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Title 34.1 - Uniform Commercial Code







    34.1-1-101.  Short title.


    This act shall be knownand may be cited as the Uniform Commercial Code.


    34.1-1-102.  Purposes; rules of construction; variationby agreement.


    (a)  This act shall be liberally construed and applied topromote its underlying purposes and policies.


    (b)  Underlying purposes and policies of this act are:


    (i)  To simplify, clarify and modernize the law governingcommercial transactions;


    (ii)  To permit the continued expansion of commercialpractices through custom usage and agreement of the parties;


    (iii)  To make uniform the law among the variousjurisdictions.


    (c)  The effect of provisions of this act may be variedby agreement, except as otherwise provided in this act and except that theobligations of good faith, diligence, reasonableness and care prescribed bythis act may not be disclaimed by agreement but the parties may by agreementdetermine the standards by which the performance of such obligations is to bemeasured if such standards are not manifestly unreasonable.


    (d)  The presence in certain provisions of this act ofthe words "unless otherwise agreed" or words of similar import doesnot imply that the effect of other provisions may not be varied by agreementunder subsection (c).


    (e)  In this act unless the context otherwise requires:


    (i)  Words in the singular number include the plural, andin the plural include the singular;


    (ii)  Words of the masculine gender include the feminineand the neuter, and when the sense so indicates words of the neuter gender mayrefer to any gender.


    34.1-1-103.  Supplementary general principles of lawapplicable.


    Unless displaced by theparticular provisions of this act, the principles of law and equity, includingthe law merchant and the law relative to capacity to contract, principal andagent, estoppel, fraud, misrepresentation, duress, coercion, mistake,bankruptcy, or other validating or invalidating cause shall supplement itsprovisions.


    34.1-1-104.  Construction against implicit repeal.


    This act being a generalact intended as a unified coverage of its subject matter, no part of it shallbe deemed to be impliedly repealed by subsequent legislation if suchconstruction can reasonably be avoided.


    34.1-1-105.  Territorial application of the act; parties'power to choose applicable law.


    (a)  Except as provided hereafter in this section, when atransaction bears a reasonable relation to this state and also to another stateor nation the parties may agree that the law either of this state or of suchother state or nation shall govern their rights and duties. Failing suchagreement this act applies to transactions bearing an appropriate relation tothis state.


    (b)  Where one (1) of the following provisions of thisact specifies the applicable law, that provision governs and a contraryagreement is effective only to the extent permitted by the law (including theconflict of laws rules) so specified:


    (i)  Rights of creditors against sold goods. Section34.1-2-402;


    (ii)  Applicability of the article on leases. Sections34.1-2.A-105 and 34.1-2.A-106;


    (iii)  Applicability of the article on bank deposits andcollections. Section 34.1-4-102;


    (iv)  Repealed by Laws 1991, ch. 177, 2.


    (v)  Applicability of the article on investmentsecurities. Section 34.1-8-110;


    (vi)  Policy and scope of the article on securedtransactions. Section 34.1-9-109;


    (vii)  Governing law in the article on fundstransfers.  Section 34.1-4.A-507;


    (viii)  Letters of credit.  Section 34.1-5-116;


    (ix)  Law governing perfection, the effect of perfectionor nonperfection, and the priority of security interests and agricultural liens.Sections 34.1-9-301 through 34.1-9-307.


    34.1-1-106.  Remedies to be liberally administered.


    (a)  The remedies provided by this act shall be liberallyadministered to the end that the aggrieved party may be put in as good aposition as if the other party had fully performed but neither consequential orspecial nor penal damages may be had except as specifically provided in thisact or by other rule of law.


    (b)  Any right or obligation declared by this act isenforceable by action unless the provision declaring it specifies a differentand limited effect.


    34.1-1-107.  Waiver or renunciation of claim or rightafter breach.


    Any claim or rightarising out of an alleged breach can be discharged in whole or in part withoutconsideration by a written waiver or renunciation signed and delivered by theaggrieved party.


    34.1-1-108.  Severability.


    If any provision orclause of this act or application thereof to any person or circumstances isheld invalid, such invalidity shall not affect other provisions or applicationsof the act which can be given effect without the invalid provision orapplication, and to this end the provisions of this act are declared to beseverable.


    34.1-1-109.  Section captions.


    Section captions areparts of this act.




    34.1-1-201.  General definitions.


