WARM SPRINGS TRIBAL CODE
I. GENERAL 1
720.120 Remedies to be Liberally Administered
II. FORMATION OF CONTRACT
720.200 Formation in General
720.210 Written Contract Required in Certain Cases (Statute of Frauds)
720.220 Parol or Extrinsic Evidence of Contract Terms
720.230 Offer and Acceptance in Formation of Contract
720.240 Additional Terms in Acceptance
720.250 Firm Offers
720.260 Course of Performance
720.270 Modification and Rescission
720.280 Delegation of Duty – Assignment of Rights
III. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT
720.300 General Obligation of Parties
720.310 Unconscionable Contract or Clause
720.320 Open Price Term
720.330 Warranty of Title and Against Infringement – Buyer’s Obligation Against Infringement
250.340 Express Warranties by Affirmation, Promise, Description, Sample
250.350 Implied Warranty – Merchantability – Usage of Trade
720.360 Implied Warranty – Fitness for Particular Purpose
720.370 Exclusion or Modification of Warranties
720.380 Cattle, Hogs and Sheep – No Implied Warranty as to Disease
720.390 Third-Party Beneficiaries of Warranties Express or Implied
720.395 Sale by Auction
720.400 Passing of Title – Reservation for Security
720.410 Insurable Interest in Goods – Manner of Identification of Goods
720.420 Cure by Seller of Improper Tender or Delivery – Replacement
720.430 Risk of Loss in the Absence of Breach
720.440 Effect of Breach on Risk of Loss
720.450 Buyer’s Right to Inspection of Goods
720.460 Preserving Evidence of Goods in Dispute
V. BREACH, REPUDIATION, AND EXCUSE
720.500 Buyer’s Rights on Improper Delivery
720.510 Manner and Effect of Rightful Rejection
720.520 Buyer’s Options as to Salvage of Rightfully Rejected Goods
720.540 What Constitutes Acceptance of Goods
720.550 Effect of Acceptance – Notice of Breach – Burden of Establishing Breach After Acceptance – Notice of Claim or Litigation to Person Answerable Over
720.560 Revocation of Acceptance in Whole or in Part
720.570 Anticipatory Repudiation
720.580 Retraction of Anticipatory Repudiation
720.590 Casualty to Identified Goods
720.595 Substituted Performance
VI. SELLERS REMEDIES
720.600 Seller’s Remedies on Discovery of Buyer’s Insolvency
720.610 Seller’s Remedies in General
720.620 Seller’s Right to Identify Goods to the Contract Notwithstanding Breach or to Salvage Unfinished Goods
720.630 Seller’s Stoppage of Delivery in Transit or Otherwise
720.640 Seller’s Resale Including Contract for Resale
720.650 Seller’s Damages for Nonacceptance or Repudiation
720.660 Action for the Price
720.670 Seller’s Incidental Damages
VII. BUYER’S REMEDIES
720.700 Buyer’s Remedies in General – Buyer’s Security Interest in Rejected Goods
720.710 “Cover” – Buyer’s Procurement of Substitute Goods
720.720 Buyer’s Damages for Nondelivery or Repudiation
720.730 Buyer’s Damages for Breach in Regard to Accepted Goods
720.740 Buyer’s Incidental and Consequential Damages
720.750 Buyer’s Right to Specific Performance or Replevin
720.760 Deduction of Damages from the Price
VIII. GENERAL PROVISIONS AS TO REMEDIES
720.800 Liquidation or Limitation of Damages – Deposits
720.810 Contractual Modification or Limitation of Remedy
720.820 Effect of “Cancellation” or “Rescission” on Claims for Prior Breach
720.830 Remedies for Fraud
720.840 Who Can Sue Third Parties for Injury to Goods
720.850 Proof of Market Price; Time and Place
720.860 Admissibility of Market Quotations
720.870 Statute of Limitations in Contracts for Sale
WARM SPRINGS TRIBAL CODE
- This Chapter is modeled on the Article 2 of the Uniform Commercial Code (UCC Article 2) published by the National Commission on Uniform State Laws. In an effort to provide concise and accessible, yet comprehensive rules governing the sale of goods, some provisions UCC Article 2 have been omitted. Any such omissions are not intended and may not be construed as indicating any specific intention or purpose by the drafters or the Tribal Council. In addition, the language of this Chapter has been altered in some areas from that of UCC Article 2 in order to clarify its meaning. Such stylistic changes are not necessarily intended to alter the meaning of those provisions, and each provision of this Chapter must be construed on its own merits. However, the court may look to cases and interpretations of similar provisions from other jurisdictions in construing this Chapter.
- This Chapter is adopted as an exercise of the sovereignty of the Tribe for the following purposes: (a) To establish and clarify the rules governing contracts for the sale of goods in the Tribes’ jurisdiction; (b) To support and encourage economic activity and investment on the Reservation; and (c) To make uniform, so far as possible, the law among this and other jurisdictions.
- The effect of provisions of this Chapter may be varied by agreement, except as otherwise provided in this Chapter and except that the obligations of good faith, diligence, reasonableness and care prescribed by this Chapter may not be disclaimed by agreement.
- Unless the context otherwise requires, this Chapter applies to all transactions in goods subject to the jurisdiction of the Tribe. This Chapter does not impair or repeal any tribal law regulating sales to consumers or other specified classes of buyers.
