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IC 26-1-2-101
Short title
Sec. 101. IC 26-1-2 shall be known and may be cited as Uniform
Commercial 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 this
chapter
Sec. 102. Unless the context otherwise requires, IC 26-1-2 applies
to transactions in goods. It does not apply to any transaction which
although in the form of an unconditional contract to sell or present
sale is intended to operate only as a security transaction, nor does
IC 26-1-2 impair or repeal any statute regulating sales to consumers,
farmers, or other specified classes of buyers. IC 26-1-2 does not
impair 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 fact
and observance of reasonable commercial standards of fair
dealing in the trade.
(c) "Receipt" of goods means taking physical possession of
them.
(d) "Seller" means a person who sells or contracts to sell goods.
(2) Other definitions applying to IC 26-1-2, or to specified parts
thereof, 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.
IC 26-1-2-104
IC 26-1-2-106
than for its breach. On "termination" all obligations which are still
executory on both sides are discharged but any right based on prior
breach or performance survives.
IC 26-1-2-107
IC 26-1-2-201
(10) days after it is received.
IC 26-1-2-202
IC 26-1-2-203
IC 26-1-2-204
IC 26-1-2-205
IC 26-1-2-206
IC 26-1-2-207
IC 26-1-2-208
IC 26-1-2-209
IC 26-1-2-210
imposed on him by his contract, or impair materially his chance of
obtaining return performance. A right to damages for breach of the
whole contract or a right arising out of the assignor's due
performance of his entire obligation can be assigned despite
agreement otherwise.
IC 26-1-2-301
IC 26-1-2-302
clause, or it may so limit the application of any unconscionable
clause as to avoid any unconscionable result.
IC 26-1-2-303
IC 26-1-2-304
IC 26-1-2-305
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.
IC 26-1-2-306
IC 26-1-2-307
IC 26-1-2-308
IC 26-1-2-309
IC 26-1-2-310
IC 26-1-2-311
to all other remedies:
IC 26-1-2-312
IC 26-1-2-313
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.
IC 26-1-2-314
IC 26-1-2-315
IC 26-1-2-316
IC 26-1-2-317
sample or model or general language of description.
IC 26-1-2-318
IC 26-1-2-319
instructions as a failure of cooperation under IC 26-1-2-311. He may
also at his option move the goods in any reasonable manner
preparatory to delivery or shipment.
IC 26-1-2-320
IC 26-1-2-321
warranty of condition on arrival
IC 26-1-2-322
IC 26-1-2-323
provisions of IC 26-1-2-508(1) on cure of improper delivery;
and
IC 26-1-2-324
IC 26-1-2-325
IC 26-1-2-326
use; and
IC 26-1-2-327
IC 26-1-2-328
does not revive any previous bid.
IC 26-1-2-401
passes at the time and place of contracting.
IC 26-1-2-402
IC 26-1-2-403
under the criminal law.
IC 26-1-2-501
IC 26-1-2-502
the goods have not been shipped, a buyer who has paid a part or all
of the price of goods in which he has a special property under the
provisions of IC 26-1-2-501 may on making and keeping good a
tender of any unpaid portion of their price recover them from the
seller if:
IC 26-1-2-503
obey the direction remains on the seller until the buyer has had
a reasonable time to present the document or direction, and a
refusal by the bailee to honor the document or to obey the
direction defeats the tender.
IC 26-1-2-504
IC 26-1-2-505
improper contract for transportation within IC 26-1-2-504, but
impairs neither the rights given to the buyer by shipment and
identification of the goods to the contract nor the seller's powers as
a holder of a negotiable document of title.
IC 26-1-2-506
IC 26-1-2-507
IC 26-1-2-508
IC 26-1-2-510
IC 26-1-2-511
condition to the seller's duty to tender and complete any delivery.
IC 26-1-2-512
IC 26-1-2-513
inspection shall be as provided in this section unless the place or
method fixed was clearly intended as an indispensable condition
failure of which avoids the contract.
IC 26-1-2-514
IC 26-1-2-515
IC 26-1-2-601
IC 26-1-2-602
IC 26-1-2-603
IC 26-1-2-604
IC 26-1-2-605
IC 26-1-2-606
IC 26-1-2-607
after he receives notice of the litigation or be barred from any
remedy over for liability established by the litigation.
IC 26-1-2-608
IC 26-1-2-609
demand adequate assurance of due performance and until he receives
such assurance may if commercially reasonable suspend any
performance for which he has not already received the agreed return.
IC 26-1-2-610
IC 26-1-2-611
IC 26-1-2-613
IC 26-1-2-614
provided by the regulation discharges the buyer's obligation unless
the regulation is discriminatory, oppressive or predatory.
IC 26-1-2-615
IC 26-1-2-616
SEC.160.
IC 26-1-2-701
IC 26-1-2-702
IC 26-1-2-703
SEC.162.
IC 26-1-2-704
IC 26-1-2-705
SEC.164; P.L.143-2007, SEC.18.
IC 26-1-2-706
IC 26-1-2-708
IC 26-1-2-709
IC 26-1-2-710
IC 26-1-2-711
IC 26-1-2-712
reasonable purchase of or contract to purchase goods in substitution
for those due from the seller.
IC 26-1-2-713
IC 26-1-2-714
IC 26-1-2-715
connection with effecting cover and any other reasonable expense
incident to the delay or other breach.
IC 26-1-2-716
IC 26-1-2-717
IC 26-1-2-718
"Merchant"; "between merchants"; "financing agency"
Sec. 104. (1) "Merchant" means a person who deals in goods of
the kind or otherwise by his occupation holds himself out as having
knowledge or skill peculiar to the practices or goods involved in the
transaction or to whom such knowledge or skill may be attributed by
his employment of an agent or broker or other intermediary who by
his occupation holds himself out as having such knowledge or skill.
(2) "Financing agency" means a bank, finance company, or other
person who in the ordinary course of business makes advances
against goods or documents of title or who by arrangement with
either the seller or the buyer intervenes in ordinary course to make
or collect payment due or claimed under the contract for sale, as by
purchasing or paying the seller's draft or making advances against it
or by merely taking it for collection whether or not documents of title
accompany or are associated with the draft. "Financing agency"
includes also a bank or other person who similarly intervenes
between persons who are in the position of seller and buyer in
respect to the goods (IC 26-1-2-707).
(3) "Between merchants" means in any transaction with respect to
which both parties are chargeable with the knowledge or skill of
merchants.
(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"; "commercial
unit"
Sec. 105. (1) "Goods" means all things (including specially
manufactured goods) which are movable at the time of identification
to the contract for sale, other than the money in which the price is to
be paid, investment securities (IC 26-1-8.1), and things in action.
"Goods" also includes the unborn young of animals and growing
crops and other identified things attached to realty as described in the
section on goods to be severed from realty (IC 26-1-2-107).
(2) Goods must be both existing and identified before any interest
in them can pass. Goods which are not both existing and identified
are "future" goods. A purported present sale of future goods or of any
interest therein operates as a contract to sell.
(3) There may be a sale of a part interest in existing identified
goods.
(4) An undivided share in an identified bulk of fungible goods is
sufficiently identified to be sold although the quantity of the bulk is
not determined. Any agreed proportion of such a bulk or any quantity
thereof agreed upon by number, weight, or other measure may, to the
extent of the seller's interest in the bulk, be sold to the buyer who
then becomes an owner in common.
(5) "Lot" means a parcel or a single article which is the subject
matter of a separate sale or delivery, whether or not it is sufficient to
perform the contract.
(6) "Commercial unit" means such a unit of goods as by
commercial usage is a single whole for purposes of sale and division
of which materially impairs its character or value on the market or in
use. A commercial unit may be a single article (as a machine) or a set
of articles (as a suite of furniture or an assortment of sizes) or a
quantity (as a bale, gross, or carload) or any other unit treated in use
or in the relevant market as a single whole.
(Formerly: Acts 1963, c.317, s.2-105.) As amended by P.L.152-1986,
SEC.123; P.L.247-1995, SEC.3.
"Contract"; "agreement"; "contract for sale"; "sale"; "present
sale"; "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 the
present or future sale of goods. "Contract for sale" includes both a
present sale of goods and a contract to sell goods at a future time. A
"sale" consists in the passing of title from the seller to the buyer for
a price (IC 26-1-2-401). A "present sale" means a sale which is
accomplished by the making of the contract.
(2) Goods or conduct including any part of a performance are
"conforming" or conform to the contract when they are in accordance
with the obligations under the contract.
(3) "Termination" occurs when either party pursuant to a power
created by agreement or law puts an end to the contract otherwise
(4) "Cancellation" occurs when either party puts an end to the
contract for breach by the other, and its effect is the same as that of
"termination" except that the cancelling party also retains any
remedy for breach of the whole contract or of any unperformed
balance.
(Formerly: Acts 1963, c.317, s.2-106.) As amended by P.L.152-1986,
SEC.124.
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 removed
from realty is a contract for the sale of goods within IC 26-1-2 if they
are to be severed by the seller but until severance a purported present
sale thereof which is not effective as a transfer of an interest in land
is effective only as a contract to sell.
(2) A contract for the sale apart from the land of growing crops or
other things attached to realty and capable of severance without
material harm thereto but not described in subsection (1) or of timber
to be cut is a contract for the sale of goods within IC 26-1-2 whether
the subject matter is to be severed by the buyer or by the seller even
though it forms part of the realty at the time of contracting, and the
parties can by identification effect a present sale before severance.
(3) The provisions of this section are subject to any third party
rights provided by the law relating to realty records, and the contract
for sale may be executed and recorded as a document transferring an
interest in land and shall then constitute notice to third parties of the
buyer's rights under the contract for sale.
(Formerly: Acts 1963, c.317, s.2-107.) As amended by P.L.93-1985,
SEC.4.
Formal requirements; statute of frauds
Sec. 201. (1) Except as otherwise provided in this section, a
contract for the sale of goods for the price of five hundred dollars
($500) or more is not enforceable by way of action or defense unless
there is some writing sufficient to indicate that a contract for sale has
been made between the parties and signed by the party against whom
enforcement is sought or by his authorized agent or broker. A writing
is not insufficient because it omits or incorrectly states a term agreed
upon, but the contract is not enforceable under this paragraph beyond
the quantity of goods shown in such writing.
