Section § 2501

Explanation

This section explains when and how a buyer gains an interest in goods they've contracted to purchase, even if those goods don't conform to the agreement. A buyer's interest in the goods can start once specific goods are identified to the contract. Depending on the type of goods, this identification happens at different times: immediately for existing goods, when shipped for future goods, or when crops are planted or animals conceived for agriculture-related contracts. The seller keeps an interest in the goods as long as they have rights or claims to them. Sellers can switch the identified goods before the deal is fully settled, unless there's a default or insolvency. This law doesn't change other established legal rights related to insurable interests.

(1)CA Commercial Law Code § 2501(1) The buyer obtains a special property and an insurable interest in goods by identification of existing goods as goods to which the contract refers even though the goods so identified are nonconforming and he has an option to return or reject them. Such identification can be made at any time and in any manner explicitly agreed to by the parties. In the absence of explicit agreement identification occurs
(a)CA Commercial Law Code § 2501(a) When the contract is made if it is for the sale of goods already existing and identified;
(b)CA Commercial Law Code § 2501(b) If the contract is for the sale of future goods other than those described in paragraph (c), when goods are shipped, marked or otherwise designated by the seller as goods to which the contract refers;
(c)CA Commercial Law Code § 2501(c) If the contract is for the sale of unborn young or future crops, when the crops are planted or otherwise become growing crops or the young are conceived.
(2)CA Commercial Law Code § 2501(c)(2) The seller retains an insurable interest in goods so long as title to or any security interest in the goods remains in him and where the identification is by the seller alone he may until default or insolvency or notification to the buyer that the identification is final substitute other goods for those identified.
(3)CA Commercial Law Code § 2501(c)(3) Nothing in this section impairs any insurable interest recognized under any other statute or rule of law.

Section § 2502

Explanation

If you've paid for goods and have a special interest in them, you can reclaim them from the seller if certain conditions exist. First, if the goods are for personal use and the seller doesn't deliver or backs out, you could get them back. Second, no matter what the goods are for, if the seller becomes financially unstable shortly after taking your first payment, you're also entitled to reclaim them. Your right to those goods kicks in as soon as you have that special interest, even before the seller defaults. Lastly, you can only recover these goods if they match what's described in the sale contract.

(1)CA Commercial Law Code § 2502(1) Subject to subdivisions (2) and (3), and even though the goods have not been shipped, a buyer who has paid a part or all of the price of goods in which he or she has a special property under the provisions of the immediately preceding section may on making and keeping good a tender of any unpaid portion of their price recover them from the seller if either:
(a)CA Commercial Law Code § 2502(a) In the case of goods bought for personal, family, or household purposes, the seller repudiates or fails to deliver as required by the contract.
(b)CA Commercial Law Code § 2502(b) In all cases, the seller becomes insolvent within 10 days after receipt of the first installment on their price.
(2)CA Commercial Law Code § 2502(b)(2) The buyer’s right to recover the goods under paragraph (a) of subdivision (1) vests upon acquisition of a special property, even if the seller had not then repudiated or failed to deliver.
(3)CA Commercial Law Code § 2502(b)(3) If the identification creating his or her special property has been made by the buyer, he or she acquires the right to recover the goods only if they conform to the contract for sale.

Section § 2503

Explanation

This section explains that when a seller delivers goods, they need to make sure everything is ready for the buyer to take possession. The seller must inform the buyer that the goods are set for pickup at a reasonable time and place. If goods are shipped or require delivery to a specific destination, the seller must follow additional rules. If a third party, like a storage facility (bailee), holds the goods, the seller has to provide proper documents to transfer the buyer's rights to those goods. The risk remains with the seller until the buyer can take the goods. All documents related to delivery should be correct, and if documents are sent through banks and are dishonored, it's considered a failed delivery.