    (a)  Subject to additional definitions contained inthe  subsequent articles of this act which are  applicable tospecific articles or parts thereof, and unless the context otherwise requires,in this act:


    (i)  "Action" in the sense of a judicialproceeding  includes recoupment, counterclaim, setoff, suit in equity andany other proceedings  in which rights are determined;


    (ii)  "Aggrieved party" means a party entitledto resort  to a remedy;


    (iii)  "Agreement" means the bargain of theparties in  fact as found in their language or by implication from othercircumstances  including course of dealing or usage of trade or course ofperformance as  provided in this act (sections 34.1-1-205 and 34.1-2-208).Whether an agreement has legal consequences is determined by the provisions of this act, if applicable; otherwise by the law of contracts (section 34.1-1-103). (Compare "Contract");


    (iv)  "Bank" means any person engaged in thebusiness of banking;


    (v)  "Bearer" means the person in possession ofan  instrument, document of title, or security payable to bearer orindorsed in blank;


    (vi)  "Bill of lading" means a documentevidencing  the receipt of goods for shipment issued by a person engagedin the business of  transporting or forwarding goods, and includes anairbill. "Airbill"  means a document serving for airtransportation as a bill of lading does  for marine or railtransportation, and includes an air consignment note  or air waybill;


    (vii)  "Branch" includes a separatelyincorporated  foreign branch of a bank;


    (viii)  "Burden of establishing" a fact meansthe burden  of persuading the triers of a fact that the existence of thefact is more probable  than its nonexistence;


    (ix)  "Buyer in ordinary course of business"means a person that buys goods in good faith, without knowledge that the saleviolates the rights of another person in the goods, and in the ordinary coursefrom a person, other than a pawnbroker, in the business of selling  goodsof that kind. A person buys goods in the ordinary course if the sale to theperson comports with the usual or customary practices in the kind of businessin which the seller is engaged or with the seller's own usual or customarypractices.  A person that sells oil, gas or other minerals at the wellheador minehead is a person in the business of selling goods of that kind. A buyerin ordinary course of business may buy for cash, by exchange of other property,or on secured or unsecured credit, and may acquire goods or documents of titleunder a preexisting contract for sale. Only a buyer that takes possession ofthe goods or has a right to recover the goods from the seller under article 2 maybe a buyer in ordinary course of business.  A person that acquires goodsin a transfer in bulk or as security for or in total or partial satisfaction ofa money debt is not a buyer in ordinary course of business;


    (x)  "Conspicuous": a term or clause isconspicuous  when it is so written that a reasonable person against whomit is to operate  ought to have noticed it. A printed heading in capitals(as: NONNEGOTIABLE BILL OF LADING) is conspicuous. Language in the body of aform  is "conspicuous" if it is in larger or other contrastingtype or color. But  in a telegram any stated term is"conspicuous". Whether a term or clause is "conspicuous" or not is for decision by the court;


    (xi)  "Contract" means the total legalobligation which  results from the parties' agreement as affected by thisact and any other  applicable rules of law. (Compare"agreement");


    (xii)  "Creditor" includes a general creditor,a secured  creditor, a lien creditor and any representative of creditors,including an  assignee for the benefit of creditors, a trustee inbankruptcy, a receiver  in equity and an executor or administrator of aninsolvent debtor's or  assignor's estate;


    (xiii)  "Defendant" includes a person in the position of defendant in a cross-action or counterclaim;


    (xiv)  "Delivery" with respect to instruments,documents  of title, chattel paper or securities means voluntary transferof possession;


    (xv)  "Document of title" includes bill oflading, dock  warrant, dock receipt, warehouse receipt or order for thedelivery of goods,  and also any other document which in the regularcourse of business or  financing is treated as adequately evidencing thatthe person in possession  of it is entitled to receive, hold and disposeof the document and the  goods it covers. To be a document of title adocument must purport to be issued  by or addressed to a bailee andpurport to cover goods in the  bailee's possession which are eitheridentified or are fungible portions of  an identified mass;


    (xvi)  "Fault" means wrongful act, omission orbreach;


    (xvii)  "Fungible" with respect to goods orsecurities  means goods or securities of which any unit is, by nature orusage of trade,  the equivalent of any other like unit. Goods which arenot fungible shall be deemed fungible for the purposes of this act to theextent that  under a particular agreement or document unlike units aretreated as equivalents;


    (xviii)  "Genuine" means free of forgery orcounterfeiting;


    (xix)  "Good faith" means honesty in fact inthe conduct  or transaction concerned;


