CHAPTER 2. SALES
IC 26-1-2
Chapter 2. Sales
IC 26-1-2-101
Short title
Sec. 101. IC 26-1-2 shall be known and may be cited as Uniform
Commercial Code . Sales.
(Formerly: Acts 1963, c.317, s.2-101.) As amended by P.L.152-1986,
SEC.119.
IC 26-1-2-102
Scope; certain security and other transactions excluded from this
chapter
Sec. 102. Unless the context otherwise requires, IC 26-1-2 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
IC 26-1-2 impair or repeal any statute regulating sales to consumers,
farmers, or other specified classes of buyers. IC 26-1-2 does not
impair or repeal IC 9-14, IC 9-17, or IC 9-22-5.
(Formerly: Acts 1963, c.317, s.2-102.) As amended by P.L.152-1986,
SEC.120; P.L.2-1991, SEC.86.
IC 26-1-2-103
Definitions and index of definitions
Sec. 103. (1) In IC 26-1-2, unless the context otherwise requires:
(a) "Buyer" means a person who buys or contracts to buy goods.
(b) "Good faith" in the case of a merchant means honesty in fact
and observance of reasonable commercial standards of fair
dealing in the trade.
(c) "Receipt" of goods means taking physical possession of
them.
(d) "Seller" means a person who sells or contracts to sell goods.
(2) Other definitions applying to IC 26-1-2, or to specified parts
thereof, and the sections in which they appear are:
"Acceptance". IC 26-1-2-606.
"Banker's credit". IC 26-1-2-325.
"Between merchants". IC 26-1-2-104.
"Cancellation". IC 26-1-2-106(4).
"Commercial unit". IC 26-1-2-105.
"Confirmed credit". IC 26-1-2-325.
"Conforming to contract". IC 26-1-2-106.
"Contract for sale". IC 26-1-2-106.
"Cover". IC 26-1-2-712.
"Entrusting". IC 26-1-2-403.
"Financing agency". IC 26-1-2-104.
"Future goods". IC 26-1-2-105.
"Goods". IC 26-1-2-105.
"Identification". IC 26-1-2-501.
"Installment contract". IC 26-1-2-612.
"Letter of credit". IC 26-1-2-325.
"Lot". IC 26-1-2-105.
"Merchant". IC 26-1-2-104.
"Overseas". IC 26-1-2-323.
"Person in the position of seller". IC 26-1-2-707.
"Present sale". IC 26-1-2-106.
"Sale". IC 26-1-2-106.
"Sale on approval". IC 26-1-2-326.
"Sale or return". IC 26-1-2-326.
"Termination". IC 26-1-2-106.
(3) "Control" as provided in IC 26-1-7-106 and the following
definitions apply to IC 26-1-2:
"Check". IC 26-1-3.1-104.
"Consignee". IC 26-1-7-102.
"Consignor". IC 26-1-7-102.
"Consumer goods". IC 26-1-9.1-102.
"Dishonor". IC 26-1-3.1-502.
"Draft". IC 26-1-3.1-104.
(4) In addition, IC 26-1-1 contains general definitions and
principles of construction and interpretation applicable throughout
IC 26-1-2.
(Formerly: Acts 1963, c.317, s.2-103.) As amended by P.L.152-1986,
SEC.121; P.L.222-1993, SEC.3; P.L.57-2000, SEC.15;
P.L.143-2007, SEC.7.
IC 26-1-2-104
"Merchant"; "between merchants"; "financing agency"
Sec. 104. (1) "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.
(2) "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 or are associated with 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 (IC 26-1-2-707).
(3) "Between merchants" means in any transaction with respect to
which both parties are chargeable with the knowledge or skill of
merchants.
(Formerly: Acts 1963, c.317, s.2-104.) As amended by P.L.152-1986,
SEC.122; P.L.143-2007, SEC.8.
IC 26-1-2-105
Transferability; "goods"; "future" goods; "lot"; "commercial
unit"
Sec. 105. (1) "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 (IC 26-1-8.1), 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 (IC 26-1-2-107).
(2) 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.
(3) There may be a sale of a part interest in existing identified
goods.