(2) Between merchants, if within a reasonable time a writing in
confirmation of the contract and sufficiently against the sender is
received and the party receiving it has reason to know its contents,
it satisfies the requirements of subsection (1) against such party
unless written notice of objection to its contents is given within ten
(3) A contract which does not satisfy the requirements of
subsection (1) but which is valid in other respects is enforceable:
(a) if the goods are to be specially manufactured for the buyer
and are not suitable for sale to others in the ordinary course of
the seller's business and the seller, before notice of repudiation
is received and under circumstances which reasonably indicate
that the goods are for the buyer, has made either a substantial
beginning of their manufacture or commitments for their
procurement; or
(b) if the party against whom enforcement is sought admits in
his pleading, testimony, or otherwise in court that a contract for
sale was made, but the contract is not enforceable under this
provision beyond the quantity of goods admitted; or
(c) with respect to goods for which payment has been made and
accepted or which have been received and accepted (IC
26-1-2-606).
(Formerly: Acts 1963, c.317, s.2-201.) As amended by P.L.152-1986,
SEC.125.
Final written expression; parol or extrinsic evidence
Sec. 202. Terms with respect to which the confirmatory
memoranda of the parties agree or which are otherwise set forth in
a writing intended by the parties as a final expression of their
agreement with respect to such terms as are included therein may not
be contradicted by evidence of any prior agreement or of a
contemporaneous oral agreement but may be explained or
supplemented:
(a) by course of dealing or usage of trade (IC 26-1-1-205) or by
course of performance (IC 26-1-1-205); and
(b) by evidence of consistent additional terms, unless the court
finds the writing to have been intended also as a complete and
exclusive statement of the terms of the agreement.
(Formerly: Acts 1963, c.317, s.2-202.) As amended by P.L.152-1986,
SEC.126; P.L.143-2007, SEC.9.
Seals inoperative
Sec. 203. The affixing of a seal to a writing evidencing a contract
for sale or an offer to buy or sell goods does not constitute the
writing a sealed instrument and the law with respect to sealed
instruments does not apply to such a contract or offer.
(Formerly: Acts 1963, c.317, s.2-203.)
Formation in general
Sec. 204. (1) A contract for sale of goods may be made in any
manner sufficient to show agreement, including conduct by both
parties which recognizes the existence of such a contract.
(2) An agreement sufficient to constitute a contract for sale may
be found even though the moment of its making is undetermined.
(3) Even though one or more terms are left open a contract for
sale does not fail for indefiniteness if the parties have intended to
make a contract and there is a reasonably certain basis for giving an
appropriate remedy.
(Formerly: Acts 1963, c.317, s.2-204.)
Firm offers
Sec. 205. An offer by a merchant to buy or sell goods in a signed
writing which by its terms gives assurance that it will be held open
is not revocable, for lack of consideration, during the time stated or
if no time is stated for a reasonable time, but in no event may such
period of irrevocability exceed three (3) months; but any such term
of assurance on a form supplied by the offeree must be separately
signed by the offeror.
(Formerly: Acts 1963, c.317, s.2-205.)
Offer and acceptance in formation of contract
Sec. 206. (1) Unless otherwise unambiguously indicated by the
language or circumstances
(a) an offer to make a contract shall be construed as inviting
acceptance in any manner and by any medium reasonable in the
circumstances;
(b) an order or other offer to buy goods for prompt or current
shipment shall be construed as inviting acceptance either by a prompt
promise to ship or by the prompt or current shipment of conforming
or non-conforming goods, but such a shipment of non-conforming
goods does not constitute an acceptance if the seller seasonably
notifies the buyer that the shipment is offered only as an
accommodation to the buyer.
(2) Where the beginning of a requested performance is a
reasonable mode of acceptance an offeror who is not notified of
acceptance within a reasonable time may treat the offer as having
lapsed before acceptance.
(Formerly: Acts 1963, c.317, s.2-206.)
Additional terms in acceptance or confirmation
Sec. 207. (1) A definite and seasonable expression of acceptance
or a written confirmation which is sent within a reasonable time
operates as an acceptance even though it states terms additional to or
different from those offered or agreed upon, unless acceptance is
expressly made conditional on assent to the additional or different
terms.
(2) The additional terms are to be construed as proposals for
addition to the contract. Between merchants such terms become part
of the contract unless:
(a) the offer expressly limits acceptance to the terms of the offer;
(b) they materially alter it; or
(c) notification of objection to them has already been given or is
given within a reasonable time after notice of them is received.
(3) Conduct by both parties which recognizes the existence of a
contract is sufficient to establish a contract for sale although the
writings of the parties do not otherwise establish a contract. In such
case the terms of the particular contract consist of those terms on
which the writings of the parties agree, together with any
supplementary terms incorporated under any other provisions of this
Act.
(Formerly: Acts 1963, c.317, s.2-207.)
Repealed
(Repealed by P.L.143-2007, SEC.78.)
Modification, rescission, and waiver
Sec. 209. (1) An agreement modifying a contract within IC 26-1-2
needs no consideration to be binding.
(2) A signed agreement which excludes modification or
rescission, except by a signed writing, cannot be otherwise modified
or rescinded, but except as between merchants such a requirement on
a form supplied by the merchant must be separately signed by the
other party.
(3) The requirements of the statute of frauds section (IC
26-1-2-201) must be satisfied if the contract as modified is within its
provisions.
(4) Although an attempt at modification or rescission does not
satisfy the requirements of subsection (2) or (3), it can operate as a
waiver.
(5) A party who has made a waiver affecting an executory portion
of the contract may retract the waiver by reasonable notification
received by the other party that strict performance will be required
of any term waived, unless the retraction would be unjust in view of
a material change of position in reliance on the waiver.
(Formerly: Acts 1963, c.317, s.2-209.) As amended by P.L.152-1986,
SEC.128.
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 substantial
interest in having his original promisor perform or control the acts
required by the contract. No delegation of performance relieves the
party delegating of any duty to perform or any liability for breach.
(2) 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
(3) The creation, attachment, perfection, or enforcement of a
security interest in the seller's interest under a contract is not a
transfer that materially changes the duty of or increases materially
the burden or risk imposed on the buyer or impairs materially the
buyer's chance of obtaining return performance within the purview
of subsection (2) unless, and then only to the extent that,
enforcement actually results in a delegation of material performance
of the seller. Even in that event, the creation, attachment, perfection,
and enforcement of the security interest remain effective, but (i) the
seller is liable to the buyer for damages caused by the delegation to
the extent that the damages could not reasonably be prevented by the
buyer, and (ii) a court having jurisdiction may grant other appropriate
relief, including cancellation of the contract for sale or an injunction
against enforcement of the security interest or consummation of the
enforcement.
(4) Unless the circumstances indicate the contrary, a prohibition
of assignment of "the contract" is to be construed as barring only the
delegation to the assignee of the assignor's performance.
(5) An assignment of "the contract" or of "all my rights under the
contract" or an assignment in similar general terms is an assignment
of rights, and unless the language or the circumstances (as in an
assignment for security) indicate the contrary, it is a delegation of
performance of the duties of the assignor, and its acceptance by the
assignee constitutes a promise by him to perform those duties. This
promise is enforceable by either the assignor or the other party to the
original contract.
(6) The other party may treat any assignment which delegates
performance as creating reasonable grounds for insecurity and may,
without prejudice to his rights against the assignor, demand
assurances from the assignee (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.
General obligations of parties
Sec. 301. The obligation of the seller is to transfer and deliver and
that of the buyer is to accept and pay in accordance with the contract.
(Formerly: Acts 1963, c.317, s.2-301.)
Unconscionable contract or clause
Sec. 302. (1) If the court as a matter of law finds the contract or
any clause of the contract to have been unconscionable at the time it
was made the court may refuse to enforce the contract, or it may
enforce the remainder of the contract without the unconscionable
(2) When it is claimed or appears to the court that the contract or
any clause thereof may be unconscionable the parties shall be
afforded a reasonable opportunity to present evidence as to its
commercial setting, purpose and effect to aid the court in making the
determination.
(Formerly: Acts 1963, c.317, s.2-302.)
Allocation or division of risks
Sec. 303. Where IC 26-1-2 allocates a risk or a burden as between
the parties "unless otherwise agreed," the agreement may not only
shift the allocation but may also divide the risk or burden.
(Formerly: Acts 1963, c.317, s.2-303.) As amended by P.L.152-1986,
SEC.130.
Price payable in money, goods, realty, or otherwise
Sec. 304. (1) The price can be made payable in money or
otherwise. If it is payable in whole or in part in goods, each party is
a seller of the goods which he is to transfer.
(2) Even though all or part of the price is payable in an interest in
realty, the transfer of the goods and the seller's obligations with
reference to them are subject to IC 26-1-2, but not the transfer of the
interest in realty or the transferor's obligations in connection
therewith.
(Formerly: Acts 1963, c.317, s.2-304.) As amended by P.L.152-1986,
SEC.131.
Open price term
Sec. 305. (1) The parties if they so intend can conclude a contract
for sale even though the price is not settled. In such a case the price
is a reasonable price at the time for delivery if
(a) nothing is said as to price; or
(b) the price is left to be agreed by the parties and they fail to
agree; or
(c) the price is to be fixed in terms of some agreed market or other
standard as set or recorded by a third person or agency and it is not
so set or recorded.
(2) A price to be fixed by the seller or by the buyer means a price
for him to fix in good faith.
(3) When a price left to be fixed otherwise than by agreement of
the parties fails to be fixed through fault of one (1) party the other
may at his option treat the contract as canceled or himself fix a
reasonable price.
(4) Where, however, the parties intend not to be bound unless the
price be fixed or agreed and it is not fixed or agreed there is no
contract. In such a case the buyer must return any goods already
(Formerly: Acts 1963, c.317, s.2-305.)
Output, requirements, and exclusive dealings
Sec. 306. (1) A term which measures the quantity by the output of
the seller or the requirements of the buyer means such actual output
or requirements as may occur in good faith, except that no quantity
unreasonably disproportionate to any stated estimate or in the
absence of a stated estimate to any normal or otherwise comparable
prior output or requirements may be tendered or demanded.
(2) A lawful agreement by either the seller or the buyer for
exclusive dealing in the kind of goods concerned imposes unless
otherwise agreed an obligation by the seller to use best efforts to
supply the goods and by the buyer to use best efforts to promote their
sale.
(Formerly: Acts 1963, c.317, s.2-306.)
Delivery in single lot or several lots
Sec. 307. Unless otherwise agreed all goods called for by a
contract for sale must be tendered in a single delivery and payment
is due only on such tender but where the circumstances give either
party the right to make or demand delivery in lots the price if it can
be apportioned may be demanded for each lot.
(Formerly: Acts 1963, c.317, s.2-307.)
Absence of specified place for delivery
Sec. 308. Unless otherwise agreed:
(a) the place for delivery of goods is the seller's place of
business or if he has none his residence; but
(b) in a contract for sale of identified goods which to the
knowledge of the parties at the time of contracting are in some
other place, that place is the place for their delivery; and
(c) documents of title may be delivered through customary
banking channels.
