-1-2-208
Repealed
(Repealed by P.L.143-2007, SEC.78.)
IC 26-1-2-209
Modification, rescission, and waiver
Sec. 209. (1) An agreement modifying a contract within IC 26-1-2needs no consideration to be binding.
(2) A signed agreement which excludes modification orrescission, except by a signed writing, cannot be otherwise modifiedor rescinded, but except as between merchants such a requirement ona form supplied by the merchant must be separately signed by theother party.
(3) The requirements of the statute of frauds section (IC26-1-2-201) must be satisfied if the contract as modified is within itsprovisions.
(4) Although an attempt at modification or rescission does notsatisfy the requirements of subsection (2) or (3), it can operate as awaiver.
(5) A party who has made a waiver affecting an executory portionof the contract may retract the waiver by reasonable notificationreceived by the other party that strict performance will be requiredof any term waived, unless the retraction would be unjust in view ofa material change of position in reliance on the waiver.
(Formerly: Acts 1963, c.317, s.2-209.) As amended by P.L.152-1986,SEC.128.
IC 26-1-2-210
Delegation of performance; assignment of rights
Sec. 210. (1) A party may perform his duty through a delegate,unless otherwise agreed, or unless the other party has a substantialinterest in having his original promisor perform or control the actsrequired by the contract. No delegation of performance relieves theparty delegating of any duty to perform or any liability for breach.
(2) Unless otherwise agreed, all rights of either seller or buyer canbe assigned except where the assignment would materially changethe duty of the other party, or increase materially the burden or risk
imposed on him by his contract, or impair materially his chance ofobtaining return performance. A right to damages for breach of thewhole contract or a right arising out of the assignor's dueperformance of his entire obligation can be assigned despiteagreement otherwise.
(3) The creation, attachment, perfection, or enforcement of asecurity interest in the seller's interest under a contract is not atransfer that materially changes the duty of or increases materiallythe burden or risk imposed on the buyer or impairs materially thebuyer's chance of obtaining return performance within the purviewof subsection (2) unless, and then only to the extent that,enforcement actually results in a delegation of material performanceof the seller. Even in that event, the creation, attachment, perfection,and enforcement of the security interest remain effective, but (i) theseller is liable to the buyer for damages caused by the delegation tothe extent that the damages could not reasonably be prevented by thebuyer, and (ii) a court having jurisdiction may grant other appropriaterelief, including cancellation of the contract for sale or an injunctionagainst enforcement of the security interest or consummation of theenforcement.
(4) Unless the circumstances indicate the contrary, a prohibitionof assignment of "the contract" is to be construed as barring only thedelegation to the assignee of the assignor's performance.
(5) An assignment of "the contract" or of "all my rights under thecontract" or an assignment in similar general terms is an assignmentof rights, and unless the language or the circumstances (as in anassignment for security) indicate the contrary, it is a delegation ofperformance of the duties of the assignor, and its acceptance by theassignee constitutes a promise by him to perform those duties. Thispromise is enforceable by either the assignor or the other party to theoriginal contract.
(6) The other party may treat any assignment which delegatesperformance as creating reasonable grounds for insecurity and may,without prejudice to his rights against the assignor, demandassurances from the assignee (IC 26-1-2-609).
(Formerly: Acts 1963, c.317, s.2-210.) As amended by P.L.152-1986,SEC.129; P.L.57-2000, SEC.16.
IC 26-1-2-301
General obligations of parties
Sec. 301. The obligation of the seller is to transfer and deliver andthat of the buyer is to accept and pay in accordance with the contract.
(Formerly: Acts 1963, c.317, s.2-301.)
IC 26-1-2-302
Unconscionable contract or clause
Sec. 302. (1) If the court as a matter of law finds the contract orany clause of the contract to have been unconscionable at the time itwas made the court may refuse to enforce the contract, or it mayenforce the remainder of the contract without the unconscionable
clause, or it may so limit the application of any unconscionableclause as to avoid any unconscionable result.
