Chapter 402

402.402(2) (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 the creditor 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.

402.402(3) (3) Nothing in this chapter shall be deemed to impair the rights of creditors of the seller:

402.402(3)(a) (a) Under the provisions of ch. 409; or

402.402(3)(b) (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 preexisting 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 this chapter constitute the transaction a fraudulent or voidable transfer or voidable preference.

402.402 History History: 1991 a. 316; 2023 a. 246.

402.403 402.403 Power to transfer; good faith purchase of goods; “entrusting”.

402.403(1) (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:

402.403(1)(a) (a) The transferor was deceived as to the identity of the purchaser; or

402.403(1)(b) (b) The delivery was in exchange for a check which is later dishonored; or

402.403(1)(c) (c) It was agreed that the transaction was to be a “cash sale”; or

402.403(1)(d) (d) The delivery was procured through fraud punishable as larcenous under the criminal law.

402.403(2) (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.

402.403(3) (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 larcenous under the criminal law.

402.403(4) (4) The rights of other purchasers of goods and of lien creditors are governed by chs. 407 and 409.

402.403 History History: 1991 a. 316; 2009 a. 110.

402.403 Annotation A person with a voidable title in property, having the power to pass title to a good faith purchaser under this section, may transfer a security interest in that property. National Pawn Brokers Unlimited v. Osterman, Inc., 176 Wis. 2d 418, 500 N.W.2d 407 (Ct. App. 1993).

402.403 Annotation Discussing “voidable titles” under sub. (1) (a). Met-Al, Inc. v. Hansen Storage Co., 844 F. Supp. 485 (1994).

402.403 Annotation Buyer in Ordinary Course of Business Under Article 9 of the Uniform Commercial Code (and Related Matters). Skilton. 1974 WLR 1.

subch. V of ch. 402 SUBCHAPTER V

PERFORMANCE

402.501 402.501 Insurable interest in goods; manner of identification of goods.

402.501(1) (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 the buyer has an option to return or reject them. Such identification can be made at any time and in any manner explicitly agreed to by the parties. In the absence of explicit agreement identification occurs:

402.501(1)(a) (a) When the contract is made if it is for the sale of goods already existing and identified;

402.501(1)(b) (b) If the contract is for the sale of future goods other than those described in par. (c), when goods are shipped, marked or otherwise designated by the seller as goods to which the contract refers;

402.501(1)(c) (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 12 months after contracting or for the sale of crops to be harvested within 12 months or the next normal harvest season after contracting whichever is longer.

402.501(2) (2) The seller retains an insurable interest in goods so long as title to or any security interest in the goods remains in the seller and where the identification is by the seller alone the seller may until default or insolvency or notification to the buyer that the identification is final substitute other goods for those identified.

402.501(3) (3) Nothing in this section impairs any insurable interest recognized under any other statute or rule of law.

402.501 History History: 1991 a. 316.

402.502 402.502 Buyer’s right to goods on seller’s repudiation, failure to deliver, or insolvency.

402.502(1) (1) Subject to subs. (2) and (3) and even though the goods have not been shipped a buyer who has paid a part or all of the price of goods in which the buyer has a special property under s. 402.501 may on making and keeping good a tender of any unpaid portion of their price recover them from the seller if:

402.502(1)(a) (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

402.502(1)(b) (b) In all cases, the seller becomes insolvent within 10 days after receipt of the first installment on their price.

402.502(2) (2) The buyer’s right to recover the goods under sub. (1) (a) vests upon acquisition of a special property, even if the seller had not then repudiated or failed to deliver.

402.502(3) (3) If the identification creating the buyer’s special property has been made by the buyer, the buyer acquires the right to recover the goods only if they conform to the contract for sale.

402.502 History History: 1991 a. 316; 2001 a. 10.

402.503 402.503 Manner of seller’s tender of delivery.

402.503(1) (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 the buyer to take delivery. The manner, time and place for tender are determined by the agreement and this chapter, and in particular:

402.503(1)(a) (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

402.503(1)(b) (b) Unless otherwise agreed the buyer must furnish facilities reasonably suited to the receipt of the goods.

402.503(2) (2) Where the case is within s. 402.504 respecting shipment tender requires that the seller comply with its provisions.

402.503(3) (3) Where the seller is required to deliver at a particular destination tender requires that the seller comply with sub. (1) and also in any appropriate case tender documents as described in subs. (4) and (5).

402.503(4) (4) Where goods are in the possession of a bailee and are to be delivered without being moved:

402.503(4)(a) (a) Tender requires that the seller either tender a negotiable document of title covering such goods or procure acknowledgment by the bailee of the buyer’s right to possession of the goods; but

402.503(4)(b) (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 ch. 409 receipt by the bailee of notification of the buyer’s rights fixes those rights as against the bailee and all 3rd persons; but risk of loss of the goods and of any failure by the bailee to honor the nonnegotiable document of title or to 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.