(1)CA Commercial Law Code § 2503(1) Tender of delivery requires that the seller put and hold conforming goods at the buyer’s disposition and give the buyer any notification reasonably necessary to enable him to take delivery. The manner, time and place for tender are determined by the agreement and this division, and in particular
(a)CA Commercial Law Code § 2503(a) Tender must be at a reasonable hour, and if it is of goods they must be kept available for the period reasonably necessary to enable the buyer to take possession; but
(b)CA Commercial Law Code § 2503(b) Unless otherwise agreed, the buyer must furnish facilities reasonably suited to the receipt of the goods.
(2)CA Commercial Law Code § 2503(b)(2) Where the case is within the next section respecting shipment tender requires that the seller comply with its provisions.
(3)CA Commercial Law Code § 2503(b)(3) Where the seller is required to deliver at a particular destination tender requires that he comply with subdivision (1) and also in any appropriate case tender documents as described in subdivisions (4) and (5) of this section.
(4)CA Commercial Law Code § 2503(b)(4) Where goods are in the possession of a bailee and are to be delivered without being moved
(a)CA Commercial Law Code § 2503(a) Tender requires that the seller either tender a negotiable document of title covering such goods or procure acknowledgment by the bailee of the buyer’s right to possession of the goods; but
(b)CA Commercial Law Code § 2503(b) Tender to the buyer of a nonnegotiable document of title or of a record directing the bailee to deliver is sufficient tender unless the buyer seasonably objects, and except as otherwise provided in Division 9 (commencing with Section 9101), receipt by the bailee of notification of the buyer’s rights fixes those rights as against the bailee and all third persons; but risk of loss of the goods and of any failure by the bailee to honor the nonnegotiable document of title or to obey the direction remains on the seller until the buyer has had a reasonable time to present the document or direction, and a refusal by the bailee to honor the document or to obey the direction defeats the tender.
(5)CA Commercial Law Code § 2503(b)(5) Where the contract requires the seller to deliver documents
(a)CA Commercial Law Code § 2503(a) He must tender all such documents in correct form, except as provided in this division with respect to bills of lading in a set (subdivision (2) of Section 2323); and
(b)CA Commercial Law Code § 2503(b) Tender through customary banking channels is sufficient and dishonor of a draft accompanying or associated with the documents constitutes nonacceptance or rejection.

Section § 2504

Explanation

This section explains what a seller must do when they have to send goods to a buyer, but aren't required to deliver to a specific location. First, the seller needs to give the goods to a qualified carrier and make a sensible transport agreement. Second, they must provide any necessary documents so the buyer can pick up the goods. Finally, the seller must quickly inform the buyer once the goods are shipped. If the seller fails to notify the buyer or set up the transport correctly, the buyer can reject the goods only if this causes significant delays or issues.

Where the seller is required or authorized to send the goods to the buyer and the contract does not require him to deliver them at a particular destination, then unless otherwise agreed he must
(a)CA Commercial Law Code § 2504(a) Put the goods in the possession of such a carrier and make such a contract for their transportation as may be reasonable having regard to the nature of the goods and other circumstances of the case; and
(b)CA Commercial Law Code § 2504(b) Obtain and promptly deliver or tender in due form any document necessary to enable the buyer to obtain possession of the goods or otherwise required by the agreement or by usage of trade; and
(c)CA Commercial Law Code § 2504(c) Promptly notify the buyer of the shipment.
Failure to notify the buyer under paragraph (c) or to make a proper contract under paragraph (a) is a ground for rejection only if material delay or loss ensues.

Section § 2505

Explanation

This section explains what happens when a seller ships goods and reserves a security interest in those goods through a bill of lading. If the seller uses a negotiable bill of lading, it means they maintain a security interest, which they might transfer to someone else later. However, if a non-negotiable bill names the buyer as the consignee, the seller doesn’t keep that interest. The section also mentions that shipping with a reserved security interest can violate a sales contract, but it doesn’t affect the buyer's rights to the goods or the seller's control over a negotiable document of title.