    (xx)  "Holder," with respect to a negotiableinstrument, means the person in possession if the instrument is payable tobearer or, in the case of an instrument payable to an identified person, if theidentified person is in possession. "Holder" with respect to adocument of title means the person in possession if the goods are deliverableto bearer or to the order of the person in possession;


    (xxi)  To "honor" is to pay or to accept andpay, or where a credit so engages to purchase or discount a draft complyingwith the terms of the credit;


    (xxii)  "Insolvency proceedings" includes anyassignment for the benefit of creditors or other proceedings intended toliquidate or rehabilitate the estate of the person involved;


    (xxiii)  A person is "insolvent" who either hasceased to pay his debts in the ordinary course of business or cannot pay hisdebts as they become due or is insolvent within the meaning of the federalbankruptcy law;


    (xxiv)  "Money" means a medium of exchangeauthorized or adopted by a domestic or foreign government and includes amonetary unit of account established by an intergovernmental organization or byagreement between two (2) or more nations;


    (xxv)  A person has "notice" of a fact when:


    (A)  He has actual knowledge of it; or


    (B)  He has received a notice or notification of it; or


    (C)  From all the facts and circumstances known to him atthe time in question he has reason to know that it exists. A person"knows" or has "knowledge" of a fact when he has actualknowledge of it. "Discover" or "learn" or a word or phraseof similar import refers to knowledge rather than to reason to know. The timeand circumstances under which a notice or notification may cease to beeffective are not determined by this act.


    (xxvi)  A person "notifies" or"gives" a notice or notification  to another by taking suchsteps as may be reasonably required to inform the  other in ordinarycourse whether or not such other actually comes to know  of it. A person"receives" a notice or notification when:


    (A)  It comes to his attention; or


    (B)  It is duly delivered at the place of businessthrough  which the contract was made or at any other place held out by himas the place for receipt of such communications.


    (xxvii)  Notice, knowledge or a notice or notificationreceived  by an organization is effective for a particular transactionfrom the  time when it is brought to the attention of the individualconducting that  transaction, and in any event from the time when it wouldhave been brought to  his attention if the organization had exercised duediligence. An organization  exercises due diligence if it maintainsreasonable routines for communicating significant information to the personconducting the transaction  and there is reasonable compliance with theroutines. Due diligence does  not require an individual acting for theorganization to communicate  information unless such communication is partof his regular duties or unless  he has reason to know of the transactionand that the transaction would be  materially affected by the information;


    (xxviii)  "Organization" includes a corporation,government or governmental subdivision or agency, business trust, estate,trust, partnership or association, two (2) or more persons having a  jointor common interest, or any other legal or commercial entity;


    (xxix)  "Party", as distinct from "thirdparty", means a person who has engaged in a transaction or made anagreement within this act;


    (xxx)  "Person" includes an individual or anorganization.  (See section 34.1-1-102);


    (xxxi)  "Presumption" or "presumed"means that the trier of  fact must find the existence of the fact presumedunless and until evidence is introduced which would support a finding of itsnonexistence;


    (xxxii)  "Purchase" includes taking by sale,discount, negotiation, mortgage, pledge, lien, security interest, issue orreissue, gift or any other voluntary transaction creating an interest inproperty;


    (xxxiii)  "Purchaser" means a person who takesby purchase;


    (xxxiv)  "Remedy" means any remedial right towhich an aggrieved party is entitled with or without resort to a tribunal;


    (xxxv)  "Representative" includes an agent, anofficer of a  corporation or association, and a trustee, executor oradministrator of an estate,  or any other person empowered to act foranother;


    (xxxvi)  "Rights" includes remedies;


    (xxxvii)  "Security interest" means an interestin personal property or fixtures which secures payment or performance of anobligation. The term also includes any interest of a consignor and a buyer ofaccounts, chattel paper a payment intangible, or a promissory note in atransaction that is subject to article 9. The special property interest of abuyer of goods on identification of those goods to a contract for saleunder  section 34.1-2-401 is not a "security interest", but abuyer may also acquire a "security interest" by complying witharticle 9. Except as otherwise provided in section 34.1-2-505, the right of aseller or lessor of goods under article 2 or 2A to retain or acquire possessionof the goods is not a "security interest", but a seller or lessor mayalso acquire a "security interest" by complying with article 9. The retention or reservation of title by a seller of goods notwithstandingshipment or delivery to the buyer (section 34.1-2-401) is limited in effect toa reservation of a "security interest":


