§ 336.2-702 — Seller's Remedies on Discovery of Buyer's Insolvency
Plain-Language Summary
If a seller discovers the buyer is insolvent, the seller can stop delivery and demand cash payment. If the buyer received goods on credit while insolvent, the seller can reclaim the goods within 10 days of delivery. The seller's reclamation right is subject to a good-faith purchaser's rights.
336.2-702 SELLER’S REMEDIES ON DISCOVERY OF BUYER’S INSOLVENCY.
(1) Where the seller discovers the buyer to be insolvent the seller may refuse delivery except for cash including payment for all goods theretofore delivered under the contract, and stop delivery under this article (section 336.2-705).
(2) Where the seller discovers that the buyer has received goods on credit while insolvent the seller may reclaim the goods upon demand made within ten days after the receipt, but if misrepresentation of solvency has been made to the particular seller in writing within three months before delivery the ten-day limitation does not apply. Except as provided in this subsection the seller may not base a right to reclaim goods on the buyer’s fraudulent or innocent misrepresentation of solvency or of intent to pay.
(3) The seller’s right to reclaim under subsection (2) is subject to the rights of a buyer in ordinary course or other good faith purchaser under this article (section 336.2-403). Successful reclamation of goods excludes all other remedies with respect to them.
History:
1965 c 811 s 336.2-702; 1969 c 621 s 1; 1986 c 444
History: History: 1965 c 811 s 336.2-702; 1969 c 621 s 1; 1986 c 444