Printable Format84-2-502. Buyer's right to goods on seller's repudiation, failure to deliver or insolvency. (1) Subject to subsections (2) and (3) 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: (a) 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
(b) in all cases, the seller becomes insolvent within ten days after receipt of the first installment on their price.
(2) The buyer's right to recover the goods under subsection (1)(a) vests upon acquisition of a special property, even if the seller had not then repudiated or failed to deliver.
(3) 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.
History: L. 1965, ch. 564, § 67; L. 2000, ch. 142, § 140; July 1, 2001.
KANSAS COMMENT, 1996
This section provides prepaying buyers with a limited right to recover identified goods from an insolvent seller. The four prerequisites to exercise of this right are: (1) the buyer must have paid all or part of the price; (2) the buyer must have a special property in the goods (i.e., the goods must be identified to the contract); (3) the seller must have been solvent when it received the first installment of the price and must have become insolvent within ten days thereafter; and (4) the buyer must tender and continue to tender the unpaid portion of the price. The third prerequisite is almost impossible to establish, and so a buyer rarely will succeed under this section. See First-Citizens Bank & Trust Co. v. Academic Archives, Inc., 10 N.C. App. 619, 179 S.E.2d 850 (1971). In addition, the buyer's rights under this section may not survive the seller's bankruptcy. Thus, a prepaying buyer that wishes to preserve its rights in the goods should take and perfect a security interest under Article 9 rather than rely on this section.
Law Review and Bar Journal References:
"Remedies for Breach of Sales Contract Under the Code," Keith Hey, 7 W.L.J. 35, 39, 40 (1967).
"Commercial Transactions Under the New Bankruptcy Act," Paul B. Rasor, 48 J.B.A.K. 199, 204 (1979).