(4) 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.
(5) "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.
(6) "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.
(Formerly: Acts 1963, c.317, s.2-105.) As amended by P.L.152-1986,
SEC.123; P.L.247-1995, SEC.3.
IC 26-1-2-106
"Contract"; "agreement"; "contract for sale"; "sale"; "present
sale"; "conforming" to contract; "termination"; "cancellation"
Sec. 106. (1) In IC 26-1-2, 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 (IC 26-1-2-401). A "present sale" means a sale which is
accomplished by the making of the contract.
(2) 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.
(3) "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.
(4) "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 of any unperformed
balance.
(Formerly: Acts 1963, c.317, s.2-106.) As amended by P.L.152-1986,
SEC.124.
IC 26-1-2-107
Goods to be severed from realty; recording
Sec. 107. (1) 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 IC 26-1-2 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.
(2) 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 (1) or of timber
to be cut is a contract for the sale of goods within IC 26-1-2 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.
(3) 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.
(Formerly: Acts 1963, c.317, s.2-107.) As amended by P.L.93-1985,
SEC.4.
IC 26-1-2-201
Formal requirements; statute of frauds
Sec. 201. (1) Except as otherwise provided in this section, a
contract for the sale of goods for the price of five hundred dollars
($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.
(2) Between merchants, if within a reasonable time a writing in
confirmation of the contract and sufficiently against the sender is
received and the party receiving it has reason to know its contents,
it satisfies the requirements of subsection (1) against such party
unless written notice of objection to its contents is given within ten
(10) days after it is received.
(3) A contract which does not satisfy the requirements of
subsection (1) but which is valid in other respects is enforceable:
(a) 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
(b) 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
(c) with respect to goods for which payment has been made and
accepted or which have been received and accepted (IC
26-1-2-606).
(Formerly: Acts 1963, c.317, s.2-201.) As amended by P.L.152-1986,
SEC.125.
IC 26-1-2-202
Final written expression; parol or extrinsic evidence
Sec. 202. 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:
(a) by course of dealing or usage of trade (IC 26-1-1-205) or by
course of performance (IC 26-1-1-205); and
(b) 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.
(Formerly: Acts 1963, c.317, s.2-202.) As amended by P.L.152-1986,
SEC.126; P.L.143-2007, SEC.9.
IC 26-1-2-203
Seals inoperative
Sec. 203. 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.
(Formerly: Acts 1963, c.317, s.2-203.)
IC 26-1-2-204
Formation in general
Sec. 204. (1) 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.
(2) An agreement sufficient to constitute a contract for sale may
be found even though the moment of its making is undetermined.
(3) 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.
(Formerly: Acts 1963, c.317, s.2-204.)
IC 26-1-2-205
Firm offers
Sec. 205. 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 (3) months; but any such term
of assurance on a form supplied by the offeree must be separately
signed by the offeror.
(Formerly: Acts 1963, c.317, s.2-205.)
IC 26-1-2-206
Offer and acceptance in formation of contract
Sec. 206. (1) Unless otherwise unambiguously indicated by the
language or circumstances
(a) an offer to make a contract shall be construed as inviting
acceptance in any manner and by any medium reasonable in the
circumstances;
(b) 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.
(2) 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.
(Formerly: Acts 1963, c.317, s.2-206.)
IC 26-1-2-207
Additional terms in acceptance or confirmation
Sec. 207. (1) 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.
(2) The additional terms are to be construed as proposals for
addition to the contract. Between merchants such terms become part
of the contract unless:
(a) the offer expressly limits acceptance to the terms of the offer;
(b) they materially alter it; or
(c) notification of objection to them has already been given or is
given within a reasonable time after notice of them is received.
(3) 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
Act.
(Formerly: Acts 1963, c.317, s.2-207.)
IC 26-1-2-208
Repealed
(Repealed by P.L.143-2007, SEC.78.)
IC 26-1-2-209
Modification, rescission, and waiver
Sec. 209. (1) An agreement modifying a contract within IC 26-1-2
needs no consideration to be binding.
(2) 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.