(Formerly: Acts 1963, c.317, s.2-308.) As amended by P.L.3-1989,
SEC.149.
Absence of specific time provisions; notice of termination
Sec. 309. (1) The time for shipment or delivery or any other action
under a contract, if not provided in IC 26-1-2 or agreed upon, shall
be a reasonable time.
(2) Where the contract provides for successive performances but
is indefinite in duration, it is valid for a reasonable time but unless
otherwise agreed may be terminated at any time by either party.
(3) Termination of a contract by one (1) party, except on the
happening of an agreed event, requires that reasonable notification
be received by the other party, and an agreement dispensing with
notification is invalid if its operation would be unconscionable.
(Formerly: Acts 1963, c.317, s.2-309.) As amended by P.L.152-1986,
SEC.132.
Open time for payment or running of credit; authority to ship
under reservation
Sec. 310. Unless otherwise agreed:
(a) payment is due at the time and place at which the buyer is to
receive the goods, even though the place of shipment is the
place of delivery; and
(b) if the seller is authorized to send the goods, he may ship
them under reservation and may tender the documents of title,
but the buyer may inspect the goods after their arrival before
payment is due, unless such inspection is inconsistent with the
terms of the contract (IC 26-1-2-513); and
(c) if delivery is authorized and made by way of documents of
title otherwise than by subdivision (b), then payment is due,
regardless of where the goods are to be received:
(i) at the time and place at which the buyer is to receive
delivery of the tangible documents; or
(ii) at the time the buyer is to receive delivery of the
electronic documents and at the seller's place of business or,
if none, the seller's residence; and
(d) where the seller is required or authorized to ship the goods
on credit, the credit period runs from the time of shipment, but
postdating the invoice or delaying its dispatch will
correspondingly delay the starting of the credit period.
(Formerly: Acts 1963, c.317, s.2-310.) As amended by P.L.152-1986,
SEC.133; P.L.143-2007, SEC.10.
Options and cooperation respecting performance
Sec. 311. (1) An agreement for sale which is otherwise
sufficiently definite (IC 26-1-2-204(3)) to be a contract is not made
invalid by the fact that it leaves particulars of performance to be
specified by one (1) of the parties. Any such specification must be
made in good faith and within limits set by commercial
reasonableness.
(2) Unless otherwise agreed, specifications relating to assortment
of goods are at the buyer's option, and except as otherwise provided
in IC 26-1-2-319(1)(c) and IC 26-1-2-319(3), specifications or
arrangements relating to shipment are at the seller's option.
(3) Where such specification would materially affect the other
party's performance but is not seasonably made, or where one (1)
party's cooperation is necessary to the agreed performance of the
other but is not seasonably forthcoming, the other party in addition
(a) is excused for any resulting delay in his own performance;
and
(b) may also either proceed to perform in any reasonable
manner, or after the time for a material part of his own
performance, treat the failure to specify or to cooperate as a
breach by failure to deliver or accept the goods.
(Formerly: Acts 1963, c.317, s.2-311.) As amended by P.L.152-1986,
SEC.134.
Warranty of title and against infringement; buyer's obligation
against infringement
Sec. 312. (1) Subject to subsection (2) there is in a contract for
sale a warranty by the seller that
(a) the title conveyed shall be good, and its transfer rightful; and
(b) the goods shall be delivered free from any security interest or
other lien or encumbrance of which the buyer at the time of
contracting has no knowledge.
(2) A warranty under subsection (1) will be excluded or modified
only by specific language or by circumstances which give the buyer
reason to know that the person selling does not claim title in himself
or that he is purporting to sell only such right or title as he or a third
person may have.
(3) Unless otherwise agreed a seller who is a merchant regularly
dealing in goods of the kind warrants that the goods shall be
delivered free of the rightful claim of any third person by way of
infringement or the like but a buyer who furnishes specifications to
the seller must hold the seller harmless against any such claim which
arises out of compliance with the specifications.
(Formerly: Acts 1963, c.317, s.2-312.)
Express warranties by affirmation, promise, description, and
sample
Sec. 313. (1) Express warranties by the seller are created as
follows:
(a) any affirmation of fact or promise made by the seller to the
buyer which relates to the goods and becomes part of the basis of the
bargain creates an express warranty that the goods shall conform to
the affirmation or promise.
(b) any description of the goods which is made part of the basis
of the bargain creates an express warranty that the goods shall
conform to the description.
(c) any sample or model which is made part of the basis of the
bargain creates an express warranty that the whole of the goods shall
conform to the sample or model.
(2) It is not necessary to the creation of an express warranty that
the seller use formal words such as "warrant" or "guarantee" or that
he have a specific intention to make a warranty, but an affirmation
(Formerly: Acts 1963, c.317, s.2-313.)
Implied warranty; merchantability; usage of trade
Sec. 314. (1) Unless excluded or modified (IC 26-1-2-316), a
warranty that the goods shall be merchantable is implied in a contract
for their sale if the seller is a merchant with respect to goods of that
kind. Under this section the serving for value of food or drink to be
consumed either on the premises or elsewhere is a sale.
(2) Goods to be merchantable must at least be such as:
(a) pass without objection in the trade under the contract
description; and
(b) in the case of fungible goods, are of fair, average quality
within the description; and
(c) are fit for the ordinary purposes for which such goods are
used; and
(d) run, within the variations permitted by the agreement, of
even kind, quality, and quantity within each unit and among all
units involved; and
(e) are adequately contained, packaged, and labeled as the
agreement may require; and
(f) conform to the promises or affirmations of fact made on the
container or label if any.
(3) Unless excluded or modified (IC 26-1-2-316), other implied
warranties 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.
Implied warranty; fitness for particular purpose
Sec. 315. Where the seller at the time of contracting has reason to
know any particular purpose for which the goods are required and
that the buyer is relying on the seller's skill or judgment to select or
furnish suitable goods, there is, unless excluded or modified under
IC 26-1-2-316, an implied warranty that the goods shall be fit for
such purpose.
(Formerly: Acts 1963, c.317, s.2-315.) As amended by P.L.152-1986,
SEC.136.
Exclusion or modification of warranties
Sec. 316. (1) Words or conduct relevant to the creation of an
express warranty and words or conduct tending to negate or limit
warranty shall be construed wherever reasonable as consistent with
each other; but subject to the provisions of IC 26-1-2-202 on parol or
extrinsic evidence, negation or limitation is inoperative to the extent
that such construction is unreasonable.
(2) Subject to subsection (3), to exclude or modify the implied
warranty of merchantability or any part of it the language must
mention merchantability and in case of a writing must be
conspicuous, and to exclude or modify any implied warranty of
fitness the exclusion must be by a writing and conspicuous.
Language to exclude all implied warranties of fitness is sufficient if
it states, for example, that "There are no warranties which extend
beyond the description on the face hereof."
(3) Notwithstanding subsection (2):
(a) unless the circumstances indicate otherwise, all implied
warranties are excluded by expressions like "as is", "with all
faults", or other language which in common understanding calls
the buyer's attention to the exclusion of warranties and makes
plain that there is no implied warranty; and
(b) when the buyer before entering into the contract has
examined the goods or the sample or model as fully as he
desired or has refused to examine the goods there is no implied
warranty with regard to defects which an examination ought in
the circumstances to have revealed to him; and
(c) an implied warranty can also be excluded or modified by
course of dealing or course of performance or usage of trade;
and
(d) with respect to the sale of cattle, hogs, or sheep, there is no
implied warranty that the cattle, hogs, or sheep are free from
disease, if the seller shows that all state and federal regulations
concerning animal health have been complied with; and
(e) with respect to a sale of audio or visual entertainment
products, as defined by IC 26-2-6-1, made as a result of a
solicitation through a mail order catalog, it is sufficient to
exclude all implied warranties in connection with the sale of
any product in the catalog, if the contract is in writing and the
language 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 the
product is with the buyer.
(4) Remedies for breach of warranty can be limited in accordance
with the provisions of IC 26-1-2-718 and IC 26-1-2-719 on
liquidation or limitation of damages and on contractual modification
of 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.
Cumulation and conflict of warranties express or implied
Sec. 317. Warranties whether express or implied shall be
construed as consistent with each other and as cumulative, but if such
construction is unreasonable the intention of the parties shall
determine which warranty is dominant. In ascertaining that intention
the following rules apply:
(a) exact or technical specifications displace an inconsistent
(b) a sample from an existing bulk displaces inconsistent general
language of description.
(c) express warranties displace inconsistent implied warranties
other than an implied warranty of fitness for a particular purpose.
(Formerly: Acts 1963, c.317, s.2-317.)
Third party beneficiaries of warranties express or implied
Sec. 318. A seller's warranty whether express or implied extends
to any natural person who is in the family or household of his buyer
or who is a guest in his home if it is reasonable to expect that such
person may use, consume or be affected by the goods and who is
injured in person by breach of the warranty. A seller may not exclude
or limit the operation of this section.
(Formerly: Acts 1963, c.317, s.2-318.)
F.O.B. and F.A.S. terms
Sec. 319. (1) Unless otherwise agreed, the term F.O.B. (which
means "free on board") at a named place, even though used only in
connection with the stated price, is a delivery term under which:
(a) when the term is F.O.B. the place of shipment, the seller
must at that place ship the goods in the manner provided in
IC 26-1-2-504 and bear the expense and risk of putting them
into the possession of the carrier; or
(b) when the term is F.O.B. the place of destination, the seller
must at his own expense and risk transport the goods to that
place and there tender delivery of them in the manner provided
in IC 26-1-2-503;
(c) when under either subdivision (a) or (b) the term is also
F.O.B. vessel, car, or other vehicle, the seller must in addition
at his own expense and risk load the goods on board. If the term
is F.O.B. vessel, the buyer must name the vessel and in an
appropriate case, the seller must comply with the provisions of
IC 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 in
connection with the stated price, is a delivery term under which the
seller must:
(a) at his own expense and risk deliver the goods alongside the
vessel in the manner usual in that port or on a dock designated
and provided by the buyer; and
(b) obtain and tender a receipt for the goods in exchange for
which the carrier is under a duty to issue a bill of lading.
(3) Unless otherwise agreed in any case falling within subsection
(1)(a), (1)(c), or (2), the buyer must seasonably give any needed
instructions for making delivery, including when the term is F.A.S.
or F.O.B., the loading berth of the vessel, and in an appropriate case,
its name and sailing date. The seller may treat the failure of needed
(4) Under the term F.O.B. vessel or F.A.S., unless otherwise
agreed, the buyer must make payment against tender of the required
documents, and the seller may not tender nor the buyer demand
delivery of the goods and substitution for the documents.