    (A)  Whether a transaction creates a lease orsecurity  interest is determined by the facts of each case; however, atransaction creates a security interest if the consideration  the lesseeis to pay the lessor for the right to possession and use of the goods is anobligation for  the term of the lease not subject to termination by thelessee, and:


    (I)  The original term of the lease is equal to orgreater  than the remaining economic life of the goods;


    (II)  The lessee is bound to renew the lease forthe  remaining economic life of the goods or is bound to become the ownerof the goods;


    (III)  The lessee has an option to renew the leasefor  the remaining economic life of the goods for no additionalconsideration or  nominal additional consideration upon compliance withthe lease agreement, or;


    (IV)  The lessee has an option to become the ownerof  the goods for no additional consideration or nominal additionalconsideration  upon compliance with the lease agreement.


    (B)  A transaction does not create a securityinterest  merely because it provides that:


    (I)  The present value of the consideration thelessee  is obligated to pay the lessor for the right to possession and useof the goods  is substantially equal to or is greater than the fair marketvalue of the goods at the time the lease is entered into;


    (II)  The lessee assumes risk of loss of the goods,or  agrees to pay taxes, insurance, filing, recording, or registrationfees, or  service or maintenance costs with respect to the goods;


    (III)  The lessee has an option to renew the lease or tobecome the owner of the goods;


    (IV)  The lessee has an option to renew the lease fora  fixed rent that is equal to or greater than the reasonably predictablefair  market rent for the use of the goods for the term of the renewal atthe time the option is to be performed; or


    (V)  The lessee has an option to become the ownerof  the goods for a fixed price that is equal to or greater than thereasonably  predictable fair market value of the goods at the time theoption is to be performed.


    (C)  For purposes of this paragraph (xxxvii):


    (I)  Additional consideration is not nominal if (1) when the option to renew the lease is granted to the lessee the rent is statedto  be the fair market rent for the use of the goods for the term of therenewal determined at the time the option is to be performed, or (2)  whenthe option to become the owner of the goods is granted to the lessee the price is stated to be the fair market value of the goods determined at thetime  the option is to be performed.  Additional consideration isnominal if  it is less than the lessee's reasonably predictable cost ofperforming under the lease agreement if the option is not exercised;


    (II)  "Reasonably predictable" and"remaining economic  life of the goods" are to be determinedwith reference to the facts and  circumstances at the time the transactionis entered into; and


    (III)  "Present value" means the amount as of adate  certain of one (1) or more sums payable in the future, discounted tothe date certain.   The discount is determined by the interest ratespecified by the parties if the rate is not manifestly unreasonable at the timethe  transaction is entered into; otherwise, the discount is determined bya commercially  reasonable rate that takes into account the facts andcircumstances of each case at the time the transaction was entered into.


    (xxxviii)  "Send" in connection with anywriting or notice  means to deposit in the mail or deliver fortransmission by any other usual means of communication with postage or cost oftransmission provided for and properly addressed and in the case of an instrumentto an address specified thereon or otherwise agreed, or if there be none to anyaddress reasonable under the circumstances. The receipt of any writing ornotice within the time at which it would have arrived if properly sent has theeffect of a proper sending;


    (xxxix)  "Signed" includes any symbol executedor adopted by a party with present intention to authenticate a writing;


    (xl)  "Surety" includes guarantor;


    (xli)  "Telegram" includes a messagetransmitted by radio,  teletype, cable, any mechanical method oftransmission, or the like;


    (xlii)  "Term" means that portion of anagreement which  relates to a particular matter;


    (xliii)  "Unauthorized" signature means onemade without actual, implied, or apparent authority and includes a forgery;


    (xliv)  "Value": except as otherwise providedwith respect  to negotiable instruments and bank collections (sections34.1-3-303,  34.1-4-208 and 34.1-4-209) a person gives "value"for rights if he acquires them:


    (A)  In return for a binding commitment to extend credit or for the extension of immediately available credit whether ornot  drawn upon and whether or not a charge-back is provided for in theevent of difficulties in collection; or


    (B)  As security for or in total or partialsatisfaction  of a preexisting claim; or


    (C)  By accepting delivery pursuant to a preexistingcontract for purchase; or


    (D)  Generally, in return for any considerationsufficient to support a simple contract.


    (xlv)  "Warehouse receipt" means a receipt issuedby a person engaged in the business of storing goods for hire;


    (xlvi)  "Written" or "writing"includes printing, typewriting or any other intentional reduction to tangibleform.