(2) When it is claimed or appears to the court that the contract orany clause thereof may be unconscionable the parties shall beafforded a reasonable opportunity to present evidence as to itscommercial setting, purpose and effect to aid the court in making thedetermination.
(Formerly: Acts 1963, c.317, s.2-302.)
IC 26-1-2-303
Allocation or division of risks
Sec. 303. Where IC 26-1-2 allocates a risk or a burden as betweenthe parties "unless otherwise agreed," the agreement may not onlyshift the allocation but may also divide the risk or burden.
(Formerly: Acts 1963, c.317, s.2-303.) As amended by P.L.152-1986,SEC.130.
IC 26-1-2-304
Price payable in money, goods, realty, or otherwise
Sec. 304. (1) The price can be made payable in money orotherwise. If it is payable in whole or in part in goods, each party isa seller of the goods which he is to transfer.
(2) Even though all or part of the price is payable in an interest inrealty, the transfer of the goods and the seller's obligations withreference to them are subject to IC 26-1-2, but not the transfer of theinterest in realty or the transferor's obligations in connectiontherewith.
(Formerly: Acts 1963, c.317, s.2-304.) As amended by P.L.152-1986,SEC.131.
IC 26-1-2-305
Open price term
Sec. 305. (1) The parties if they so intend can conclude a contractfor sale even though the price is not settled. In such a case the priceis 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 toagree; or
(c) the price is to be fixed in terms of some agreed market or otherstandard as set or recorded by a third person or agency and it is notso set or recorded.
(2) A price to be fixed by the seller or by the buyer means a pricefor him to fix in good faith.
(3) When a price left to be fixed otherwise than by agreement ofthe parties fails to be fixed through fault of one (1) party the othermay at his option treat the contract as canceled or himself fix areasonable price.
(4) Where, however, the parties intend not to be bound unless theprice be fixed or agreed and it is not fixed or agreed there is nocontract. In such a case the buyer must return any goods already
received or if unable so to do must pay their reasonable value at thetime of delivery and the seller must return any portion of the pricepaid on account.
(Formerly: Acts 1963, c.317, s.2-305.)
IC 26-1-2-306
Output, requirements, and exclusive dealings
Sec. 306. (1) A term which measures the quantity by the output ofthe seller or the requirements of the buyer means such actual outputor requirements as may occur in good faith, except that no quantityunreasonably disproportionate to any stated estimate or in theabsence of a stated estimate to any normal or otherwise comparableprior output or requirements may be tendered or demanded.
(2) A lawful agreement by either the seller or the buyer forexclusive dealing in the kind of goods concerned imposes unlessotherwise agreed an obligation by the seller to use best efforts tosupply the goods and by the buyer to use best efforts to promote theirsale.
(Formerly: Acts 1963, c.317, s.2-306.)
IC 26-1-2-307
Delivery in single lot or several lots
Sec. 307. Unless otherwise agreed all goods called for by acontract for sale must be tendered in a single delivery and paymentis due only on such tender but where the circumstances give eitherparty the right to make or demand delivery in lots the price if it canbe apportioned may be demanded for each lot.
(Formerly: Acts 1963, c.317, s.2-307.)
IC 26-1-2-308
Absence of specified place for delivery
Sec. 308. Unless otherwise agreed:
(a) the place for delivery of goods is the seller's place ofbusiness or if he has none his residence; but
(b) in a contract for sale of identified goods which to theknowledge of the parties at the time of contracting are in someother place, that place is the place for their delivery; and
(c) documents of title may be delivered through customarybanking channels.
(Formerly: Acts 1963, c.317, s.2-308.) As amended by P.L.3-1989,SEC.149.
IC 26-1-2-309
Absence of specific time provisions; notice of termination
Sec. 309. (1) The time for shipment or delivery or any other actionunder a contract, if not provided in IC 26-1-2 or agreed upon, shallbe a reasonable time.