(Formerly: Acts 1963, c.317, s.2-319.) As amended by P.L.152-1986,
SEC.137.
C.I.F. and C.&F. terms
Sec. 320. (1) The term C.I.F. means that the price includes in a
lump sum the cost of the goods and the insurance and freight to the
named destination. The term C.&F. or C.F. means that the price so
includes cost and freight to the named destination.
(2) Unless otherwise agreed and even though used only in
connection with the stated price and destination, the term C.I.F.
destination or its equivalent requires the seller at his own expense
and risk to
(a) put the goods into the possession of a carrier at the port for
shipment and obtain a negotiable bill or bills of lading covering the
entire transportation to the named destination; and
(b) load the goods and obtain a receipt from the carrier (which
may be contained in the bill of lading) showing that the freight has
been paid or provided for; and
(c) obtain a policy or certificate of insurance, including any war
risk insurance, of a kind and on terms then current at the port of
shipment in the usual amount, in the currency of the contract, shown
to cover the same goods covered by the bill of lading and providing
for payment of loss to the order of the buyer or for the account of
whom it may concern; but the seller may add to the price the amount
of the premium for any such war risk insurance; and
(d) prepare an invoice of the goods and procure any other
documents required to effect shipment or to comply with the
contract; and
(e) forward and tender with commercial promptness all the
documents in due form and with any endorsement necessary to
perfect the buyer's rights.
(3) Unless otherwise agreed the term C.&F. or its equivalent has
the same effect and imposes upon the seller the same obligations and
risks as a C.I.F. term except the obligation as to insurance.
(4) Under the term C.I.F. or C.&F. unless otherwise agreed the
buyer must make payment against tender of the required documents
and the seller may not tender nor the buyer demand delivery of the
goods in substitution for the documents.
(Formerly: Acts 1963, c.317, s.2-320.)
C.I.F. or C.&F.; "net landed weights"; payment 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 or
quality or the like, unless otherwise agreed the seller must reasonably
estimate the price. The payment due on tender of the documents
called for by the contract is the amount so estimated, but after final
adjustment of the price a settlement must be made with commercial
promptness.
(2) An agreement described in subsection (1) or any warranty of
quality or condition of the goods on arrival places upon the seller the
risk of ordinary deterioration, shrinkage and the like in transportation
but has no effect on the place or time of identification to the contract
for sale or delivery or on the passing of the risk of loss.
(3) Unless otherwise agreed where the contract provides for
payment on or after arrival of the goods the seller must before
payment allow such preliminary inspection as is feasible; but if the
goods are lost delivery of the documents and payment are due when
the goods should have arrived.
(Formerly: Acts 1963, c.317, s.2-321.)
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 equivalent
language is not restricted to a particular ship and requires delivery
from a ship which has reached a place at the named port of
destination where goods of the kind are usually discharged.
(2) Under such a term unless otherwise agreed
(a) the seller must discharge all liens arising out of the carriage
and furnish the buyer with direction which puts the carrier under a
duty to deliver the goods; and
(b) the risk of loss does not pass to the buyer until the goods leave
the ship's tackle or are otherwise properly unloaded.
(Formerly: Acts 1963, c.317, s.2-322.)
Form of bill of lading required in overseas shipment; "overseas"
Sec. 323. (1) Where the contract contemplates overseas shipment
and contains a term C.I.F. or C.&F. or F.O.B. vessel, the seller,
unless otherwise agreed, must obtain a negotiable bill of lading
stating that the goods have been loaded on board or, in the case of a
term C.I.F. or C.&F., received for shipment.
(2) Where in a case within subsection (1) a tangible bill of lading
has been issued in a set of parts, unless otherwise agreed, if the
documents are not to be sent from abroad, the buyer may demand
tender of the full set. Otherwise, only one (1) part of the bill of
lading need be tendered. Even if the agreement expressly requires a
full set:
(a) due tender of a single part is acceptable within the
(b) even though the full set is demanded, if the documents are
sent from abroad, the person tendering an incomplete set may
nevertheless require payments upon furnishing an indemnity
which the buyer in good faith deems adequate.
(3) A shipment by water or by air or a contract contemplating
such shipment is "overseas" insofar as by usage of trade or
agreement it is subject to the commercial, financing, or shipping
practices characteristic of international deep water commerce.
(Formerly: Acts 1963, c.317, s.2-323.) As amended by P.L.152-1986,
SEC.138; P.L.143-2007, SEC.11.
"No arrival, no sale"
Sec. 324. Under a term "no arrival, no sale" or terms of like
meaning, unless otherwise agreed:
(a) the seller must properly ship conforming goods, and if they
arrive by any means he must tender them on arrival, but he
assumes no obligation that the goods will arrive unless he has
caused the nonarrival; and
(b) where without fault of the seller the goods are in part lost or
have so deteriorated as no longer to conform to the contract or
arrive after the contract time, the buyer may proceed as if there
had been casualty to identified goods (IC 26-1-2-613).
(Formerly: Acts 1963, c.317, s.2-324.) As amended by P.L.152-1986,
SEC.139.
"Letter of credit"; "confirmed credit"
Sec. 325. (1) Failure of the buyer seasonably to furnish an agreed
letter of credit is a breach of the contract for sale.
(2) The delivery to seller of a proper letter of credit suspends the
buyer's obligation to pay. If the letter of credit is dishonored, the
seller may on seasonable notification to the buyer require payment
directly from him.
(3) Unless otherwise agreed the term "letter of credit" or "banker's
credit" in a contract for sale means an irrevocable credit issued by a
financing agency of good repute and, where the shipment is overseas,
of good international repute. The term "confirmed credit" means that
the credit must also carry the direct obligation of such an agency
which does business in the seller's financial market.
(Formerly: Acts 1963, c.317, s.2-325.)
Sale on approval and sale or return
Sec. 326. (1) Unless otherwise agreed, if delivered goods may be
returned by the buyer even though they conform to the contract, the
transaction is:
(a) a "sale on approval" if the goods are delivered primarily for
(b) a "sale or return" if the goods are delivered primarily for
resale.
(2) Goods held on approval are not subject to the claims of the
buyer's creditors until acceptance. Goods held on sale or return are
subject to such claims while in the buyer's possession.
(3) Any "or return" term of a contract for sale is to be treated as
a separate contract for sale within the statute of frauds section (IC
26-2-2-201) and as contradicting the sale aspect of the contract
within 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.
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 loss
and the title do not pass to the buyer until acceptance; and
(b) use of the goods consistent with the purpose of trial is not
acceptance but failure seasonably to notify the seller of election to
return the goods is acceptance, and if the goods conform to the
contract acceptance of any part is acceptance of the whole; and
(c) after due notification of election to return, the return is at the
seller's risk and expense but a merchant buyer must follow any
reasonable instructions.
(2) Under a sale or return unless otherwise agreed
(a) the option to return extends to the whole or any commercial
unit of the goods while in substantially their original condition, but
must be exercised seasonably; and
(b) the return is at the buyer's risk and expense.
(Formerly: Acts 1963, c.317, s.2-327.)
Sale by auction
Sec. 328. (1) In a sale by auction if goods are put up in lots each
lot is the subject of a separate sale.
(2) A sale by auction is complete when the auctioneer so
announces by the fall of the hammer or in other customary manner.
Where a bid is made while the hammer is falling in acceptance of a
prior bid the auctioneer may in his discretion reopen the bidding or
declare the goods sold under the bid on which the hammer was
falling.
(3) Such a sale is with reserve unless the goods are in explicit
terms put up without reserve. In an auction with reserve the
auctioneer may withdraw the goods at any time until he announces
completion of the sale. In an auction without reserve, after the
auctioneer calls for bids on an article or lot, that article or lot cannot
be withdrawn unless no bid is made within a reasonable time. In
either case a bidder may retract his bid until the auctioneer's
announcement of completion of the sale, but a bidder's retraction
(4) If the auctioneer knowingly receives a bid on the seller's
behalf or the seller makes or procures such a bid, and notice has not
been given that liberty for such bidding is reserved, the buyer may at
his option avoid the sale or take the goods at the price of the last
good faith bid prior to the completion of the sale. This subsection
shall not apply to any bid at a forced sale.
(Formerly: Acts 1963, c.317, s.2-328.)
Passing of title; reservation of security; limited application of this
section
Sec. 401. Each provision of IC 26-1-2 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 IC 26-1-2 and matters concerning
title become material, the following rules apply:
(1) Title to goods cannot pass under a contract for sale prior to
their identification to the contract (IC 26-1-2-501), and unless
otherwise explicitly agreed, the buyer acquires by their
identification a special property as limited by IC 26-1. Any
retention or reservation by the seller of the title (property) in
goods shipped or delivered to the buyer is limited in effect to a
reservation of a security interest. Subject to these provisions
and to the provisions of IC 26-1-9.1 on secured transactions,
title to goods passes from the seller to the buyer in any manner
and on any conditions explicitly agreed on by the parties.
(2) Unless otherwise explicitly agreed, title passes to the buyer
at the time and place at which the seller completes his
performance with reference to the physical delivery of the
goods, despite any reservation of a security interest and even
though a document of title is to be delivered at a different time
or place, and in particular despite any reservation of a security
interest by the bill of lading:
(a) if the contract requires or authorizes the seller to send the
goods to the buyer but does not require him to deliver them
at destination, title passes to the buyer at the time and place
of shipment; but
(b) if the contract requires delivery at destination, title
passes on tender there.
(3) Unless otherwise explicitly agreed, where delivery is to be
made without moving the goods:
(a) if the seller is to deliver a tangible document of title, title
passes at the time when and the place where he delivers such
documents and if the seller is to deliver an electronic
document of title, title passes when the seller delivers the
document; or
(b) if the goods are at the time of contracting already
identified and no documents of title are to be delivered, title
(4) A rejection or other refusal by the buyer to receive or retain
the goods, whether or not justified, or a justified revocation of
acceptance revests title to the goods in the seller. Such revesting
occurs by operation of law and is not a "sale".
(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.
Rights of seller's creditors against sold goods
Sec. 402. (1) Except as provided in subsections (2) and (3), rights
of unsecured creditors of the seller with respect to goods which have
been identified to a contract for sale are subject to the buyer's rights
to recover the goods under IC 26-1-2-502 and IC 26-1-2-716.