- Except as otherwise provided by law, when a transaction covered by this Chapter bears a reasonable relation to the Confederated Tribes of the Warm Springs Reservation and also to another Indian tribe, state or nation, the parties may agree that the law either of this Tribe or of such other tribe, state or nation shall govern their rights and duties.
720.120 Remedies to be Liberally Administered.
- The remedies provided by the Warm Springs Commercial Code shall be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed.
- Any right or obligation declared by the Warm Springs Commercial Code is enforceable by action in tribal court unless the provision declaring it specifies a different and limited effect.
- In this Chapter, unless the context otherwise requires: (a) “Buyer” means a person who buys or contracts to buy goods. If a contract price is payable in whole or in part in goods, each party is a buyer of the goods which he or she is to receive and a seller of the goods which he or she is to transfer. (b) “Seller” means a person who sells or contracts to sell goods. If a contract price is payable in whole or in part in goods, each party is a buyer of the goods which he or she is to receive and a seller of the goods which he or she is to transfer. (c) “Agreement” means the bargain of the parties in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance. (d) “Contract” means the total legal obligation which results from the parties’ agreement as affected by the Warm Springs Commercial Code and any other applicable rules of law. For the purposes of this Chapter, “contract” and “agreement” are limited to those relating to the present or future sale of goods. (e) “Contract for sale” includes both a present sale of goods and a contract to sell goods at a future time. (f) “Goods” means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities and things in action. “Goods” also includes the unborn young of animals and growing crops. (g) “Identified” goods means those specific goods that are the subject of the contract. (h) “Lot” means a parcel or a single item which is the subject matter of a separate sale or delivery, whether or not it is sufficient to complete performance of the contract. (i) “Commercial unit” means such a unit of goods as by commercial usage is a single whole for purposes of sale, and division of which materially impairs its character or value on the market or in use. A commercial unit may be a single item (as a machine) or a set of items (as a set of furniture or an assortment of sizes) or a quantity (as a bale, gross, or carload) or any other unit treated in use or in the relevant market as a single whole. (j) “Fungible” means goods of which any unit is, by nature or usage of trade, the equivalent of any other like unit. Goods which are not fungible shall be deemed fungible for the purposes of this Chapter to the extent that, under the contract, unlike units are treated as equivalents. (k) “Conforming goods” are goods that are in accordance with the specifications and requirements under the contract. (l) “Delivery” means that the seller makes conforming goods available to the buyer and gives the buyer any notification reasonably necessary to enable him or her to take delivery. The manner, time and place for delivery are determined by the agreement and this Chapter, and in particular: (i) Delivery must be at a reasonable hour, and if it is of goods they must be kept available for a period reasonably necessary to enable the buyer to take possession; but (ii) Unless otherwise agreed the buyer must furnish facilities reasonably suited to the receipt of the goods. (m) “Receipt” of goods means taking physical possession of them. (n) “Course of Performance” means the preceding performances by either or both parties to a contract for sale when that contract involves repeated occasions for performance by either party. (o) “Course of Dealing” means a sequence of previous conduct between the parties to a particular contract which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct. (p) “Usage of trade” means any practice or method of dealing in a place, vocation or trade that is so common or regular as to justify an expectation that it will be observed with respect to the transaction in question. The existence and scope of such a usage are to be proved as facts. If it is established that such a usage is embodied in a written trade code or similar writing the interpretation of the writing is for the court. (q) An action is taken “Seasonably” when it is taken at or within the time agreed or, if no time is agreed, at or within a reasonable time (r) “Termination” occurs when either party pursuant to a power created by agreement or law puts an end to the contract for a reason other than its breach. On “termination” all obligations which are still outstanding on both sides are discharged, but any right based on prior breach or performance survives. (s) “Cancellation” occurs when either party puts an end to the contract because of breach by the other party. The effect of cancellation is the same as that of “termination,” except that the canceling party also retains any remedy for breach of the whole contract or any unperformed balance. (t) “Merchant” means a person who deals in goods of the kind in the contract or otherwise, by his or her occupation, holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction. (u) “Between Merchants” means in any transaction with respect to which both parties are chargeable with the knowledge or skill of merchants. (v) “Good Faith” means honesty in fact in the conduct or transaction concerned.(w) “Commercially Reasonable” means in conformity with the usual trade practice among reputable and responsible business and commercial enterprises engaged in the same or a similar business. (x) “Insolvent” means: (i) having generally ceased to pay debts in the ordinary course of business other than as a result of bona fide dispute; (ii) being unable to pay debts as they become due; or (iii) being insolvent within the meaning of federal bankruptcy law.” (y) “Specific Performance” is a court ordered remedy requiring a party to precisely fulfill the terms contract, such as by providing the specific goods identified in the contract. (z) “Replevin” is a court ordered remedy requiring the return of personal property wrongfully taken or detained. (aa) “Electronic” means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities. (bb) “Electronic Agent” means a computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances in whole or in part, without review or action by an individual. (cc) “Electronic Record” means a record created, generated, sent, communicated, received, or stored by electronic means.
- Goods to be severed from realty: Recording. (a) A contract for the sale of minerals or the like (including oil and gas) or a structure or its materials to be removed from realty is a contract for the sale of goods within this Chapter if they are to be severed by the seller. However, until the goods are severed from the realty, a purported present sale of the goods which is not effective as a transfer of an interest in land is effective only as a contract to sell. (b) A contract for the sale, apart from the land, of growing crops or other things attached to realty and capable of severance without material harm to the realty (except those things described in subsection (1)) or of timber to be cut is a contract for the sale of goods within this Chapter whether the subject matter is to be severed by the buyer or by the seller, even though it forms part of the realty at the time of contracting, and the parties can effect a present sale before the goods are severed from the realty by identifying the goods to the contract. (c) The provisions of this section are subject to any third-party rights provided by the law relating to realty records, and the contract for sale may be executed and recorded as a document transferring an interest in land and shall then constitute notice to third parties of the buyer’s rights under the contract for sale.