(3) The requirements of the statute of frauds section (IC
26-1-2-201) must be satisfied if the contract as modified is within its
provisions.
(4) Although an attempt at modification or rescission does not
satisfy the requirements of subsection (2) or (3), it can operate as a
waiver.
(5) 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.
(Formerly: Acts 1963, c.317, s.2-209.) As amended by P.L.152-1986,
SEC.128.
IC 26-1-2-210
Delegation of performance; assignment of rights
Sec. 210. (1) 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.
(2) 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.
(3) 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 (2) 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.
(4) 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.
(5) 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.
(6) 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 (IC 26-1-2-609).
(Formerly: Acts 1963, c.317, s.2-210.) As amended by P.L.152-1986,
SEC.129; P.L.57-2000, SEC.16.
IC 26-1-2-301
General obligations of parties
Sec. 301. 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.
(Formerly: Acts 1963, c.317, s.2-301.)
IC 26-1-2-302
Unconscionable contract or clause
Sec. 302. (1) 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.
(2) 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.
(Formerly: Acts 1963, c.317, s.2-302.)
IC 26-1-2-303
Allocation or division of risks
Sec. 303. Where IC 26-1-2 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.
(Formerly: Acts 1963, c.317, s.2-303.) As amended by P.L.152-1986,
SEC.130.
IC 26-1-2-304
Price payable in money, goods, realty, or otherwise
Sec. 304. (1) 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.
(2) 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 IC 26-1-2, but not the transfer of the
interest in realty or the transferor's obligations in connection
therewith.
(Formerly: Acts 1963, c.317, s.2-304.) As amended by P.L.152-1986,
SEC.131.
IC 26-1-2-305
Open price term
Sec. 305. (1) 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
(a) nothing is said as to price; or
(b) the price is left to be agreed by the parties and they fail to
agree; or
(c) 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.
(2) A price to be fixed by the seller or by the buyer means a price
for him to fix in good faith.
(3) When a price left to be fixed otherwise than by agreement of
the parties fails to be fixed through fault of one (1) party the other
may at his option treat the contract as canceled or himself fix a
reasonable price.
(4) 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.
(Formerly: Acts 1963, c.317, s.2-305.)
IC 26-1-2-306
Output, requirements, and exclusive dealings
Sec. 306. (1) 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.
(2) 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.
(Formerly: Acts 1963, c.317, s.2-306.)
IC 26-1-2-307
Delivery in single lot or several lots
Sec. 307. 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.
(Formerly: Acts 1963, c.317, s.2-307.)
IC 26-1-2-308
Absence of specified place for delivery
Sec. 308. Unless otherwise agreed:
(a) the place for delivery of goods is the seller's place of
business or if he has none his residence; but
(b) 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
(c) documents of title may be delivered through customary
banking channels.
(Formerly: Acts 1963, c.317, s.2-308.) As amended by P.L.3-1989,
SEC.149.
IC 26-1-2-309
Absence of specific time provisions; notice of termination
Sec. 309. (1) The time for shipment or delivery or any other action
under a contract, if not provided in IC 26-1-2 or agreed upon, shall
be a reasonable time.
(2) 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.
(3) Termination of a contract by one (1) 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.
(Formerly: Acts 1963, c.317, s.2-309.) As amended by P.L.152-1986,
SEC.132.
IC 26-1-2-310
Open time for payment or running of credit; authority to ship
under reservation
Sec. 310. Unless otherwise agreed:
(a) 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
(b) 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 (IC 26-1-2-513); and
(c) if delivery is authorized and made by way of documents of
title otherwise than by subdivision (b), then payment is due,
regardless of where the goods are to be received:
(i) at the time and place at which the buyer is to receive
delivery of the tangible documents; or
(ii) at the time the buyer is to receive delivery of the
electronic documents and at the seller's place of business or,
if none, the seller's residence; and
(d) where the seller is required or authorized to ship the goods
on credit, the credit period runs from the time of shipment, but
postdating the invoice or delaying its dispatch will
correspondingly delay the starting of the credit period.
(Formerly: Acts 1963, c.317, s.2-310.) As amended by P.L.152-1986,
SEC.133; P.L.143-2007, SEC.10.
