Chapter 402

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.

402.706(6) (6) The seller is not accountable to the buyer for any profit made on any resale. A person in the position of a seller (s. 402.707) or a buyer who has rightfully rejected or justifiably revoked acceptance must account for any excess over the amount of that person’s security interest, as defined in s. 402.711 (3).

402.706 History History: 1991 a. 316.

402.707 402.707 “Person in the position of a seller”.

402.707(1) (1) A “person in the position of a seller” includes as against a principal an agent who has paid or become responsible for the price of goods on behalf of the agent’s principal or anyone who otherwise holds a security interest or other right in goods similar to that of a seller.

402.707(2) (2) A person in the position of a seller may as provided in this chapter withhold or stop delivery (s. 402.705) and resell (s. 402.706) and recover incidental damages (s. 402.710).

402.707 History History: 1991 a. 316.

402.708 402.708 Seller’s damages for nonacceptance or repudiation.

402.708(1) (1) Subject to sub. (2) and to s. 402.723 with respect to proof of market price the measure of damages for nonacceptance or repudiation by the buyer is the difference between the market price at the time and place for tender and the unpaid contract price together with any incidental damages provided in s. 402.710, but less expenses saved in consequence of the buyer’s breach.

402.708(2) (2) If the measure of damages provided in sub. (1) is inadequate to put the seller in as good a position as performance would have done then the measure of damages is the profit (including reasonable overhead) which the seller would have made from full performance by the buyer, together with any incidental damages provided in s. 402.710, due allowance for costs reasonably incurred and due credit for payments or proceeds of resale.

402.709 402.709 Action for the price.

402.709(1) (1) When the buyer fails to pay the price as it becomes due the seller may recover, together with any incidental damages under s. 402.710, the price:

402.709(1)(a) (a) Of goods accepted or of conforming goods lost or damaged within a commercially reasonable time after risk of their loss has passed to the buyer; and

402.709(1)(b) (b) Of goods identified to the contract if the seller is unable after reasonable effort to resell them at a reasonable price or the circumstances reasonably indicate that such effort will be unavailing.

402.709(2) (2) Where the seller sues for the price the seller must hold for the buyer any goods which have been identified to the contract and are still in the seller’s control except that if resale becomes possible the seller may resell them at any time prior to the collection of the judgment. The net proceeds of any such resale must be credited to the buyer and payment of the judgment entitles the buyer to any goods not resold.

402.709(3) (3) After the buyer has wrongfully rejected or revoked acceptance of the goods or has failed to make a payment due or has repudiated (s. 402.610), a seller who is held not entitled to the price under this section shall nevertheless be awarded damages for nonacceptance under s. 402.708.

402.709 History History: 1991 a. 316.

402.710 402.710 Seller’s incidental damages. Incidental damages to an aggrieved seller include any commercially reasonable charges, expenses or commissions incurred in stopping delivery, in the transportation, care and custody of goods after the buyer’s breach, in connection with return or resale of the goods or otherwise resulting from the breach.