Title 5, Uniform Commercial Code

Debtor’s Right to Redeem Collateral. At any time before the secured party has disposed of collateral or entered into a contract for its disposition under 5 CMC § 9504 or before the obligation has been discharged under 5 CMC § 9505(2) the debtor or any other secured party may unle…

Secured Party’s Liability for Failure to Comply with This Chapter. (1) If it is established that the secured party is not proceeding in accordance with the provisions of this chapter disposition may be ordered or restrained on appropriate terms and conditions. If the disposition …

Buyer’s Rights on Improper Delivery. Subject to the provisions of this division on breach in installment contracts (5 CMC § 2612) and unless otherwise agreed under the sections on contractual limitations of remedy (5 CMC §§ 2718 and 2719), if the goods or the tender of delivery f…

Manner and Effect of Rightful Rejection. (1) Rejection of goods must be within a reasonable time after their delivery or tender. It is ineffective unless the buyer seasonably notifies the seller. (2) Subject to the provisions of the two following sections on rejected goods (5 CMC…

Merchant Buyer’s Duties as to Rightfully Rejected Goods. (1) Subject to any security interest in the buyer (5 CMC § 2711(3)), when the seller has no agent or place of business at the market of rejection a merchant buyer is under a duty after rejection of goods in his possession o…

Buyer’s Options as to Salvage of Rightfully Rejected Goods. Subject to the provisions of the immediately preceding section on perishables if the seller gives no instructions within a reasonable time after notification of rejection the buyer may store the rejected goods for the se…

Waiver of Buyer’s Objections by Failure to Particularize. (1) The buyer’s failure to state in connection with rejection a particular defect which is ascertainable by reasonable inspection precludes him from relying on the unstated defect to justify rejection or to establish breac…

What Constitutes Acceptance of Goods. (1) Acceptance of goods occurs when the buyer: (a) After a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that he will take or retain them in spite of their non-conformity; or (b) Fails to…

Effect of Acceptance; Notice of Breach; Burden of Establishing Breach After Acceptance; Notice of Claim or Litigation to Person Answerable Over. (1) The buyer must pay at the contract rate for any goods accepted. (2) Acceptance of goods by the buyer precludes rejection of the goo…

Revocation of Acceptance in Whole or in Part. (1) The buyer may revoke his acceptance of a lot or commercial unit whose non-conformity substantially impairs its value to him if he has accepted it: (a) On the reasonable assumption that its non-conformity would be cured and it has …

Right to Adequate Assurance of Performance. (1) A contract for sale imposes an obligation on each party that the other’s expectation of receiving due performance will not be impaired. When reasonable grounds for insecurity arise with respect to the performance of either party the…

Anticipatory Repudiation. When either party repudiates the contract with respect to a performance not yet due the loss of which will substantially impair the value of the contract to the other, the aggrieved party may: (a) For a commercially reasonable time await performance by t…

Retraction of Anticipatory Repudiation. (1) Until the repudiating party’s next performance is due he can retract his repudiation unless the aggrieved party has since the repudiation canceled or materially changed his position or otherwise indicated that he considers the repudiati…

“Installment Contract”; Breach. (1) An “installment contract” is one which requires or authorizes the delivery of goods in separate lots to be separately accepted, even though the contract contains a clause “each delivery is a separate contract” or its equivalent. (2) The buyer m…

Casualty to Identified Goods. Where the contract requires for its performance goods identified when the contract is made, and the goods suffer casualty without fault of either party before the risk of loss passes to the buyer, or in a proper case under a “no arrival, no sale” ter…

Substituted Performance. (1) Where without fault of either party the agreed berthing, loading, or unloading facilities fail or an agreed type of carrier becomes unavailable or the agreed manner of delivery otherwise becomes commercially impracticable but a commercially reasonable…

Excuse by Failure of Presupposed Conditions. Except so far as a seller may have assumed a greater obligation and subject to 5 CMC § 2614 on substituted performance: (a) Delay in delivery or non-delivery in whole or in part by a seller who complies with subsections (b) and (c) of …

Procedure on Notice Claiming Excuse. (1) Where the buyer receives notification of a material or indefinite delay or an allocation justified under 5 CMC § 2615 he may by written notification to the seller as to any delivery concerned, and where the prospective deficiency substanti…

Discharge of Parties. (1) The extent of the discharge of any party from liability on an instrument is governed by the sections on: (a) Payment or satisfaction (5 CMC § 3603); or (b) Tender of payment (5 CMC § 3604); or (c) Cancellation or renunciation (5 CMC § 3605); or (d) Impai…

Effect of Discharge Against Holder in Due Course. No discharge of any party provided by this division is effective against a subsequent holder in due course unless he has notice thereof when he takes the instrument. Source: PL 3-56, § 1 (§ 3602).