(2) Where the contract provides for successive performances butis indefinite in duration, it is valid for a reasonable time but unlessotherwise agreed may be terminated at any time by either party. (3) Termination of a contract by one (1) party, except on thehappening of an agreed event, requires that reasonable notificationbe received by the other party, and an agreement dispensing withnotification is invalid if its operation would be unconscionable.
(Formerly: Acts 1963, c.317, s.2-309.) As amended by P.L.152-1986,SEC.132.
IC 26-1-2-310
Open time for payment or running of credit; authority to shipunder reservation
Sec. 310. Unless otherwise agreed:
(a) payment is due at the time and place at which the buyer is toreceive the goods, even though the place of shipment is theplace of delivery; and
(b) if the seller is authorized to send the goods, he may shipthem under reservation and may tender the documents of title,but the buyer may inspect the goods after their arrival beforepayment is due, unless such inspection is inconsistent with theterms of the contract (IC 26-1-2-513); and
(c) if delivery is authorized and made by way of documents oftitle 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 receivedelivery of the tangible documents; or
(ii) at the time the buyer is to receive delivery of theelectronic 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 goodson credit, the credit period runs from the time of shipment, butpostdating the invoice or delaying its dispatch willcorrespondingly delay the starting of the credit period.
(Formerly: Acts 1963, c.317, s.2-310.) As amended by P.L.152-1986,SEC.133; P.L.143-2007, SEC.10.
IC 26-1-2-311
Options and cooperation respecting performance
Sec. 311. (1) An agreement for sale which is otherwisesufficiently definite (IC 26-1-2-204(3)) to be a contract is not madeinvalid by the fact that it leaves particulars of performance to bespecified by one (1) of the parties. Any such specification must bemade in good faith and within limits set by commercialreasonableness.
(2) Unless otherwise agreed, specifications relating to assortmentof goods are at the buyer's option, and except as otherwise providedin IC 26-1-2-319(1)(c) and IC 26-1-2-319(3), specifications orarrangements relating to shipment are at the seller's option.
(3) Where such specification would materially affect the otherparty's performance but is not seasonably made, or where one (1)party's cooperation is necessary to the agreed performance of theother 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 reasonablemanner, or after the time for a material part of his ownperformance, treat the failure to specify or to cooperate as abreach by failure to deliver or accept the goods.
(Formerly: Acts 1963, c.317, s.2-311.) As amended by P.L.152-1986,SEC.134.
IC 26-1-2-312
Warranty of title and against infringement; buyer's obligationagainst infringement
Sec. 312. (1) Subject to subsection (2) there is in a contract forsale 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 orother lien or encumbrance of which the buyer at the time ofcontracting has no knowledge.
(2) A warranty under subsection (1) will be excluded or modifiedonly by specific language or by circumstances which give the buyerreason to know that the person selling does not claim title in himselfor that he is purporting to sell only such right or title as he or a thirdperson may have.
(3) Unless otherwise agreed a seller who is a merchant regularlydealing in goods of the kind warrants that the goods shall bedelivered free of the rightful claim of any third person by way ofinfringement or the like but a buyer who furnishes specifications tothe seller must hold the seller harmless against any such claim whicharises out of compliance with the specifications.
(Formerly: Acts 1963, c.317, s.2-312.)
IC 26-1-2-313
Express warranties by affirmation, promise, description, andsample
Sec. 313. (1) Express warranties by the seller are created asfollows:
(a) any affirmation of fact or promise made by the seller to thebuyer which relates to the goods and becomes part of the basis of thebargain creates an express warranty that the goods shall conform tothe affirmation or promise.
(b) any description of the goods which is made part of the basisof the bargain creates an express warranty that the goods shallconform to the description.
(c) any sample or model which is made part of the basis of thebargain creates an express warranty that the whole of the goods shallconform to the sample or model.