    34.1-1-202.  Prima facie evidence by third partydocuments.


    A document in due formpurporting to be a bill of lading, policy or certificate of insurance, officialweigher's or inspector's certificate, consular invoice, or any other documentauthorized or required by the contract to be issued by a third party shall be primafacie evidence of its own authenticity and genuineness and of the facts statedin the document by the third party.


    34.1-1-203.  Obligation of good faith.


    Every contract or dutywithin this act imposes an obligation of good faith in its performance orenforcement.


    34.1-1-204.  Time; reasonable time;"seasonably".


    (a)  Whenever this act requires any action to be takenwithin a reasonable time, any time which is not manifestly unreasonable may befixed by agreement.


    (b)  What is a reasonable time for taking any actiondepends on the nature, purpose and circumstances of such action.


    (c)  An action is taken "seasonably" when it istaken at or within the time agreed or if no time is agreed at or within areasonable time.


    34.1-1-205.  Course of dealing and usage of trade.


    (a)  A course of dealing is a sequence of previousconduct between the parties to a particular transaction which is fairly to beregarded as establishing a common basis of understanding for interpreting theirexpressions and other conduct.


    (b)  A usage of trade is any practice or method ofdealing having such regularity of observance in a place, vocation or trade asto justify an expectation that it will be observed with respect to thetransaction in question. The existence and scope of such a usage are to beproved as facts. If it is established that such a usage is embodied in awritten trade code or similar writing the interpretation of the writing is forthe court.


    (c)  A course of dealing between parties and any usage oftrade in the vocation or trade in which they are engaged or of which they areor should be aware give particular meaning to and supplement or qualify termsof an agreement.


    (d)  The express terms of an agreement and an applicablecourse of dealing or usage of trade shall be construed wherever reasonable asconsistent with each other; but when such construction is unreasonable expressterms control both course of dealing and usage of trade and course of dealingcontrols usage of trade.


    (e)  An applicable usage of trade in the place where anypart of performance is to occur shall be used in interpreting the agreement asto that part of performance.


    (f)  Evidence of a relevant usage of trade offered by one(1) party is not admissible unless and until he has given the other party suchnotice as the court finds sufficient to prevent unfair surprise to the latter.


    34.1-1-206.  Statute of frauds for kinds of personalproperty not otherwise covered.


    (a)  Except in the cases described in subsection (b) ofthis section a contract for the sale of personal property is not enforceable byway of action or defense beyond five thousand dollars ($5,000.00) in amount orvalue of remedy unless there is some writing which indicates that a contractfor sale has been made between the parties at a defined or stated price,reasonably identifies the subject matter, and is signed by the party againstwhom enforcement is sought or by his authorized agent.


    (b)  Subsection (a) of this section does not apply tocontracts for the sale of goods (section 34.1-2-201) nor of securities (section34.1-8-113) nor to security agreements (section 34.1-9-203).


    34.1-1-207.  Performance or acceptance under reservationof rights.


    (a)  A party who, with explicit reservation of rights,performs or promises performance or assents to performance in a manner demandedor offered by the other party does not thereby prejudice the rights reserved.Such words as "without prejudice", "under protest" or thelike are sufficient.


    (b)  Subsection (a) does not apply to an accord andsatisfaction.


    34.1-1-208.  Option to accelerate at will.


    A term providing that one(1) party or his successor in interest may accelerate payment or performance orrequire collateral or additional collateral "at will" or "whenhe deems himself insecure" or in words of similar import shall beconstrued to mean that he shall have power to do so only if he in good faithbelieves that the prospect of payment or performance is impaired. The burden ofestablishing lack of good faith is on the party against whom the power has beenexercised.


    34.1-1-209.  Subordinated obligations.


    An obligation may beissued as subordinated to payment of another obligation of the personobligated, or a creditor may subordinate his right to payment of an obligationby agreement with either the person obligated or another creditor of the personobligated. Such a subordination does not create a security interest as againsteither the common debtor or a subordinated creditor. This section shall beconstrued as declaring the law as it existed prior to the enactment of thissection and not as modifying it.






    34.1-2-101.  Short title.


    This article shall beknown and may be cited as Uniform Commercial Code - Sales.


    34.1-2-102.  Scope; certain security and othertransactions excluded from this article.


    Unless the contextotherwise requires, this article applies to transactions in goods; it does notapply to any transaction which although in the form of an unconditionalcontract to sell or present sale is intended to operate only as security transactionnor does this article impair or repeal any statute regulating sales toconsumers, farmers or other specified classes of buyers.