IC 26-1-2-311
Options and cooperation respecting performance
Sec. 311. (1) An agreement for sale which is otherwise
sufficiently definite (IC 26-1-2-204(3)) to be a contract is not made
invalid by the fact that it leaves particulars of performance to be
specified by one (1) of the parties. Any such specification must be
made in good faith and within limits set by commercial
reasonableness.
(2) Unless otherwise agreed, specifications relating to assortment
of goods are at the buyer's option, and except as otherwise provided
in IC 26-1-2-319(1)(c) and IC 26-1-2-319(3), specifications or
arrangements relating to shipment are at the seller's option.
(3) Where such specification would materially affect the other
party's performance but is not seasonably made, or where one (1)
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:
(a) is excused for any resulting delay in his own performance;
and
(b) 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.
(Formerly: Acts 1963, c.317, s.2-311.) As amended by P.L.152-1986,
SEC.134.
IC 26-1-2-312
Warranty of title and against infringement; buyer's obligation
against infringement
Sec. 312. (1) Subject to subsection (2) there is in a contract for
sale a warranty by the seller that
(a) the title conveyed shall be good, and its transfer rightful; and
(b) 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.
(2) A warranty under subsection (1) 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.
(3) 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.
(Formerly: Acts 1963, c.317, s.2-312.)
IC 26-1-2-313
Express warranties by affirmation, promise, description, and
sample
Sec. 313. (1) Express warranties by the seller are created as
follows:
(a) 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.
(b) 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.
(c) 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.
(2) 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.
(Formerly: Acts 1963, c.317, s.2-313.)
IC 26-1-2-314
Implied warranty; merchantability; usage of trade
Sec. 314. (1) Unless excluded or modified (IC 26-1-2-316), 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.
(2) Goods to be merchantable must at least be such as:
(a) pass without objection in the trade under the contract
description; and
(b) in the case of fungible goods, are of fair, average quality
within the description; and
(c) are fit for the ordinary purposes for which such goods are
used; and
(d) run, within the variations permitted by the agreement, of
even kind, quality, and quantity within each unit and among all
units involved; and
(e) are adequately contained, packaged, and labeled as the
agreement may require; and
(f) conform to the promises or affirmations of fact made on the
container or label if any.
(3) Unless excluded or modified (IC 26-1-2-316), other implied
warranties may arise from course of dealing or usage of trade.
(Formerly: Acts 1963, c.317, s.2-314.) As amended by P.L.152-1986,
SEC.135.
IC 26-1-2-315
Implied warranty; fitness for particular purpose
Sec. 315. 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
IC 26-1-2-316, an implied warranty that the goods shall be fit for
such purpose.
(Formerly: Acts 1963, c.317, s.2-315.) As amended by P.L.152-1986,
SEC.136.
IC 26-1-2-316
Exclusion or modification of warranties
Sec. 316. (1) 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 IC 26-1-2-202 on parol or
extrinsic evidence, negation or limitation is inoperative to the extent
that such construction is unreasonable.
(2) Subject to subsection (3), 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."
(3) Notwithstanding subsection (2):
(a) 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
(b) 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
(c) an implied warranty can also be excluded or modified by
course of dealing or course of performance or usage of trade;
and
(d) with respect to the sale of cattle, hogs, or sheep, there is no
implied warranty that the cattle, hogs, or sheep are free from
disease, if the seller shows that all state and federal regulations
concerning animal health have been complied with; and
(e) with respect to a sale of audio or visual entertainment
products, as defined by IC 26-2-6-1, made as a result of a
solicitation through a mail order catalog, it is sufficient to
exclude all implied warranties in connection with the sale of
any product in the catalog, if the contract is in writing and the
language in the contract conspicuously states that:
(i) the product is sold "as is" or "with all faults"; and
(ii) the entire risk as to the quality and performance of the
product is with the buyer.
(4) Remedies for breach of warranty can be limited in accordance
with the provisions of IC 26-1-2-718 and IC 26-1-2-719 on
liquidation or limitation of damages and on contractual modification
of remedy.
