Chapter 402

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.

402.609(2) (2) Between merchants the reasonableness of grounds for insecurity and the adequacy of any assurance offered shall be determined according to commercial standards.

402.609(3) (3) Acceptance of any improper delivery or payment does not prejudice the aggrieved party’s right to demand adequate assurance of future performance.

402.609(4) (4) After receipt of a justified demand failure to provide within a reasonable time not exceeding 30 days such assurance of due performance as is adequate under the circumstances of the particular case is a repudiation of the contract.

402.609 History History: 1991 a. 316.

402.610 402.610 Anticipatory repudiation. When either party repudiates the contract with respect to a performance not yet due the loss of which will substantially impair the value of the contract to the other, the aggrieved party may:

402.610(1) (1) For a commercially reasonable time await performance by the repudiating party; or

402.610(2) (2) Resort to any remedy for breach (ss. 402.703 or 402.711), even though the aggrieved party has notified the repudiating party that the aggrieved party would await the latter’s performance and has urged retraction; and

402.610(3) (3) In either case suspend the aggrieved party’s performance of the contract or proceed in accordance with s. 402.704 on the seller’s right to identify goods to the contract notwithstanding breach or to salvage unfinished goods.

402.610 History History: 1991 a. 316.

402.610 Annotation A party doesn’t repudiate by asking for a contract modification, but, if a seller informs a buyer that the seller simply won’t be able to perform at the promised time, that may qualify as a repudiation. In this case, the parties’ contracts included estimated fulfillment dates, not strict deadlines. But the seller was still required to perform within a reasonable time, and the estimated dates provided a benchmark for determining what an unreasonable delay would be. If the seller’s new projected fulfillment date was outside the scope of what would be a reasonable time for performance, that would qualify as repudiation. What constitutes a reasonable time under the circumstances is a question of fact. Oregon Potato Co. v. Kerry Inc., 575 F. Supp. 3d 1064 (2021).

402.611 402.611 Retraction of anticipatory repudiation.

402.611(1) (1) Until the repudiating party’s next performance is due the repudiating party can retract the repudiation unless the aggrieved party has since the repudiation canceled or materially changed position or otherwise indicated that the aggrieved party considers the repudiation final.

402.611(2) (2) Retraction may be by any method which clearly indicates to the aggrieved party that the repudiating party intends to perform, but must include any assurance justifiably demanded under s. 402.609.

402.611(3) (3) Retraction reinstates the repudiating party’s rights under the contract with due excuse and allowance to the aggrieved party for any delay occasioned by the repudiation.

402.611 History History: 1991 a. 316.

402.612 402.612 “Installment contract”; breach.

402.612(1) (1) An “installment contract” is one which requires or authorizes the delivery of goods in separate lots to be separately accepted, even though the contract contains a clause “each delivery is a separate contract” or its equivalent.

402.612(2) (2) The buyer may reject any installment which is nonconforming if the nonconformity substantially impairs the value of that installment and cannot be cured or if the nonconformity is a defect in the required documents; but if the nonconformity does not fall within sub. (3) and the seller gives adequate assurance of its cure the buyer must accept that installment.

402.612(3) (3) Whenever nonconformity or default with respect to one or more installments substantially impairs the value of the whole contract there is a breach of the whole; but the aggrieved party reinstates the contract if the aggrieved party accepts a nonconforming installment without seasonably notifying of cancellation or if the aggrieved party brings an action with respect only to past installments or demands performance as to future installments.

402.612 History History: 1991 a. 316.

402.613 402.613 Casualty to identified goods. Where the contract requires for its performance goods identified when the contract is made, and the goods suffer casualty without fault of either party before the risk of loss passes to the buyer, or in a proper case under a “no arrival, no sale” term (s. 402.324) then:

402.613(1) (1) If the loss is total the contract is avoided; and

402.613(2) (2) If the loss is partial or the goods have so deteriorated as no longer to conform to the contract the buyer may nevertheless demand inspection and at the buyer’s option either treat the contract as avoided or accept the goods with due allowance from the contract price for the deterioration or the deficiency in quantity but without further right against the seller.

402.613 History History: 1991 a. 316.

402.614 402.614 Substituted performance.

402.614(1) (1) Where without fault of either party the agreed berthing, loading, or unloading facilities fail or an agreed type of carrier becomes unavailable or the agreed manner of delivery otherwise becomes commercially impracticable but a commercially reasonable substitute is available, such substitute performance must be tendered and accepted.

402.614(2) (2) If the agreed means or manner of payment fails because of domestic or foreign governmental regulation, the seller may withhold or stop delivery unless the buyer provides a means or manner of payment which is commercially a substantial equivalent. If delivery has already been taken, payment by the means or in the manner provided by the regulation discharges the buyer’s obligation unless the regulation is discriminatory, oppressive or predatory.