II. FORMATION OF CONTRACT
720.200 Formation in General.
- A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.
- An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.
- An agreement sufficient to constitute a contract for sale may be found even though one or more terms are left open if it is proven that the parties intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.
720.210 Written Contract Required in Certain Cases (Statute of Frauds).
- Except as otherwise provided in this section, a contract for the sale of goods for the price of five hundred dollars or more is not enforceable in tribal court unless it is in writing and is signed by the party against whom enforcement is sought or by his or her authorized agent. The contract may be written and signed in electronic form, as provided in the federal Electronic Signatures in Global and National Commerce Act, 15 USC 7001 et. seq., (“E-Sign”).
- A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable: (a) If the party against whom enforcement is sought admits in his or her pleading, testimony or otherwise in court that the contract was made, but the contract is only enforceable under this section in accordance with the contract terms admitted; or (b) If any of the goods sold under the contract have been paid for, received and accepted by the buyer, the contract is valid, but only as to those goods.
720.220 Parol or Extrinsic Evidence of Contract Terms. Terms included in a written contract may not be contradicted by evidence of any prior written agreement or of any oral agreement, but contract terms may be explained or supplemented:
- By course of dealing, usage of trade or by course of performance, as defined herein; and
- By evidence of additional terms that are consistent with the written contract unless the court finds the written contract to have been intended as a complete and exclusive statement of the terms of the agreement.
720.230 Offer and Acceptance in Formation of Contract.
- Unless otherwise unambiguously indicated by the language of the offer or by the circumstances: (a) an offer to make a contract may be accepted in any manner and by any means reasonable in the circumstances, so long as the means of acceptance are sufficient to notify the offeror that his or her offer has been accepted. (b) an order or other offer to buy goods for prompt shipment may be accepted either by a prompt promise to ship or by the prompt shipment of conforming goods.
720.240 Additional Terms in Acceptance.
- A definite and timely acceptance is valid even if in contains additional terms or terms different from those in the offer, unless the language of the acceptance makes the acceptance conditional upon the added or revised terms.
- The additional or revised terms are to be treated as a proposal to amend the contract.
- Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writing or electronic records of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writing or electronic records of the parties agree, together with any supplementary terms incorporated under any other provisions of this Chapter.
720.250 Firm Offers. A merchant, as defined herein, may not revoke a written, signed offer to buy or sell goods which, by its terms, is held open for a certain time or for a reasonable time, until the stated time has elapsed. In no event may such period of irrevocability exceed three months.
720.260 Course of Performance.
- Where the contract for sale involves repeated occasions for performance by either party and one party knows about the nature of the other party’s performance and has an opportunity to object to it and fails to object, such course of performance shall be relevant to determine the meaning of the agreement.
- The express terms of the agreement and any such course of performance, as well as any course of dealing and usage of trade, shall be construed whenever reasonable as consistent with each other. However, when such construction is unreasonable, express terms shall control course of performance and course of performance shall control both course of dealing and usage of trade in determining the meaning of the agreement.
720.270 Modification and Rescission.
- An agreement to modify a contract within this Chapter needs no consideration to be binding.
- A signed agreement which excludes modification or rescission except by a signed writing or cannot be otherwise modified or rescinded.
- The requirements of the statute of frauds section of this Chapter (Section 720.210) must be satisfied if the contract, as modified, is within its provisions.
720.280 Delegation of Duty – Assignment of Rights.
- A party may perform his or her duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his or her original promisor perform or control the acts required by the contract (such as when the original promisor has a unique talent or reputation for the duty to be provided). The delegation of performance does not relieve the original promisor of any duty to perform or any liability for breach.
- Unless otherwise agreed, all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on him or her by the contract, or impair materially his or her chance of obtaining return performance.
III. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT
720.300 General Obligation of Parties. The obligation of the seller is to deliver possession of the goods that are the subject of the contract and the obligation of the buyer is to accept and pay in accordance with the contract.
720.310 Unconscionable Contract or Clause.
- If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.
- When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.
720.320 Open Price Term.
- 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.
- A price to be fixed by the seller or by the buyer means a price for him or her to fix in good faith.
- 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.
720.330 Warranty of Title and Against Infringement – Buyer’s Obligation Against Infringement.
- Subject to subsection (2) there is in a contract for sale a warranty by the seller that: (a) The title conveyed shall be good, and its transfer rightful; and (b) The goods shall be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge.
250.340 Express Warranties by Affirmation, Promise, Description, Sample.
- The following create an express warranty by the seller: (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.
- An express warranty is still created under subsection (1) even if the seller does not use formal words such as “warrant” or “guarantee,” and even though the seller does not have a specific intention to make a warranty.
- However, the seller’s estimate or 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.
720.350 Implied Warranty – Merchantability – Usage of Trade.
- If the seller is a merchant of the kind of goods sold under the contract then the contract includes an implied warranty that the goods shall be merchantable. However, this implied warranty may be expressly excluded or modified as provided in Section 720.370 below.
