BUSINESS & COMMERCE CODE
CHAPTER 2. SALES
SUBCHAPTER A. SHORT TITLE, GENERAL CONSTRUCTION AND SUBJECT MATTER
§ 2.101. SHORT TITLE. This chapter may be cited as
Uniform Commercial Code--Sales.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.102. SCOPE; CERTAIN SECURITY AND OTHER TRANSACTIONS
EXCLUDED FROM THIS CHAPTER. Unless the context otherwise
requires, this chapter applies to transactions in goods; it does
not apply to any transaction which although in the form of an
unconditional contract to sell or present sale is intended to
operate only as a security transaction nor does this chapter impair
or repeal any statute regulating sales to consumers, farmers or
other specified classes of buyers.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.103. DEFINITIONS AND INDEX OF DEFINITIONS. (a) In
this chapter unless the context otherwise requires
(1) "Buyer" means a person who buys or contracts to buy
goods.
(2) Reserved.
(3) "Receipt" of goods means taking physical
possession of them.
(4) "Seller" means a person who sells or contracts to
sell goods.
(b) Other definitions applying to this chapter or to
specified subchapters thereof, and the sections in which they
appear are:
"Acceptance". Section 2.606.
"Banker's credit". Section 2.325.
"Between merchants". Section 2.104.
"Cancellation". Section 2.106(d).
"Commercial unit". Section 2.105.
"Confirmed credit". Section 2.325.
"Conforming to contract". Section 2.106.
"Contract for sale". Section 2.106.
"Cover". Section 2.712.
"Entrusting". Section 2.403.
"Financing agency". Section 2.104.
"Future goods". Section 2.105.
"Goods". Section 2.105.
"Identification". Section 2.501.
"Installment contract". Section 2.612.
"Letter of credit". Section 2.325.
"Lot". Section 2.105.
"Merchant". Section 2.104.
"Overseas". Section 2.323.
"Person in position of seller". Section2.707.
"Present sale". Section 2.106.
"Sale". Section 2.106.
"Sale on approval". Section 2.326.
"Sale or return". Section 2.326.
"Termination". Section 2.106.
(c) The following definitions in other chapters apply to
this chapter:
"Check". Section 3.104.
"Consignee". Section 7.102.
"Consignor". Section 7.102.
"Consumer goods". Section 9.102.
"Dishonor". Section 3.502.
"Draft". Section 3.104.
(d) In addition Chapter 1 contains general definitions and
principles of construction and interpretation applicable
throughout this chapter.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
Amended by Acts 1999, 76th Leg., ch. 414, § 2.14, eff. July 1,
2001; Acts 2003, 78th Leg., ch. 542, § 2, eff. Sept. 1, 2003.
§ 2.104. DEFINITIONS: "MERCHANT"; "BETWEEN MERCHANTS";
"FINANCING AGENCY". (a) "Merchant" means a person who deals in
goods of the kind or otherwise by his occupation holds himself out
as having knowledge or skill peculiar to the practices or goods
involved in the transaction or to whom such knowledge or skill may
be attributed by his employment of an agent or broker or other
intermediary who by his occupation holds himself out as having such
knowledge or skill.
(b) "Financing agency" means a bank, finance company or
other person who in the ordinary course of business makes advances
against goods or documents of title or who by arrangement with
either the seller or the buyer intervenes in ordinary course to make
or collect payment due or claimed under the contract for sale, as by
purchasing or paying the seller's draft or making advances against
it or by merely taking it for collection whether or not documents of
title accompany the draft. "Financing agency" includes also a bank
or other person who similarly intervenes between persons who are in
the position of seller and buyer in respect to the goods (Section
2.707).
(c) "Between merchants" means in any transaction with
respect to which both parties are chargeable with the knowledge or
skill of merchants.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.105. DEFINITIONS: TRANSFERABILITY; "GOODS";
"FUTURE" GOODS; "LOT"; "COMMERCIAL UNIT". (a) "Goods" means all
things (including specially manufactured goods) which are movable
at the time of identification to the contract for sale other than
the money in which the price is to be paid, investment securities
(Chapter 8) and things in action. "Goods" also includes the unborn
young of animals and growing crops and other identified things
attached to realty as described in the section on goods to be
severed from realty (Section 2.107).
(b) Goods must be both existing and identified before any
interest in them can pass. Goods which are not both existing and
identified are "future" goods. A purported present sale of future
goods or of any interest therein operates as a contract to sell.
(c) There may be a sale of a part interest in existing
identified goods.
(d) An undivided share in an identified bulk of fungible
goods is sufficiently identified to be sold although the quantity
of the bulk is not determined. Any agreed proportion of such a bulk
or any quantity thereof agreed upon by number, weight or other
measure may to the extent of the seller's interest in the bulk be
sold to the buyer who then becomes an owner in common.
(e) "Lot" means a parcel or a single article which is the
subject matter of a separate sale or delivery, whether or not it is
sufficient to perform the contract.
(f) "Commercial unit" means such a unit of goods as by
commercial usage is a single whole for purposes of sale and division
of which materially impairs its character or value on the market or
in use. A commercial unit may be a single article (as a machine) or
a set of articles (as a suite of furniture or an assortment of
sizes) or a quantity (as a bale, gross, or carload) or any other
unit treated in use or in the relevant market as a single whole.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.106. DEFINITIONS: "CONTRACT"; "AGREEMENT";
"CONTRACT FOR SALE"; "SALE"; "PRESENT SALE"; "CONFORMING" TO
CONTRACT; "TERMINATION"; "CANCELLATION". (a) In this chapter
unless the context otherwise requires "contract" and "agreement"
are limited to those relating to the present or future sale of
goods. "Contract for sale" includes both a present sale of goods
and a contract to sell goods at a future time. A "sale" consists in
the passing of title from the seller to the buyer for a price
(Section 2.401). A "present sale" means a sale which is
accomplished by the making of the contract.
(b) Goods or conduct including any part of a performance are
"conforming" or conform to the contract when they are in accordance
with the obligations under the contract.
(c) "Termination" occurs when either party pursuant to a
power created by agreement or law puts an end to the contract
otherwise than for its breach. On "termination" all obligations
which are still executory on both sides are discharged but any right
based on prior breach or performance survives.
(d) "Cancellation" occurs when either party puts an end to
the contract for breach by the other and its effect is the same as
that of "termination" except that the cancelling party also retains
any remedy for breach of the whole contract or any unperformed
balance.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.107. GOODS TO BE SEVERED FROM REALTY:
RECORDING. (a) A contract for the sale of minerals or the like
(including oil and gas) or a structure or its materials to be
removed from realty is a contract for the sale of goods within this
chapter if they are to be severed by the seller but until severance
a purported present sale thereof which is not effective as a
transfer of an interest in land is effective only as a contract to
sell.
(b) A contract for the sale apart from the land of growing
crops or other things attached to realty and capable of severance
without material harm thereto but not described in Subsection (a)
or of timber to be cut is a contract for the sale of goods within
this chapter whether the subject matter is to be severed by the
buyer or by the seller even though it forms part of the realty at the
time of contracting, and the parties can by identification effect a
present sale before severance.
(c) The provisions of this section are subject to any third
party rights provided by the law relating to realty records, and the
contract for sale may be executed and recorded as a document
transferring an interest in land and shall then constitute notice
to third parties of the buyer's rights under the contract for sale.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
Amended by Acts 1973, 63rd Leg., p. 998, ch. 400, § 3, eff. Jan.
1, 1974.
SUBCHAPTER B. FORM, FORMATION AND READJUSTMENT OF CONTRACT
§ 2.201. FORMAL REQUIREMENTS; STATUTE OF
FRAUDS. (a) Except as otherwise provided in this section a
contract for the sale of goods for the price of $500 or more is not
enforceable by way of action or defense unless there is some writing
sufficient to indicate that a contract for sale has been made
between the parties and signed by the party against whom
enforcement is sought or by his authorized agent or broker. A
writing is not insufficient because it omits or incorrectly states
a term agreed upon but the contract is not enforceable under this
paragraph beyond the quantity of goods shown in such writing.
(b) Between merchants if within a reasonable time a writing
in confirmation of the contract and sufficient against the sender
is received and the party receiving it has reason to know its
contents, it satisfies the requirements of Subsection (a) against
such party unless written notice of objection to its contents is
given within ten days after it is received.