(2) A creditor of the seller may treat a sale or an identification of
goods to a contract for sale as void if as against him a retention of
possession by the seller is fraudulent under any rule of law of the
state where the goods are situated, except that retention of possession
in good faith and current course of trade by a merchant-seller for a
commercially reasonable time after a sale or identification is not
fraudulent.
(3) Nothing in IC 26-1-2 shall be deemed to impair the rights of
creditors 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 not
in current course of trade but in satisfaction of or as security for
a pre-existing claim for money, security, or the like and is made
under circumstances which under any rule of law of the state
where the goods are situated would apart from IC 26-1-2
constitute the transaction a fraudulent transfer or voidable
preference.
(Formerly: Acts 1963, c.317, s.2-402.) As amended by P.L.152-1986,
SEC.142; P.L.57-2000, SEC.19.
Power to transfer; good faith purchase of goods; "entrusting"
Sec. 403. (1) A purchaser of goods acquires all title which the
purchaser's transferor had or had power to transfer, except that a
purchaser of a limited interest acquires rights only to the extent of
the interest purchased. A person with voidable title has power to
transfer a good title to a good faith purchaser for value. When goods
have been delivered under a transaction of purchase, the purchaser
has such power even though:
(a) the transferor was deceived as to the identity of the
purchaser; or
(b) the delivery was in exchange for a check which is later
dishonored; or
(c) it was agreed that the transaction was to be a "cash sale"; or
(d) the delivery was procured through fraud punishable as theft
(2) Any entrusting of possession of goods to a merchant who
deals in goods of that kind gives the merchant power to transfer all
rights of the entruster to a buyer in ordinary course of business.
(3) "Entrusting" includes any delivery and any acquiescence in
retention of possession regardless of any condition expressed
between the parties to the delivery or acquiescence and regardless of
whether the procurement of the entrusting or the possessor's
disposition of the goods have been such as to be theft under the
criminal law.
(4) The rights of other purchasers of goods and of lien creditors
are governed by IC 26-1-9.1 on secured transactions and IC 26-1-7
on documents of title.
(Formerly: Acts 1963, c.317, s.2-403.) As amended by P.L.152-1986,
SEC.143; P.L.144-1997, SEC.3; P.L.57-2000, SEC.20; P.L.77-2007,
SEC.3.
Insurable interest in goods; manner of identification of goods
Sec. 501. (1) The buyer obtains a special property and an
insurable interest in goods by identification of existing goods as
goods to which the contract refers even though the goods so
identified are nonconforming and he has an option to return or reject
them. Such identification can be made at any time and in any manner
explicitly agreed to by the parties. In the absence of explicit
agreement identification occurs
(a) when the contract is made if it is for the sale of goods already
existing and identified;
(b) if the contract is for the sale of future goods other than those
described in paragraph (c), when goods are shipped, marked or
otherwise designated by the seller as goods to which the contract
refers;
(c) when the crops are planted or otherwise become growing crops
or the young are conceived if the contract is for the sale of unborn
young to be born within twelve (12) months after contracting or for
the sale of crops to be harvested within twelve (12) months or the
next normal harvest season after contracting whichever is longer.
(2) The seller retains an insurable interest in goods so long as title
to or any security interest in the goods remains in him and where the
identification is by the seller alone he may until default or insolvency
or notification to the buyer that the identification is final substitute
other goods for those identified.
(3) Nothing in this section impairs any insurable interest
recognized under any other statute or rule of law.
(Formerly: Acts 1963, c.317, s.2-501.)
Buyer's right to goods on seller's repudiation, failure to deliver, or
insolvency
Sec. 502. (1) Subject to subsections (2) and (3) and even though
(a) in the case of goods bought for personal, family, or
household purposes, the seller repudiates or fails to deliver as
required by the contract; or
(b) in other cases, the seller becomes insolvent within ten (10)
days after receipt of the first installment on their price.
(2) The buyer's right to recover the goods under subsection (1)(a)
vests upon acquisition of a special property, even if the seller had not
then repudiated or failed to deliver.
(3) If the identification creating his special property has been
made by the buyer, he acquires the right to recover the goods only if
they conform to the contract for sale.
(Formerly: Acts 1963, c.317, s.2-502.) As amended by P.L.152-1986,
SEC.144; P.L.57-2000, SEC.21.
Manner of seller's tender of delivery
Sec. 503. (1) Tender of delivery requires that the seller put and
hold conforming goods at the buyer's disposition and give the buyer
any notification reasonably necessary to enable him to take delivery.
The manner, time and place for tender are determined by the
agreement and IC 26-1-2, and in particular:
(a) tender must be at a reasonable hour, and if it is of goods they
must be kept available for the period reasonably necessary to
enable the buyer to take possession; but
(b) unless otherwise agreed, the buyer must furnish facilities
reasonably suited to the receipt of the goods.
(2) Where the case is within IC 26-1-2-504 respecting shipment,
tender requires that the seller comply with its provisions.
(3) Where the seller is required to deliver at a particular
destination, tender requires that he comply with subsection (1) and
also in any appropriate case tender documents as described in
subsections (4) and (5).
(4) Where goods are in the possession of a bailee and are to be
delivered without being moved:
(a) tender requires that the seller either tender a negotiable
document of title covering such goods or procure
acknowledgement by the bailee of the buyer's right to
possession of the goods; but
(b) tender to the buyer of a nonnegotiable document of title or
of a record directing the bailee to deliver is sufficient tender
unless the buyer seasonably objects, and except as otherwise
provided in IC 26-1-9.1, receipt by the bailee of notification of
the buyer's rights fixes those rights as against the bailee and all
third persons; but risk of loss of the goods and of any failure by
the bailee to honor the nonnegotiable document of title or to
(5) Where the contract requires the seller to deliver documents:
(a) he must tender all such documents in correct form, except as
provided in IC 26-1-2-323(2) with respect to bills of lading in
a set; and
(b) tender through customary banking channels is sufficient and
dishonor of a draft accompanying the documents constitutes
nonacceptance or rejection.
(Formerly: Acts 1963, c.317, s.2-503.) As amended by P.L.152-1986,
SEC.145; P.L.143-2007, SEC.13.
Shipment by seller
Sec. 504. Where the seller is required or authorized to send the
goods to the buyer and the contract does not require him to deliver
them at a particular destination, then unless otherwise agreed he must
(a) put the goods in the possession of such a carrier and make
such a contract for their transportation as may be reasonable having
regard to the nature of the goods and other circumstances of the case;
and
(b) obtain and promptly deliver or tender in due form any
document necessary to enable the buyer to obtain possession of the
goods or otherwise required by the agreement or by usage of trade;
and
(c) promptly notify the buyer of the shipment.
Failure to notify the buyer under paragraph (c) or to make a
proper contract under paragraph (a) is a ground for rejection only if
material delay or loss ensues.
(Formerly: Acts 1963, c.317, s.2-504.)
Seller's shipment under reservation
Sec. 505. (1) Where the seller has identified goods to the contract
by or before shipment:
(a) His procurement of a negotiable bill of lading to his own
order or otherwise reserves in him a security interest in the
goods. His procurement of the bill to the order of a financing
agency or of the buyer indicates in addition only the seller's
expectation of transferring that interest to the person named.
(b) A nonnegotiable bill of lading to himself or his nominee
reserves possession of the goods as security, but except in a
case of conditional delivery (IC 26-1-2-507(2)), a nonnegotiable
bill of lading naming the buyer as consignee reserves no
security interest even though the seller retains possession or
control of the bill of lading.
(2) When shipment by the seller with reservation of a security
interest is in violation of the contract for sale, it constitutes an
(Formerly: Acts 1963, c.317, s.2-505.) As amended by P.L.152-1986,
SEC.146; P.L.143-2007, SEC.14.
Rights of financing agency
Sec. 506. (1) A financing agency by paying or purchasing for
value a draft which relates to a shipment of goods acquires to the
extent of the payment or purchase and in addition to its own rights
under the draft and any document of title securing it any rights of the
shipper in the goods including the right to stop delivery and the
shipper's right to have the draft honored by the buyer.
(2) The right to reimbursement of a financing agency which has
in good faith honored or purchased the draft under commitment to or
authority from the buyer is not impaired by subsequent discovery of
defects with reference to any relevant document which was
apparently regular.
(Formerly: Acts 1963, c.317, s.2-506.) As amended by P.L.143-2007,
SEC.15.
Effect of seller's tender; delivery on condition
Sec. 507. (1) Tender of delivery is a condition to the buyer's duty
to accept the goods and, unless otherwise agreed, to his duty to pay
for them. Tender entitles the seller to acceptance of the goods and to
payment according to the contract.
(2) Where payment is due and demanded on the delivery to the
buyer of goods or documents of title, his right as against the seller to
retain or dispose of them is conditional upon his making the payment
due.
(Formerly: Acts 1963, c.317, s.2-507.)
Cure by seller of improper tender or delivery; replacement
Sec. 508. (1) Where any tender or delivery by the seller is rejected
because non-conforming and the time for performance has not yet
expired, the seller may seasonably notify the buyer of his intention
to cure and may then within the contract time make a conforming
delivery.
(2) Where the buyer rejects a non-conforming tender which the
seller had reasonable grounds to believe would be acceptable with or
without money allowance the seller may if he seasonably notifies the
buyer have a further reasonable time to substitute a conforming
tender.
(Formerly: Acts 1963, c.317, s.2-508.)
Risk of loss in the absence of breach
Sec. 509. (1) Where the contract requires or authorizes the seller
to ship the goods by carrier:
(a) if it does not require him to deliver them at a particular
destination, the risk of loss passes to the buyer when the goods
are duly delivered to the carrier even though the shipment is
under reservation (IC 26-1-2-505); but
(b) if it does require him to deliver them at a particular
destination and the goods are there duly tendered while in the
possession of the carrier, the risk of loss passes to the buyer
when the goods are there duly so tendered as to enable the
buyer to take delivery.
(2) Where the goods are held by a bailee to be delivered without
being moved, the risk of loss passes to the buyer:
(a) on his receipt of possession or control of a negotiable
document of title covering the goods; or
(b) on acknowledgment by the bailee of the buyer's right to
possession of the goods; or
(c) after his receipt of possession or control of a nonnegotiable
document of title or other direction to deliver in a record, as
provided in IC 26-1-2-503(4)(b).
(3) In any case not within subsection (1) or (2), the risk of loss
passes to the buyer on his receipt of the goods if the seller is a
merchant. Otherwise the risk passes to the buyer on tender of
delivery.
(4) The provisions of this section are subject to contrary
agreement of the parties and to the provisions of IC 26-1-2-327 on
sale on approval and IC 26-1-2-510 on effect of breach on risk of
loss.