(2) It is not necessary to the creation of an express warranty thatthe seller use formal words such as "warrant" or "guarantee" or thathe have a specific intention to make a warranty, but an affirmation
merely of the value of the goods or a statement purporting to bemerely the seller's opinion or commendation of the goods does notcreate a warranty.
(Formerly: Acts 1963, c.317, s.2-313.)
IC 26-1-2-314
Implied warranty; merchantability; usage of trade
Sec. 314. (1) Unless excluded or modified (IC 26-1-2-316), awarranty that the goods shall be merchantable is implied in a contractfor their sale if the seller is a merchant with respect to goods of thatkind. Under this section the serving for value of food or drink to beconsumed either on the premises or elsewhere is a sale.
(2) Goods to be merchantable must at least be such as:
(a) pass without objection in the trade under the contractdescription; and
(b) in the case of fungible goods, are of fair, average qualitywithin the description; and
(c) are fit for the ordinary purposes for which such goods areused; and
(d) run, within the variations permitted by the agreement, ofeven kind, quality, and quantity within each unit and among allunits involved; and
(e) are adequately contained, packaged, and labeled as theagreement may require; and
(f) conform to the promises or affirmations of fact made on thecontainer or label if any.
(3) Unless excluded or modified (IC 26-1-2-316), other impliedwarranties may arise from course of dealing or usage of trade.
(Formerly: Acts 1963, c.317, s.2-314.) As amended by P.L.152-1986,SEC.135.
IC 26-1-2-315
Implied warranty; fitness for particular purpose
Sec. 315. Where the seller at the time of contracting has reason toknow any particular purpose for which the goods are required andthat the buyer is relying on the seller's skill or judgment to select orfurnish suitable goods, there is, unless excluded or modified underIC 26-1-2-316, an implied warranty that the goods shall be fit forsuch purpose.
(Formerly: Acts 1963, c.317, s.2-315.) As amended by P.L.152-1986,SEC.136.
IC 26-1-2-316
Exclusion or modification of warranties
Sec. 316. (1) Words or conduct relevant to the creation of anexpress warranty and words or conduct tending to negate or limitwarranty shall be construed wherever reasonable as consistent witheach other; but subject to the provisions of IC 26-1-2-202 on parol orextrinsic evidence, negation or limitation is inoperative to the extentthat such construction is unreasonable. (2) Subject to subsection (3), to exclude or modify the impliedwarranty of merchantability or any part of it the language mustmention merchantability and in case of a writing must beconspicuous, and to exclude or modify any implied warranty offitness the exclusion must be by a writing and conspicuous.Language to exclude all implied warranties of fitness is sufficient ifit states, for example, that "There are no warranties which extendbeyond the description on the face hereof."
(3) Notwithstanding subsection (2):
(a) unless the circumstances indicate otherwise, all impliedwarranties are excluded by expressions like "as is", "with allfaults", or other language which in common understanding callsthe buyer's attention to the exclusion of warranties and makesplain that there is no implied warranty; and
(b) when the buyer before entering into the contract hasexamined the goods or the sample or model as fully as hedesired or has refused to examine the goods there is no impliedwarranty with regard to defects which an examination ought inthe circumstances to have revealed to him; and
(c) an implied warranty can also be excluded or modified bycourse of dealing or course of performance or usage of trade;and
(d) with respect to the sale of cattle, hogs, or sheep, there is noimplied warranty that the cattle, hogs, or sheep are free fromdisease, if the seller shows that all state and federal regulationsconcerning animal health have been complied with; and
(e) with respect to a sale of audio or visual entertainmentproducts, as defined by IC 26-2-6-1, made as a result of asolicitation through a mail order catalog, it is sufficient toexclude all implied warranties in connection with the sale ofany product in the catalog, if the contract is in writing and thelanguage in the contract conspicuously states that:
(i) the product is sold "as is" or "with all faults"; and
(ii) the entire risk as to the quality and performance of theproduct is with the buyer.
(4) Remedies for breach of warranty can be limited in accordancewith the provisions of IC 26-1-2-718 and IC 26-1-2-719 onliquidation or limitation of damages and on contractual modificationof remedy.