(c) A contract which does not satisfy the requirements of
Subsection (a) but which is valid in other respects is enforceable
(1) if the goods are to be specially manufactured for
the buyer and are not suitable for sale to others in the ordinary
course of the seller's business and the seller, before notice of
repudiation is received and under circumstances which reasonably
indicate that the goods are for the buyer, has made either a
substantial beginning of their manufacture or commitments for their
procurement; or
(2) if the party against whom enforcement is sought
admits in his pleading, testimony or otherwise in court that a
contract for sale was made, but the contract is not enforceable
under this provision beyond the quantity of goods admitted; or
(3) with respect to goods for which payment has been
made and accepted or which have been received and accepted (Section
2.606).
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.202. FINAL WRITTEN EXPRESSION: PAROL OR EXTRINSIC
EVIDENCE. Terms with respect to which the confirmatory memoranda
of the parties agree or which are otherwise set forth in a writing
intended by the parties as a final expression of their agreement
with respect to such terms as are included therein may not be
contradicted by evidence of any prior agreement or of a
contemporaneous oral agreement but may be explained or supplemented
(1) by course of performance, course of dealing, or
usage of trade (Section 1.303); and
(2) by evidence of consistent additional terms unless
the court finds the writing to have been intended also as a complete
and exclusive statement of the terms of the agreement.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
Amended by Acts 2003, 78th Leg., ch. 542, § 3, eff. Sept. 1,
2003.
§ 2.203. SEALS INOPERATIVE. The affixing of a seal to a
writing evidencing a contract for sale or an offer to buy or sell
goods does not constitute the writing a sealed instrument and the
law with respect to sealed instruments does not apply to such a
contract or offer.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.204. FORMATION IN GENERAL. (a) A contract for sale
of goods may be made in any manner sufficient to show agreement,
including conduct by both parties which recognizes the existence of
such a contract.
(b) An agreement sufficient to constitute a contract for
sale may be found even though the moment of its making is
undetermined.
(c) Even though one or more terms are left open a contract
for sale does not fail for indefiniteness if the parties have
intended to make a contract and there is a reasonably certain basis
for giving an appropriate remedy.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.205. FIRM OFFERS. An offer by a merchant to buy or
sell goods in a signed writing which by its terms gives assurance
that it will be held open is not revocable, for lack of
consideration, during the time stated or if no time is stated for a
reasonable time, but in no event may such period of irrevocability
exceed three months; but any such term of assurance on a form
supplied by the offeree must be separately signed by the offeror.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.206. OFFER AND ACCEPTANCE IN FORMATION OF
CONTRACT. (a) Unless otherwise unambiguously indicated by the
language or circumstances
(1) an offer to make a contract shall be construed as
inviting acceptance in any manner and by any medium reasonable in
the circumstances;
(2) an order or other offer to buy goods for prompt or
current shipment shall be construed as inviting acceptance either
by a prompt promise to ship or by the prompt or current shipment of
conforming or non-conforming goods, but such a shipment of
non-conforming goods does not constitute an acceptance if the
seller seasonably notifies the buyer that the shipment is offered
only as an accommodation to the buyer.
(b) Where the beginning of a requested performance is a
reasonable mode of acceptance an offeror who is not notified of
acceptance within a reasonable time may treat the offer as having
lapsed before acceptance.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.207. ADDITIONAL TERMS IN ACCEPTANCE OR
CONFIRMATION. (a) A definite and seasonable expression of
acceptance or a written confirmation which is sent within a
reasonable time operates as an acceptance even though it states
terms additional to or different from those offered or agreed upon,
unless acceptance is expressly made conditional on assent to the
additional or different terms.
(b) The additional terms are to be construed as proposals
for addition to the contract. Between merchants such terms become
part of the contract unless:
(1) the offer expressly limits acceptance to the terms
of the offer;
(2) they materially alter it; or
(3) notification of objection to them has already been
given or is given within a reasonable time after notice of them is
received.
(c) Conduct by both parties which recognizes the existence
of a contract is sufficient to establish a contract for sale
although the writings of the parties do not otherwise establish a
contract. In such case the terms of the particular contract consist
of those terms on which the writings of the parties agree, together
with any supplementary terms incorporated under any other
provisions of this title.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.209. MODIFICATION, RESCISSION AND WAIVER. (a) An
agreement modifying a contract within this chapter needs no
consideration to be binding.
(b) A signed agreement which excludes modification or
rescission except by a signed writing cannot be otherwise modified
or rescinded, but except as between merchants such a requirement on
a form supplied by the merchant must be separately signed by the
other party.
(c) The requirements of the statute of frauds section of
this chapter (Section 2.201) must be satisfied if the contract as
modified is within its provisions.
(d) Although an attempt at modification or rescission does
not satisfy the requirements of Subsection (b) or (c) it can operate
as a waiver.
(e) A party who has made a waiver affecting an executory
portion of the contract may retract the waiver by reasonable
notification received by the other party that strict performance
will be required of any term waived, unless the retraction would be
unjust in view of a material change of position in reliance on the
waiver.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.210. DELEGATION OF PERFORMANCE; ASSIGNMENT OF
RIGHTS. (a) A party may perform his duty through a delegate
unless otherwise agreed or unless the other party has a substantial
interest in having his original promisor perform or control the
acts required by the contract. No delegation of performance
relieves the party delegating of any duty to perform or any
liability for breach.
(b) Unless otherwise agreed all rights of either seller or
buyer can be assigned except where the assignment would materially
change the duty of the other party, or increase materially the
burden or risk imposed on him by his contract, or impair materially
his chance of obtaining return performance. A right to damages for
breach of the whole contract or a right arising out of the
assignor's due performance of his entire obligation can be assigned
despite agreement otherwise.
(c) The creation, attachment, perfection, or enforcement of
a security interest in the seller's interest under a contract is not
a transfer that materially changes the duty of or increases
materially the burden or risk imposed on the buyer or impairs
materially the buyer's chance of obtaining return performance
within the purview of Subsection (b) unless, and then only to the
extent that, enforcement actually results in a delegation of
material performance of the seller. Even in that event, the
creation, attachment, perfection, and enforcement of the security
interest remain effective, but (i) the seller is liable to the buyer
for damages caused by the delegation to the extent that the damages
could not reasonably be prevented by the buyer, and (ii) a court
having jurisdiction may grant other appropriate relief, including
cancellation of the contract for sale or an injunction against
enforcement of the security interest or consummation of the
enforcement.
(d) Unless the circumstances indicate the contrary a
prohibition of assignment of "the contract" is to be construed as
barring only the delegation to the assignee of the assignor's
performance.
(e) An assignment of "the contract" or of "all my rights
under the contract" or an assignment in similar general terms is an
assignment of rights and unless the language or the circumstances
(as in an assignment for security) indicate the contrary, it is a
delegation of performance of the duties of the assignor and its
acceptance by the assignee constitutes a promise by him to perform
those duties. This promise is enforceable by either the assignor or
the other party to the original contract.
(f) The other party may treat any assignment which delegates
performance as creating reasonable grounds for insecurity and may
without prejudice to his rights against the assignor demand
assurances from the assignee (Section 2.609).
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
Amended by Acts 1999, 76th Leg., ch. 414, § 2.15, eff. July 1,
2001.
SUBCHAPTER C. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT
§ 2.301. GENERAL OBLIGATIONS OF PARTIES. The
obligation of the seller is to transfer and deliver and that of the
buyer is to accept and pay in accordance with the contract.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.302. UNCONSCIONABLE CONTRACT OR CLAUSE. (a) If
the court as a matter of law finds the contract or any clause of the
contract to have been unconscionable at the time it was made the
court may refuse to enforce the contract, or it may enforce the
remainder of the contract without the unconscionable clause, or it
may so limit the application of any unconscionable clause as to
avoid any unconscionable result.
(b) When it is claimed or appears to the court that the
contract or any clause thereof may be unconscionable the parties
shall be afforded a reasonable opportunity to present evidence as
to its commercial setting, purpose and effect to aid the court in
making the determination.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.303. ALLOCATION OR DIVISION OF RISKS. Where this
chapter allocates a risk or a burden as between the parties "unless
otherwise agreed", the agreement may not only shift the allocation
but may also divide the risk or burden.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.304. PRICE PAYABLE IN MONEY, GOODS, REALTY, OR
OTHERWISE. (a) The price can be made payable in money or
otherwise. If it is payable in whole or in part in goods each party
is a seller of the goods which he is to transfer.