    34.1-2-103.  Definitions and index of definitions.


    (a)  In this article unless the context otherwiserequires:


    (i)  "Buyer" means a person who buys orcontracts to buy goods;


    (ii)  "Good faith" in the case of a merchantmeans honesty in fact and the observance of reasonable commercial standards offair dealing in the trade;


    (iii)  "Receipt" of goods means taking physicalpossession of them;


    (iv)  "Seller" means a person who sells orcontracts to sell goods.


    (b)  Other definitions applying to this article or tospecified parts thereof, and the sections in which they appear are:


    "Acceptance".W.S. 34.1-2-606.

    "Banker'scredit". W.S. 34.1-2-325.

    "Betweenmerchants".    W.S. 34.1-2-104.

    "Cancellation".   W.S. 34.1-2-106(d).

    "Commercialunit". W.S. 34.1-2-105.

    "Confirmedcredit". W.S. 34.1-2-325.

    "Conforming tocontract".    W.S. 34.1-2-106.

    "Contract for sale".   W.S. 34.1-2-106.

    "Cover". W.S. 34.1-2-712.

    "Entrusting".W.S. 34.1-2-403.

    "Financingagency". W.S. 34.1-2-104.

    "Futuregoods".    W.S. 34.1-2-105.

    "Goods". W.S. 34.1-2-105.

    "Identification". W.S. 34.1-2-501.

    "Installmentcontract". W.S. 34.1-2-612.

    "Letter ofcredit". W.S. 34.1-2-325.

    "Lot".   W.S. 34.1-2-105.

    "Merchant".  W.S. 34.1-2-104.

    "Overseas".  W.S. 34.1-2-323.

    "Person in positionof seller".   W.S. 34.1-2-707.

    "Presentsale".    W.S. 34.1-2-106.

    "Sale".   W.S. 34.1-2-106.

    "Sale on approval". W.S. 34.1-2-326.

    "Sale or return".  W.S. 34.1-2-326.

    "Termination".W.S. 34.1-2-106.


    (c)  Thefollowing definitions in other articles apply to this article:


    "Check". W.S. 34.1-3-104.

    "Consignee". W.S. 34.1-7-102.

    "Consignor". W.S. 34.1-7-102.

    "Consumergoods".  W.S. 34.1-9-102.

    "Dishonor".  W.S. 34.1-3-502.

    "Draft". W.S. 34.1-3-104.


    (d)  In addition article 1 contains general definitionsand principles of construction and interpretation applicable throughout thisarticle.


    34.1-2-104.  Definitions: "Merchant";"between merchants"; "financing agency".


    (a)  "Merchant" means a person who deals ingoods of the kind or otherwise by his occupation holds himself out as havingknowledge or skill peculiar to the practices or goods involved in thetransaction or to whom such knowledge or skill may be attributed by hisemployment of an agent or broker or other intermediary who by his occupationholds himself out as having such knowledge or skill.


    (b)  "Financing agency" means a bank, finance companyor other person who in the ordinary course of business makes advances againstgoods or documents of title or who by arrangement with either the seller or thebuyer intervenes in ordinary course to make or collect payment due or claimedunder the contract for sale, as by purchasing or paying the seller's draft ormaking advances against it or by merely taking it for collection whether or notdocuments of title accompany the draft. "Financing agency" includesalso a bank or other person who similarly intervenes between persons who are inthe position of seller and buyer in respect to the goods (section 34.1-2-707).


    (c)  "Between merchants" means in anytransaction with respect to which both parties are chargeable with theknowledge or skill of merchants.


    34.1-2-105.  Definitions: Transferability;"goods"; "future" goods; "lot"; "commercialunit".


    (a)  "Goods" means all things (includingspecially manufactured goods) which are movable at the time of identificationto the contract for sale other than the money in which the price is to be paid,investment securities (article 8) and things in action. "Goods" alsoincludes the unborn young of animals and growing crops and other identifiedthings attached to realty as described in the section on goods to be severedfrom realty (section 34.1-2-107).


    (b)  Goods must be both existing and identified beforeany interest in them can pass. Goods which are not both existing and identifiedare "future" goods. A purported present sale of future goods or ofany interest therein operates as a contract to sell.


    (c)  There may be a sale of a part interest in existingidentified goods.