(Formerly: Acts 1963, c.317, s.2-316.) As amended by Acts 1980,P.L.167, SEC.1; P.L.254-1983, SEC.1.
IC 26-1-2-317
Cumulation and conflict of warranties express or implied
Sec. 317. Warranties whether express or implied shall beconstrued as consistent with each other and as cumulative, but if suchconstruction is unreasonable the intention of the parties shalldetermine which warranty is dominant. In ascertaining that intentionthe 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 generallanguage of description.
(c) express warranties displace inconsistent implied warrantiesother than an implied warranty of fitness for a particular purpose.
(Formerly: Acts 1963, c.317, s.2-317.)
IC 26-1-2-318
Third party beneficiaries of warranties express or implied
Sec. 318. A seller's warranty whether express or implied extendsto any natural person who is in the family or household of his buyeror who is a guest in his home if it is reasonable to expect that suchperson may use, consume or be affected by the goods and who isinjured in person by breach of the warranty. A seller may not excludeor limit the operation of this section.
(Formerly: Acts 1963, c.317, s.2-318.)
IC 26-1-2-319
F.O.B. and F.A.S. terms
Sec. 319. (1) Unless otherwise agreed, the term F.O.B. (whichmeans "free on board") at a named place, even though used only inconnection with the stated price, is a delivery term under which:
(a) when the term is F.O.B. the place of shipment, the sellermust at that place ship the goods in the manner provided inIC 26-1-2-504 and bear the expense and risk of putting theminto the possession of the carrier; or
(b) when the term is F.O.B. the place of destination, the sellermust at his own expense and risk transport the goods to thatplace and there tender delivery of them in the manner providedin IC 26-1-2-503;
(c) when under either subdivision (a) or (b) the term is alsoF.O.B. vessel, car, or other vehicle, the seller must in additionat his own expense and risk load the goods on board. If the termis F.O.B. vessel, the buyer must name the vessel and in anappropriate case, the seller must comply with the provisions ofIC 26-1-2-323 on the form of bill of lading.
(2) Unless otherwise agreed, the term F.A.S. vessel (which means"free alongside") at a named port, even though used only inconnection with the stated price, is a delivery term under which theseller must:
(a) at his own expense and risk deliver the goods alongside thevessel in the manner usual in that port or on a dock designatedand provided by the buyer; and
(b) obtain and tender a receipt for the goods in exchange forwhich the carrier is under a duty to issue a bill of lading.
(3) Unless otherwise agreed in any case falling within subsection(1)(a), (1)(c), or (2), the buyer must seasonably give any neededinstructions 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 IC 26-1-2-311. He mayalso at his option move the goods in any reasonable mannerpreparatory to delivery or shipment.
(4) Under the term F.O.B. vessel or F.A.S., unless otherwiseagreed, the buyer must make payment against tender of the requireddocuments, and the seller may not tender nor the buyer demanddelivery of the goods and substitution for the documents.
(Formerly: Acts 1963, c.317, s.2-319.) As amended by P.L.152-1986,SEC.137.
IC 26-1-2-320
C.I.F. and C.&F. terms
Sec. 320. (1) The term C.I.F. means that the price includes in alump sum the cost of the goods and the insurance and freight to thenamed destination. The term C.&F. or C.F. means that the price soincludes cost and freight to the named destination.
(2) Unless otherwise agreed and even though used only inconnection with the stated price and destination, the term C.I.F.destination or its equivalent requires the seller at his own expenseand risk to
(a) put the goods into the possession of a carrier at the port forshipment and obtain a negotiable bill or bills of lading covering theentire transportation to the named destination; and
(b) load the goods and obtain a receipt from the carrier (whichmay be contained in the bill of lading) showing that the freight hasbeen paid or provided for; and
(c) obtain a policy or certificate of insurance, including any warrisk insurance, of a kind and on terms then current at the port ofshipment in the usual amount, in the currency of the contract, shownto cover the same goods covered by the bill of lading and providingfor payment of loss to the order of the buyer or for the account ofwhom it may concern; but the seller may add to the price the amountof the premium for any such war risk insurance; and
(d) prepare an invoice of the goods and procure any otherdocuments required to effect shipment or to comply with thecontract; and
(e) forward and tender with commercial promptness all thedocuments in due form and with any endorsement necessary toperfect the buyer's rights.