(Formerly: Acts 1963, c.317, s.2-509.) As amended by P.L.152-1986,
SEC.147; P.L.143-2007, SEC.16.
Effect of breach on risk of loss
Sec. 510. (1) Where a tender or delivery of goods so fails to
conform to the contract as to give a right of rejection the risk of their
loss remains on the seller until cure or acceptance.
(2) Where the buyer rightfully revokes acceptance he may to the
extent of any deficiency in his effective insurance coverage treat the
risk of loss as having rested on the seller from the beginning.
(3) Where the buyer as to conforming goods already identified to
the contract for sale repudiates or is otherwise in breach before risk
of their loss has passed to him, the seller may to the extent of any
deficiency in his effective insurance coverage treat the risk of loss as
resting on the buyer for a commercially reasonable time.
(Formerly: Acts 1963, c.317, s.2-510.)
Tender of payment by buyer; payment by check
Sec. 511. (1) Unless otherwise agreed, tender of payment is a
(2) Tender of payment is sufficient when made by any means or
in any manner current in the ordinary course of business, unless the
seller demands payment in legal tender and gives any extension of
time reasonably necessary to procure it.
(3) Subject to the provisions of IC 26-1-3.1-802 on the effect of
an instrument on an obligation, payment by check is conditional and
is defeated as between the parties by dishonor of the check on due
presentment.
(Formerly: Acts 1963, c.317, s.2-511.) As amended by P.L.152-1986,
SEC.148; P.L.222-1993, SEC.4.
Payment by buyer before inspection
Sec. 512. (1) Where the contract requires payment before
inspection, nonconformity of the goods does not excuse the buyer
from so making payment unless:
(a) the nonconformity appears without inspection; or
(b) despite tender of the required documents the circumstances
would justify injunction against honor under
IC 26-1-5.1-109(b).
(2) Payment pursuant to subsection (1) does not constitute an
acceptance of the goods or impair the buyer's right to inspect or any
of his remedies.
(Formerly: Acts 1963, c.317, s.2-512.) As amended by P.L.152-1986,
SEC.149; P.L.183-1996, SEC.2.
Buyer's right of inspection of goods
Sec. 513. (1) Unless otherwise agreed and subject to subsection
(3), where goods are tendered or delivered or identified to the
contract for sale, the buyer has a right before payment or acceptance
to inspect them at any reasonable place and time and in any
reasonable manner. When the seller is required or authorized to send
the goods to the buyer, the inspection may be after their arrival.
(2) Expenses of inspection must be borne by the buyer but may be
recovered from the seller if the goods do not conform and are
rejected.
(3) Unless otherwise agreed and subject to the provisions of
IC 26-1-2-321(3) on C.I.F. contracts, the buyer is not entitled to
inspect the goods before payment of the price when the contract
provides:
(a) for delivery "C.O.D." or on other like terms; or
(b) for payment against documents of title, except where such
payment is due only after the goods are to become available for
inspection.
(4) A place or method of inspection fixed by the parties is
presumed to be exclusive, but unless otherwise expressly agreed, it
does not postpone identification or shift the place for delivery or for
passing the risk of loss. If compliance becomes impossible,
(Formerly: Acts 1963, c.317, s.2-513.) As amended by P.L.152-1986,
SEC.150.
When documents deliverable on acceptance; when on payment
Sec. 514. Unless otherwise agreed documents against which a
draft is drawn are to be delivered to the drawee on acceptance of the
draft if it is payable more than three (3) days after presentment;
otherwise, only on payment.
(Formerly: Acts 1963, c.317, s.2-514.)
Preserving evidence of goods in dispute
Sec. 515. In furtherance of the adjustment of any claim or dispute
(a) either party on reasonable notification to the other and for the
purpose of ascertaining the facts and preserving evidence has the
right to inspect, test and sample the goods including such of them as
may be in the possession or control of the other; and
(b) the parties may agree to a third party inspection or survey to
determine the conformity or condition of the goods and may agree
that the findings shall be binding upon them in any subsequent
litigation or adjustment.
(Formerly: Acts 1963, c.317, s.2-515.)
Buyer's rights on improper delivery
Sec. 601. Subject to the provisions of IC 26-1-2-612 on breach in
installment contracts and unless otherwise agreed under the sections
on contractual limitation of remedy (IC 26-1-2-718 and
IC 26-1-2-719), if the goods or the tender of delivery fail in any
respect to conform to the contract, the buyer may:
(a) reject the whole; or
(b) accept the whole; or
(c) accept any commercial unit or units and reject the rest.
(Formerly: Acts 1963, c.317, s.2-601.) As amended by P.L.152-1986,
SEC.151.
Manner and effect of rightful rejection
Sec. 602. (1) Rejection of goods must be within a reasonable time
after their delivery or tender. It is ineffective unless the buyer
seasonably notifies the seller.
(2) Subject to the provisions of the sections on rejected goods (IC
26-1-2-603 and IC 26-1-2-604):
(a) after rejection, any exercise of ownership by the buyer with
respect to any commercial unit is wrongful as against the seller;
and
(b) if the buyer has before rejection taken physical possession
of goods in which he does not have a security interest under the
provisions of IC 26-1-2-711(3), he is under a duty after
rejection to hold them with reasonable care at the seller's
disposition for a time sufficient to permit the seller to remove
them; but
(c) the buyer has no further obligations with regard to goods
rightfully rejected.
(3) The seller's rights with respect to goods wrongfully rejected
are governed by the provisions of IC 26-1-2-703 on seller's remedies
in general.
(Formerly: Acts 1963, c.317, s.2-602.) As amended by P.L.152-1986,
SEC.152.
Merchant buyer's duties as to rightfully rejected goods
Sec. 603. (1) Subject to any security interest in the buyer (IC
26-1-2-711(3)), when the seller has no agent or place of business at
the market of rejection, a merchant buyer is under a duty after
rejection of goods in his possession or control to follow any
reasonable instructions received from the seller with respect to the
goods and in the absence of such instructions to make reasonable
efforts to sell them for the seller's account if they are perishable or
threaten to decline in value speedily. Instructions are not reasonable
if on demand indemnity for expenses is not forthcoming.
(2) When the buyer sells goods under subsection (1), he is entitled
to reimbursement from the seller or out of the proceeds for
reasonable expenses of caring for and selling them, and if the
expenses include no selling commission then to such commission as
is usual in the trade or if there is none to a reasonable sum not
exceeding ten percent (10%) on the gross proceeds.
(3) In complying with this section, the buyer is held only to good
faith and good faith conduct hereunder is neither acceptance nor
conversion nor the basis of an action for damages.
(Formerly: Acts 1963, c.317, s.2-603.) As amended by P.L.152-1986,
SEC.153.
Buyer's options as to salvage of rightfully rejected goods
Sec. 604. Subject to the provisions of IC 26-1-2-603 on
perishables, if the seller gives no instructions within a reasonable
time after notification of rejection, the buyer may store the rejected
goods for the seller's account or reship them to him or resell them for
the seller's account with reimbursement as provided in
IC 26-1-2-603. Such action is not acceptance or conversion.
(Formerly: Acts 1963, c.317, s.2-604.) As amended by P.L.152-1986,
SEC.154.
Waiver of buyer's objections by failure to particularize
Sec. 605. (1) The buyer's failure to state in connection with
rejection a particular defect which is ascertainable by reasonable
inspection precludes him from relying on the unstated defect to
justify rejection or to establish breach:
(a) where the seller could have cured it if stated seasonably; or
(b) between merchants when the seller has after rejection made
a request in writing for a full and final written statement of all
defects on which the buyer proposes to rely.
(2) Payment against documents made without reservation of rights
precludes recovery of the payment for defects apparent in the
documents.
(Formerly: Acts 1963, c.317, s.2-605.) As amended by P.L.143-2007,
SEC.17.
What constitutes acceptance of goods
Sec. 606. (1) Acceptance of goods occurs when the buyer:
(a) after a reasonable opportunity to inspect the goods signifies
to the seller that the goods are conforming or that he will take
or retain them in spite of their nonconformity; or
(b) fails to make an effective rejection (IC 26-1-2-602(1)), but
such acceptance does not occur until the buyer has had a
reasonable opportunity to inspect them; or
(c) does any act inconsistent with the seller's ownership; but if
such act is wrongful as against the seller it is an acceptance only
if ratified by him.
(2) Acceptance of a part of any commercial unit is acceptance of
that entire unit.
(Formerly: Acts 1963, c.317, s.2-606.) As amended by P.L.152-1986,
SEC.155.
Effect of acceptance; notice of breach; burden of establishing
breach after acceptance; notice of claim or litigation to person
answerable over
Sec. 607. (1) The buyer must pay at the contract rate for any
goods accepted.
(2) Acceptance of goods by the buyer precludes rejection of the
goods accepted, and if made with knowledge of a nonconformity
cannot be revoked because of it unless the acceptance was on the
reasonable assumption that the nonconformity would be seasonably
cured, but acceptance does not of itself impair any other remedy
provided by IC 26-1-2 for nonconformity.
(3) Where a tender has been accepted:
(a) the buyer must, within a reasonable time after he discovers
or should have discovered any breach, notify the seller of
breach or be barred from any remedy; and
(b) if the claim is one for infringement or the like (IC
26-1-2-312(3)) and the buyer is sued as a result of such a
breach, he must so notify the seller within a reasonable time
(4) The burden is on the buyer to establish any breach with
respect to the goods accepted.
(5) Where the buyer is sued for breach of a warranty or other
obligation for which his seller is answerable over:
(a) He may give his seller written notice of the litigation. If the
notice states that the seller may come in and defend and that if
the seller does not do so he will be bound in any action against
him by his buyer by any determination of fact common to the
two (2) litigations, then unless the seller after seasonable receipt
of the notice does come in and defend he is so bound.
(b) If the claim is one for infringement or the like (IC
26-1-2-312(3)), the original seller may demand in writing that
his buyer turn over to him control of the litigation including
settlement or else be barred from any remedy over, and if he
also agrees to bear all expense and to satisfy any adverse
judgment, then unless the buyer after seasonable receipt of the
demand does turn over control, the buyer is so barred.
(6) The provisions of subsections (3), (4), and (5) apply to any
obligation of a buyer to hold the seller harmless against infringement
or the like (IC 26-1-2-312(3)).
(Formerly: Acts 1963, c.317, s.2-607.) As amended by P.L.152-1986,
SEC.156.
Revocation of acceptance in whole or in part
Sec. 608. (1) The buyer may revoke his acceptance of a lot or
commercial unit whose non-conformity substantially impairs its
value to him if he has accepted it
(a) on the reasonable assumption that its non-conformity would be
cured and it has not been seasonably cured; or
(b) without discovery of such non-conformity if his acceptance
was reasonably induced either by the difficulty of discovery before
acceptance or by the seller's assurances.
