Chapter 402

GENERAL OBLIGATION AND CONSTRUCTION
OF CONTRACT

402.301 402.301 General obligations of parties. The obligation of the seller is to transfer and deliver and that of the buyer is to accept and pay in accordance with the contract.

402.302 402.302 Unconscionable contract or clause.

402.302(1) (1) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.

402.302(2) (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.

402.302 Annotation Unconscionability requires an absence of meaningful choice on the part of one party, together with contract terms that are unreasonably favorable to the other. To find unconscionability requires a certain quantum of both procedural and substantive unconscionability. Procedural unconscionability bears on a meeting of the minds, while substantive unconscionability pertains to the reasonableness of the contract terms themselves. Deminsky v. Arlington Plastics Machinery, 2003 WI 15, 259 Wis. 2d 587, 657 N.W.2d 411, 01-0242.

402.302 Annotation Discussing the conspicuousness necessary for an effective warranty disclaimer. H.B. Fuller Co. v. Kinetic Systems, Inc., 932 F.2d 681 (1991).

402.303 402.303 Allocation or division of risks. Where this chapter 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.

402.304 402.304 Price payable in money, goods, realty, or otherwise.

402.304(1) (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 that party is to transfer.

402.304(2) (2) Even though all or part of the price is payable in an interest in realty the transfer of the goods and the seller’s obligations with reference to them are subject to this chapter, but not the transfer of the interest in realty or the transferor’s obligations in connection therewith.

402.304 History History: 1991 a. 316.

402.305 402.305 Open price term.

402.305(1) (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:

402.305(1)(a) (a) Nothing is said as to price; or

402.305(1)(b) (b) The price is left to be agreed by the parties and they fail to agree; or

402.305(1)(c) (c) The price is to be fixed in terms of some agreed market or other standard as set or recorded by a 3rd person or agency and it is not so set or recorded.

402.305(2) (2) A price to be fixed by the seller or by the buyer means a price for that party to fix in good faith.

402.305(3) (3) When a price left to be fixed otherwise than by agreement of the parties fails to be fixed through fault of one party the other party may at his or her option treat the contract as canceled or fix a reasonable price.

402.305(4) (4) Where, however, the parties intend not to be bound unless the price is fixed or agreed and it is not fixed or agreed there is no contract. In such a case the buyer must return any goods already received or if unable so to do must pay their reasonable value at the time of delivery and the seller must return any portion of the price paid on account.

402.305 History History: 1991 a. 316; 1997 a. 35; 2005 a. 253.

402.305 Annotation An implied contract by a dairy plant to pay the competitive price to milk producers does not permit the plant to pay a lower price since the mere absence of misrepresentation or deceit does not establish good faith; an open price contract still requires fair dealing. Columbus Milk Producers’ Cooperative v. Department of Agriculture, 48 Wis. 2d 451, 180 N.W.2d 617 (1970).

402.305 Annotation Under this section, which allows parties to a contract for the sale of goods to conclude the contract agreeing to settle the price at a subsequent date, the contract price is a reasonable price at the time of delivery if the parties are unable to agree. Schmieder v. Standard Oil Co. of Indiana, 69 Wis. 2d 419, 230 N.W.2d 732 (1975).

402.306 402.306 Output, requirements and exclusive dealings.

402.306(1) (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.

402.306(2) (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.

402.306 Annotation A “pay as used” proposal to purchase inventory was analogous to a “requirements contract.” Lambert Corp. v. Evans, 575 F.2d 132 (1978).

402.307 402.307 Delivery in single lot or several lots. Unless otherwise agreed all goods called for by a contract for sale must be tendered in a single delivery and payment is due only on such tender but where the circumstances give either party the right to make or demand delivery in lots the price if it can be apportioned may be demanded for each lot.

402.308 402.308 Absence of specified place for delivery. Unless otherwise agreed:

402.308(1) (1) The place for delivery of goods is the seller’s place of business or if the seller has none the seller’s residence; but

402.308(2) (2) 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

402.308(3) (3) Documents of title may be delivered through customary banking channels.

402.308 History History: 1991 a. 316.

402.309 402.309 Absence of specific time provisions; notice of termination.

402.309(1) (1) The time for shipment or delivery or any other action under a contract if not provided in this chapter or agreed upon shall be a reasonable time.

402.309(2) (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.

402.309(3) (3) Termination of a contract by one party except on the happening of an agreed event requires that reasonable notification be received by the other party and an agreement dispensing with notification is invalid if its operation would be unconscionable.

402.309 Annotation In this case, although the parties’ agreements showed that the defendant did not promise to meet a strict deadline, that didn’t mean that the defendant’s delays could not qualify as a material breach. Under sub. (1), even when no time for performance is identified in a sales agreement, a party must complete performance in a reasonable time. Oregon Potato Co. v. Kerry Inc., 575 F. Supp. 3d 1064 (2021).

402.310 402.310 Open time for payment or running of credit; authority to ship under reservation. Unless otherwise agreed:

402.310(1) (1) 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

402.310(2) (2) If the seller is authorized to send the goods the seller 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 (s. 402.513); and

402.310(3) (3) If delivery is authorized and made by way of documents of title otherwise than by sub. (2) then payment is due regardless of where the goods are to be received at the time and place at which the buyer is to receive the documents; or 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

402.310(4) (4) 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.

402.310 History History: 1991 a. 316; 2009 a. 322.

402.311 402.311 Options and cooperation respecting performance.

402.311(1) (1) An agreement for sale which is otherwise sufficiently definite (s. 402.204 (3)) to be a contract is not made invalid by the fact that it leaves particulars of performance to be specified by one of the parties. Any such specification must be made in good faith and within limits set by commercial reasonableness.