(b) Even though all or part of the price is payable in an
interest in realty the transfer of the goods and the seller's
obligations with reference to them are subject to this chapter, but
not the transfer of the interest in realty or the transferor's
obligations in connection therewith.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.305. OPEN PRICE TERM. (a) The parties if they so
intend can conclude a contract for sale even though the price is not
settled. In such a case the price is a reasonable price at the time
for delivery if
(1) nothing is said as to price; or
(2) the price is left to be agreed by the parties and
they fail to agree; or
(3) the price is to be fixed in terms of some agreed
market or other standard as set or recorded by a third person or
agency and it is not so set or recorded.
(b) A price to be fixed by the seller or by the buyer means a
price for him to fix in good faith.
(c) When a price left to be fixed otherwise than by
agreement of the parties fails to be fixed through fault of one
party the other may at his option treat the contract as cancelled or
himself fix a reasonable price.
(d) Where, however, the parties intend not to be bound
unless the price be fixed or agreed and it is not fixed or agreed
there is no contract. In such a case the buyer must return any goods
already received or if unable so to do must pay their reasonable
value at the time of delivery and the seller must return any portion
of the price paid on account.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.306. OUTPUT, REQUIREMENTS AND EXCLUSIVE
DEALINGS. (a) A term which measures the quantity by the output of
the seller or the requirements of the buyer means such actual output
or requirements as may occur in good faith, except that no quantity
unreasonably disproportionate to any stated estimate or in the
absence of a stated estimate to any normal or otherwise comparable
prior output or requirements may be tendered or demanded.
(b) A lawful agreement by either the seller or the buyer for
exclusive dealing in the kind of goods concerned imposes unless
otherwise agreed an obligation by the seller to use best efforts to
supply the goods and by the buyer to use best efforts to promote
their sale.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.307. DELIVERY IN SINGLE LOT OR SEVERAL LOTS. Unless
otherwise agreed all goods called for by a contract for sale must be
tendered in a single delivery and payment is due only on such tender
but where the circumstances give either party the right to make or
demand delivery in lots the price if it can be apportioned may be
demanded for each lot.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.308. ABSENCE OF SPECIFIED PLACE FOR
DELIVERY. Unless otherwise agreed
(1) the place for delivery of goods is the seller's
place of business or if he has none his residence; but
(2) in a contract for sale of identified goods which to
the knowledge of the parties at the time of contracting are in some
other place, that place is the place for their delivery; and
(3) documents of title may be delivered through
customary banking channels.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.309. ABSENCE OF SPECIFIC TIME PROVISIONS; NOTICE OF
TERMINATION. (a) The time for shipment or delivery or any other
action under a contract if not provided in this chapter or agreed
upon shall be a reasonable time.
(b) Where the contract provides for successive performances
but is indefinite in duration it is valid for a reasonable time but
unless otherwise agreed may be terminated at any time by either
party.
(c) Termination of a contract by one party except on the
happening of an agreed event requires that reasonable notification
be received by the other party and an agreement dispensing with
notification is invalid if its operation would be unconscionable.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.310. OPEN TIME FOR PAYMENT OR RUNNING OF CREDIT;
AUTHORITY TO SHIP UNDER RESERVATION. Unless otherwise agreed
(1) payment is due at the time and place at which the
buyer is to receive the goods even though the place of shipment is
the place of delivery; and
(2) if the seller is authorized to send the goods he
may ship them under reservation, and may tender the documents of
title, but the buyer may inspect the goods after their arrival
before payment is due unless such inspection is inconsistent with
the terms of the contract (Section 2.513); and
(3) if delivery is authorized and made by way of
documents of title otherwise than by Subdivision (2) then payment
is due at the time and place at which the buyer is to receive the
documents regardless of where the goods are to be received; and
(4) where the seller is required or authorized to ship
the goods on credit the credit period runs from the time of shipment
but post-dating the invoice or delaying its dispatch will
correspondingly delay the starting of the credit period.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.311. OPTIONS AND COOPERATION RESPECTING
PERFORMANCE. (a) An agreement for sale which is otherwise
sufficiently definite (Subsection (c) of Section 2.204) to be a
contract is not made invalid by the fact that it leaves particulars
of performance to be specified by one of the parties. Any such
specification must be made in good faith and within limits set by
commercial reasonableness.
(b) Unless otherwise agreed specifications relating to
assortment of the goods are at the buyer's option and except as
otherwise provided in Subsections (a)(3) and (c) of Section 2.319
specifications or arrangements relating to shipment are at the
seller's option.
(c) Where such specification would materially affect the
other party's performance but is not seasonably made or where one
party's cooperation is necessary to the agreed performance of the
other but is not seasonably forthcoming, the other party in
addition to all other remedies
(1) is excused for any resulting delay in his own
performance; and
(2) may also either proceed to perform in any
reasonable manner or after the time for a material part of his own
performance treat the failure to specify or to cooperate as a breach
by failure to deliver or accept the goods.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.312. WARRANTY OF TITLE AND AGAINST INFRINGEMENT;
BUYER'S OBLIGATION AGAINST INFRINGEMENT. (a) Subject to
Subsection (b) there is in a contract for sale a warranty by the
seller that
(1) the title conveyed shall be good, and its transfer
rightful; and
(2) the goods shall be delivered free from any
security interest or other lien or encumbrance of which the buyer at
the time of contracting has no knowledge.
(b) A warranty under Subsection (a) will be excluded or
modified only by specific language or by circumstances which give
the buyer reason to know that the person selling does not claim
title in himself or that he is purporting to sell only such right or
title as he or a third person may have.
(c) Unless otherwise agreed a seller who is a merchant
regularly dealing in goods of the kind warrants that the goods shall
be delivered free of the rightful claim of any third person by way
of infringement or the like but a buyer who furnishes
specifications to the seller must hold the seller harmless against
any such claim which arises out of compliance with the
specifications.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.313. EXPRESS WARRANTIES BY AFFIRMATION, PROMISE,
DESCRIPTION, SAMPLE. (a) Express warranties by the seller are
created as follows:
(1) Any affirmation of fact or promise made by the
seller to the buyer which relates to the goods and becomes part of
the basis of the bargain creates an express warranty that the goods
shall conform to the affirmation or promise.
(2) Any description of the goods which is made part of
the basis of the bargain creates an express warranty that the goods
shall conform to the description.
(3) Any sample or model which is made part of the basis
of the bargain creates an express warranty that the whole of the
goods shall conform to the sample or model.
(b) It is not necessary to the creation of an express
warranty that the seller use formal words such as "warrant" or
"guarantee" or that he have a specific intention to make a warranty,
but an affirmation merely of the value of the goods or a statement
purporting to be merely the seller's opinion or commendation of the
goods does not create a warranty.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.314. IMPLIED WARRANTY: MERCHANTABILITY; USAGE OF
TRADE. (a) Unless excluded or modified (Section 2.316), a
warranty that the goods shall be merchantable is implied in a
contract for their sale if the seller is a merchant with respect to
goods of that kind. Under this section the serving for value of
food or drink to be consumed either on the premises or elsewhere is
a sale.
(b) Goods to be merchantable must be at least such as
(1) pass without objection in the trade under the
contract description; and
(2) in the case of fungible goods, are of fair average
quality within the description; and
(3) are fit for the ordinary purposes for which such
goods are used; and
(4) run, within the variations permitted by the
agreement, of even kind, quality and quantity within each unit and
among all units involved; and
(5) are adequately contained, packaged, and labeled as
the agreement may require; and
(6) conform to the promises or affirmations of fact
made on the container or label if any.
(c) Unless excluded or modified (Section 2.316) other
implied warranties may arise from course of dealing or usage of
trade.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.315. IMPLIED WARRANTY: FITNESS FOR PARTICULAR
PURPOSE. Where the seller at the time of contracting has reason to
know any particular purpose for which the goods are required and
that the buyer is relying on the seller's skill or judgment to
select or furnish suitable goods, there is unless excluded or
modified under the next section an implied warranty that the goods
shall be fit for such purpose.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.316. EXCLUSION OR MODIFICATION OF
WARRANTIES. (a) Words or conduct relevant to the creation of an
express warranty and words or conduct tending to negate or limit
warranty shall be construed wherever reasonable as consistent with
each other; but subject to the provisions of this chapter on parol
or extrinsic evidence (Section 2.202) negation or limitation is
inoperative to the extent that such construction is unreasonable.
(b) Subject to Subsection (c), to exclude or modify the
implied warranty of merchantability or any part of it the language
must mention merchantability and in case of a writing must be
conspicuous, and to exclude or modify any implied warranty of
fitness the exclusion must be by a writing and conspicuous.
Language to exclude all implied warranties of fitness is sufficient
if it states, for example, that "There are no warranties which
extend beyond the description on the face hereof."