(1)CA Commercial Law Code § 2505(1) Where the seller has identified goods to the contract by or before shipment:
(a)CA Commercial Law Code § 2505(a) His procurement of a negotiable bill of lading to his own order or otherwise reserves in him a security interest in the goods. His procurement of the bill to the order of a financing agency or of the buyer indicates in addition only the seller’s expectation of transferring that interest to the person named.
(b)CA Commercial Law Code § 2505(b) A nonnegotiable bill of lading to himself or his nominee reserves possession of the goods as security but except in a case of conditional delivery (subdivision (2) of Section 2507) a nonnegotiable bill of lading naming the buyer as consignee reserves no security interest even though the seller retains possession or control of the bill of lading.
(2)CA Commercial Law Code § 2505(b)(2) When shipment by the seller with reservation of a security interest is in violation of the contract for sale it constitutes an improper contract for transportation within the preceding section but impairs neither the rights given to the buyer by shipment and identification of the goods to the contract nor the seller’s powers as a holder of a negotiable document of title.

Section § 2506

Explanation

If a financing agency pays for or buys a draft, which is a document related to shipping goods, they gain the shipper's rights over the goods. This includes stopping the delivery and insisting the buyer honors the draft. The agency's right to get their money back isn't affected if they later find out there were issues with the documents, as long as they acted in good faith.

(1)CA Commercial Law Code § 2506(1) A financing agency by paying or purchasing for value a draft which relates to a shipment of goods acquires to the extent of the payment or purchase and in addition to its own rights under the draft and any document of title securing it any rights of the shipper in the goods including the right to stop delivery and the shipper’s right to have the draft honored by the buyer.
(2)CA Commercial Law Code § 2506(2) The right to reimbursement of a financing agency which has in good faith honored or purchased the draft under commitment to or authority from the buyer is not impaired by subsequent discovery of defects with reference to any relevant document which was apparently regular.

Section § 2507

Explanation

When a seller is ready to deliver goods, the buyer is expected to accept the goods and pay for them, unless they have agreed otherwise. If the payment is due when the goods are delivered, the buyer can't keep or use the goods until they pay what they owe.

(1)CA Commercial Law Code § 2507(1) Tender of delivery is a condition to the buyer’s duty to accept the goods and, unless otherwise agreed, to his duty to pay for them. Tender entitles the seller to acceptance of the goods and to payment according to the contract.
(2)CA Commercial Law Code § 2507(2) Where payment is due and demanded on the delivery to the buyer of goods or documents of title, his right as against the seller to retain or dispose of them is conditional upon his making the payment due.

Section § 2508

Explanation

This law section explains what happens when a buyer rejects a product from a seller because it doesn't meet the agreed terms. If the seller still has time under the contract, they can let the buyer know they plan to fix the issue and deliver the right product. If the seller thought the buyer might accept the product despite its issues, they can notify the buyer and get extra time to deliver a product that meets the contract terms.

(1)CA Commercial Law Code § 2508(1) Where any tender or delivery by the seller is rejected because nonconforming and the time for performance has not yet expired, the seller may seasonably notify the buyer of his intention to cure and may then within the contract time make a conforming delivery.
(2)CA Commercial Law Code § 2508(2) Where the buyer rejects a nonconforming tender which the seller had reasonable grounds to believe would be acceptable with or without money allowance the seller may if he seasonally notifies the buyer have a further reasonable time to substitute a conforming tender.

Section § 2509

Explanation

This law outlines when the buyer takes on the risk of losing goods after a seller ships them in different situations. If the goods are shipped without a specific delivery destination, the risk transfers to the buyer once the goods are handed to the carrier. If the goods have a specific delivery point, the risk shifts when they reach that point and the buyer can pick them up. If there's no movement of goods and a bailee (someone holding the goods) is involved, risk passes to the buyer upon receiving certain documents or acknowledgments. If none of these conditions apply, for merchant sellers, risk passes when the buyer gets the goods; otherwise, it happens when delivery is offered. Parties can agree on different terms, and there are exceptions for sale on approval and breaches.