(3) Unless otherwise agreed the term C.&F. or its equivalent hasthe same effect and imposes upon the seller the same obligations andrisks 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 thebuyer must make payment against tender of the required documentsand the seller may not tender nor the buyer demand delivery of thegoods in substitution for the documents.
(Formerly: Acts 1963, c.317, s.2-320.)
IC 26-1-2-321
C.I.F. or C.&F.; "net landed weights"; payment on arrival;
warranty of condition on arrival
Sec. 321. 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 orquality or the like, unless otherwise agreed the seller must reasonablyestimate the price. The payment due on tender of the documentscalled for by the contract is the amount so estimated, but after finaladjustment of the price a settlement must be made with commercialpromptness.
(2) An agreement described in subsection (1) or any warranty ofquality or condition of the goods on arrival places upon the seller therisk of ordinary deterioration, shrinkage and the like in transportationbut has no effect on the place or time of identification to the contractfor sale or delivery or on the passing of the risk of loss.
(3) Unless otherwise agreed where the contract provides forpayment on or after arrival of the goods the seller must beforepayment allow such preliminary inspection as is feasible; but if thegoods are lost delivery of the documents and payment are due whenthe goods should have arrived.
(Formerly: Acts 1963, c.317, s.2-321.)
IC 26-1-2-322
Delivery "ex-ship"
Sec. 322. (1) Unless otherwise agreed a term for delivery of goods"ex-ship" (which means from the carrying vessel) or in equivalentlanguage is not restricted to a particular ship and requires deliveryfrom a ship which has reached a place at the named port ofdestination 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 carriageand furnish the buyer with direction which puts the carrier under aduty to deliver the goods; and
(b) the risk of loss does not pass to the buyer until the goods leavethe ship's tackle or are otherwise properly unloaded.
(Formerly: Acts 1963, c.317, s.2-322.)
IC 26-1-2-323
Form of bill of lading required in overseas shipment; "overseas"
Sec. 323. (1) Where the contract contemplates overseas shipmentand 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 ladingstating that the goods have been loaded on board or, in the case of aterm C.I.F. or C.&F., received for shipment.
(2) Where in a case within subsection (1) a tangible bill of ladinghas been issued in a set of parts, unless otherwise agreed, if thedocuments are not to be sent from abroad, the buyer may demandtender of the full set. Otherwise, only one (1) part of the bill oflading need be tendered. Even if the agreement expressly requires afull set:
(a) due tender of a single part is acceptable within the
provisions of IC 26-1-2-508(1) on cure of improper delivery;and
(b) even though the full set is demanded, if the documents aresent from abroad, the person tendering an incomplete set maynevertheless require payments upon furnishing an indemnitywhich the buyer in good faith deems adequate.
(3) A shipment by water or by air or a contract contemplatingsuch shipment is "overseas" insofar as by usage of trade oragreement it is subject to the commercial, financing, or shippingpractices characteristic of international deep water commerce.
(Formerly: Acts 1963, c.317, s.2-323.) As amended by P.L.152-1986,SEC.138; P.L.143-2007, SEC.11.
IC 26-1-2-324
"No arrival, no sale"
Sec. 324. Under a term "no arrival, no sale" or terms of likemeaning, unless otherwise agreed:
(a) the seller must properly ship conforming goods, and if theyarrive by any means he must tender them on arrival, but heassumes no obligation that the goods will arrive unless he hascaused the nonarrival; and
(b) where without fault of the seller the goods are in part lost orhave so deteriorated as no longer to conform to the contract orarrive after the contract time, the buyer may proceed as if therehad been casualty to identified goods (IC 26-1-2-613).