402.615 402.615 Excuse by failure of presupposed conditions. Except so far as a seller may have assumed a greater obligation and subject to s. 402.614 on substituted performance:

402.615(1) (1) Delay in delivery or nondelivery in whole or in part by a seller who complies with subs. (2) and (3) is not a breach of the seller’s duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the nonoccurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid.

402.615(2) (2) Where the causes mentioned in sub. (1) affect only a part of the seller’s capacity to perform, the seller must allocate production and deliveries among the seller’s customers but may at the seller’s option include regular customers not then under contract as well as the seller’s own requirements for further manufacture. The seller may so allocate in any manner which is fair and reasonable.

402.615(3) (3) The seller must notify the buyer seasonably that there will be delay or nondelivery and, when allocation is required under sub. (2), of the estimated quota thus made available for the buyer.

402.615 History History: 1991 a. 316.

402.615 Annotation An impracticability defense requires a defendant to show three things: 1) a contingency occurred; 2) the contingency made performance impracticable; and 3) the nonoccurrence of that contingency was a basic assumption upon which the contract was made. The third element requires the defendant to show that its inability to perform is because of circumstances beyond the defendant’s control and not within the defendant’s ability to foresee. The question is whether the contingency should have been foreseen, not whether the defendant actually knew the problem was coming. Oregon Potato Co. v. Kerry Inc., 575 F. Supp. 3d 1064 (2021).

402.615 Annotation The impracticability defense is generally reserved for events caused by a third party or acts of nature, for example, war, embargo, local crop failure, loss of a supplier, fires, sickness, and death. Oregon Potato Co. v. Kerry Inc., 575 F. Supp. 3d 1064 (2021).

402.615 Annotation The Legal Domino Effect: COVID-19 & Contracts. Gegios & Duroni. Wis. Law. May 2020.

402.616 402.616 Procedure on notice claiming excuse.

402.616(1) (1) Where the buyer receives notification of a material or indefinite delay or an allocation justified under s. 402.615 the buyer may by written notification to the seller as to any delivery concerned, and where the prospective deficiency substantially impairs the value of the whole contract under s. 402.612 relating to breach of installment contracts, then also as to the whole:

402.616(1)(a) (a) Terminate and thereby discharge any unexecuted portion of the contract; or

402.616(1)(b) (b) Modify the contract by agreeing to take the buyer’s available quota in substitution.

402.616(2) (2) If after receipt of such notification from the seller the buyer fails so to modify the contract within a reasonable time not exceeding 30 days the contract lapses with respect to any deliveries affected.

402.616 History History: 1991 a. 316.

subch. VII of ch. 402 SUBCHAPTER VII

REMEDIES

402.701 402.701 Remedies for breach of collateral contracts not impaired. Remedies for breach of any obligation or promise collateral or ancillary to a contract for sale are not impaired by the provisions of this chapter.

402.702 402.702 Seller’s remedies on discovery of buyer’s insolvency.

402.702(1) (1) Where the seller discovers the buyer to be insolvent the seller may refuse delivery except for cash including payment for all goods theretofore delivered under the contract, and stop delivery under s. 402.705.

402.702(2) (2) Where the seller discovers that the buyer has received goods on credit while insolvent the seller may reclaim the goods upon demand made within 10 days after the receipt, but if misrepresentation of solvency has been made to the particular seller in writing within 3 months before delivery the 10-day limitation does not apply. Except as provided in this subsection the seller may not base a right to reclaim goods on the buyer’s fraudulent or innocent misrepresentation of solvency or of intent to pay.

402.702(3) (3) The seller’s right to reclaim under sub. (2) is subject to the rights of a buyer in ordinary course or other good faith purchaser under s. 402.403. Successful reclamation of goods excludes all other remedies with respect to them.

402.702 History History: 1991 a. 316.

402.702 Annotation A holder of a security interest in after-acquired collateral qualifies as a good faith purchaser under sub. (3). House of Stainless, Inc. v. Marshall & Ilsley Bank, 75 Wis. 2d 264, 249 N.W.2d 561 (1977).

402.702 Annotation When a bank, as the transferee of the seller, did not rely on a balance sheet that misrepresented the buyer’s insolvency and had no knowledge of the facts prior to the sale or delivery, it could not exercise the seller’s right of reclamation. Shapiro v. Union Bank & Savings Co., 458 F.2d 938 (1972).