(1)CA Commercial Law Code § 2509(1) Where the contract requires or authorizes the seller to ship the goods by carrier
(a)CA Commercial Law Code § 2509(a) If it does not require him to deliver them at a particular destination, the risk of loss passes to the buyer when the goods are duly delivered to the carrier even though the shipment is under reservation (Section 2505); but
(b)CA Commercial Law Code § 2509(b) If it does require him to deliver them at a particular destination and the goods are there duly tendered while in the possession of the carrier, the risk of loss passes to the buyer when the goods are there duly so tendered as to enable the buyer to take delivery.
(2)CA Commercial Law Code § 2509(b)(2) Where the goods are held by a bailee to be delivered without being moved, the risk of loss passes to the buyer
(a)CA Commercial Law Code § 2509(a) On his receipt of possession or control of a negotiable document of title covering the goods; or
(b)CA Commercial Law Code § 2509(b) On acknowledgment by the bailee of the buyer’s right to possession of the goods; or
(c)CA Commercial Law Code § 2509(c) After his receipt of possession or control of a nonnegotiable document of title or other direction to deliver in a record, as provided in subdivision (4)(b) of Section 2503.
(3)CA Commercial Law Code § 2509(c)(3) In any case not within subdivision (1) or (2), the risk of loss passes to the buyer on his receipt of the goods if the seller is a merchant; otherwise the risk passes to the buyer on tender of delivery.
(4)CA Commercial Law Code § 2509(c)(4) The provisions of this section are subject to contrary agreement of the parties and to the provisions of this division on sale on approval (Section 2327) and on effect of breach on risk of loss (Section 2510).

Section § 2510

Explanation

This section talks about what happens when goods that are supposed to be delivered do not meet the contract terms or when a buyer or seller backs out. If the delivered goods don't match the contract and can be rejected, the seller is responsible for any loss until it's fixed or accepted. If a buyer revokes acceptance because things aren't right, they can consider the seller responsible for losses up to what their insurance doesn't cover. On the other hand, if a buyer breaks the deal before taking the risk for the goods, the seller can treat the buyer as responsible for any uninsured losses but only for a reasonable time.

(1)CA Commercial Law Code § 2510(1) Where a tender or delivery of goods so fails to conform to the contract as to give a right of rejection the risk of their loss remains on the seller until cure or acceptance.
(2)CA Commercial Law Code § 2510(2) Where the buyer rightfully revokes acceptance he may to the extent of any deficiency in his effective insurance coverage treat the risk of loss as having rested on the seller from the beginning.
(3)CA Commercial Law Code § 2510(3) Where the buyer as to conforming goods already identified to the contract for sale repudiates or is otherwise in breach before risk of their loss has passed to him, the seller may to the extent of any deficiency in his effective insurance coverage treat the risk of loss as resting on the buyer for a commercially reasonable time.

Section § 2511

Explanation

If you're buying something, your payment is generally required before the seller must deliver the goods unless there's a different agreement in place. You can usually pay in any common business method unless the seller asks specifically for cash or gives you extra time to get it. If you pay with a check, it's considered a temporary payment. If the check bounces when the seller tries to cash it, the payment doesn't count.

(1)CA Commercial Law Code § 2511(1) Unless otherwise agreed, tender of payment is a condition to the seller’s duty to tender and complete any delivery.
(2)CA Commercial Law Code § 2511(2) Tender of payment is sufficient when made by any means or in any manner current in the ordinary course of business unless the seller demands payment in legal tender and gives any extension of time reasonably necessary to procure it.
(3)CA Commercial Law Code § 2511(3) Subject to the provisions of this code on the effect of an instrument on an obligation (Section 3310), payment by check is conditional and is defeated as between the parties by dishonor of the check on due presentment.