- To be merchantable, goods must be at least such as: (a) Are fit for the ordinary purposes for which such goods are used; and (b) Pass without objection in the general course of trade under the contract description; and (c) In the case of fungible goods, are of fair average quality within the description; 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.
- Other implied warranties may arise from course of dealing or usage of trade.
720.360 Implied Warranty – Fitness for Particular Purpose. Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is an implied warranty that the goods shall be fit for such purpose. However, this implied warranty may be expressly excluded or modified as provided in Section 720.370, below.
720.370 Exclusion or Modification of Warranties. In the following circumstances implied warranties of merchantability or fitness shall be excluded or modified:
- unless the circumstances indicate otherwise, all implied warranties are excluded by conspicuous, written language such as “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
- when the buyer before entering into the contract has examined the goods or the sample or model as fully as he or she 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.
720.380 Cattle, Hogs and Sheep – No Implied Warranty as to Disease. Notwithstanding Section 720.350, there is no implied warranty on the sale of cattle, hogs, or sheep that such cattle, hogs, or sheep are free from disease.
720.390 Third-Party Beneficiaries of Warranties Express or Implied. A seller’s warranty whether express or implied extends to any person who may reasonably be expected to use, consume or be affected by the goods and who is injured by breach of the warranty. A seller may not exclude or limit the operation of this section.
720.395 Sale by Auction.
- In a sale by auction if goods are put up in lots each lot is the subject of a separate sale.
- 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 or her discretion reopen the bidding or declare the goods sold under the bid on which the hammer was falling.
- 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 or she announces completion of the sale. In an auction without reserve, after the auctioneer calls for bids on an item or lot, that item or lot cannot be withdrawn unless no bid is made within a reasonable time. In either case a bidder may retract his or her bid until the auctioneer’s announcement of completion of the sale, but a bidder’s retraction does not revive any previous bid.
- 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 or her option avoid the sale or take the goods at the price of the last good faith bid prior to the completion of the sale. This subsection shall not apply to any bid at a forced sale.
720.400 Passing of Title – Reservation for Security. Each provision of this Chapter with regard to the rights, obligations and remedies of the seller, the buyer, purchasers or other third parties applies irrespective of title to the goods except where the provision refers to such title. Insofar as situations are not covered by the other provisions of this Chapter and matters concerning title become material the following rules apply:
- Title to goods cannot pass under a contract for sale prior to their identification to the contract. Any retention or reservation by the seller of the title in goods shipped or delivered to the buyer is limited in effect to a reservation of a security interest. Subject to these provisions and to the provisions of the Warm Springs Personal Property Secured Transactions Code, title to goods passes from the seller to the buyer in any manner and on any conditions explicitly agreed on by the parties.
- Unless otherwise explicitly agreed title passes to the buyer at the time and place at which the seller physically delivers the goods, despite any reservation of a security interest and even though a document of title is to be delivered at a different time or place.
- Unless otherwise explicitly agreed by the parties, where delivery is to be made without moving the goods, (a) If the seller is to deliver a document of title, title passes at the time when and the place where he or she delivers such documents; or (b) If the goods are at the time of contracting already identified and no documents are to be delivered, title passes at the time and place of contracting.
- A rejection or other refusal by the buyer to receive or retain the goods, whether or not justified, revests title to the goods in the seller.
720.410 Insurable Interest in Goods – Manner of Identification of Goods.
- The buyer obtains an insurable interest in goods by identification of existing goods as goods to which the contract refers, even if the goods so identified are nonconforming and the buyer has an option to return or reject them. Such identification can be made at any time and in any manner explicitly agreed to by the parties. In the absence of explicit agreement identification occurs: (a) When contract is made if it is for the sale of goods already existing and identified; (b) If the contract is for the sale of future goods other than those described in paragraph (c), when goods are shipped, marked or otherwise designated by the seller as goods to which the contract refers; (c) When the crops are planted or otherwise become growing crops or the young are conceived if the contract is for the sale of unborn young to be born within twelve months after contracting or for the sale of crops to be harvested within twelve months or the next normal harvest season after contracting whichever is longer.
- The seller retains an insurable interest in goods so long as title to or any security interest in the goods remains in him or her and where the identification is by the seller alone he or she may, until default or insolvency or notification to the buyer that the identification is final, substitute other conforming goods for those identified.
- Nothing in this section impairs any insurable interest recognized under any other statute or rule of law.
720.420 Cure by Seller of Improper Tender or Delivery – Replacement.
- Where any delivery of goods by the seller is rejected because the goods do not conform to the contract, and the time for performance has not yet expired, the seller may notify the buyer of his or her intention to cure and may then, within the contract time, make a conforming delivery.
- Where the buyer rejects a delivery of nonconforming goods which the seller had reasonable grounds to believe would be acceptable, the seller may, if he or she seasonably notifies the buyer, have a further reasonable time to substitute conforming goods.
720.430 Risk of Loss in the Absence of Breach.
- Where the contract requires or authorizes the seller to ship the goods by carrier (a) If it does not require him or her to deliver them at a particular destination, the risk of loss passes to the buyer when the goods are duly delivered to the carrier; but (b) If it does require him or her to deliver them at a particular destination and the goods are there duly tendered while in the possession of the carrier, the risk of loss passes to the buyer when the goods are tendered so as to enable the buyer to take delivery.
- In any case not within subsection (1), the risk of loss passes to the buyer on his or her receipt of the goods if the seller is a merchant; otherwise the risk passes to the buyer on tender of delivery.
