Title 5, Uniform Commercial Code

Lien of Warehouseman. (1) A warehouseman has a lien against the bailor on the goods covered by a warehouse receipt or on the proceeds thereof in his possession for charges for storage or transportation (including demurrage and terminal charges), insurance, labor, or charges prese…

Enforcement of Warehouseman’s Lien. (1) Except as provided in subsection (2) of this section, a warehouseman’s lien may be enforced by public or private sale of the goods in block or in parcels, at any time or place and on any terms which are commercially reasonable, after notify…

“Issuer.” (1) With respect to obligations on or defenses to a security, “issuer” includes a person who: (a) Places or authorizes the placing of his name on a certificated security (otherwise than as authenticating trustee, registrar, transfer agent, or the like) to evidence that …

Issuer’s Responsibility and Defenses; Notice of Defect or Defense. (1) Even against a purchaser for value and without notice, the terms of a security include: (a) If the security is certificated, those stated on the security; (b) If the security is uncertificated, those contained…

Staleness as Notice of Defects or Defenses. (1) After an act or event creating a right to immediate performance of the principal obligation represented by a certificated security or that sets a date on or after which the security is to be presented or surrendered for redemption o…

Effect of Issuer’s Restrictions on Transfer. A restriction on transfer of a security imposed by the issuer, even if otherwise lawful, is ineffective against any person without actual knowledge of it unless: (a) The security is certificated and the restriction is noted conspicuous…

Effect of Unauthorized Signature on Certificated Security or Initial Transaction Statement. An unauthorized signature placed on a certificated security prior to or in the course of issue or placed on an initial transaction statement is ineffective, but the signature is effective …

Completion or Alteration of Certificated Security or Initial Transaction Statement. (1) If a certificated security contains the signatures necessary to its issue or transfer but is incomplete in any other respect: (a) Any person may complete it by filling in the blanks as authori…

Rights and Duties of Issuer With Respect to Registered Owners and Registered Pledgees. (1) Prior to due presentment for registration of transfer of a certificated security in registered form, the issuer or indenture trustee may treat the registered owner as the person exclusively…

Effect of Signature of Authenticating Trustee, Registrar, or Transfer Agent. (1) A person placing his signature upon a certificated security or an initial transaction statement as authenticating trustee, registrar, transfer agent, or the like, warrants to a purchaser for value of…

General Validity of Security Agreement. Except as otherwise provided by this title a security agreement is effective according to its terms between the parties, against purchasers of the collateral and against creditors. Nothing in this division validates any charge or practice i…

Title to Collateral Immaterial. Each provision of this division with regard to rights, obligations and remedies applies whether title to collateral is in the secured party or in the debtor. Source: PL 3-56, § 1 (§ 9202).

Attachment and Enforceability of Security Interest; Proceeds; Formal Requisites. (1) Subject to the provisions of 5 CMC § 4208 on the security interest of a collecting bank, 5 CMC § 8321 on security interests in securities and 5 CMC § 9113 on a securities interest arising under t…

After-Acquired Property; Future Advances. (1) Except as provided in subsection (2) of this section, a security agreement may provide that any or all obligations covered by the security agreement are to be secured by after-acquired collateral. (2) No security interest attaches und…

Use or Disposition of Collateral Without Accounting Permissible. A security interest is not invalid or fraudulent against creditors by reason of liberty in the debtor to use, commingle or dispose of all or part of the collateral (including returned or repossessed goods) or to col…

Agreement Not to Assert Defenses Against Assignee; Modification of Sales Warranties Where Security Agreement Exists. (1) Subject to any statute or decision which establishes a different rule for buyers or lessees of consumer goods, an agreement by a buyer or lessee that he will n…

Rights and Duties When Collateral is in Secured Party’s Possession. (1) A secured party must use reasonable care in the custody and preservation of collateral in his possession. In the case of an instrument or chattel paper reasonable care includes taking necessary steps to prese…

Request for Statement of Account or List of Collateral. (1) A debtor may sign a statement indicating what he believes to be the aggregate amount of unpaid indebtedness as of a specified date and may send it to the secured party with a request that the statement be approved or cor…

General Obligations of Parties. The obligation of the seller is to transfer and deliver and that of the buyer is to accept and pay in accordance with the contract. Source: PL 3-56, § 1 (§ 2301).

Unconscionable Contract or Clause. (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 un…

Allocation or Division of Risks. Where this division 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. Source: PL 3-56, § 1 (§ 2303).

Price Payable in Money, Goods, Realty, or Otherwise. (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 inter…

Open Price Term. (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 part…

Output, Requirements and Exclusive Dealings. (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 state…

Delivery in Single Lot or Several Lots. Unless otherwise agreed all goods called for by a contract for sale must be tendered in a single delivery and payment is due only on such tender but where the circumstances give either party the right to make or demand delivery in lots the …

Absence of Specified Place for Delivery. 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 contrac…

Absence of Specific Time Provisions; Notice of Termination. (1) The time for shipment or delivery or any other action under a contract if not provided in this division or agreed upon shall be a reasonable time. (2) Where the contract provides for successive performances but is in…

Open Time for Payment or Running of Credit; Authority to Ship Under Reservation. 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 autho…

Options and Cooperation Respecting Performance. (1) An agreement for sale which is otherwise sufficiently definite (5 CMC § 2204(3)) to be a contract is not made invalid by the fact that it leaves particulars of performance to be specified by one of the parties. Any such specific…

Warranty of Title and Against Infringement; Buyer’s Obligation Against Infringement. (1) Subject to subsection (2) of this section 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 sha…

Express Warranties by Affirmation, Promise, Description, Sample. (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 …

Implied Warranty: Merchantability; Usage of Trade. (1) Unless excluded or modified (5 CMC § 2316), 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 servin…

Implied Warranty: Fitness for Particular Purpose. Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is u…

Exclusion or Modification of Warranties. (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 this divis…

Cumulation and Conflict of Warranties Express or Implied. Warranties whether express or implied shall be construed as consistent with each other and as cumulative, but if such construction is unreasonable the intention of the parties shall determine which warranty is dominant. In…

Third Party Beneficiaries of Warranties Express or Implied. A seller’s warranty whether express or implied extends to any person who may reasonably be expected to use, consume or be affected by the goods and who is injured by breach of the warranty. A seller may not exclude or li…

F.O.B. and F.A.S. Terms. (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 th…

C.I.F. and C. & F. Terms. (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 …

C.I.F. or C. & F.: “Net Landed Weights”; “Payment on Arrival”; Warranty of Condition on Arrival. Under a contract containing a term C.I.F. or C. & F.: (1) Where the price is based on or is to be adjusted according to “net landed weights,” “delivered weights,” “out turn” quantity …

Delivery “Ex-Ship.” (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 destinat…

Form of Bill of Lading Required in Overseas Shipment; “Overseas.” (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 b…

“No Arrival, No Sale” Term. 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 arr…

“Letter of Credit” Term; “Confirmed Credit.” (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 …

Sale on Approval and Sale or Return; Consignment Sales and Rights of Creditors. (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…

Special Incidents of Sale on Approval and Sale or Return. (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…

Sale by Auction. (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 fal…