(Formerly: Acts 1963, c.317, s.2-316.) As amended by Acts 1980,
P.L.167, SEC.1; P.L.254-1983, SEC.1.
IC 26-1-2-317
Cumulation and conflict of warranties express or implied
Sec. 317. 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:
(a) exact or technical specifications displace an inconsistent
sample or model or general language of description.
(b) a sample from an existing bulk displaces inconsistent general
language of description.
(c) express warranties displace inconsistent implied warranties
other than an implied warranty of fitness for a particular purpose.
(Formerly: Acts 1963, c.317, s.2-317.)
IC 26-1-2-318
Third party beneficiaries of warranties express or implied
Sec. 318. A seller's warranty whether express or implied extends
to any natural person who is in the family or household of his buyer
or who is a guest in his home if it is reasonable to expect that such
person may use, consume or be affected by the goods and who is
injured in person by breach of the warranty. A seller may not exclude
or limit the operation of this section.
(Formerly: Acts 1963, c.317, s.2-318.)
IC 26-1-2-319
F.O.B. and F.A.S. terms
Sec. 319. (1) 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:
(a) 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
IC 26-1-2-504 and bear the expense and risk of putting them
into the possession of the carrier; or
(b) 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 IC 26-1-2-503;
(c) when under either subdivision (a) or (b) 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
IC 26-1-2-323 on the form of bill of lading.
(2) 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:
(a) 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
(b) obtain and tender a receipt for the goods in exchange for
which the carrier is under a duty to issue a bill of lading.
(3) Unless otherwise agreed in any case falling within subsection
(1)(a), (1)(c), or (2), 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 IC 26-1-2-311. He may
also at his option move the goods in any reasonable manner
preparatory to delivery or shipment.
(4) 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 and substitution for the documents.
(Formerly: Acts 1963, c.317, s.2-319.) As amended by P.L.152-1986,
SEC.137.
IC 26-1-2-320
C.I.F. and C.&F. terms
Sec. 320. (1) 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.
(2) 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
(a) 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
(b) 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
(c) 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
(d) prepare an invoice of the goods and procure any other
documents required to effect shipment or to comply with the
contract; and
(e) forward and tender with commercial promptness all the
documents in due form and with any endorsement necessary to
perfect the buyer's rights.
(3) 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.
(4) 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.
(Formerly: Acts 1963, c.317, s.2-320.)
IC 26-1-2-321
C.I.F. or C.&F.; "net landed weights"; payment on arrival;
warranty of condition on arrival
Sec. 321. Under a contract containing a term C.I.F. or C.&F.
(1) 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.
(2) An agreement described in subsection (1) 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.
(3) 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.
(Formerly: Acts 1963, c.317, s.2-321.)
IC 26-1-2-322
Delivery "ex-ship"
Sec. 322. (1) 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.
(2) Under such a term unless otherwise agreed
(a) the seller must discharge all liens arising out of the carriage
and furnish the buyer with direction which puts the carrier under a
duty to deliver the goods; and
(b) the risk of loss does not pass to the buyer until the goods leave
the ship's tackle or are otherwise properly unloaded.
(Formerly: Acts 1963, c.317, s.2-322.)
IC 26-1-2-323
Form of bill of lading required in overseas shipment; "overseas"
Sec. 323. (1) 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.
(2) Where in a case within subsection (1) a tangible 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 (1) part of the bill of
lading need be tendered. Even if the agreement expressly requires a
full set:
(a) due tender of a single part is acceptable within the
provisions of IC 26-1-2-508(1) on cure of improper delivery;
and
(b) even though the full set is demanded, if the documents are
sent from abroad, the person tendering an incomplete set may
nevertheless require payments upon furnishing an indemnity
which the buyer in good faith deems adequate.
(3) 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.
(Formerly: Acts 1963, c.317, s.2-323.) As amended by P.L.152-1986,
SEC.138; P.L.143-2007, SEC.11.
IC 26-1-2-324
"No arrival, no sale"
Sec. 324. Under a term "no arrival, no sale" or terms of like
meaning, unless otherwise agreed:
(a) 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 nonarrival; and
(b) 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 (IC 26-1-2-613).
