Chapter 402

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.

402.606(2) (2) Acceptance of a part of any commercial unit is acceptance of that entire unit.

402.606 History History: 1991 a. 316.

402.606 Annotation When a buyer accepts goods, the seller need not prove that the goods were not defective in an action to recover the purchase price. Central Soya Co. v. Epstein Fisheries, Inc., 676 F.2d 939 (1982).

402.607 402.607 Effect of acceptance; notice of breach; burden of establishing breach after acceptance; notice of claim or litigation to person answerable over.

402.607(1) (1) The buyer must pay at the contract rate for any goods accepted.

402.607(2) (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 this chapter for nonconformity.

402.607(3) (3) Where a tender has been accepted:

402.607(3)(a) (a) The buyer must within a reasonable time after the buyer discovers or should have discovered any breach notify the seller of breach or be barred from any remedy; and

402.607(3)(b) (b) If the claim is one for infringement or the like (s. 402.312 (3)) and the buyer is sued as a result of such a breach the buyer must so notify the seller within a reasonable time after the buyer receives notice of the litigation or be barred from any remedy over for liability established by the litigation.

402.607(4) (4) The burden is on the buyer to establish any breach with respect to the goods accepted.

402.607(5) (5) Where the buyer is sued for breach of a warranty or other obligation for which the buyer’s seller is answerable over:

402.607(5)(a) (a) The buyer may give the buyer’s 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 the seller will be bound in any action against the seller by the seller’s buyer by any determination of fact common to the 2 litigations, then unless the seller after seasonable receipt of the notice does come in and defend, the seller is so bound.

402.607(5)(b) (b) If the claim is one for infringement or the like (s. 402.312 (3)) the original seller may demand in writing that his or her buyer turn over control of the litigation to the original seller including settlement or else be barred from any remedy over and if the original seller 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.

402.607(6) (6) Subsections (3), (4) and (5) apply to any obligation of the buyer to hold the seller harmless against infringement or the like (s. 402.312 (3)).

402.607 History History: 1991 a. 316.

402.607 Annotation Under the facts of the case, a two-month delay in giving notice was not unreasonable. Paulson v. Olson Implement Co., 107 Wis. 2d 510, 319 N.W.2d 855 (1982).

402.607 Annotation Ordinarily, what constitutes a reasonable time is a question of fact for a jury. However, a delay may be for such a long period that as a matter of law the court must hold that the notice was not given within a reasonable time. Absent evidence of circumstances excusing or justifying the delay, ten months is not a reasonable time to delay giving notice as a matter of law. Wilson v. Tuxen, 2008 WI App 94, 312 Wis. 2d 705, 754 N.W.2d 220, 07-1964.

402.607 Annotation Sub. (3) (a) requires pre-suit notice. One of the purposes of the notice requirement is to enable the seller to take corrective action and avoid litigation. Thus, service of a summons and complaint cannot function as the notice required by sub. (3) (a). Brame v. General Motors LLC, 535 F. Supp. 3d 832 (2021).

402.607 Annotation A buyer must give a seller notice of an alleged breach even if the seller would not have cured the breach after receiving the notice. Brame v. General Motors LLC, 535 F. Supp. 3d 832 (2021).

402.608 402.608 Revocation of acceptance in whole or in part.

402.608(1) (1) The buyer may revoke the buyer’s acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to the buyer if the buyer has accepted it:

402.608(1)(a) (a) On the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or

402.608(1)(b) (b) Without discovery of such nonconformity if the buyer’s acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller’s assurances.

402.608(2) (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.

402.608(3) (3) A buyer who so revokes has the same rights and duties with regard to the goods involved as if the buyer had rejected them.

402.608 History History: 1991 a. 316.

402.608 Annotation Sub. (2) provides that a revocation of acceptance must occur within a reasonable time after the buyer discovers a nonconformity, and s. 402.602 (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.

402.608 Annotation When the trial court found that the plaintiff’s employees were told by the defendant that a part of a system purchased from the defendant would not work and there was no evidence presented at trial as to any further discussion of additional work, the plaintiff could not reasonably assume that the nonconformity would be cured, making revocation under subs. (1) (a) and (2) unavailable. Viking Packaging Technologies, Inc. v. Vassallo Foods, Inc., 2011 WI App 133, 337 Wis. 2d 125, 804 N.W.2d 507, 10-2067.

402.609 402.609 Right to adequate assurance of performance.

402.609(1) (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 demand adequate assurance of due performance and until the demanding party receives such assurance may if commercially reasonable suspend any performance for which the demanding party has not already received the agreed return.