Section § 2512

Explanation

This law says that if a contract requires you to pay before inspecting the goods, you still have to pay even if the goods don't meet your standards—unless the problem is obvious before inspection or there's a valid legal reason not to proceed. Also, paying for the goods doesn't mean you've accepted them as satisfactory, nor does it limit your ability to inspect them or use other legal options if something’s wrong.

(1)CA Commercial Law Code § 2512(1) Where the contract requires payment before inspection nonconformity of the goods does not excuse the buyer from so making payment unless (a) the nonconformity appears without inspection or (b) despite tender of the required documents the circumstances would justify injunction against honor under this code (subdivision (b) of Section 5109).
(2)CA Commercial Law Code § 2512(2) Payment pursuant to subdivision (1) does not constitute an acceptance of goods or impair the buyer’s right to inspect or any of his remedies.

Section § 2513

Explanation

In California, when goods are sold, a buyer is usually allowed to check them out before paying or accepting them, at any reasonable place and time. If the seller ships the goods, the check can happen when they arrive. The buyer pays for inspection costs, but if the goods are faulty and rejected, they can get those costs back from the seller. However, there are times when a buyer can't check the goods before paying, like if the contract is C.O.D., which means payment on delivery, or if payment happens with documents proving ownership. If the buyer and seller decide on a specific way to check the goods, that's usually the only method allowed, unless they clearly agree otherwise. If that method becomes impossible, the general rules for inspection apply unless checking the goods was a crucial contract condition.

(1)CA Commercial Law Code § 2513(1) Unless otherwise agreed and subject to subdivision (3), where goods are tendered or delivered or identified to the contract for sale, the buyer has a right before payment or acceptance to inspect them at any reasonable place and time and in any reasonable manner. When the seller is required or authorized to send the goods to the buyer, the inspection may be after their arrival.
(2)CA Commercial Law Code § 2513(2) Expenses of inspection must be borne by the buyer but may be recovered from the seller if the goods do not conform and are rejected.
(3)CA Commercial Law Code § 2513(3) Unless otherwise agreed and subject to the provisions of this division on C.I.F. contracts (subdivision (3) of Section 2321), the buyer is not entitled to inspect the goods before payment of the price when the contract provides
(a)CA Commercial Law Code § 2513(a) For delivery “C.O.D.” or on other like terms; or
(b)CA Commercial Law Code § 2513(b) For payment against documents of title, except where such payment is due only after the goods are to become available for inspection.
(4)CA Commercial Law Code § 2513(b)(4) A place or method of inspection fixed by the parties is presumed to be exclusive but unless otherwise expressly agreed it does not postpone identification or shift the place for delivery or for passing the risk of loss. If compliance becomes impossible, inspection shall be as provided in this section unless the place or method fixed was clearly intended as an indispensable condition failure of which avoids the contract.

Section § 2514

Explanation

When there's an agreement about documents relating to a draft (like a bill of exchange), these documents should normally be given to the person accepting the draft if it's due more than three days after it's shown to them. If the draft is due right away, the documents are handed over only when the payment is made.

Unless otherwise agreed documents against which a draft is drawn are to be delivered to the drawee on acceptance of the draft if it is payable more than three days after presentment; otherwise, only on payment.

Section § 2515

Explanation

If there's a disagreement about goods, both parties have the right to look at, test, or take samples to understand the situation better, as long as they let the other side know. They can also agree to bring in an independent expert to check the goods, and what's found can be used as a definitive answer in any future arguments or legal actions.

In furtherance of the adjustment of any claim or dispute
(a)CA Commercial Law Code § 2515(a) Either party on reasonable notification to the other and for the purpose of ascertaining the facts and preserving evidence has the right to inspect, test and sample the goods including such of them as may be in the possession or control of the other; and
(b)CA Commercial Law Code § 2515(b) The parties may agree to a third party inspection or survey to determine the conformity or condition of the goods and may agree that the findings shall be binding upon them in any subsequent litigation or adjustment.