Chapter 402

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.

402.316(2) (2) Subject to sub. (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.”

402.316(3) (3) Notwithstanding sub. (2), all of the following apply:

402.316(3)(a) (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.

402.316(3)(b) (b) When the buyer before entering into the contract has examined the goods or the sample or model as fully as the buyer 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 the buyer.

402.316(3)(c) (c) Except as provided in s. 95.195, there is no implied warranty that cattle, hogs, sheep or horses are free from sickness or disease at the time a sale is consummated if all state and federal regulations pertaining to animal health are complied with by the seller, unless the seller knows at the time a sale is consummated that the cattle, hogs, sheep or horses were sick or diseased.

402.316(3)(d) (d) An implied warranty can be excluded or modified by course of dealing or course of performance or usage of trade.

402.316(4) (4) Remedies for breach of warranty can be limited in accordance with ss. 402.718 and 402.719 on liquidation or limitation of damages and on contractual modification of remedy.

402.316 History History: 1981 c. 128; 1989 a. 277.

402.316 Annotation A disclaimer of implied warranties under sub. (2) made after sale would be ineffective. Taterka v. Ford Motor Co., 86 Wis. 2d 140, 271 N.W.2d 653 (1978).

402.317 402.317 Cumulation and conflict of warranties express or implied. 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:

402.317(1) (1) Exact or technical specifications displace an inconsistent sample or model or general language of description.

402.317(2) (2) A sample from an existing bulk displaces inconsistent general language of description.

402.317(3) (3) Express warranties displace inconsistent implied warranties other than an implied warranty of fitness for a particular purpose.

402.318 402.318 Third-party beneficiaries of warranties, express or implied. A seller’s warranty whether express or implied extends to any natural person who is in the family or household of the seller’s buyer or who is a guest in that buyer’s 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.

402.318 History History: 1991 a. 316; 2007 a. 97.

402.318 Annotation Privity of contract is required in implied warranty cases, and the availability of punitive damages depends on the facts proved rather than the formal theory of recovery alleged. Drake v. Wham-O Manufacturing Co., 373 F. Supp. 608 (1974).

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

402.319 402.319 F.O.B. and F.A.S. terms.

402.319(1) (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:

402.319(1)(a) (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 s. 402.504 and bear the expense and risk of putting them into the possession of the carrier; or

402.319(1)(b) (b) When the term is F.O.B. the place of destination, the seller must at the seller’s expense and risk transport the goods to that place and there tender delivery of them in the manner provided in s. 402.503;

402.319(1)(c) (c) When under either par. (a) or (b) the term is also F.O.B. vessel, car or other vehicle, the seller must in addition at the seller’s 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 s. 402.323 on the form of bill of lading.

402.319(2) (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:

402.319(2)(a) (a) At the seller’s 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

402.319(2)(b) (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.

402.319(3) (3) Unless otherwise agreed in any case falling within sub. (1) (a) or (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 instructions as a failure of cooperation under s. 402.311. The seller may also at the seller’s option move the goods in any reasonable manner preparatory to delivery or shipment.

402.319(4) (4) Under the term F.O.B. vessel or F.A.S. unless otherwise agreed the buyer must make payment against tender of the required documents and the seller may not tender nor the buyer demand delivery of the goods in substitution for the documents.

402.319 History History: 1991 a. 316.

402.319 Annotation When a contract specified “free alongside” (FAS) terms, the buyer’s confirmation form containing inconsistent terms did not relieve the buyer of liability for goods properly delivered FAS. Melrose International Trading Co. of Canada v. Patrick Cudahy Inc., 482 F. Supp. 1369 (1980).

402.320 402.320 C.I.F. and C.& F. terms.

402.320(1) (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.

402.320(2) (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 the seller’s expense and risk to:

402.320(2)(a) (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

402.320(2)(b) (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

402.320(2)(c) (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

402.320(2)(d) (d) Prepare an invoice of the goods and procure any other documents required to effect shipment or to comply with the contract; and

402.320(2)(e) (e) Forward and tender with commercial promptness all the documents in due form and with any endorsement necessary to perfect the buyer’s rights.

402.320(3) (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.

402.320(4) (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.

402.320 History History: 1991 a. 316.

402.321 402.321 C.I.F. or C.& F.: “net landed weights”; “payment on arrival”; warranty of condition on arrival. Under a contract containing a term C.I.F. or C.& F.:

402.321(1) (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.

402.321(2) (2) An agreement described in sub. (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.

402.321(3) (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.

402.322 402.322 Delivery “ex-ship”.