(Formerly: Acts 1963, c.317, s.2-324.) As amended by P.L.152-1986,
SEC.139.
IC 26-1-2-325
"Letter of credit"; "confirmed credit"
Sec. 325. (1) Failure of the buyer seasonably to furnish an agreed
letter of credit is a breach of the contract for sale.
(2) 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.
(3) 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.
(Formerly: Acts 1963, c.317, s.2-325.)
IC 26-1-2-326
Sale on approval and sale or return
Sec. 326. (1) Unless otherwise agreed, if delivered goods may be
returned by the buyer even though they conform to the contract, the
transaction is:
(a) a "sale on approval" if the goods are delivered primarily for
use; and
(b) a "sale or return" if the goods are delivered primarily for
resale.
(2) 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.
(3) 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 (IC
26-2-2-201) and as contradicting the sale aspect of the contract
within the provisions of IC 26-1-2-202 on parol or extrinsic evidence.
(Formerly: Acts 1963, c.317, s.2-326.) As amended by P.L.152-1986,
SEC.140; P.L.57-2000, SEC.17.
IC 26-1-2-327
Special incidents of sale on approval and sale or return
Sec. 327. (1) Under a sale on approval unless otherwise agreed
(a) although the goods are identified to the contract the risk of loss
and the title do not pass to the buyer until acceptance; and
(b) 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
(c) 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.
(2) Under a sale or return unless otherwise agreed
(a) 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
(b) the return is at the buyer's risk and expense.
(Formerly: Acts 1963, c.317, s.2-327.)
IC 26-1-2-328
Sale by auction
Sec. 328. (1) In a sale by auction if goods are put up in lots each
lot is the subject of a separate sale.
(2) 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.
(3) 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.
(4) 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.
(Formerly: Acts 1963, c.317, s.2-328.)
IC 26-1-2-401
Passing of title; reservation of security; limited application of this
section
Sec. 401. Each provision of IC 26-1-2 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 IC 26-1-2 and matters concerning
title become material, the following rules apply:
(1) Title to goods cannot pass under a contract for sale prior to
their identification to the contract (IC 26-1-2-501), and unless
otherwise explicitly agreed, the buyer acquires by their
identification a special property as limited by IC 26-1. 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 IC 26-1-9.1 on secured transactions,
title to goods passes from the seller to the buyer in any manner
and on any conditions explicitly agreed on by the parties.
(2) 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 despite any reservation of a security
interest by the bill of lading:
(a) 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
(b) if the contract requires delivery at destination, title
passes on tender there.
(3) Unless otherwise explicitly agreed, where delivery is to be
made without moving the goods:
(a) if the seller is to deliver a tangible document of title, title
passes at the time when and the place where he delivers such
documents and if the seller is to deliver an electronic
document of title, title passes when the seller delivers the
document; or
(b) if the goods are at the time of contracting already
identified and no documents of title are to be delivered, title
passes at the time and place of contracting.
(4) 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".
(Formerly: Acts 1963, c.317, s.2-401.) As amended by P.L.152-1986,
SEC.141; P.L.57-2000, SEC.18; P.L.143-2007, SEC.12.
IC 26-1-2-402
Rights of seller's creditors against sold goods
Sec. 402. (1) Except as provided in subsections (2) and (3), 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 IC 26-1-2-502 and IC 26-1-2-716.
(2) 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.
(3) Nothing in IC 26-1-2 shall be deemed to impair the rights of
creditors of the seller:
(a) under the provisions of IC 26-1-9.1 on secured transactions;
or
(b) 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 IC 26-1-2
constitute the transaction a fraudulent transfer or voidable
preference.
(Formerly: Acts 1963, c.317, s.2-402.) As amended by P.L.152-1986,
SEC.142; P.L.57-2000, SEC.19.
IC 26-1-2-403
Power to transfer; good faith purchase of goods; "entrusting"
Sec. 403. (1) A purchaser of goods acquires all title which the
purchaser's 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:
(a) the transferor was deceived as to the identity of the
purchaser; or
(b) the delivery was in exchange for a check which is later
dishonored; or
&