(Formerly: Acts 1963, c.317, s.2-324.) As amended by P.L.152-1986,SEC.139.
IC 26-1-2-325
"Letter of credit"; "confirmed credit"
Sec. 325. (1) Failure of the buyer seasonably to furnish an agreedletter of credit is a breach of the contract for sale.
(2) The delivery to seller of a proper letter of credit suspends thebuyer's obligation to pay. If the letter of credit is dishonored, theseller may on seasonable notification to the buyer require paymentdirectly from him.
(3) Unless otherwise agreed the term "letter of credit" or "banker'scredit" in a contract for sale means an irrevocable credit issued by afinancing agency of good repute and, where the shipment is overseas,of good international repute. The term "confirmed credit" means thatthe credit must also carry the direct obligation of such an agencywhich does business in the seller's financial market.
(Formerly: Acts 1963, c.317, s.2-325.)
IC 26-1-2-326
Sale on approval and sale or return
Sec. 326. (1) Unless otherwise agreed, if delivered goods may bereturned by the buyer even though they conform to the contract, thetransaction 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 forresale.
(2) Goods held on approval are not subject to the claims of thebuyer's creditors until acceptance. Goods held on sale or return aresubject to such claims while in the buyer's possession.
(3) Any "or return" term of a contract for sale is to be treated asa separate contract for sale within the statute of frauds section (IC26-2-2-201) and as contradicting the sale aspect of the contractwithin the provisions of IC 26-1-2-202 on parol or extrinsic evidence.
(Formerly: Acts 1963, c.317, s.2-326.) As amended by P.L.152-1986,SEC.140; P.L.57-2000, SEC.17.
IC 26-1-2-327
Special incidents of sale on approval and sale or return
Sec. 327. (1) Under a sale on approval unless otherwise agreed
(a) although the goods are identified to the contract the risk of lossand the title do not pass to the buyer until acceptance; and
(b) use of the goods consistent with the purpose of trial is notacceptance but failure seasonably to notify the seller of election toreturn the goods is acceptance, and if the goods conform to thecontract acceptance of any part is acceptance of the whole; and
(c) after due notification of election to return, the return is at theseller's risk and expense but a merchant buyer must follow anyreasonable instructions.
(2) Under a sale or return unless otherwise agreed
(a) the option to return extends to the whole or any commercialunit of the goods while in substantially their original condition, butmust be exercised seasonably; and
(b) the return is at the buyer's risk and expense.
(Formerly: Acts 1963, c.317, s.2-327.)
IC 26-1-2-328
Sale by auction
Sec. 328. (1) In a sale by auction if goods are put up in lots eachlot is the subject of a separate sale.
(2) A sale by auction is complete when the auctioneer soannounces by the fall of the hammer or in other customary manner.Where a bid is made while the hammer is falling in acceptance of aprior bid the auctioneer may in his discretion reopen the bidding ordeclare the goods sold under the bid on which the hammer wasfalling.
(3) Such a sale is with reserve unless the goods are in explicitterms put up without reserve. In an auction with reserve theauctioneer may withdraw the goods at any time until he announcescompletion of the sale. In an auction without reserve, after theauctioneer calls for bids on an article or lot, that article or lot cannotbe withdrawn unless no bid is made within a reasonable time. Ineither case a bidder may retract his bid until the auctioneer'sannouncement 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'sbehalf or the seller makes or procures such a bid, and notice has notbeen given that liberty for such bidding is reserved, the buyer may athis option avoid the sale or take the goods at the price of the lastgood faith bid prior to the completion of the sale. This subsectionshall not apply to any bid at a forced sale.
(Formerly: Acts 1963, c.317, s.2-328.)
