Chapter 402

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.

402.511 402.511 Tender of payment by buyer; payment by check.

402.511(1) (1) Unless otherwise agreed tender of payment is a condition to the seller’s duty to tender and complete any delivery.

402.511(2) (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.

402.511(3) (3) Subject to s. 403.310 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.

402.511 History History: 1995 a. 449.

402.512 402.512 Payment by buyer before inspection.

402.512(1) (1) Where the contract requires payment before inspection nonconformity of the goods does not excuse the buyer from so making payment unless:

402.512(1)(a) (a) The nonconformity appears without inspection; or

402.512(1)(b) (b) Despite tender of the required documents the circumstances would justify injunction against honor under s. 405.109 (2).

402.512(2) (2) Payment pursuant to sub. (1) does not constitute an acceptance of goods or impair the buyer’s right to inspect or any remedies available to the buyer.

402.512 History History: 1991 a. 316; 2005 a. 213.

402.513 402.513 Buyer’s right to inspection of goods.

402.513(1) (1) Unless otherwise agreed and subject to sub. (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.

402.513(2) (2) Unless otherwise agreed, 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.

402.513(3) (3) Unless otherwise agreed and subject to s. 402.321 (3) on C.I.F. contracts, the buyer is not entitled to inspect the goods before payment of the price when the contract provides:

402.513(3)(a) (a) For delivery “C.O.D.” or on other like terms; or

402.513(3)(b) (b) For payment against documents of title, except where such payment is due only after the goods are to become available for inspection.

402.513(4) (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, 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.

402.514 402.514 When documents deliverable on acceptance; when on payment. 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 3 days after presentment; otherwise, only on payment.

402.515 402.515 Preserving evidence of goods in dispute. In furtherance of the adjustment of any claim or dispute:

402.515(1) (1) 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

402.515(2) (2) The parties may agree to a 3rd 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.

402.515 History History: 2005 a. 253.

subch. VI of ch. 402 SUBCHAPTER VI

BREACH, REPUDIATION AND EXCUSE

402.601 402.601 Buyer’s rights on improper delivery. Subject to s. 402.612 on breach in installment contracts and unless otherwise agreed under ss. 402.718 and 402.719 on contractual limitations of remedy, if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may:

402.601(1) (1) Reject the whole; or

402.601(2) (2) Accept the whole; or

402.601(3) (3) Accept any commercial unit or units and reject the rest.

402.602 402.602 Manner and effect of rightful rejection.

402.602(1) (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.

402.602(2) (2) Subject to ss. 402.603 and 402.604 on rejected goods:

402.602(2)(a) (a) After rejection any exercise of ownership by the buyer with respect to any commercial unit is wrongful as against the seller; and

402.602(2)(b) (b) If the buyer has before rejection taken physical possession of goods in which the buyer does not have a security interest under s. 402.711 (3), the buyer 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

402.602(2)(c) (c) The buyer has no further obligations with regard to goods rightfully rejected.

402.602(3) (3) The seller’s rights with respect to goods wrongfully rejected are governed by s. 402.703 on seller’s remedies in general.

402.602 History History: 1991 a. 316.

402.602 Annotation Section 402.608 (2) provides that a revocation of acceptance must occur within a reasonable time after the buyer discovers a nonconformity, and sub. (2) (b) requires a buyer who rejects goods to hold the goods for a sufficient time for the seller to remove them. A truck purchaser who used the vehicle for 18 months, then transferred it back to the dealer and sought relief ten months after the transfer did not reject the vehicle in a timely manner or hold it as required and was not entitled to relief. Smyser v. Western Star Trucks Corp., 2001 WI App 180, 247 Wis. 2d 281, 634 N.W.2d 134, 00-2482.

402.602 Annotation When a seller refused to accept a return of goods upon notice of breach by the buyer, and the buyer thereafter used the goods for three months, the buyer could not recover for breach of warranty. Concrete Equipment Co. v. William A. Smith Contracting Co., 358 F. Supp. 1137 (1973).

402.603 402.603 Merchant buyer’s duties as to rightfully rejected goods.

402.603(1) (1) Subject to any security interest in the buyer (s. 402.711 (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 the merchant buyer’s 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.

402.603(2) (2) When the buyer sells goods under sub. (1), the buyer 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 10 percent of the gross proceeds.

402.603(3) (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.

402.603 History History: 1991 a. 316; 2009 a. 177.

402.604 402.604 Buyer’s options as to salvage of rightfully rejected goods. Subject to s. 402.603 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 the seller or resell them for the seller’s account with reimbursement as provided in s. 402.603. Such action is not acceptance or conversion.

402.604 History History: 1991 a. 316.

402.605 402.605 Waiver of buyer’s objections by failure to particularize.

402.605(1) (1) The buyer’s failure to state in connection with rejection a particular defect which is ascertainable by reasonable inspection precludes the buyer from relying on the unstated defect to justify rejection or to establish breach:

402.605(1)(a) (a) Where the seller could have cured it if stated seasonably; or

402.605(1)(b) (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.

402.605(2) (2) Payment against documents made without reservation of rights precludes recovery of the payment for defects apparent in the documents.

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

402.606 402.606 What constitutes acceptance of goods.

402.606(1) (1) Acceptance of goods occurs when the buyer:

402.606(1)(a) (a) After a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that the buyer will take or retain them in spite of their nonconformity; or

402.606(1)(b) (b) Fails to make an effective rejection (s. 402.602 (1)), but such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them; or

402.606(1)(c) (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 the seller.