    (d)  An undivided share in an identified bulk of fungiblegoods is sufficiently identified to be sold although the quantity of the bulkis not determined. Any agreed proportion of such a bulk or any quantity thereofagreed upon by number, weight or other measure may to the extent of theseller's interest in the bulk be sold to the buyer who then becomes an owner incommon.


    (e)  "Lot"means a parcel or a single article which is the subject matter of a separatesale or delivery, whether or not it is sufficient to perform the contract.


    (f)  "Commercial unit" means such a unit ofgoods as by commercial usage is a single whole for purposes of sale anddivision of which materially impairs its character or value on the market or inuse. A commercial unit may be a single article (as a machine) or a set ofarticles (as a suite of furniture or an assortment of sizes) or a quantity (as abale, gross, or carload) or any other unit treated in use or in the relevantmarket as a single whole.


    34.1-2-106.  Definitions: "Contract";"agreement"; "contract for sale"; "sale";"present sale"; "conforming" to contract;"termination"; "cancellation".


    (a)  In this article unless the context otherwiserequires "contract" and "agreement" are limited to thoserelating to the present or future sale of goods. "Contract for sale" includesboth 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 buyerfor a price (section 34.1-2-401). A "present sale" means a sale whichis accomplished by the making of the contract.


    (b)  Goods or conduct including any part of a performanceare "conforming" or conform to the contract when they are inaccordance with the obligations under the contract.


    (c)  "Termination" occurs when either partypursuant to a power created by agreement or law puts an end to the contractotherwise than for its breach. On "termination" all obligations whichare still executory on both sides are discharged but any right based on priorbreach or performance survives.


    (d)  "Cancellation" occurs when either partyputs an end to the contract for breach by the other and its effect is the sameas that of "termination" except that the cancelling party alsoretains any remedy for breach of the whole contract or any unperformed balance.


    34.1-2-107.  Goods to be severed from realty; recording.


    (a)  A contract for the sale of timber, minerals or thelike or a structure or its materials to be removed from realty is a contractfor the sale of goods within this article if they are to be severed by theseller but until severance a purported present sale thereof which is noteffective as a transfer of an interest in land is effective only as a contractto sell.


    (b)  A contract for the sale apart from the land ofgrowing crops or other things attached to realty and capable of severancewithout material harm thereto but not described in subsection (a) is a contractfor the sale of goods within this article whether the subject matter is to besevered by the buyer or by the seller even though it forms part of the realtyat the time of contracting, and the parties can by identification effect apresent sale before severance.


    (c)  The provisions of this section are subject to any thirdparty rights provided by the law relating to realty records, and the contractfor sale may be executed and recorded as a document transferring an interest inland and shall then constitute notice to third parties of the buyer's rightsunder the contract for sale.




    34.1-2-201.  Formal requirements; statute of frauds.


    (a)  Except as otherwise provided in this section acontract for the sale of goods for the price of five hundred dollars ($500.00)or more is not enforceable by way of action or defense unless there is somewriting sufficient to indicate that a contract for sale has been made betweenthe parties and signed by the party against whom enforcement is sought or byhis authorized agent or broker. A writing is not insufficient because it omitsor incorrectly states a term agreed upon but the contract is not enforceableunder this paragraph beyond the quantity of goods shown in such writing.


    (b)  Between merchants if within a reasonable time awriting in confirmation of the contract and sufficient against the sender isreceived and the party receiving it has reason to know its contents, itsatisfies the requirements of subsection (a) against such party unless writtennotice of objection to its contents is given within ten (10) days after it isreceived.


    (c)  A contract which does not satisfy the requirementsof subsection (a) but which is valid in other respects is enforceable:


    (i)  If the goods are to be specially manufactured for thebuyer and are not suitable for sale to others in the ordinary course of theseller's business and the seller, before notice of repudiation is received andunder circumstances which reasonably indicate that the goods are for the buyer,has made either a substantial beginning of their manufacture or commitments fortheir procurement; or


    (ii)  If the party against whom enforcement is soughtadmits in his pleading, testimony or otherwise in court that a contract for salewas made, but the contract is not enforceable under this provision beyond thequantity of goods admitted; or


    (iii)  With respect to goods for which payment has beenmade and accepted or which have been received and accepted (section34.1-2-606).


    34.1-2-202.  Final written expression; parol or extrinsicevidence.