IC 26-1-2-401
Passing of title; reservation of security; limited application of thissection
Sec. 401. Each provision of IC 26-1-2 with regard to the rights,obligations, and remedies of the seller, the buyer, purchasers, orother third parties applies irrespective of title to the goods, exceptwhere the provision refers to such title. Insofar as situations are notcovered by the other provisions of IC 26-1-2 and matters concerningtitle become material, the following rules apply:
(1) Title to goods cannot pass under a contract for sale prior totheir identification to the contract (IC 26-1-2-501), and unlessotherwise explicitly agreed, the buyer acquires by theiridentification a special property as limited by IC 26-1. Anyretention or reservation by the seller of the title (property) ingoods shipped or delivered to the buyer is limited in effect to areservation of a security interest. Subject to these provisionsand to the provisions of IC 26-1-9.1 on secured transactions,title to goods passes from the seller to the buyer in any mannerand on any conditions explicitly agreed on by the parties.
(2) Unless otherwise explicitly agreed, title passes to the buyerat the time and place at which the seller completes hisperformance with reference to the physical delivery of thegoods, despite any reservation of a security interest and eventhough a document of title is to be delivered at a different timeor place, and in particular despite any reservation of a securityinterest by the bill of lading:
(a) if the contract requires or authorizes the seller to send thegoods to the buyer but does not require him to deliver themat destination, title passes to the buyer at the time and placeof shipment; but
(b) if the contract requires delivery at destination, titlepasses on tender there.
(3) Unless otherwise explicitly agreed, where delivery is to bemade without moving the goods:
(a) if the seller is to deliver a tangible document of title, titlepasses at the time when and the place where he delivers suchdocuments and if the seller is to deliver an electronicdocument of title, title passes when the seller delivers thedocument; or
(b) if the goods are at the time of contracting alreadyidentified and no documents of title 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 retainthe goods, whether or not justified, or a justified revocation ofacceptance revests title to the goods in the seller. Such revestingoccurs by operation of law and is not a "sale".
(Formerly: Acts 1963, c.317, s.2-401.) As amended by P.L.152-1986,SEC.141; P.L.57-2000, SEC.18; P.L.143-2007, SEC.12.
IC 26-1-2-402
Rights of seller's creditors against sold goods
Sec. 402. (1) Except as provided in subsections (2) and (3), rightsof unsecured creditors of the seller with respect to goods which havebeen identified to a contract for sale are subject to the buyer's rightsto recover the goods under IC 26-1-2-502 and IC 26-1-2-716.
(2) A creditor of the seller may treat a sale or an identification ofgoods to a contract for sale as void if as against him a retention ofpossession by the seller is fraudulent under any rule of law of thestate where the goods are situated, except that retention of possessionin good faith and current course of trade by a merchant-seller for acommercially reasonable time after a sale or identification is notfraudulent.
(3) Nothing in IC 26-1-2 shall be deemed to impair the rights ofcreditors of the seller:
(a) under the provisions of IC 26-1-9.1 on secured transactions;or
(b) where identification to the contract or delivery is made notin current course of trade but in satisfaction of or as security fora pre-existing claim for money, security, or the like and is madeunder circumstances which under any rule of law of the statewhere the goods are situated would apart from IC 26-1-2constitute the transaction a fraudulent transfer or voidablepreference.
(Formerly: Acts 1963, c.317, s.2-402.) As amended by P.L.152-1986,SEC.142; P.L.57-2000, SEC.19.
IC 26-1-2-403
Power to transfer; good faith purchase of goods; "entrusting"
Sec. 403. (1) A purchaser of goods acquires all title which thepurchaser's transferor had or had power to transfer, except that apurchaser of a limited interest acquires rights only to the extent ofthe interest purchased. A person with voidable title has power totransfer a good title to a good faith purchaser for value. When goodshave been delivered under a transaction of purchase, the purchaserhas such power even though:
(a) the transferor was deceived as to the identity of thepurchaser; or
(b) the delivery was in exchange for a check which is laterdishonored; or
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