402.311(2) (2) Unless otherwise agreed specifications relating to assortment of the goods are at the buyer’s option and except as otherwise provided in s. 402.319 (1) (c) and (3) specifications or arrangements relating to shipment are at the seller’s option.

402.311(3) (3) Where such specification would materially affect the other party’s performance but is not seasonably made or where one party’s cooperation is necessary to the agreed performance of the other but is not seasonably forthcoming, the other party in addition to all other remedies:

402.311(3)(a) (a) Is excused for any resulting delay in his or her own performance; and

402.311(3)(b) (b) May also either proceed to perform in any reasonable manner or after the time for a material part of his or her own performance treat the failure to specify or to cooperate as a breach by failure to deliver or accept the goods.

402.311 History History: 1991 a. 316.

402.312 402.312 Warranty of title and against infringements; buyer’s obligation against infringement.

402.312(1) (1) Subject to sub. (2) there is in a contract for sale a warranty by the seller that:

402.312(1)(a) (a) The title conveyed shall be good, and its transfer rightful; and

402.312(1)(b) (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.

402.312(2) (2) A warranty under sub. (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 herself or that the person selling is purporting to sell only such right or title as the person selling or a 3rd person may have.

402.312(3) (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 3rd 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.

402.312 History History: 1971 c. 40; 1991 a. 316; 2005 a. 253.

402.313 402.313 Express warranties by affirmation, promise, description, sample.

402.313(1) (1) Express warranties by the seller are created as follows:

402.313(1)(a) (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.

402.313(1)(b) (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.

402.313(1)(c) (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.

402.313(2) (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 the seller have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller’s opinion or commendation of the goods does not create a warranty.

402.313 History History: 1991 a. 316.

402.313 Annotation Discussing express warranties. Ewers v. Eisenzopf, 88 Wis. 2d 482, 276 N.W.2d 802 (1979).

402.313 Annotation Nothing in this section exempts promises to repair and replace defective parts from the definition of express warranty. That makes sense because a promise to repair and replace does not change the character of a warranty but rather the remedy available to the consumer. Most motor vehicle warranties limit a buyer’s remedy to repair or replacement. Bryant v. BMW of North America LLC, 585 F. Supp. 3d 1178 (2022).

402.313 Annotation Strict Liability of the Bailor, Lessor and Licensor. Wiseman. 57 MLR 111 (1973).

402.314 402.314 Implied warranty: merchantability; usage of trade.

402.314(1) (1) Unless excluded or modified (s. 402.316), 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.

402.314(2) (2) Goods to be merchantable must be at least such as:

402.314(2)(a) (a) Pass without objection in the trade under the contract description; and

402.314(2)(b) (b) In the case of fungible goods, are of fair average quality within the description; and

402.314(2)(c) (c) Are fit for the ordinary purposes for which such goods are used; and

402.314(2)(d) (d) Run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; and

402.314(2)(e) (e) Are adequately contained, packaged, and labeled as the agreement may require; and

402.314(2)(f) (f) Conform to the promises or affirmations of fact made on the container or label if any.

402.314(3) (3) Unless excluded or modified (s. 402.316) other implied warranties may arise from course of dealing or usage of trade.

402.314 Annotation An unincorporated organization of band mothers who sold food at a fund-raising luncheon were not merchants as contemplated by sub. (1). Samson v. Riesing, 62 Wis. 2d 698, 215 N.W.2d 662 (1974).

402.314 Annotation Evidence that the goods break or physically deteriorate after delivery may be relevant to whether the goods were fit at the time of delivery for the ordinary purpose for which they are used, but consideration of that evidence for that purpose does not impose an express warranty for future performance. City of Stoughton v. Thomasson Lumber Co., 2004 WI App 6, 269 Wis. 2d 339, 675 N.W.2d 487, 02-2192.

402.314 Annotation A party may sue for breach of implied warranties under the Uniform Commercial Code although it does not take possession of the goods if it is the party who contracts to buy the goods. Estate of Kriefall v. Sizzler USA Franchise, Inc., 2011 WI App 101, 335 Wis. 2d 151, 801 N.W.2d 781, 09-1212.

402.314 Annotation When circumstances rendered a breach of good faith and of a fiduciary obligation chargeable to the buyer, the buyer was barred from asserting causes based on a breach of the warranty of merchantability, or on the seller’s claimed fault, to recover from the seller that portion of the claim disallowed, with the buyer’s consent, by the shipper. Greisler Brothers, Inc. v. Packerland Packing Co., 392 F. Supp. 206 (1975).

402.314 Annotation The Implied Warranty of Merchantability and the Remote Manufacturer. Anzivino. 101 MLR 505 (2017).

402.314 Annotation Status of Products Liability in Wisconsin. Coyne. WBB Aug. 1970.

402.315 402.315 Implied warranty: fitness for particular purpose. Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is unless excluded or modified under s. 402.316 an implied warranty that the goods shall be fit for such purpose.

402.315 Annotation A party may sue for breach of implied warranties under the Uniform Commercial Code although it does not take possession of the goods if it is the party who contracts to buy the goods. Estate of Kriefall v. Sizzler USA Franchise, Inc., 2011 WI App 101, 335 Wis. 2d 151, 801 N.W.2d 781, 09-1212.

402.315 Annotation When expansion joints corroded soon after installation in a steam system, but the defendant manufacturer was unaware of the corrosive agent in the steam, this section did not allow recovery. Wisconsin Electric Power Co. v. Zallea Brothers, Inc., 606 F.2d 697 (1979).

402.316 402.316 Exclusion or modification of warranties.

402.316(1) (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 s. 402.202 on parol or extrinsic evidence, negation or limitation is inoperative to the extent that such construction is unreasonable.