(c) Notwithstanding Subsection (b)
(1) unless the circumstances indicate otherwise, all
implied warranties are excluded by expressions like "as is", "with
all faults" or other language which in common understanding calls
the buyer's attention to the exclusion of warranties and makes
plain that there is no implied warranty; and
(2) when the buyer before entering into the contract
has examined the goods or the sample or model as fully as he desired
or has refused to examine the goods there is no implied warranty
with regard to defects which an examination ought in the
circumstances to have revealed to him; and
(3) an implied warranty can also be excluded or
modified by course of dealing or course of performance or usage of
trade.
(d) Remedies for breach of warranty can be limited in
accordance with the provisions of this chapter on liquidation or
limitation of damages and on contractual modification of remedy
(Sections 2.718 and 2.719).
(e) The implied warranties of merchantability and fitness
shall not be applicable to the furnishing of human blood, blood
plasma, or other human tissue or organs from a blood bank or
reservoir of such other tissues or organs. Such blood, blood plasma
or tissue or organs shall not for the purpose of this Title be
considered commodities subject to sale or barter, but shall be
considered as medical services.
(f) The implied warranties of merchantability and fitness
do not apply to the sale or barter of livestock or its unborn young.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
Amended by Acts 1979, 66th Leg., p. 190, ch. 99, § 1, eff. May 2,
1979.
§ 2.317. CUMULATION AND CONFLICT OF WARRANTIES EXPRESS
OR IMPLIED. Warranties whether express or implied shall be
construed as consistent with each other and as cumulative, but if
such construction is unreasonable the intention of the parties
shall determine which warranty is dominant. In ascertaining that
intention the following rules apply:
(1) Exact or technical specifications displace an
inconsistent sample or model or general language of description.
(2) A sample from an existing bulk displaces
inconsistent general language of description.
(3) Express warranties displace inconsistent implied
warranties other than an implied warranty of fitness for a
particular purpose.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.318. CHAPTER NEUTRAL ON QUESTION OF THIRD PARTY
BENEFICIARIES OF WARRANTIES OF QUALITY AND ON NEED FOR PRIVITY OF
CONTRACT. This chapter does not provide whether anyone other than
a buyer may take advantage of an express or implied warranty of
quality made to the buyer or whether the buyer or anyone entitled to
take advantage of a warranty made to the buyer may sue a third party
other than the immediate seller for deficiencies in the quality of
the goods. These matters are left to the courts for their
determination.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.319. F.O.B. AND F.A.S. TERMS. (a) Unless
otherwise agreed the term F.O.B. (which means "free on board") at a
named place, even though used only in connection with the stated
price, is a delivery term under which
(1) when the term is F.O.B. the place of shipment, the
seller must at that place ship the goods in the manner provided in
this chapter (Section 2.504) and bear the expense and risk of
putting them into the possession of the carrier; or
(2) when the term is F.O.B. the place of destination,
the seller must at his own expense and risk transport the goods to
that place and there tender delivery of them in the manner provided
in this chapter (Section 2.503);
(3) when under either Subdivision (1) or (2) the term
is also F.O.B. vessel, car or other vehicle, the seller must in
addition at his own expense and risk load the goods on board. If the
term is F.O.B. vessel the buyer must name the vessel and in an
appropriate case the seller must comply with the provisions of this
chapter on the form of bill of lading (Section 2.323).
(b) Unless otherwise agreed the term F.A.S. vessel (which
means "free alongside") at a named port, even though used only in
connection with the stated price, is a delivery term under which the
seller must
(1) at his own expense and risk deliver the goods
alongside the vessel in the manner usual in that port or on a dock
designated and provided by the buyer; and
(2) obtain and tender a receipt for the goods in
exchange for which the carrier is under a duty to issue a bill of
lading.
(c) Unless otherwise agreed in any case falling within
Subsection (a)(1) or (3) or Subsection (b) the buyer must
seasonably give any needed instructions for making delivery,
including when the term is F.A.S. or F.O.B. the loading berth of the
vessel and in an appropriate case its name and sailing date. The
seller may treat the failure of needed instructions as a failure of
cooperation under this chapter (Section 2.311). He may also at his
option move the goods in any reasonable manner preparatory to
delivery or shipment.
(d) Under the term F.O.B. vessel or F.A.S. unless otherwise
agreed the buyer must make payment against tender of the required
documents and the seller may not tender nor the buyer demand
delivery of the goods in substitution for the documents.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.320. C.I.F. AND C. & F. TERMS. (a) The term C.I.F.
means that the price includes in a lump sum the cost of the goods and
the insurance and freight to the named destination. The term C. &
F. or C.F. means that the price so includes cost and freight to the
named destination.
(b) Unless otherwise agreed and even though used only in
connection with the stated price and destination, the term C.I.F.
destination or its equivalent requires the seller at his own
expense and risk to
(1) put the goods into the possession of a carrier at
the port for shipment and obtain a negotiable bill or bills of
lading covering the entire transportation to the named destination;
and
(2) load the goods and obtain a receipt from the
carrier (which may be contained in the bill of lading) showing that
the freight has been paid or provided for; and
(3) obtain a policy or certificate of insurance,
including any war risk insurance, of a kind and on terms then
current at the port of shipment in the usual amount, in the currency
of the contract, shown to cover the same goods covered by the bill
of lading and providing for payment of loss to the order of the
buyer or for the account of whom it may concern; but the seller may
add to the price the amount of the premium for any such war risk
insurance; and
(4) prepare an invoice of the goods and procure any
other documents required to effect shipment or to comply with the
contract; and
(5) forward and tender with commercial promptness all
the documents in due form and with any indorsement necessary to
perfect the buyer's rights.
(c) Unless otherwise agreed the term C. & F. or its
equivalent has the same effect and imposes upon the seller the same
obligations and risks as a C.I.F. term except the obligation as to
insurance.
(d) Under the term C.I.F. or C. & F. unless otherwise agreed
the buyer must make payment against tender of the required
documents and the seller may not tender nor the buyer demand
delivery of the goods in substitution for the documents.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.321. C.I.F. OR C. & F.: "NET LANDED WEIGHTS";
"PAYMENT ON ARRIVAL"; WARRANTY OF CONDITION ON ARRIVAL. Under a
contract containing a term C.I.F. or C. & F.
(a) Where the price is based on or is to be adjusted
according to "net landed weights", "delivered weights", "out turn"
quantity or quality or the like, unless otherwise agreed the seller
must reasonably estimate the price. The payment due on tender of
the documents called for by the contract is the amount so estimated,
but after final adjustment of the price a settlement must be made
with commercial promptness.
(b) An agreement described in Subsection (a) or any warranty
of quality or condition of the goods on arrival places upon the
seller the risk of ordinary deterioration, shrinkage and the like
in transportation but has no effect on the place or time of
identification to the contract for sale or delivery or on the
passing of the risk of loss.
(c) Unless otherwise agreed where the contract provides for
payment on or after arrival of the goods the seller must before
payment allow such preliminary inspection as is feasible; but if
the goods are lost delivery of the documents and payment are due
when the goods should have arrived.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.322. DELIVERY "EX-SHIP". (a) Unless otherwise
agreed a term for delivery of goods "ex-ship" (which means from the
carrying vessel) or in equivalent language is not restricted to a
particular ship and requires delivery from a ship which has reached
a place at the named port of destination where goods of the kind are
usually discharged.
(b) Under such a term unless otherwise agreed
(1) the seller must discharge all liens arising out of
the carriage and furnish the buyer with a direction which puts the
carrier under a duty to deliver the goods; and
(2) the risk of loss does not pass to the buyer until
the goods leave the ship's tackle or are otherwise properly
unloaded.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.323. FORM OF BILL OF LADING REQUIRED IN OVERSEAS
SHIPMENT; "OVERSEAS". (a) Where the contract contemplates
overseas shipment and contains a term C.I.F. or C. & F. or F.O.B.
vessel, the seller unless otherwise agreed must obtain a negotiable
bill of lading stating that the goods have been loaded on board or,
in the case of a term C.I.F. or C. & F., received for shipment.
(b) Where in a case within Subsection (a) a bill of lading
has been issued in a set of parts, unless otherwise agreed if the
documents are not to be sent from abroad the buyer may demand tender
of the full set; otherwise only one part of the bill of lading need
be tendered. Even if the agreement expressly requires a full set
(1) due tender of a single part is acceptable within
the provisions of this chapter on cure of improper delivery
(Subsection (a) of Section 2.508); and
(2) even though the full set is demanded, if the
documents are sent from abroad the person tendering an incomplete
set may nevertheless require payment upon furnishing an indemnity
which the buyer in good faith deems adequate.