Payment or Satisfaction. (1) The liability of any party is discharged to the extent of his payment or satisfaction to the holder even though it is made with knowledge of a claim of another person to the instrument unless prior to such payment or satisfaction the person making the…

Tender of Payment. (1) Any party making tender of full payment to a holder when or after it is due is discharged to the extent of all subsequent liability for interest, costs and attorney’s fees. (2) The holder’s refusal of such tender wholly discharges any party who has a right …

Cancellation and Renunciation. (1) The holder of an instrument may even without consideration discharge any party: (a) In any manner apparent on the face of the instrument or the indorsement, as by intentionally canceling the instrument or the party’s signature by destruction or …

Impairment of Recourse or of Collateral. (1) The holder discharges any party to the instrument to the extent that without such party’s consent the holder: (a) Without express reservation of rights releases or agrees not to sue any person against whom the party has to the knowledg…

Lost and Missing Documents. (1) If a document has been lost, stolen or destroyed, a court may order delivery of the goods or issuance of a substitute document and the bailee may without liability to any person comply with such order. If the document was negotiable the claimant mu…

Attachment of Goods Covered by a Negotiable Document. Except where the document was originally issued upon delivery of the goods by a person who had no power to dispose of them, no lien attaches by virtue of any judicial process to goods in the possession of a bailee for which a …

Conflicting Claims; Interpleader. If more than one person claims title or possession of the goods, the bailee is excused from delivery until he has had a reasonable time to ascertain the validity of the adverse claims or to bring an action to compel all claimants to interplead an…

Remedies for Breach of Collateral Contracts Not Impaired. Remedies for breach of any obligation or promise collateral or ancillary to a contract for sale are not impaired by the provisions of this division. Source: PL 3-56, § 1 (§ 2701).

Seller’s Remedies on Discovery of Buyer’s Insolvency. (1) Where the seller discovers the buyer to be insolvent he may refuse delivery except for cash including payment for all goods theretofore delivered under the contract, and stop delivery under this division (5 CMC § 2705). (2…

Seller’s Remedies in General. Where the buyer wrongfully rejects or revokes acceptance of goods or fails to make a payment due on or before delivery or repudiates with respect to a part or the whole, then with respect to any goods directly affected and, if the breach is of the wh…

Seller’s Right to Identify Goods to the Contract Notwithstanding Breach or to Salvage Unfinished Goods. (1) An aggrieved seller under 5 CMC § 2703 may: (a) Identify to the contract conforming goods not already identified if at the time he learned of the breach they are in his pos…

Seller’s Stoppage of Delivery in Transit or Otherwise. (1) The seller may stop delivery of goods in the possession of a carrier or other bailee when he discovers the buyer to be insolvent (5 CMC § 2702) and may stop delivery of carload, truckload, planeload or larger shipments of…

Seller’s Resale Including Contract for Resale. (1) Under the conditions stated in 5 CMC § 2703 on seller’s remedies, the seller may resell the goods concerned or the undelivered balance thereof. Where the resale is made in good faith and in a commercially reasonable manner the se…

“Person in the Position of a Seller.” (1) A “person in the position of a seller” includes as against a principal an agent who has paid or become responsible for the price of goods on behalf of his principal or anyone who otherwise holds a security interest or other right in goods…

Seller’s Damages for Non-acceptance or Repudiation. (1) Subject to subsection (2) of this section and to the provisions of this division with respect to proof of market price (5 CMC § 2723), the measure of damages for non-acceptance or repudiation by the buyer is the difference b…

Action for the Price. (1) When the buyer fails to pay the price as it becomes due the seller may recover, together with any incidental damages under 5 CMC § 2710, the price: (a) Of goods accepted or of conforming goods lost or damaged within a commercially reasonable time after r…

Seller’s Incidental Damages. Incidental damages to an aggrieved seller include any commercially reasonable charges, expenses or commissions incurred in stopping delivery, in the transportation, care and custody of goods after the buyer’s breach, in connection with return or resal…

Buyer’s Remedies in General; Buyer’s Security Interest in Rejected Goods. (1) Where the seller fails to make delivery or repudiates or the buyer rightfully rejects or justifiably revokes acceptance then with respect to any goods involved, and with respect to the whole if the brea…

“Cover”; Buyer’s Procurement of Substitute Goods. (1) After a breach within 5 CMC § 2711 the buyer may “cover” by making in good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller. (2) The bu…

Buyer’s Damages for Non-Delivery or Repudiation. (1) Subject to the provisions of this division with respect to proof of market price (5 CMC § 2723), the measure of damages for non-delivery or repudiation by the seller is the difference between the market price at the time when t…

Buyer’s Damages for Breach in Regard to Accepted Goods. (1) Where the buyer has accepted goods and given notification (5 CMC § 2607(3)) he may recover as damages for any non-conformity of tender the loss resulting in the ordinary course of events from the seller’s breach as deter…

Buyer’s Incidental and Consequential Damages. (1) Incidental damages resulting from the seller’s breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or …

Buyer’s Right to Specific Performance or Replevin. (1) Specific performance may be decreed where the goods are unique or in other proper circumstances. (2) The decree for specific performance may include such terms and conditions as to payment of the price, damages, or other reli…

Deduction of Damages From the Price. The buyer on notifying the seller of his intention to do so may deduct all or any part of the damages resulting from any breach of the contract from any part of the price still due under the same contract. Source: PL 3-56, § 1 (§ 2717).

Liquidation or Limitation of Damages; Deposits. (1) Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inco…

Contractual Modification or Limitation of Remedy. (1) Subject to the provisions of subsections (2) and (3) of this section and of 5 CMC § 2718 on liquidation and limitation of damages: (a) The agreement may provide for remedies in addition to or in substitution for those provided…