(2) Revocation of acceptance must occur within a reasonable time
after the buyer discovers or should have discovered the ground for it
and before any substantial change in condition of the goods which is
not caused by their own defects. It is not effective until the buyer
notifies the seller of it.
(3) A buyer who so revokes has the same rights and duties with
regard to the goods involved as if he had rejected them.
(Formerly: Acts 1963, c.317, s.2-608.)
Right to adequate assurance of performance
Sec. 609. (1) A contract for sale imposes an obligation on each
party that the other's expectation of receiving due performance will
not be impaired. When reasonable grounds for insecurity arise with
respect to the performance of either party the other may in writing
(2) Between merchants the reasonableness of grounds for
insecurity and the adequacy of any assurance offered shall be
determined according to commercial standards.
(3) Acceptance of any improper delivery or payment does not
prejudice the aggrieved party's right to demand adequate assurance
of future performance.
(4) After receipt of a justified demand failure to provide within a
reasonable time not exceeding thirty (30) days such assurance of due
performance as is adequate under the circumstances of the particular
case is a repudiation of the contract.
(Formerly: Acts 1963, c.317, s.2-609.)
Anticipatory repudiation
Sec. 610. When either party repudiates the contract with respect
to a performance not yet due, the loss of which will substantially
impair the value of the contract to the other, the aggrieved party may:
(a) for a commercially reasonable time await performance by
the repudiating party; or
(b) resort to any remedy for breach (IC 26-1-2-703 or
IC 26-1-2-711), even though he has notified the repudiating
party that he would await the latter's performance and has urged
retraction; and
(c) in either case suspend his own performance or proceed in
accordance with the provisions of IC 26-1-2-704 on the seller's
right to identify goods to the contract notwithstanding breach or
to salvage unfinished goods.
(Formerly: Acts 1963, c.317, s.2-610.) As amended by P.L.152-1986,
SEC.157.
Retraction of anticipatory repudiation
Sec. 611. (1) Until the repudiating party's next performance is
due, he can retract his repudiation unless the aggrieved party has
since the repudiation cancelled or materially changed his position or
otherwise indicated that he considers the repudiation final.
(2) Retraction may be by any method which clearly indicates to
the aggrieved party that the repudiating party intends to perform, but
must include any assurance justifiably demanded under the
provisions of IC 26-1-2-609.
(3) Retraction reinstates the repudiating party's rights under the
contract with due excuse and allowance to the aggrieved party for
any delay occasioned by the repudiation.
(Formerly: Acts 1963, c.317, s.2-611.) As amended by P.L.152-1986,
SEC.158.
"Instalment contract"; breach
Sec. 612. (1) An "instalment contract" is one which requires or
authorizes the delivery of goods in separate lots to be separately
accepted, even though the contract contains a clause "each delivery
is a separate contract or its equivalent.
(2) The buyer may reject any instalment which is non-conforming
if the non-conformity substantially impairs the value of that
instalment and cannot be cured or if the non-conformity is a defect
in the required documents; but if the non-conformity does not fall
within subsection (3) and the seller gives adequate assurance of its
cure the buyer must accept that instalment.
(3) Whenever non-conformity or default with respect to one (1)
or more instalments substantially impairs the value of the whole
contract there is a breach of the whole. But the aggrieved party
reinstates the contract if he accepts a non-conforming instalment
without seasonably notifying of cancellation or if he brings an action
with respect only to past instalments or demands performance as to
future instalments.
(Formerly: Acts 1963, c.317, s.2-612.)
Casualty to identified goods
Sec. 613. Where the contract requires for its performance goods
identified when the contract is made, and the goods suffer casualty
without fault of either party before the risk of loss passes to the
buyer, or in a proper case under a "no arrival, no sale" term (IC
26-1-2-324), then:
(a) if the loss is total, the contract is avoided; and
(b) if the loss is partial or the goods have so deteriorated as no
longer to conform to the contract, the buyer may nevertheless
demand inspection and at his option either treat the contract as
avoided or accept the goods with due allowance from the
contract price for the deterioration or deficiency in quantity but
without further right against the seller.
(Formerly: Acts 1963, c.317, s.2-613.) As amended by P.L.152-1986,
SEC.159.
Substituted performance
Sec. 614. (1) Where without fault of either party the agreed
berthing, loading, or unloading facilities fail or an agreed type of
carrier becomes unavailable or the agreed manner of delivery
otherwise becomes commercially impracticable but a commercially
reasonable substitute is available, such substitute performance must
be tendered and accepted.
(2) If the agreed means or manner of payment fails because of
domestic or foreign governmental regulation, the seller may withhold
or stop delivery unless the buyer provides a means or manner of
payment which is commercially a substantial equivalent. If delivery
has already been taken, payment by the means or in the manner
(Formerly: Acts 1963, c.317, s.2-614.)
Excuse by failure of presupposed conditions
Sec. 615. Except so far as a seller may have assumed a greater
obligation and subject to IC 26-1-2-614 on substituted performance:
(a) Delay in delivery or non-delivery in whole or in part by a
seller who complies with paragraphs (b) and (c) is not a breach
of his duty under a contract for sale if performance as agreed
has been made impracticable by the occurrence of a
contingency the non-occurrence of which was a basic
assumption on which the contract was made or by compliance
in good faith with any applicable foreign or domestic
governmental regulation or order whether or not it later proves
to be invalid.
(b) Where the causes mentioned in paragraph (a) affect only a
part of the seller's capacity to perform, he must allocate
production and deliveries among his customers but may at his
option include regular customers not then under contract as well
as his own requirements for further manufacture. He may so
allocate in any manner which is fair and reasonable.
(c) The seller must notify the buyer seasonably that there will
be delay or non-delivery and, when allocation is required under
paragraph (b), of the estimated quota thus made available for
the buyer.
(Formerly: Acts 1963, c.317, s.2-615.) As amended by P.L.16-1983,
SEC.18.
Procedure on notice claiming excuse
Sec. 616. (1) Where the buyer receives notification of a material
or indefinite delay or an allocation justified under IC 26-1-2-615, he
may by written notification to the seller as to any delivery concerned,
and where the prospective deficiency substantially impairs the value
of the whole contract under the provisions of IC 26-1-2-612 relating
to breach of installment contracts, then also as to the whole:
(a) terminate and thereby discharge any unexecuted portion of
the contract; or
(b) modify the contract by agreeing to take his available quota
in substitution.
(2) If after receipt of such notification from the seller the buyer
fails so to modify the contract within a reasonable time not exceeding
thirty (30) days, the contract lapses with respect to any deliveries
affected.
(3) The provisions of this section may not be negated by
agreement except insofar as the seller has assumed a greater
obligation under IC 26-1-2-615.
(Formerly: Acts 1963, c.317, s.2-616.) As amended by P.L.152-1986,
Remedies for breach of collateral contracts not impaired
Sec. 701. Remedies for breach of any obligation or promise
collateral or ancillary to a contract for sale are not impaired by the
provisions of IC 26-1-2.
(Formerly: Acts 1963, c.317, s.2-701.) As amended by P.L.152-1986,
SEC.161.
Seller's remedies on discovery of buyer's insolvency
Sec. 702. (1) Where the seller discovers the buyer to be insolvent
he may refuse delivery except for cash including payment for all
goods theretofore delivered under the contract, and stop delivery
under IC 26-1-2-705.
(2) Where the seller discovers that the buyer has received goods
on credit while insolvent he may reclaim the goods upon demand
made within ten (10) days after the receipt, but if misrepresentation
of solvency has been made to the particular seller in writing within
three (3) months before delivery the ten (10) day limitation does not
apply. Except as provided in this subsection the seller may not base
a right to reclaim goods on the buyer's fraudulent or innocent
misrepresentation of solvency or of intent to pay.
(3) The seller's right to reclaim under subsection (2) is subject to
the rights of a buyer in ordinary course or other good faith purchaser
under IC 26-1-2-403. Successful reclamation of goods excludes all
other remedies with respect to them.
(Formerly: Acts 1963, c.317, s.2-702.) As amended by P.L.93-1985,
SEC.5.
Seller's remedies in general
Sec. 703. 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 (IC 26-1-2-612), then also with respect to the whole
undelivered balance, the aggrieved seller may:
(a) withhold delivery of such goods;
(b) stop delivery by any bailee as hereafter provided (IC
26-1-2-705);
(c) proceed under IC 26-1-2-704 respecting goods still
unidentified to the contract;
(d) resell and recover damages as hereafter provided (IC
26-1-2-706);
(e) recover damages for nonacceptance (IC 26-1-2-708) or in a
proper case the price (IC 26-1-2-709);
(f) cancel.
(Formerly: Acts 1963, c.317, s.2-703.) As amended by P.L.152-1986,
Seller's right to identify goods to the contract notwithstanding
breach or to salvage unfinished goods
Sec. 704. (1) An aggrieved seller under IC 26-1-2-703 may:
(a) identify to the contract conforming goods not already
identified if at the time he learned of the breach they are in his
possession or control;
(b) treat as the subject of resale goods which have demonstrably
been intended for the particular contract even though those
goods are unfinished.
(2) Where the goods are unfinished, an aggrieved seller may in the
exercise of reasonable commercial judgment for the purposes of
avoiding loss and of effective realization either complete the
manufacture and wholly identify the goods to the contract or cease
manufacture and resell for scrap or salvage value or proceed in any
other reasonable manner.
(Formerly: Acts 1963, c.317, s.2-704.) As amended by P.L.152-1986,
SEC.163.
Seller's stoppage of delivery in transit or otherwise
Sec. 705. (1) The seller may stop delivery of goods in the
possession of a carrier or other bailee when he discovers the buyer
to be insolvent (IC 26-1-2-702) and may stop delivery of carload,
truckload, planeload, or larger shipments of express or freight when
the buyer repudiates or fails to make a payment due before delivery
or if for any other reason the seller has a right to withhold or reclaim
the goods.
(2) As against such buyer the seller may stop delivery until:
(a) receipt of the goods by the buyer; or
(b) acknowledgment to the buyer by any bailee of the goods
except a carrier that the bailee holds the goods for the buyer; or
(c) such acknowledgment to the buyer by a carrier by
reshipment or as a warehouse; or
(d) negotiation to the buyer of any negotiable document of title
covering the goods.
(3) (a) To stop delivery, the seller must so notify as to enable the
bailee by reasonable diligence to prevent delivery of the goods.