(c) A shipment by water or by air or a contract
contemplating such shipment is "overseas" insofar as by usage of
trade or agreement it is subject to the commercial, financing or
shipping practices characteristic of international deep water
commerce.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.324. "NO ARRIVAL, NO SALE" TERM. Under a term "no
arrival, no sale" or terms of like meaning, unless otherwise
agreed,
(1) the seller must properly ship conforming goods and
if they arrive by any means he must tender them on arrival but he
assumes no obligation that the goods will arrive unless he has
caused the non-arrival; and
(2) where without fault of the seller the goods are in
part lost or have so deteriorated as no longer to conform to the
contract or arrive after the contract time, the buyer may proceed as
if there had been casualty to identified goods (Section 2.613).
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.325. "LETTER OF CREDIT" TERM; "CONFIRMED
CREDIT". (a) Failure of the buyer seasonably to furnish an agreed
letter of credit is a breach of the contract for sale.
(b) The delivery to seller of a proper letter of credit
suspends the buyer's obligation to pay. If the letter of credit is
dishonored, the seller may on seasonable notification to the buyer
require payment directly from him.
(c) Unless otherwise agreed the term "letter of credit" or
"banker's credit" in a contract for sale means an irrevocable
credit issued by a financing agency of good repute and, where the
shipment is overseas, of good international repute. The term
"confirmed credit" means that the credit must also carry the direct
obligation of such an agency which does business in the seller's
financial market.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.326. SALE ON APPROVAL AND SALE OR RETURN; RIGHTS OF
CREDITORS. (a) Unless otherwise agreed, if delivered goods may
be returned by the buyer even though they conform to the contract,
the transaction is
(1) a "sale on approval" if the goods are delivered
primarily for use, and
(2) a "sale or return" if the goods are delivered
primarily for resale.
(b) Goods held on approval are not subject to the claims of
the buyer's creditors until acceptance; goods held on sale or
return are subject to such claims while in the buyer's possession.
(c) Any "or return" term of a contract for sale is to be
treated as a separate contract for sale within the statute of frauds
section of this chapter (Section 2.201) and as contradicting the
sale aspect of the contract within the provisions of this chapter on
parol or extrinsic evidence (Section 2.202).
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
Amended by Acts 1977, 65th Leg., p. 1530, ch. 623, § 4, eff. Aug.
29, 1977; Acts 1999, 76th Leg., ch. 414, § 2.16, eff. July 1,
2001.
§ 2.327. SPECIAL INCIDENTS OF SALE ON APPROVAL AND SALE
OR RETURN. (a) Under a sale on approval unless otherwise agreed
(1) although the goods are identified to the contract
the risk of loss and the title do not pass to the buyer until
acceptance; and
(2) use of the goods consistent with the purpose of
trial is not acceptance but failure seasonably to notify the seller
of election to return the goods is acceptance, and if the goods
conform to the contract acceptance of any part is acceptance of the
whole; and
(3) after due notification of election to return, the
return is at the seller's risk and expense but a merchant buyer must
follow any reasonable instructions.
(b) Under a sale or return unless otherwise agreed
(1) the option to return extends to the whole or any
commercial unit of the goods while in substantially their original
condition, but must be exercised seasonably; and
(2) the return is at the buyer's risk and expense.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.328. SALE BY AUCTION. (a) In a sale by auction if
goods are put up in lots each lot is the subject of a separate sale.
(b) A sale by auction is complete when the auctioneer so
announces by the fall of the hammer or in other customary manner.
Where a bid is made while the hammer is falling in acceptance of a
prior bid the auctioneer may in his discretion reopen the bidding or
declare the goods sold under the bid on which the hammer was
falling.
(c) Such a sale is with reserve unless the goods are in
explicit terms put up without reserve. In an auction with reserve
the auctioneer may withdraw the goods at any time until he announces
completion of the sale. In an auction without reserve, after the
auctioneer calls for bids on an article or lot, that article or lot
cannot be withdrawn unless no bid is made within a reasonable time.
In either case a bidder may retract his bid until the auctioneer's
announcement of completion of the sale, but a bidder's retraction
does not revive any previous bid.
(d) If the auctioneer knowingly receives a bid on the
seller's behalf or the seller makes or procures such a bid, and
notice has not been given that liberty for such bidding is reserved,
the buyer may at his option avoid the sale or take the goods at the
price of the last good faith bid prior to the completion of the
sale. This subsection shall not apply to any bid at a forced sale.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
SUBCHAPTER D. TITLE, CREDITORS AND GOOD FAITH PURCHASERS
§ 2.401. PASSING OF TITLE; RESERVATION FOR SECURITY;
LIMITED APPLICATION OF THIS SECTION. Each provision of this
chapter with regard to the rights, obligations and remedies of the
seller, the buyer, purchasers or other third parties applies
irrespective of title to the goods except where the provision
refers to such title. Insofar as situations are not covered by the
other provisions of this chapter and matters concerning title
become material the following rules apply:
(a) Title to goods cannot pass under a contract for sale
prior to their identification to the contract (Section 2.501), and
unless otherwise explicitly agreed the buyer acquires by their
identification a special property as limited by this title. Any
retention or reservation by the seller of the title (property) in
goods shipped or delivered to the buyer is limited in effect to a
reservation of a security interest. Subject to these provisions
and to the provisions of the chapter on Secured Transactions
(Chapter 9), title to goods passes from the seller to the buyer in
any manner and on any conditions explicitly agreed on by the
parties.
(b) Unless otherwise explicitly agreed title passes to the
buyer at the time and place at which the seller completes his
performance with reference to the physical delivery of the goods,
despite any reservation of a security interest and even though a
document of title is to be delivered at a different time or place;
and in particular and despite any reservation of a security
interest by the bill of lading
(1) if the contract requires or authorizes the seller
to send the goods to the buyer but does not require him to deliver
them at destination, title passes to the buyer at the time and place
of shipment; but
(2) if the contract requires delivery at destination,
title passes on tender there.
(c) Unless otherwise explicitly agreed where delivery is to
be made without moving the goods,
(1) if the seller is to deliver a document of title,
title passes at the time when and the place where he delivers such
documents; or
(2) if the goods are at the time of contracting already
identified and no documents are to be delivered, title passes at the
time and place of contracting.
(d) A rejection or other refusal by the buyer to receive or
retain the goods, whether or not justified, or a justified
revocation of acceptance revests title to the goods in the seller.
Such revesting occurs by operation of law and is not a "sale".
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.402. RIGHTS OF SELLER'S CREDITORS AGAINST SOLD
GOODS. (a) Except as provided in Subsections (b) and (c), rights
of unsecured creditors of the seller with respect to goods which
have been identified to a contract for sale are subject to the
buyer's rights to recover the goods under this chapter (Sections
2.502 and 2.716).
(b) A creditor of the seller may treat a sale or an
identification of goods to a contract for sale as void if as against
him 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.
(c) Nothing in this chapter shall be deemed to impair the
rights of creditors of the seller
(1) under the provisions of the chapter on Secured
Transactions (Chapter 9); or
(2) where identification to the contract or delivery
is made not in current course of trade but in satisfaction of or as
security for a pre-existing 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 transfer or voidable
preference.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.403. POWER TO TRANSFER; GOOD FAITH PURCHASE OF
GOODS; "ENTRUSTING". (a) A purchaser of goods acquires all title
which his 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
(1) the transferor was deceived as to the identity of
the purchaser, or
(2) the delivery was in exchange for a check which is
later dishonored, or
(3) it was agreed that the transaction was to be a
"cash sale", or
(4) the delivery was procured through fraud punishable
as larcenous under the criminal law.
(b) Any entrusting of possession of goods to a merchant who
deals in goods of that kind gives him power to transfer all rights
of the entruster to a buyer in ordinary course of business.
(c) "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.
(d) The rights of other purchasers of goods and of lien
creditors are governed by the chapters on Secured Transactions
(Chapter 9) and Documents of Title (Chapter 7).
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
Amended by Acts 1993, 73rd Leg., ch. 570, § 3, eff. Sept. 1,
1993.