402.503(5) (5) Where the contract requires the seller to deliver documents:

402.503(5)(a) (a) The seller must tender all such documents in correct form, except as provided in s. 402.323 (2) with respect to bills of lading in a set; and

402.503(5)(b) (b) Tender through customary banking channels is sufficient and dishonor of a draft accompanying or associated with the documents constitutes nonacceptance or rejection.

402.503 History History: 1991 a. 316; 2005 a. 253; 2009 a. 322.

402.504 402.504 Shipment by seller.

402.504(1) (1) Where the seller is required or authorized to send the goods to the buyer and the contract does not require the seller to deliver them at a particular destination, then unless otherwise agreed the seller must:

402.504(1)(a) (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

402.504(1)(b) (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

402.504(1)(c) (c) Promptly notify the buyer of the shipment.

402.504(2) (2) Failure to notify the buyer under sub. (1) (c) or to make a proper contract under sub. (1) (a) is a ground for rejection only if material delay or loss ensues.

402.504 History History: 1991 a. 316.

402.505 402.505 Seller’s shipment under reservation.

402.505(1) (1) Where the seller has identified goods to the contract by or before shipment:

402.505(1)(a) (a) The seller’s procurement of a negotiable bill of lading to the seller’s own order or otherwise reserves in the seller a security interest in the goods. The seller’s 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.

402.505(1)(b) (b) A nonnegotiable bill of lading to the seller or the seller’s nominee reserves possession of the goods as security but except in a case of conditional delivery (s. 402.507 (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.

402.505(2) (2) When shipment by the seller with reservation of a security interest is in violation of the contract for sale it constitutes an improper contract for transportation within s. 402.504 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.

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

402.506 402.506 Rights of financing agency.

402.506(1) (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.

402.506(2) (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.

402.506 History History: 2009 a. 322.

402.507 402.507 Effect of seller’s tender; delivery on condition.

402.507(1) (1) Tender of delivery is a condition to the buyer’s duty to accept the goods and, unless otherwise agreed, to the buyer’s duty to pay for them. Tender entitles the seller to acceptance of the goods and to payment according to the contract.

402.507(2) (2) Where payment is due and demanded on the delivery to the buyer of goods or documents of title, the buyer’s right as against the seller to retain or dispose of them is conditional upon the buyer’s making the payment due.

402.507 History History: 1991 a. 316.

402.508 402.508 Cure by seller of improper tender or delivery; replacement.

402.508(1) (1) Where any tender or delivery by the seller is rejected because nonconforming and the time for performance has not yet expired, the seller may seasonably notify the buyer of the seller’s intention to cure and may then within the contract time make a conforming delivery.

402.508(2) (2) Where the buyer rejects a nonconforming tender which the seller had reasonable grounds to believe would be acceptable with or without money allowance the seller may if the seller seasonably notifies the buyer have a further reasonable time to substitute a conforming tender.

402.508 History History: 1991 a. 316.

402.509 402.509 Risk of loss in the absence of breach.

402.509(1) (1) Where the contract requires or authorizes the seller to ship the goods by carrier:

402.509(1)(a) (a) If it does not require the seller 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 (s. 402.505); but

402.509(1)(b) (b) If it does require the seller 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.

402.509(2) (2) Where the goods are held by a bailee to be delivered without being moved, the risk of loss passes to the buyer:

402.509(2)(a) (a) On the buyer’s receipt of possession or control of a negotiable document of title covering the goods; or

402.509(2)(b) (b) On acknowledgment by the bailee of the buyer’s right to possession of the goods; or

402.509(2)(c) (c) After the buyer’s receipt of possession or control of a nonnegotiable document of title or other direction to deliver in a record, as provided in s. 402.503 (4) (b).

402.509(3) (3) In any case not within sub. (1) or (2), the risk of loss passes to the buyer on the buyer’s receipt of the goods if the seller is a merchant; otherwise the risk passes to the buyer on tender of delivery.

402.509(4) (4) The provisions of this section are subject to contrary agreement of the parties and to s. 402.327 on sale on approval and s. 402.510 on effect of breach on risk of loss.

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

402.510 402.510 Effect of breach on risk of loss.

402.510(1) (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.

402.510(2) (2) Where the buyer rightfully revokes acceptance the buyer may to the extent of any deficiency in the buyer’s effective insurance coverage treat the risk of loss as having rested on the seller from the beginning.

402.510(3) (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 the buyer, the seller may to the extent of any deficiency in the seller’s effective insurance coverage treat the risk of loss as resting on the buyer for a commercially reasonable time.

402.510 History History: 1991 a. 316.