Article 2 — Sales · Section 2-702
This section addresses the seller's rights to reclaim goods from a buyer who has defaulted on payment.
Source: U.C.C. § 2-702
If a buyer is in default under the contract, a seller may reclaim goods under certain circumstances. Specifically, a seller may reclaim goods if the buyer is insolvent and the seller demands the goods within ten days after the buyer receives them.
UCC § 2-702 allows a seller to reclaim goods sold to a buyer who hasn't paid for them, provided the buyer is insolvent and the seller makes a claim within a set timeframe. This is a protective measure for sellers ensuring they can retrieve goods when facing payment issues.
Inability to pay debts as they come due, indicating that the buyer is facing financial distress.
A failure to fulfill a contractual obligation, such as failing to make a payment.
Example 1
A seller delivers $50,000 worth of electronics to a buyer. The buyer, after receiving the goods, fails to make the payment and declares bankruptcy within a month. The seller can reclaim the electronics if the demand is made within ten days of delivery.
Example 2
A clothing manufacturer sells garments to a retailer who has not paid and is now insolvent. The manufacturer may invoke UCC § 2-702 to reclaim the unsold garments as long as they request return of the goods within the specified ten-day period after the retailer received them.