402.703 402.703 Seller’s remedies in general. Where the buyer wrongfully rejects or revokes acceptance of goods or fails to make a payment due on or before delivery or repudiates with respect to a part or the whole, then with respect to any goods directly affected and, if the breach is of the whole contract (s. 402.612), then also with respect to the whole undelivered balance, the aggrieved seller may:

402.703(1) (1) Withhold delivery of such goods;

402.703(2) (2) Stop delivery by any bailee as provided in s. 402.705;

402.703(3) (3) Proceed under s. 402.704 respecting goods still unidentified to the contract;

402.703(4) (4) Resell and recover damages as provided in s. 402.706;

402.703(5) (5) Recover damages for nonacceptance (s. 402.708) or in a proper case the price (s. 402.709);

402.703(6) (6) Cancel.

402.704 402.704 Seller’s right to identify goods to the contract notwithstanding breach or to salvage unfinished goods.

402.704(1) (1) An aggrieved seller under s. 402.703 may:

402.704(1)(a) (a) Identify to the contract conforming goods not already identified if at the time the aggrieved seller learned of the breach those goods are in the aggrieved seller’s possession or control;

402.704(1)(b) (b) Treat as the subject of resale goods which have demonstrably been intended for the particular contract even though those goods are unfinished.

402.704(2) (2) Where the goods are unfinished an aggrieved seller may in the exercise of reasonable commercial judgment for the purposes of avoiding loss and of effective realization either complete the manufacture and wholly identify the goods to the contract or cease manufacture and resell for scrap or salvage value or proceed in any other reasonable manner.

402.704 History History: 1991 a. 316.

402.705 402.705 Seller’s stoppage of delivery in transit or otherwise.

402.705(1) (1) The seller may stop delivery of goods in the possession of a carrier or other bailee when the seller discovers the buyer to be insolvent (s. 402.702) and may stop delivery of carload, truckload, planeload or larger shipments of express or freight when the buyer repudiates or fails to make a payment due before delivery or if for any other reason the seller has a right to withhold or reclaim the goods.

402.705(2) (2) As against such buyer the seller may stop delivery until:

402.705(2)(a) (a) Receipt of the goods by the buyer; or

402.705(2)(b) (b) Acknowledgment to the buyer by any bailee of the goods except a carrier that the bailee holds the goods for the buyer; or

402.705(2)(c) (c) Such acknowledgment to the buyer by a carrier by reshipment or as a warehouse; or

402.705(2)(d) (d) Negotiation to the buyer of any negotiable document of title covering the goods.

402.705(3) (3) 

402.705(3)(a) (a) To stop delivery the seller must so notify as to enable the bailee by reasonable diligence to prevent delivery of the goods.

402.705(3)(b) (b) After such notification the bailee must hold and deliver the goods according to the directions of the seller but the seller is liable to the bailee for any ensuing charges or damages.

402.705(3)(c) (c) If a negotiable document of title has been issued for goods the bailee is not obliged to obey a notification to stop until surrender of possession or control of the document.

402.705(3)(d) (d) A carrier who has issued a nonnegotiable bill of lading is not obliged to obey a notification to stop received from a person other than the consignor.

402.705 History History: 1983 a. 500 s. 43; 1991 a. 316; 2009 a. 322.

402.706 402.706 Seller’s resale including contract for resale.

402.706(1) (1) Under the conditions stated in s. 402.703 on seller’s remedies, the seller may resell the goods concerned or the undelivered balance thereof. Where the resale is made in good faith and in a commercially reasonable manner the seller may recover the difference between the resale price and the contract price together with any incidental damages allowed under s. 402.710, but less expenses saved in consequence of the buyer’s breach.

402.706(2) (2) Except as otherwise provided in sub. (3) or unless otherwise agreed resale may be at public or private sale including sale by way of one or more contracts to sell or of identification to an existing contract of the seller. Sale may be as a unit or in parcels and at any time and place and on any terms but every aspect of the sale including the method, manner, time, place and terms must be commercially reasonable. The resale must be reasonably identified as referring to the broken contract, but it is not necessary that the goods be in existence or that any or all of them have been identified to the contract before the breach.

402.706(3) (3) Where the resale is at private sale the seller must give the buyer reasonable notification of the seller’s intention to resell.

402.706(4) (4) Where the resale is at public sale:

402.706(4)(a) (a) Only identified goods can be sold except where there is a recognized market for a public sale of futures in goods of the kind; and

402.706(4)(b) (b) It must be made at a usual place or market for public sale if one is reasonably available and except in the case of goods which are perishable or threaten to decline in value speedily the seller must give the buyer reasonable notice of the time and place of the resale; and

402.706(4)(c) (c) If the goods are not to be within the view of those attending the sale the notification of sale must state the place where the goods are located and provide for their reasonable inspection by prospective bidders; and

402.706(4)(d) (d) The seller may buy.

402.706(5) (5) A purchaser who buys in good faith at a resale takes the goods free of any rights of the original buyer even though the seller fails to comply with one or more of the requirements of this section.