SUBCHAPTER E. PERFORMANCE
§ 2.501. INSURABLE INTEREST IN GOODS; MANNER OF
IDENTIFICATION OF GOODS. (a) 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 non-conforming and he 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
(1) when the contract is made if it is for the sale of
goods already existing and identified;
(2) if the contract is for the sale of future goods
other than those described in Subdivision (3), when goods are
shipped, marked or otherwise designated by the seller as goods to
which the contract refers;
(3) 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 twelve months after
contracting or for the sale of crops to be harvested within twelve
months or the next normal harvest season after contracting
whichever is longer.
(b) The seller retains an insurable interest in goods so
long as title to or any security interest in the goods remains in
him and where the identification is by the seller alone he may until
default or insolvency or notification to the buyer that the
identification is final substitute other goods for those
identified.
(c) Nothing in this section impairs any insurable interest
recognized under any other statute or rule of law.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.502. BUYER'S RIGHT TO GOODS ON SELLER'S REPUDIATION,
FAILURE TO DELIVER, OR INSOLVENCY. (a) Subject to Subsections
(b) and (c) 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 he has a
special property under the provisions of the immediately preceding
section may on making and keeping good a tender of any unpaid
portion of their price recover them from the seller if:
(1) 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
(2) in all cases, the seller becomes insolvent within
ten days after receipt of the first installment on their price.
(b) The buyer's right to recover the goods under Subsection
(a)(1) vests upon acquisition of a special property, even if the
seller had not then repudiated or failed to deliver.
(c) If the identification creating his special property has
been made by the buyer he acquires the right to recover the goods
only if they conform to the contract for sale.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
Amended by Acts 1999, 76th Leg., ch. 414, § 2.17, eff. July 1,
2001.
§ 2.503. MANNER OF SELLER'S TENDER OF
DELIVERY. (a) 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 him to take
delivery. The manner, time and place for tender are determined by
the agreement and this chapter, and in particular
(1) 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
(2) unless otherwise agreed the buyer must furnish
facilities reasonably suited to the receipt of the goods.
(b) Where the case is within the next section respecting
shipment tender requires that the seller comply with its
provisions.
(c) Where the seller is required to deliver at a particular
destination tender requires that he comply with Subsection (a) and
also in any appropriate case tender documents as described in
Subsections (d) and (e) of this section.
(d) Where goods are in the possession of a bailee and are to
be delivered without being moved
(1) 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
(2) tender to the buyer of a non-negotiable document
of title or of a written direction to the bailee to deliver is
sufficient tender unless the buyer seasonably objects, and receipt
by the bailee of notification of the buyer's rights fixes those
rights as against the bailee and all third persons; but risk of
loss of the goods and of any failure by the bailee to honor the
non-negotiable 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.
(e) Where the contract requires the seller to deliver
documents
(1) he must tender all such documents in correct form,
except as provided in this chapter with respect to bills of lading
in a set (Subsection (b) of Section 2.323); and
(2) tender through customary banking channels is
sufficient and dishonor of a draft accompanying the documents
constitutes non-acceptance or rejection.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
Amended by Acts 1983, 68th Leg., p. 1530, ch. 290, § 1, eff. Aug.
29, 1983.
§ 2.504. SHIPMENT BY SELLER. Where the seller is
required or authorized to send the goods to the buyer and the
contract does not require him to deliver them at a particular
destination, then unless otherwise agreed he must
(1) 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
(2) 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
(3) promptly notify the buyer of the shipment.
Failure to notify the buyer under Subdivision (3) or to make a
proper contract under Subdivision (1) is a ground for rejection
only if material delay or loss ensues.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.505. SELLER'S SHIPMENT UNDER
RESERVATION. (a) Where the seller has identified goods to the
contract by or before shipment:
(1) his procurement of a negotiable bill of lading to
his own order or otherwise reserves in him a security interest in
the goods. His 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.
(2) a non-negotiable bill of lading to himself or his
nominee reserves possession of the goods as security but except in a
case of conditional delivery (Subsection (b) of Section 2.507) a
non-negotiable bill of lading naming the buyer as consignee
reserves no security interest even though the seller retains
possession of the bill of lading.
(b) 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 the
preceding section 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.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.506. RIGHTS OF FINANCING AGENCY. (a) 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.
(b) 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 on its face.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.507. EFFECT OF SELLER'S TENDER; DELIVERY ON
CONDITION. (a) Tender of delivery is a condition to the buyer's
duty to accept the goods and, unless otherwise agreed, to his duty
to pay for them. Tender entitles the seller to acceptance of the
goods and to payment according to the contract.
(b) Where payment is due and demanded on the delivery to the
buyer of goods or documents of title, his right as against the
seller to retain or dispose of them is conditional upon his making
the payment due.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.508. CURE BY SELLER OF IMPROPER TENDER OR DELIVERY;
REPLACEMENT. (a) Where any tender or delivery by the seller is
rejected because non-conforming and the time for performance has
not yet expired, the seller may seasonably notify the buyer of his
intention to cure and may then within the contract time make a
conforming delivery.
(b) Where the buyer rejects a non-conforming tender which
the seller had reasonable grounds to believe would be acceptable
with or without money allowance the seller may if he seasonably
notifies the buyer have a further reasonable time to substitute a
conforming tender.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.509. RISK OF LOSS IN THE ABSENCE OF
BREACH. (a) Where the contract requires or authorizes the seller
to ship the goods by carrier
(1) if it does not require him 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 (Section 2.505); but
(2) if it does require him 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.
(b) Where the goods are held by a bailee to be delivered
without being moved, the risk of loss passes to the buyer
(1) on his receipt of a negotiable document of title
covering the goods; or
(2) on acknowledgment by the bailee of the buyer's
right to possession of the goods; or
(3) after his receipt of a non-negotiable document of
title or other written direction to deliver, as provided in
Subsection (d)(2) of Section 2.503.
(c) In any case not within Subsection (a) or (b), the risk of
loss passes to the buyer on his receipt of the goods if the seller is
a merchant; otherwise the risk passes to the buyer on tender of
delivery.
(d) The provisions of this section are subject to contrary
agreement of the parties and to the provisions of this chapter on
sale on approval (Section 2.327) and on effect of breach on risk of
loss (Section 2.510).
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
Amended by Acts 1983, 68th Leg., p. 1531, ch. 290, § 2, eff. Aug.
29, 1983.
§ 2.510. EFFECT OF BREACH ON RISK OF LOSS. (a) 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.
(b) Where the buyer rightfully revokes acceptance he may to
the extent of any deficiency in his effective insurance coverage
treat the risk of loss as having rested on the seller from the
beginning.
(c) 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 him, the seller may
to the extent of any deficiency in his effective insurance coverage
treat the risk of loss as resting on the buyer for a commercially
reasonable time.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.511. TENDER OF PAYMENT BY BUYER; PAYMENT BY
CHECK. (a) Unless otherwise agreed tender of payment is a
condition to the seller's duty to tender and complete any delivery.
(b) 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.
(c) Subject to the provisions of this title on the effect of
an instrument on an obligation (Section 3.802), payment by check is
conditional and is defeated as between the parties by dishonor of
the check on due presentment.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.512. PAYMENT BY BUYER BEFORE
INSPECTION. (a) Where the contract requires payment before
inspection non-conformity of the goods does not excuse the buyer
from so making payment unless
(1) the non-conformity appears without inspection; or
(2) despite tender of the required documents
circumstances would justify injunction against honor under this
title (Section 5.109(b)).
(b) Payment pursuant to Subsection (a) does not constitute
an acceptance of goods or impair the buyer's right to inspect or any
of his remedies.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
Amended by Acts 1999, 76th Leg., ch. 4, § 3, eff. Sept. 1, 1999.
§ 2.513. BUYER'S RIGHT TO INSPECTION OF
GOODS. (a) Unless otherwise agreed and subject to Subsection
(c), 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.
(b) 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.
(c) Unless otherwise agreed and subject to the provisions of
this chapter on C.I.F. contracts (Subsection (c) of Section 2.321),
the buyer is not entitled to inspect the goods before payment of the
price when the contract provides
(1) for delivery "C.O.D." or on other like terms; or
(2) for payment against documents of title, except
where such payment is due only after the goods are to become
available for inspection.
(d) 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.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.514. 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 three days after presentment;
otherwise, only on payment.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.515. PRESERVING EVIDENCE OF GOODS IN DISPUTE. In
furtherance of the adjustment of any claim or dispute
(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
(2) the parties may agree to a third 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.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
SUBCHAPTER F. BREACH, REPUDIATION AND EXCUSE
§ 2.601. BUYER'S RIGHTS ON IMPROPER DELIVERY. Subject
to the provisions of this chapter on breach in installment
contracts (Section 2.612) and unless otherwise agreed under the
sections on contractual limitations of remedy (Sections 2.718 and
2.719), if the goods or the tender of delivery fail in any respect
to conform to the contract, the buyer may
(1) reject the whole; or
(2) accept the whole; or
(3) accept any commercial unit or units and reject the
rest.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.602. MANNER AND EFFECT OF RIGHTFUL
REJECTION. (a) Rejection of goods must be within a reasonable
time after their delivery or tender. It is ineffective unless the
buyer seasonably notifies the seller.