    (a)  Terms with respect to which the confirmatorymemoranda of the parties agree or which are otherwise set forth in a writingintended by the parties as a final expression of their agreement with respectto such terms as are included therein may not be contradicted by evidence ofany prior agreement or of a contemporaneous oral agreement but may be explainedor supplemented:


    (i)  By course of dealing or usage of trade (section34.1-1-205) or by course of performance (section 34.1-2-208); and


    (ii)  By evidence of consistent additional terms unlessthe court finds the writing to have been intended also as a complete andexclusive statement of the terms of the agreement.


    34.1-2-203.  Seals inoperative.


    The affixing of a seal toa writing evidencing a contract for sale or an offer to buy or sell goods doesnot constitute the writing a sealed instrument and the law with respect tosealed instruments does not apply to such a contract or offer.


    34.1-2-204.  Formation in general.


    (a)  A contract for sale of goods may be made in anymanner sufficient to show agreement, including conduct by both parties whichrecognizes the existence of such a contract.


    (b)  An agreement sufficient to constitute a contract forsale may be found even though the moment of its making is undetermined.


    (c)  Even though one (1) or more terms are left open acontract for sale does not fail for indefiniteness if the parties have intendedto make a contract and there is a reasonably certain basis for giving anappropriate remedy.


    34.1-2-205.  Firm offers.


    An offer by a merchant tobuy or sell goods in a signed writing which by its terms gives assurance thatit will be held open is not revocable, for lack of consideration, during thetime stated or if no time is stated for a reasonable time, but in no event maysuch period of irrevocability exceed three (3) months, but any such term ofassurance on a form supplied by the offeree must be separately signed by theofferor.


    34.1-2-206.  Offer and acceptance in formation ofcontract.


    (a)  Unless otherwise unambiguously indicated by thelanguage or circumstances:


    (i)  An offer to make a contract shall be construed as invitingacceptance in any manner and by any medium reasonable in the circumstances;


    (ii)  An order or other offer to buy goods for prompt orcurrent shipment shall be construed as inviting acceptance either by a promptpromise to ship or by the prompt or current shipment of conforming ornonconforming goods, but such a shipment of nonconforming goods does notconstitute an acceptance if the seller seasonably notifies the buyer that theshipment is offered only as an accommodation to the buyer.


    (b)  Where the beginning of a requested performance is areasonable mode of acceptance an offeror who is not notified of acceptancewithin a reasonable time may treat the offer as having lapsed before anacceptance.


    34.1-2-207.  Additional terms in acceptance orconfirmation.


    (a)  A definite and seasonable expression of acceptanceor a written confirmation which is sent within a reasonable time operates as anacceptance even though it states terms additional to or different from thoseoffered or agreed upon, unless acceptance is expressly made conditional onassent to the additional or different terms.


    (b)  The additional terms are to be construed asproposals for addition to the contract. Between merchants such terms becomepart of the contract unless:


    (i)  The offer expressly limits acceptance to the termsof the offer;


    (ii)  They materially alter it; or


    (iii)  Notification of objection to them has already beengiven or is given within a reasonable time after notice of them is received.


    (c)  Conduct by both parties which recognizes theexistence of a contract is sufficient to establish a contract for sale althoughthe writings of the parties do not otherwise establish a contract. In such casethe terms of the particular contract consist of those terms on which thewritings of the parties agree, together with any supplementary termsincorporated under any other provisions of this act.


    34.1-2-208.  Course of performance or practicalconstruction.


    (a)  Where the contract for sale involves repeatedoccasions for performance by either party with knowledge of the nature of theperformance and opportunity for objection to it by the other, any course ofperformance accepted or acquiesced in without objection shall be relevant todetermine the meaning of the agreement.


    (b)  The express terms of the agreement and any suchcourse of performance, as well as any course of dealing and usage of trade,shall be construed whenever reasonable as consistent with each other; but when suchconstruction is unreasonable, express terms shall control course of performanceand course of performance shall control both course of dealing and usage oftrade (section 34.1-1-205).


    (c)  Subject to the provisions of the next section onmodification and waiver, such course of performance shall be relevant to show awaiver or modification of any term inconsistent with such course ofperformance.


    34.1-2-209.  Modification, rescission and waiver.


    (a)  An agreement modifying a contract within this articleneeds no consideration to be binding.


    (b)  A signed agreement which excludes modification orrescission except by a signed writing cannot be otherwise modified orrescinded, but except as between merchants such a requirement on a formsupplied by the merchant must be separately signed by the other party.


    (c)  The requirements of the statute of frauds section ofthis article (section 34.1-2-201) must be satisfied if the contract as modifiedis within its provisions.


    (d)  Although an attempt at modificatio

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