Chapter 5Performance
Section § 2501
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.
Section § 2502
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.
Section § 2503
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.
Section § 2504
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.
Section § 2505
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.
Section § 2506
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.
Section § 2507
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.
Section § 2508
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.
Section § 2509
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.
Section § 2510
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.
Section § 2511
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.
Section § 2512
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.
Section § 2513
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.
Section § 2514
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.
Section § 2515
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.