(b) Subject to the provisions of the two following sections
on rejected goods (Sections 2.603 and 2.604),
(1) after rejection any exercise of ownership by the
buyer with respect to any commercial unit is wrongful as against the
seller; and
(2) if the buyer has before rejection taken physical
possession of goods in which he does not have a security interest
under the provisions of this chapter (Subsection (c) of Section
2.711), he 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
(3) the buyer has no further obligations with regard
to goods rightfully rejected.
(c) The seller's rights with respect to goods wrongfully
rejected are governed by the provisions of this chapter on Seller's
remedies in general (Section 2.703).
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.603. MERCHANT BUYER'S DUTIES AS TO RIGHTFULLY
REJECTED GOODS. (a) Subject to any security interest in the buyer
(Subsection (c) of Section 2.711), 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 his 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.
(b) When the buyer sells goods under Subsection (a), he 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 ten per cent on the gross proceeds.
(c) 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.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.604. BUYER'S OPTIONS AS TO SALVAGE OF RIGHTFULLY
REJECTED GOODS. Subject to the provisions of the immediately
preceding section 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 him or resell them for the seller's
account with reimbursement as provided in the preceding section.
Such action is not acceptance or conversion.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.605. WAIVER OF BUYER'S OBJECTIONS BY FAILURE TO
PARTICULARIZE. (a) The buyer's failure to state in connection
with rejection a particular defect which is ascertainable by
reasonable inspection precludes him from relying on the unstated
defect to justify rejection or to establish breach
(1) where the seller could have cured it if stated
seasonably; or
(2) 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.
(b) Payment against documents made without reservation of
rights precludes recovery of the payment for defects apparent on
the face of the documents.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.606. WHAT CONSTITUTES ACCEPTANCE OF
GOODS. (a) Acceptance of goods occurs when the buyer
(1) after a reasonable opportunity to inspect the
goods signifies to the seller that the goods are conforming or that
he will take or retain them in spite of their non-conformity; or
(2) fails to make an effective rejection (Subsection
(a) of Section 2.602), but such acceptance does not occur until the
buyer has had a reasonable opportunity to inspect them; or
(3) 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 him.
(b) Acceptance of a part of any commercial unit is
acceptance of that entire unit.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.607. EFFECT OF ACCEPTANCE; NOTICE OF BREACH; BURDEN
OF ESTABLISHING BREACH AFTER ACCEPTANCE; NOTICE OF CLAIM OR
LITIGATION TO PERSON ANSWERABLE OVER. (a) The buyer must pay at
the contract rate for any goods accepted.
(b) Acceptance of goods by the buyer precludes rejection of
the goods accepted and if made with knowledge of a non-conformity
cannot be revoked because of it unless the acceptance was on the
reasonable assumption that the non-conformity would be seasonably
cured but acceptance does not of itself impair any other remedy
provided by this chapter for non-conformity.
(c) Where a tender has been accepted
(1) the buyer must within a reasonable time after he
discovers or should have discovered any breach notify the seller of
breach or be barred from any remedy; and
(2) if the claim is one for infringement or the like
(Subsection (c) of Section 2.312) and the buyer is sued as a result
of such a breach he must so notify the seller within a reasonable
time after he receives notice of the litigation or be barred from
any remedy over for liability established by the litigation.
(d) The burden is on the buyer to establish any breach with
respect to the goods accepted.
(e) Where the buyer is sued for breach of a warranty or other
obligation for which his seller is answerable over
(1) he may give his 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 he will be bound in any
action against him by his buyer by any determination of fact common
to the two litigations, then unless the seller after seasonable
receipt of the notice does come in and defend he is so bound.
(2) if the claim is one for infringement or the like
(Subsection (c) of Section 2.312) the original seller may demand in
writing that his buyer turn over to him control of the litigation
including settlement or else be barred from any remedy over and if
he 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.
(f) The provisions of Subsections (c), (d) and (e) apply to
any obligation of a buyer to hold the seller harmless against
infringement or the like (Subsection (c) of Section 2.312).
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.608. REVOCATION OF ACCEPTANCE IN WHOLE OR IN
PART. (a) The buyer may revoke his acceptance of a lot or
commercial unit whose non-conformity substantially impairs its
value to him if he has accepted it
(1) on the reasonable assumption that its
non-conformity would be cured and it has not been seasonably cured;
or
(2) without discovery of such non-conformity if his
acceptance was reasonably induced either by the difficulty of
discovery before acceptance or by the seller's assurances.
(b) 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.
(c) A buyer who so revokes has the same rights and duties
with regard to the goods involved as if he had rejected them.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.609. RIGHT TO ADEQUATE ASSURANCE OF
PERFORMANCE. (a) 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 he receives such assurance may if
commercially reasonable suspend any performance for which he has
not already received the agreed return.
(b) Between merchants the reasonableness of grounds for
insecurity and the adequacy of any assurance offered shall be
determined according to commercial standards.
(c) Acceptance of any improper delivery or payment does not
prejudice the aggrieved party's right to demand adequate assurance
of future performance.
(d) After receipt of a justified demand failure to provide
within a reasonable time not exceeding thirty days such assurance
of due performance as is adequate under the circumstances of the
particular case is a repudiation of the contract.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.610. 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
(1) for a commercially reasonable time await
performance by the repudiating party; or
(2) resort to any remedy for breach (Section 2.703 or
Section 2.711), even though he has notified the repudiating party
that he would await the latter's performance and has urged
retraction; and
(3) in either case suspend his own performance or
proceed in accordance with the provisions of this chapter on the
seller's right to identify goods to the contract notwithstanding
breach or to salvage unfinished goods (Section 2.704).
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.611. RETRACTION OF ANTICIPATORY
REPUDIATION. (a) Until the repudiating party's next performance
is due he can retract his repudiation unless the aggrieved party has
since the repudiation cancelled or materially changed his position
or otherwise indicated that he considers the repudiation final.
(b) 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
the provisions of this chapter (Section 2.609).
(c) 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.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.612. "INSTALLMENT CONTRACT"; BREACH. (a) 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.
(b) The buyer may reject any installment which is
non-conforming if the non-conformity substantially impairs the
value of that installment and cannot be cured or if the
non-conformity is a defect in the required documents; but if the
non-conformity does not fall within Subsection (c) and the seller
gives adequate assurance of its cure the buyer must accept that
installment.
(c) Whenever non-conformity 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 he accepts a non-conforming installment
without seasonably notifying of cancellation or if he brings an
action with respect only to past installments or demands
performance as to future installments.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.613. 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 (Section 2.324) then
(1) if the loss is total the contract is avoided; and
(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 his 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.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.614. SUBSTITUTED PERFORMANCE. (a) 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.
(b) 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.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.615. EXCUSE BY FAILURE OF PRESUPPOSED
CONDITIONS. Except so far as a seller may have assumed a greater
obligation and subject to the preceding section on substituted
performance:
(1) Delay in delivery or non-delivery in whole or in
part by a seller who complies with Subdivisions (2) and (3) is not a
breach of his duty under a contract for sale if performance as
agreed has been made impracticable by the occurrence of a
contingency the non-occurrence 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.
(2) Where the causes mentioned in Subdivision (1)
affect only a part of the seller's capacity to perform, he must
allocate production and deliveries among his customers but may at
his option include regular customers not then under contract as
well as his own requirements for further manufacture. He may so
allocate in any manner which is fair and reasonable.
(3) The seller must notify the buyer seasonably that
there will be delay or non-delivery and, when allocation is
required under Subdivision (2), of the estimated quota thus made
available for the buyer.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.616. PROCEDURE ON NOTICE CLAIMING
EXCUSE. (a) Where the buyer receives notification of a material
or indefinite delay or an allocation justified under the preceding
section he 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 the
provisions of this chapter relating to breach of installment
contracts (Section 2.612), then also as to the whole,
(1) terminate and thereby discharge any unexecuted
portion of the contract; or
(2) modify the contract by agreeing to take his
available quota in substitution.