(b) After such notification, the bailee must hold and deliver the
goods according to the directions of the seller, but the seller is liable
to the bailee for any ensuing charges or damages.
(c) If a negotiable document of title has been issued for goods, the
bailee is not obliged to obey a notification to stop until surrender of
possession or control of the document.
(d) A carrier who has issued a nonnegotiable bill of lading is not
obliged to obey a notification to stop received from a person other
than the consignor.
(Formerly: Acts 1963, c.317, s.2-705.) As amended by P.L.152-1986,
Seller's resale, including contract for resale
Sec. 706. (1) Under the conditions stated in IC 26-1-2-703 on
seller's remedies, the seller may resell the goods concerned or the
undelivered balance thereof. Where the resale is made in good faith
and in a commercially reasonable manner, the seller may recover the
difference between the resale price and the contract price together
with any incidental damages allowed under the provisions of
IC 26-1-2-710, but less expenses saved in consequence of the buyer's
breach.
(2) Except as otherwise provided in subsection (3) or unless
otherwise agreed, resale may be at public or private sale including
sale by way of one (1) or more contracts to sell or of identification
to an existing contract of the seller. Sale may be as a unit or in
parcels and at any time and place and on any terms, but every aspect
of the sale including the method, manner, time, place, and terms must
be commercially reasonable. The resale must be reasonably
identified as referring to the broken contract, but it is not necessary
that the goods be in existence or that any or all of them have been
identified to the contract before the breach.
(3) Where the resale is at private sale, the seller must give the
buyer reasonable notification of his intention to resell.
(4) Where the resale is at public sale:
(a) only identified goods can be sold except where there is a
recognized market for a public sale of futures in goods of the
kind; and
(b) it must be made at a usual place or market for public sale if
one is reasonably available and, except in the case of goods
which are perishable or threaten to decline in value speedily,
the seller must give the buyer reasonable notice of the time and
place of the resale; and
(c) if the goods are not to be within the view of those attending
the sale, the notification of sale must state the place where the
goods are located and provide for their reasonable inspection by
prospective bidders; and
(d) the seller may buy.
(5) A purchaser who buys in good faith at a resale takes the goods
free of any rights of the original buyer even though the seller fails to
comply with one (1) or more of the requirements of this section.
(6) The seller is not accountable to the buyer for any profit made
on any resale. A person in the position of a seller (IC 26-1-2-707) or
a buyer who has rightfully rejected or justifiably revoked acceptance
must account for any excess over the amount of his security interest,
as hereinafter defined (IC 26-1-2-711(3)).
(Formerly: Acts 1963, c.317, s.2-706.) As amended by P.L.152-1986,
SEC.165.
"Person in the position of a seller"
Sec. 707. (1) A "person in the position of a seller" includes (as
against a principal) an agent who has paid or become responsible for
the price of goods on behalf of his principal or anyone who otherwise
holds a security interest or other right in goods similar to that of a
seller.
(2) A person in the position of a seller may as provided in
IC 26-1-2 withhold or stop delivery (IC 26-1-2-705) and resell (IC
26-1-2-706) and recover incidental damages (IC 26-1-2-710).
(Formerly: Acts 1963, c.317, s.2-707.) As amended by P.L.152-1986,
SEC.166.
Seller's damages for nonacceptance or repudiation
Sec. 708. (1) Subject to subsection (2) and to the provisions of
IC 26-1-2-723 with respect to proof of market price, 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 IC 26-1-2-710, but less expenses saved in consequence
of the buyer's breach.
(2) If the measure of damages provided in subsection (1) is
inadequate to put the seller in as good a position as performance
would have done, then the measure of damages is the profit
(including reasonable overhead) which the seller would have made
from full performance by the buyer, together with any incidental
damages provided in IC 26-1-2-710, due allowance for costs
reasonably incurred and due credit for payments or proceeds of
resale.
(Formerly: Acts 1963, c.317, s.2-708.) As amended by P.L.152-1986,
SEC.167.
Action for the price
Sec. 709. (1) When the buyer fails to pay the price as it becomes
due, the seller may recover, together with any incidental damages
under IC 26-1-2-710, the price:
(a) of goods accepted or of conforming goods lost or damaged
within a commercially reasonable time after risk of their loss
has passed to the buyer; and
(b) of goods identified to the contract if the seller is unable after
reasonable effort to resell them at a reasonable price or the
circumstances reasonably indicate that such effort will be
unavailing.
(2) Where the seller sues for the price, he must hold for the buyer
any goods which have been identified to the contract and are still in
his control, except that if resale becomes possible he may resell them
at any time prior to the collection of the judgment. The net proceeds
of any such resale must be credited to the buyer and payment of the
judgment entitles him to any goods not resold.
(3) After the buyer has wrongfully rejected or revoked acceptance
of the goods or has failed to make a payment due or has repudiated
(IC 26-1-2-610), a seller who is held not entitled to the price under
this section shall nevertheless be awarded damages for
nonacceptance under IC 26-1-2-708.
(Formerly: Acts 1963, c.317, s.2-709.) As amended by P.L.152-1986,
SEC.168.
Seller's incidental damages
Sec. 710. 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.
(Formerly: Acts 1963, c.317, s.2-710.)
Buyer's remedies in general; buyer's security interest in rejected
goods
Sec. 711. (1) Where the seller fails to make delivery or repudiates
or the buyer rightfully rejects or justifiably revokes acceptance, then
with respect to any goods involved, and with respect to the whole if
the breach goes to the whole contract (IC 26-1-2-612), the buyer may
cancel, and whether or not he has done so may in addition to
recovering so much of the price as has been paid:
(a) "cover" and have damages under IC 26-1-2-712 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
IC 26-1-2-713.
(2) Where the seller fails to deliver or repudiates the buyer may
also:
(a) if the goods have been identified, recover them as provided
in IC 26-1-2-502; or
(b) in a proper case obtain specific performance or replevy the
goods as provided in IC 26-1-2-716.
(3) On rightful rejection or justifiable revocation of acceptance,
a buyer has a security interest in goods in his possession or control
for any payments made on their price and any expenses reasonably
incurred in their inspection, receipt, transportation, care, and custody
and may hold such goods and resell them in like manner as an
aggrieved seller (IC 26-1-2-706).
(Formerly: Acts 1963, c.317, s.2-711.) As amended by P.L.152-1986,
SEC.169.
"Cover"; buyer's procurement of substitute goods
Sec. 712. (1) After a breach within IC 26-1-2-711, the buyer may
"cover" by making in good faith and without unreasonable delay any
(2) The buyer may recover from the seller as damages the
difference between the cost of cover and the contract price together
with any incidental or consequential damages as hereinafter defined
(IC 26-1-2-715), but less expenses saved in consequence of the
seller's breach.
(3) Failure of the buyer to effect cover within this section does not
bar him from any other remedy.
(Formerly: Acts 1963, c.317, s.2-712.) As amended by P.L.152-1986,
SEC.170.
Buyer's damages for nondelivery or repudiation
Sec. 713. (1) Subject to the provisions of IC 26-1-2-723 with
respect to proof of market price, 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 IC 26-1-2-715, but less expenses saved in
consequence of the seller's breach.
(2) Market price is to be determined as of the place for tender or,
in cases of rejection after arrival or revocation of acceptance, as of
the place of arrival.
(Formerly: Acts 1963, c.317, s.2-713.) As amended by P.L.152-1986,
SEC.171.
Buyer's damages for breach in regard to accepted goods
Sec. 714. (1) Where the buyer has accepted goods and given
notification (IC 26-1-2-607(3)), he may recover as damages for any
nonconformity of tender the loss resulting in the ordinary course of
events from the seller's breach as determined in any manner which is
reasonable.
(2) The measure of damages for breach of warranty is the
difference at the time and place of acceptance between the value of
the goods accepted and the value they would have had if they had
been as warranted, unless special circumstances show proximate
damages of a different amount.
(3) In a proper case any incidental and consequential damages
under IC 26-1-2-715 may also be recovered.
(Formerly: Acts 1963, c.317, s.2-714.) As amended by P.L.152-1986,
SEC.172.
Buyer's incidental and consequential damages
Sec. 715. (1) Incidental damages resulting from the seller's breach
include expenses reasonably incurred in inspection, receipt,
transportation and care and custody of goods rightfully rejected, any
commercially reasonable charges, expenses or commissions in
(2) Consequential damages resulting from the seller's breach
include
(a) any loss resulting from general or particular requirements and
needs of which the seller at the time of contracting had reason to
know and which could not reasonably be prevented by cover or
otherwise; and
(b) injury to person or property proximately resulting from any
breach of warranty.
(Formerly: Acts 1963, c.317, s.2-715.)
Buyer's right to specific performance or replevin
Sec. 716. (1) Specific performance may be decreed where the
goods are unique or in other proper circumstances.
(2) The decree for specific performance may include such terms
and conditions as to payment of the price, damages, or other relief as
the court may deem just.
(3) The buyer has a right of replevin for goods identified to the
contract if after reasonable effort he is unable to effect cover for such
goods or the circumstances reasonably indicate that such effort will
be unavailing or if the goods have been shipped under reservation
and satisfaction of the security interest in them has been made or
tendered. In the case of goods bought for personal, family, or
household purposes, the buyer's right of replevin vests upon
acquisition of a special property, even if the seller had not then
repudiated or failed to deliver.
(Formerly: Acts 1963, c.317, s.2-716.) As amended by P.L.57-2000,
SEC.22.
Deduction of damages from the price
Sec. 717. The buyer on notifying the seller of his intention so to
do 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.
(Formerly: Acts 1963, c.317, s.2-717.)
Liquidation or limitation of damages; deposits
Sec. 718. (1) Damages for breach by either party may be
liquidated in the agreement, but only at an amount which is
reasonable in the light of the anticipated or actual harm caused by the
breach, the difficulties of proof of loss, and the inconvenience or
nonfeasibility of otherwise obtaining an adequate remedy. A term
fixing unreasonably large liquidated damages is void as a penalty.
(2) Where the seller justifiably withholds delivery of goods
because of the buyer's breach, the buyer is entitled to restitution of
any amount by which the sum of his payments exceeds:
(a) the amount to which the seller is entitled by virtue of terms
liquidating the seller's damages in accordance with subsection
(1); or
(b) in the absence of such terms, twenty percent (20%) of the
value of the total performance for which the buyer is obligated
under the contract or five hundred dollars ($500), whichever is
smaller.
(3) The buyer's right to restitution under subsection (2) is subject
to offset to the extent that the seller establishes:
(a) a right to recover damages under the provisions of IC 26-1-2
other than subsection (1); and
(b) the amount or value of any benefits received by the buyer
directly or indirec