- The provisions of this section are subject to contrary agreement of the parties and to the provisions of this Chapter on effect of breach on risk of loss (Section 720.440).
720.440 Effect of Breach on Risk of Loss.
- Where a tender or delivery of goods so fails to conform to the contract as to give a right of rejection, the risk of their loss remains on the seller until cure by the seller or acceptance by the buyer.
- Where conforming goods already identified to the contract are repudiated by the buyer, or the buyer is otherwise in breach of the contract, before the risk of loss of the goods has passed to him, the seller, may to the extent of any deficiency in his or her effective insurance coverage, treat the risk of loss as resting on the buyer for a commercially reasonable time.
720.450 Buyer’s Right to Inspection of Goods.
- Unless otherwise agreed, where goods are tendered or delivered or identified to the contract for sale, the buyer has a right before payment or acceptance to inspect them at any reasonable place and time and in any reasonable manner. When the seller is required or authorized to send the goods to the buyer the inspection may be after their arrival.
- Expenses of inspection must be borne by the buyer but may be recovered from the seller if the goods do not conform and are rejected.
720.460 Preserving Evidence of Goods in Dispute. In furtherance of the adjustment of any claim or dispute
- Either party on reasonable notification to the other and for the purpose of ascertaining the facts and preserving evidence has the right to inspect, test and sample the goods including such of them as may be in the possession or control of the other; and
- The parties may agree to a third-party inspection or survey to determine the conformity or condition of the goods and may agree that the findings shall be binding upon them in any subsequent litigation or adjustment.
V. BREACH, REPUDIATION, AND EXCUSE
720.500 Buyer’s Rights on Improper Delivery. Unless otherwise agreed under the sections on contractual limitations of remedy (Section 720.800 and Section 720.810), if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may
- Reject the whole; or
- Accept the whole; or
- Accept any commercial unit or units and reject the rest.
720.510 Manner and Effect of Rightful Rejection.
- Rejection of goods must be within a reasonable time after their delivery or tender. It is ineffective unless the buyer timely notifies the seller.
- Subject to the provisions of the two following sections on rejected goods (Section 720.520 and Section 720.530) (a) After rejection any exercise of ownership by the buyer with respect to any commercial unit is wrongful as against the seller; and (b) If the buyer has before rejection taken physical possession of goods in which he or she does not have a security interest under the provisions of this Chapter (subsection (3) of Section 720.700), he or she is under a duty after rejection to hold them with reasonable care at the seller’s disposition for a time sufficient to permit the seller to remove them; but (c) The buyer has no further obligations with regard to goods rightfully rejected.
- The seller’s rights with respect to goods wrongfully rejected are governed by the provisions of this Chapter on seller’s remedies in general (Section 720.610).
720.520 Buyer’s Options as to Salvage of Rightfully Rejected Goods. Subject to the provisions of Section 720.530 on perishables, if the seller gives no instructions within a reasonable time after notification of rejection the buyer may store the rejected goods for the seller’s account or reship them to him or her or resell them for the seller’s account with reimbursement as provided in Section 720.740. Such action is not acceptance or conversion.
720.530 Merchant Buyer’s Duties as to Rightfully Rejected Goods.
- Subject to any security interest in the buyer (subsection (3) of Section 720.700), when the seller has no agent or place of business at the market of rejection a merchant buyer is under a duty after rejection of goods in his or her possession or control to follow any reasonable instructions received from the seller with respect to the goods and in the absence of such instructions to make reasonable efforts to sell them for the seller’s account if they are perishable or threaten to decline in value speedily. Instructions are not reasonable if, on demand indemnity, for expenses is not forthcoming.
- When the buyer sells goods under subsection (1), he or she is entitled to reimbursement from the seller, or out of the proceeds, for reasonable expenses of caring for and selling them, and if the expenses include no selling commission then to such commission as is usual in the trade or, if there is none, to a reasonable sum not exceeding ten percent on the gross proceeds.
720.540 What Constitutes Acceptance of Goods.
- Acceptance of goods occurs when the buyer (a) After a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that he or she will take or retain them in spite of their nonconformity; or (b) Fails to make an effective rejection (subsection (1) of Section 720.510), but such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them; or (c) Does any act inconsistent with the seller’s ownership; but if such act is wrongful as against the seller it is an acceptance only if ratified by him.
- Acceptance of a part of any commercial unit is acceptance of that entire unit.
720.550 Effect of Acceptance – Notice of Breach – Burden of Establishing Breach After Acceptance – Notice of Claim or Litigation to Person Answerable Over.
- The buyer must pay at the contract rate for any goods accepted.
- Acceptance of goods by the buyer precludes rejection of the goods accepted and, if made with knowledge of a nonconformity, cannot be revoked because of the nonconformity unless the acceptance was on the reasonable assumption that the nonconformity would be timely cured by the seller. Acceptance does not of itself impair any other remedy provided by this Chapter for nonconformity.
- Where a tender has been accepted the buyer must within a reasonable time after he or she discovers or should have discovered any breach notify the seller of breach or be barred from any remedy.
- The burden is on the buyer to establish any breach with respect to the goods accepted.
720.560 Revocation of Acceptance in Whole or in Part.
- The buyer may revoke his or her acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to him or her if he or she has accepted it (a) On the reasonable assumption that its nonconformity would be cured and it has not been timely cured; or (b) Without discovery of such nonconformity if his or her acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller’s assurances.
- Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. Revocation is not effective until the buyer notifies the seller of it.
- A buyer who so revokes has the same rights and duties with regard to the goods involved as if he or she had rejected them.
720.570 Anticipatory Repudiation. When either party repudiates the contract by expressing an intention not to complete a performance not yet due, and the loss of that performance will substantially impair the value of the contract to the other party, the aggrieved party may
- For a commercially reasonable time await performance by the repudiating party; or
- Resort to any remedy for breach provided in this Chapter, even though he or she has notified the repudiating party that he or she would await the latter’s performance and has urged retraction; and
- In either case suspend his or her own performance or proceed in accordance with the provisions of this Chapter on the seller’s right to identify goods to the contract notwithstanding breach or to salvage unfinished goods (Section 720.620).
720.580 Retraction of Anticipatory Repudiation.
- Until the repudiating party’s next performance is due he or she can retract his or her repudiation unless the aggrieved party has since the repudiation canceled or materially changed his or her position or otherwise indicated that he or she considers the repudiation final.
- Retraction may be by any method which clearly indicates to the aggrieved party that the repudiating party intends to perform, but must include any assurance justifiably demanded by the aggrieved party.
- Retraction reinstates the repudiating party’s rights under the contract with due excuse and allowance to the aggrieved party for any delay occasioned by the repudiation.
720.590 Casualty to Identified Goods. Where the contract requires for its performance goods identified when the contract is made, and the goods suffer casualty without fault of either party before the risk of loss passes to the buyer:
- If the loss is total the contract is avoided; and
- If the loss is partial or the goods have so deteriorated as no longer to conform to the contract the buyer may nevertheless demand inspection and at his or her option either treat the contract as avoided or accept the goods with due allowance from the contract price for the deterioration or the deficiency in quantity but without further right against the seller.
720.595 Substituted Performance.
- Where without fault of either party the agreed manner of delivery becomes unavailable or commercially impracticable, but a commercially reasonable substitute is available, such substitute performance must be tendered and accepted.
- If the agreed means or manner of payment fails because of domestic or foreign governmental regulation, the seller may withhold or stop delivery unless the buyer provides a means or manner of payment which is commercially a substantial equivalent. If delivery has already been taken, payment by the means or in the manner provided by the regulation discharges the buyer’s obligation unless the regulation is discriminatory, oppressive or predatory.
VI. SELLERS REMEDIES
720.600 Seller’s Remedies on Discovery of Buyer’s Insolvency.
- Where the seller discovers the buyer to be insolvent he or she may refuse delivery except for cash including payment for all goods theretofore delivered under the contract, and stop delivery under this Chapter.
- Where the seller discovers that the buyer has received goods on credit while insolvent, he or she may reclaim the goods upon demand made within ten days after the receipt, but if the buyer misrepresented his or her solvency the seller in writing or within three months before delivery, the ten-day limitation does not apply.
720.610 Seller’s Remedies in General. Where the buyer wrongfully rejects or revokes acceptance of goods or fails to make a payment due on or before delivery or repudiates with respect to a part or the whole, then with respect to any goods directly affected and, if the breach is of the whole contract, then also with respect to the whole undelivered balance, the aggrieved seller may
- Withhold delivery of such goods;
- Proceed under Section 720.620respecting goods still unidentified to the contract;
- Resell and recover damages as hereafter provided (Section 720.640);
- Recover damages for nonacceptance (Section 720.650) or in a proper case the price (Section 720.660);
720.620 Seller’s Right to Identify Goods to the Contract Notwithstanding Breach or to Salvage Unfinished Goods.
- An aggrieved seller under Section 720.610 may (a) Identify to the contract conforming goods not already identified if at the time he or she learned of the breach they are in his or her possession or control; (b) Treat as the subject of resale goods which have demonstrably been intended for the particular contract even though those goods are unfinished.
- Where the goods are unfinished an aggrieved seller may in the exercise of reasonable commercial judgment for the purposes of avoiding loss and of effective realization either complete the manufacture and wholly identify the goods to the contract or cease manufacture and resell for scrap or salvage value or proceed in any other reasonable manner.
720.630 Seller’s Stoppage of Delivery in Transit or Otherwise.
- The seller may stop delivery of goods in the possession of a carrier when he or she discovers the buyer to be insolvent (Section 720.600) and may stop delivery of carload, truckload, planeload or larger shipments of express or freight when the buyer repudiates or fails to make a payment due before delivery or if for any other reason the seller has a right to withhold or reclaim the goods.
- As against such buyer, the seller may stop delivery until (a) Receipt of the goods by the buyer; or (b) Negotiation to the buyer of any negotiable document of title covering the goods.
720.640 Seller’s Resale Including Contract for Resale.
- Under the conditions stated in Section 720.610 on seller’s remedies, the seller may resell the goods, or the undelivered balance of the goods. Where the resale is made in good faith and in a commercially reasonable manner, the seller may recover the difference between the resale price and the contract price together with any incidental damages allowed under the provisions of this Chapter (Section 720.670), but less expenses saved in consequence of the buyer’s breach.
- Except as otherwise provided in subsection (3) or unless otherwise agreed, resale may be at a public or private sale. The goods may be resold as a unit or in parcels, at any time and place and on any terms, so long as the method, manner, time, place and terms of the resale are commercially reasonable. The resale must be reasonable identified as resulting from the broken contract, but it is not necessary that the goods be in existence or that any or all of them have been identified to the contract before the breach.