(b) If after receipt of such notification from the seller
the buyer fails so to modify the contract within a reasonable time
not exceeding thirty days the contract lapses with respect to any
deliveries affected.
(c) The provisions of this section may not be negated by
agreement except insofar as the seller has assumed a greater
obligation under the preceding section.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
SUBCHAPTER G. REMEDIES
§ 2.701. 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.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.702. SELLER'S REMEDIES ON DISCOVERY OF BUYER'S
INSOLVENCY. (a) Where the seller discovers the buyer to be
insolvent he may refuse delivery except for cash including payment
for all goods theretofore delivered under the contract, and stop
delivery under this chapter (Section 2.705).
(b) Where the seller discovers that the buyer has received
goods on credit while insolvent he may reclaim the goods upon demand
made within ten days after the receipt, but if misrepresentation of
solvency has been made to the particular seller in writing within
three months before delivery the ten 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.
(c) The seller's right to reclaim under Subsection (b) is
subject to the rights of a buyer in ordinary course or other good
faith purchaser or lien creditor under this chapter (Section
2.403). Successful reclamation of goods excludes all other
remedies with respect to them.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.703. 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 (Section 2.612), then
also with respect to the whole undelivered balance, the aggrieved
seller may
(1) withhold delivery of such goods;
(2) stop delivery by any bailee as hereafter provided
(Section 2.705);
(3) proceed under the next section respecting goods
still unidentified to the contract;
(4) resell and recover damages as hereafter provided
(Section 2.706);
(5) recover damages for non-acceptance (Section
2.708) or in a proper case the price (Section 2.709);
(6) cancel.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.704. SELLER'S RIGHT TO IDENTIFY GOODS TO THE
CONTRACT NOTWITHSTANDING BREACH OR TO SALVAGE UNFINISHED
GOODS. (a) An aggrieved seller under the preceding section may
(1) identify to the contract conforming goods not
already identified if at the time he learned of the breach they are
in his possession or control;
(2) treat as the subject of resale goods which have
demonstrably been intended for the particular contract even though
those goods are unfinished.
(b) 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.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.705. SELLER'S STOPPAGE OF DELIVERY IN TRANSIT OR
OTHERWISE. (a) The seller may stop delivery of goods in the
possession of a carrier or other bailee when he discovers the buyer
to be insolvent (Section 2.702) 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.
(b) As against such buyer the seller may stop delivery until
(1) receipt of the goods by the buyer; or
(2) acknowledgment to the buyer by any bailee of the
goods except a carrier that the bailee holds the goods for the
buyer; or
(3) such acknowledgment to the buyer by a carrier by
reshipment or as warehouseman; or
(4) negotiation to the buyer of any negotiable
document of title covering the goods.
(c)(1) To stop delivery the seller must so notify as to enable
the bailee by reasonable diligence to prevent delivery of the
goods.
(2) 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.
(3) 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 the document.
(4) A carrier who has issued a non-negotiable bill of
lading is not obliged to obey a notification to stop received from a
person other than the consignor.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.706. SELLER'S RESALE INCLUDING CONTRACT FOR
RESALE. (a) Under the conditions stated in Section 2.703 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 the provisions of this
chapter (Section 2.710), but less expenses saved in consequence of
the buyer's breach.
(b) Except as otherwise provided in Subsection (c) 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.
(c) Where the resale is at private sale the seller must give
the buyer reasonable notification of his intention to resell.
(d) Where the resale is at public sale
(1) 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
(2) 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
(3) 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
(4) the seller may buy.
(e) 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.
(f) The seller is not accountable to the buyer for any
profit made on any resale. A person in the position of a seller
(Section 2.707) or a buyer who has rightfully rejected or
justifiably revoked acceptance must account for any excess over the
amount of his security interest, as hereinafter defined (Subsection
(c) of Section 2.711).
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.707. "PERSON IN THE POSITION OF A SELLER". (a) 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 his principal or anyone who otherwise holds a security
interest or other right in goods similar to that of a seller.
(b) A person in the position of a seller may as provided in
this chapter withhold or stop delivery (Section 2.705) and resell
(Section 2.706) and recover incidental damages (Section 2.710).
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.708. SELLER'S DAMAGES FOR NON-ACCEPTANCE OR
REPUDIATION. (a) Subject to Subsection (b) and to the provisions
of this chapter with respect to proof of market price (Section
2.723), the measure of damages for non-acceptance 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 this chapter (Section 2.710), but
less expenses saved in consequence of the buyer's breach.
(b) If the measure of damages provided in Subsection (a) 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 this chapter (Section 2.710), due allowance for costs
reasonably incurred and due credit for payments or proceeds of
resale.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.709. ACTION FOR THE PRICE. (a) When the buyer
fails to pay the price as it becomes due the seller may recover,
together with any incidental damages under the next section, the
price
(1) 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
(2) 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.
(b) Where the seller sues for the price he must hold for the
buyer any goods which have been identified to the contract and are
still in his control except that if resale becomes possible he 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 him to any goods not resold.
(c) After the buyer has wrongfully rejected or revoked
acceptance of the goods or has failed to make a payment due or has
repudiated (Section 2.610), a seller who is held not entitled to the
price under this section shall nevertheless be awarded damages for
nonacceptance under the preceding section.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.710. 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.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.711. BUYER'S REMEDIES IN GENERAL; BUYER'S SECURITY
INTEREST IN REJECTED GOODS. (a) Where the seller fails to make
delivery or repudiates or the buyer rightfully rejects or
justifiably revokes acceptance then with respect to any goods
involved, and with respect to the whole if the breach goes to the
whole contract (Section 2.612), the buyer may cancel and whether or
not he has done so may in addition to recovering so much of the price
as has been paid
(1) "cover" and have damages under the next section as
to all the goods affected whether or not they have been identified
to the contract; or
(2) recover damages for non-delivery as provided in
this chapter (Section 2.713).
(b) Where the seller fails to deliver or repudiates the
buyer may also
(1) if the goods have been identified recover them as
provided in this chapter (Section 2.502); or
(2) in a proper case obtain specific performance or
replevy the goods as provided in this chapter (Section 2.716).
(c) On rightful rejection or justifiable revocation of
acceptance a buyer has a security interest in goods in his
possession or control for any payments made on their price and any
expenses reasonably incurred in their inspection, receipt,
transportation, care and custody and may hold such goods and resell
them in like manner as an aggrieved seller (Section 2.706).
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.712. "COVER"; BUYER'S PROCUREMENT OF SUBSTITUTE
GOODS. (a) After a breach within the preceding section the buyer
may "cover" by making in good faith and without unreasonable delay
any reasonable purchase of or contract to purchase goods in
substitution for those due from the seller.
(b) The buyer may recover from the seller as damages the
difference between the cost of cover and the contract price
together with any incidental or consequential damages as
hereinafter defined (Section 2.715), but less expenses saved in
consequence of the seller's breach.
(c) Failure of the buyer to effect cover within this section
does not bar him from any other remedy.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.713. BUYER'S DAMAGES FOR NON-DELIVERY OR
REPUDIATION. (a) Subject to the provisions of this chapter with
respect to proof of market price (Section 2.723), the measure of
damages for non-delivery or repudiation by the seller is the
difference between the market price at the time when the buyer
learned of the breach and the contract price together with any
incidental and consequential damages provided in this chapter
(Section 2.715), but less expenses saved in consequence of the
seller's breach.
(b) Market price is to be determined as of the place for
tender or, in cases of rejection after arrival or revocation of
acceptance, as of the place of arrival.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.714. BUYER'S DAMAGES FOR BREACH IN REGARD TO
ACCEPTED GOODS. (a) Where the buyer has accepted goods and given
notification (Subsection (c) of Section 2.607) he may recover as
damages for any non-conformity of tender the loss resulting in the
ordinary course of events from the seller's breach as determined in
any manner which is reasonable.
(b) The measure of damages for breach of warranty is the
difference at the time and place of acceptance between the value of
the goods accepted and the value they would have had if they had
been as warranted, unless special circumstances show proximate
damages of a different amount.
(c) In a proper case any incidental and consequential
damages under the next section may also be recovered.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
§ 2.715. BUYER'S INCIDENTAL AND CONSEQUENTIAL
DAMAGES. (a) Incidental damages resulting from the seller's
breach include expenses reasonably incurred in inspection,
receipt, transportation and care and custody of goods rightfully
rejected, any commercially reasonable charges, expenses or
commissions in connection with effecting cover and any other
reasonable expense incident to the delay or other breach.
(b) Consequential damages resulting from the seller's
breach include
(1) any loss resulting from gene