402.322(1) (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.

402.322(2) (2) Under such a term unless otherwise agreed:

402.322(2)(a) (a) The seller must discharge all liens arising out of the carriage and furnish the buyer with a direction which puts the carrier under a duty to deliver the goods; and

402.322(2)(b) (b) The risk of loss does not pass to the buyer until the goods leave the ship’s tackle or are otherwise properly unloaded.

402.323 402.323 Form of bill of lading required in overseas shipment; “overseas”.

402.323(1) (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.

402.323(2) (2) Where in a case within sub. (1) a tangible bill of lading has been issued in a set of parts, unless otherwise agreed if the documents are not to be sent from abroad the buyer may demand tender of the full set; otherwise only one part of the bill of lading need be tendered. Even if the agreement expressly requires a full set:

402.323(2)(a) (a) Due tender of a single part is acceptable within the provisions of s. 402.508 (1) on cure of improper delivery; and

402.323(2)(b) (b) Even though the full set is demanded, if the documents are sent from abroad the person tendering an incomplete set may nevertheless require payment upon furnishing an indemnity which the buyer in good faith deems adequate.

402.323(3) (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.

402.323 History History: 2009 a. 322.

402.324 402.324 “No arrival, no sale” term. Under a term “no arrival, no sale” or terms of like meaning, unless otherwise agreed:

402.324(1) (1) The seller must properly ship conforming goods and if they arrive by any means the seller must tender them on arrival but the seller assumes no obligation that the goods will arrive unless the seller has caused the nonarrival; and

402.324(2) (2) 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 (s. 402.613).

402.324 History History: 1991 a. 316.

402.325 402.325 “Letter of credit” term; “confirmed credit”.

402.325(1) (1) Failure of the buyer seasonably to furnish an agreed letter of credit is a breach of the contract for sale.

402.325(2) (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 the buyer.

402.325(3) (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.

402.325 History History: 1991 a. 316.

402.326 402.326 Sale on approval and sale or return; rights of creditors.

402.326(1) (1) Unless otherwise agreed, if delivered goods may be returned by the buyer even though they conform to the contract, the transaction is:

402.326(1)(a) (a) A “sale on approval” if the goods are delivered primarily for use; and

402.326(1)(b) (b) A “sale or return” if the goods are delivered primarily for resale.

402.326(2) (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.

402.326(4) (4) Any “or return” term of a contract for sale is to be treated as a separate contract for sale within s. 402.201 and as contradicting the sale aspect of the contract within s. 402.202 on parol or extrinsic evidence.

402.326(5) (5) If a person delivers or consigns for sale goods that the person used, or bought for use, for personal, family or household purposes, these goods do not become the property of the deliveree or consignee unless the deliveree or consignee purchases and fully pays for the goods. This subsection does not prevent the deliveree or consignee from acting as the deliverer’s or consignor’s agent to transfer title to these goods to a buyer who pays the full purchase price. Any payment received by the deliveree or consignee from a buyer of these goods, less any amount that the deliverer or consignor expressly agreed could be deducted from the payment for commissions, fees or expenses, is the property of the deliveror or consignor and is not subject to the claims of the deliveree’s or consignee’s creditors.

402.326 History History: 1991 a. 316; 1997 a. 279; 2001 a. 10.

402.326 Annotation Enumerating and discussing factors relevant to determining whether goods are delivered “for sale.” Armor All Products v. Amoco Oil Co., 194 Wis. 2d 35, 533 N.W.2d 720 (1995).

402.326 Annotation Whether a transaction is a “sale on approval” must be determined by an objective examination of the transaction documents and the parties’ performance, rather than examination of the parties’ subjective intent. Houghton Wood Products, Inc. v. Badger Wood Products, Inc., 196 Wis. 2d 457, 538 N.W.2d 621 (Ct. App. 1995), 95-0004.

402.326 Annotation When a good is used in the manufacturing process where it undergoes transformation and is subsequently resold, it is not delivered for “use” under sub. (1). Houghton Wood Products, Inc. v. Badger Wood Products, Inc., 196 Wis. 2d 457, 538 N.W.2d 621 (Ct. App. 1995), 95-0004.

402.327 402.327 Special incidents of sale on approval and sale or return.

402.327(1) (1) Under a sale on approval unless otherwise agreed:

402.327(1)(a) (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

402.327(1)(b) (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

402.327(1)(c) (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.

402.327(2) (2) Under a sale or return unless otherwise agreed:

402.327(2)(a) (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

402.327(2)(b) (b) The return is at the buyer’s risk and expense.