- Where the resale is at private sale the seller must give the buyer reasonable notification of his or her intention to resell.
- Where the resale is at public sale. (a) Only identified goods can be sold except where there is a recognized market for a public sale of futures in goods of the kind; and (b) It must be made at a usual place or market for public sale if one is reasonably available and, except in the case of goods which are perishable or threaten to decline in value speedily, the seller must give the buyer reasonable notice of the time and place of the resale; and (c) If the goods are not to be within the view of those attending the sale the notification of sale must state the place where the goods are located and provide for their reasonable inspection by prospective bidders; and (d) The seller may buy.
- A purchaser who buys in good faith at a resale takes the goods free of any rights of the original buyer, even if the seller fails to comply with one or more of the requirements of this section.
- The seller is not accountable to the buyer for any profit made on any resale. The seller, or a buyer who has rightfully rejected or justifiably revoked acceptance, must account for any excess over the amount of his or her security interest, as hereinafter defined (subsection (3) of Section 720.700).
720.650 Seller’s Damages for Nonacceptance or Repudiation.
- Subject to subsection (2) and to the provisions of this Chapter with respect to proof of market price (Section 720.850), the measure of damages for nonacceptance or repudiation by the buyer is the difference between the market price at the time and place for tender and the unpaid contract price together with any incidental damages provided in this Chapter (Section 720.670), but less expenses saved in consequence of the buyer’s breach.
- If the measure of damages provided in subsection (1) is inadequate to put the seller in as good a position as performance of the contract would have done, then the measure of damages is the profit (including reasonable overhead) which the seller would have made from full performance by the buyer, together with any incidental damages provided in this Chapter (Section 720.670), due allowance for costs reasonably incurred and due credit for payments or proceeds of resale.
720.660 Action for the Price.
- When the buyer fails to pay the price as it becomes due the seller may recover, together with any incidental damages under Section 720.670, the price (a) Of goods accepted or of conforming goods lost or damaged within a commercially reasonable time after risk of their loss has passed to the buyer; and (b) Of goods identified to the contract if the seller is unable after reasonable effort to resell them at a reasonable price or the circumstances reasonably indicate that such effort will be unavailing.
- Where the seller sues for the price he or she must hold for the buyer any goods which have been identified to the contract and are still in his or her control except that if resale becomes possible he or she may resell them at any time prior to the collection of the judgment. The net proceeds of any such resale must be credited to the buyer and payment of the judgment entitles him or her to any goods not resold.
- After the buyer has wrongfully rejected or revoked acceptance of the goods or has failed to make a payment due or has repudiated (Section 720.570), a seller who is held not entitled to the price under this section shall nevertheless be awarded damages for nonacceptance under Section 720.650.
720.670 Seller’s Incidental Damages. Incidental damages to an aggrieved seller include any commercially reasonable charges, expenses or commissions incurred in stopping delivery, in the transportation, care and custody of goods after the buyer’s breach, in connection with return or resale of the goods or otherwise resulting from the breach.
VII. BUYER’S REMEDIES
720.700 Buyer’s Remedies in General – Buyer’s Security Interest in Rejected Goods.
- Where the seller fails to make delivery or repudiates, or the buyer rightfully rejects or justifiably revokes acceptance, then with respect to any goods involved, and with respect to the whole contract if the breach goes to the whole contract, the buyer may cancel. Whether or not the buyer cancels, the buyer may recover as much of the price he or she has already paid for the goods that are subject to the breach and, in addition, the buyer may do one of the following: (a) “Cover” and have damages as provided under the next section as to all the goods affected whether or not they have been identified to the contract; or (b) Recover damages for nondelivery as provided in this Chapter (Section 720.720).
- Where the seller fails to deliver or repudiates the buyer may also, in a proper case, obtain specific performance or replevy the goods as provided in this Chapter (Section 720.750).
- On rightful rejection or justifiable revocation of acceptance, a buyer has a security interest in the rejected goods in his or her possession or control for any payments made on their price and any expenses reasonably incurred in their inspection, receipt, transportation, care and custody. The buyer may hold such goods and resell them in like manner as an aggrieved seller (Section 720.640).
720.710 “Cover” – Buyer’s Procurement of Substitute Goods.
- After a breach within Section 720.700, the buyer may “cover” by making in good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller. The buyer is not required to “cover.”
- If the buyer “covers”, he or she may recover damages from the seller in the amount of the difference between the cost of the goods purchased as “cover” and the contract price, together with any incidental or consequential damages as hereinafter defined (Section 720.740), but less expenses saved in consequence of the seller’s breach.
- Failure of the buyer to effect cover within this section does not bar him or her from any other remedy.
720.720 Buyer’s Damages for Nondelivery or Repudiation.
- Subject to the provisions of this Chapter with respect to proof of market price (Section 720.850), the measure of damages for nondelivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages provided in this Chapter (Section 720.740), but less expenses saved in consequence of the seller’s breach.
- Market price is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.
720.730 Buyer’s Damages for Breach in Regard to Accepted Goods.
- Where the buyer has accepted goods and given notification (subsection (3) of Section 720.550) he or she may recover as damages for any nonconformity the loss resulting in the ordinary course of events from the seller’s breach as determined in any manner which is reasonable.
- The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as they were warranted to be, unless special circumstances show reasonably foreseeable damages of a different amount.
- In a proper case, any incidental and consequential damages under Section 720.740 may also be recovered.
720.740 Buyer’s Incidental and Consequential Damages.
- Incidental damages resulting from the seller’s breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting “cover,” as provided in Section 720.710 above, and any other reasonable expense incident to the delay or other breach.
- Consequential damages resulting from the seller’s breach include: (a) Any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and (b) Injury to person or property proximately resulting from any breach of warranty.
720.750 Buyer’s Right to Specific Performance or Replevin.
- Specific performance may be decreed where the goods are unique or in other proper circumstances.
- The decree for specific performance may include such terms and conditions as to payment of the price, damages, or other relief as the court may deem just.
- The buyer has a right of replevin for goods identified to the contract if, after reasonable effort, he or she is unable to affect “cover” for such goods as provided in Section 720.710 or if the circumstances reasonably indicate that a reasonable effort to affect “cover” will be unsuccessful.
720.760 Deduction of Damages from the Price. The buyer, on notifying the seller of his or her intention to do so, may deduct all or any part of the damages resulting from any breach of the contract from any part of the price still due under the same contract.
VIII. GENERAL PROVISIONS AS TO REMEDIES
720.800 Liquidation or Limitation of Damages – Deposits.
- The contract may provide for liquidated damages for breach by either party, but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty.
- Where the seller justifiably withholds delivery of goods because of the buyer’s breach, the buyer is entitled to restitution of his or her payments, less: (a) The amount to which the seller is entitled in liquidated damages under the contract, in accordance with subsection (1), or (b) In the absence of such terms, twenty percent of the value of the total price under the contract or five hundred dollars, whichever is smaller.
- The buyer’s right to restitution under subsection (2) is subject to offset to the extent that the seller establishes (a) A right to recover damages under the provisions of this Chapter other than subsection (1), and (b) The amount or value of any benefits received by the buyer directly or indirectly by reason of the contract.
- Where a seller has received payment in goods rather than money, the reasonable value of the goods or the proceeds of their resale shall be treated as payments for the purposes of subsection (2); but if the seller has notice of the buyer’s breach before reselling goods received in part performance, his or her resale is subject to the conditions laid down in this Chapter on resale by an aggrieved seller (Section 720.640).
720.810 Contractual Modification or Limitation of Remedy.
- Subject to the provisions of subsections (2) and (3) of this section and of Section 720.800 on liquidation and limitation of damages, (a) The agreement may provide for remedies in addition to or in substitution for those provided in this Chapter and may limit or alter the measure of damages recoverable under this Chapter as, for example, by limiting the buyer’s remedies to return of the goods and repayment of the price or to repair and replacement of nonconforming goods or parts; and (b) Resort to a specific form of remedy as provided in the contract is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy.
- Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this title.
- Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for personal injury in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not.
720.820 Effect of “Cancellation” or “Rescission” on Claims for Prior Breach. Unless the contrary intention clearly appears, expressions of “cancellation” or “rescission” of the contract or the like shall not be construed as a renunciation or discharge of any claim in damages for a prior breach of that contract.
720.830 Remedies for Fraud. Remedies for material misrepresentation or fraud include all remedies available under this Chapter for nonfraudulent breach. Neither rescission or a claim for rescission of the contract for sale nor rejection or return of the goods shall bar or be deemed inconsistent with a claim for damages or other remedy.
720.840 Who Can Sue Third Parties for Injury to Goods. Where a third party so deals with goods which have been identified to a contract for sale as to cause actionable injury to a party to that contract: (a) Either party to the contract for sale who has title to, a security interest, a special property or an insurable interest in the goods may bring a lawsuit against the third party. If the goods have been destroyed or stolen, the party who either bore the risk of loss under the contract for sale or has since the injury assumed that risk may bring a lawsuit against the third party; (b) If at the time of the injury the party who brings the lawsuit did not bear the risk of loss under the contract and there is no arrangement between the contract parties for disposition of the recovery, his or her lawsuit or settlement is, subject to his or her own interest, as a fiduciary for the other party to the contract; (c) Either party may, with the consent of the other, sue for the benefit of whom it may concern.
720.850 Proof of Market Price; Time and Place.
- If an action based on anticipatory repudiation, as provided in Section 720.570, comes to trial before the time for performance with respect to some or all of the goods, any damages based on market price shall be determined according to the price of such goods prevailing at the time when the aggrieved party learned of the repudiation.
- If evidence of a price prevailing at the times or places described in this Chapter is not readily available, the price prevailing within any reasonable time before or after the time described or at any other place which, in commercial judgment or under usage of trade, would serve as a reasonable substitute for the one described may be used, making any proper allowance for the cost of transporting the goods to or from such other place.
- Evidence of a relevant price prevailing at a time or place other than the one described in this Chapter offered by one party is not admissible unless and until he or she has given the other party such notice as the court finds sufficient to prevent unfair surprise.
720.860 Admissibility of Market Quotations. Whenever the prevailing price or value of any goods regularly bought and sold in any established commodity market is in issue, reports in official publications or trade journals or in newspapers or periodicals of general circulation published as the reports of such market shall be admissible in evidence. The circumstances of the preparation of such a report may be shown to affect its weight but not its admissibility.
720.870 Statute of Limitations in Contracts for Sale.
- An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued.
- A cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods, and discovery of the breach must await the time of such performance, the cause of action accrues when the breach is or should have been discovered.
1 Chapter 720 restated in its entirety by Tribal Council Resolution 11,744 adopted April 1, 2013.