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84-2-507. Effect of seller's tender; delivery on condition. (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) 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.

History: L. 1965, ch. 564, § 72; January 1, 1966.

KANSAS COMMENT, 1996

1. This section, like 84-2-301, states the reciprocal obligations of the seller to tender and deliver the goods and the buyer to accept and pay for the goods. Unless the parties agree otherwise, the seller's tender of delivery is a condition to the buyer's obligation to pay. Once the seller has completed tender, that condition is satisfied and the seller is entitled to payment according to the contract.

2. Subsection (2) makes clear that the buyer's rights against the seller are conditional upon payment. Because the buyer's rights are conditional, the seller by implication has the right to reclaim the goods if the buyer's payment fails, such as by a check being dishonored. See 84-2-511(3). A seller on credit also has a right to reclaim goods upon discovering the buyer is insolvent, but must act within ten days after the buyer received the goods. See 84-2-702(2). This subsection contains no similar statutory time limit. Kansas Comment 1983 suggested that the ten-day limitation of section 84-2-702 applies to cash sellers as well, relying in part on the original version of Official Comment 3 to this section. The Tenth Circuit reached the same conclusion in Holiday Rambler Corp. v. First Nat'l Bank & Trust Co., 723 F.2d 1449 (10th Cir. 1983) (applying Kansas law). Since then, however, the Permanent Editorial Board has rejected that position and replaced the language of Official Comment 3 with the following: "There is no specific limit for a cash seller to exercise the right of reclamation. However, the right will be defeated by delay causing prejudice to the buyer, waiver, estoppel, or ratification of the buyer's right to retain possession. "P.E.B. Commentary No. 1 (Mar. 10, 1990). The new language in the Official Comment is more consistent with the lack of any time limit in the statute, and makes it an open question whether the Kansas Supreme Court would reach the same result as the Tenth Circuit in Holiday Rambler.

3. In addition, the seller's rights under this section are subject to the provisions of Article 2 concerning the claims of good faith purchasers and creditors (84-2-402 and 84-2-403). See Dick Hatfield Chevrolet, Inc. v. Bob Watson Motors, Inc., 238 K. 41, 708 P.2d 494 (1985); Iola State Bank v. Bolan, 235 K. 175, 679 P.2d 720 (1984).

Law Review and Bar Journal References:

Duty of party hereunder contingent upon performance or tender of performance by other party in absence of contrary agreement, Keith Hey, 7 W.L.J. 35 (1967).

"Bank's Right of Setoff—Iola State Bank v. Bolan," SueAnn S. Bradford, 33 K.L.R. 569, 570 (1985).

"Electronic Commerce in Kansas: Contract Formation and Formalities Under Article 2," Christopher R. Drahozal, 68 J.K.B.A. No. 5, 22 (1999).

CASE ANNOTATIONS

1. Where the buyer fails to make payment due on or before delivery, the seller may cancel and resell the goods. Spikes v. Bauer, 6 Kan. App. 2d 45, 46, 626 P.2d 816.

2. Buyer's right to retain and dispose of goods conditioned on seller's right of reclamation; right to reclaim exists where checks dishonored; right to reclaim not indefinite. Holiday Rambler Corp. v. First Nat. Bank and Trust, 723 F.2d 1449, 1451, 1452 (1983).

3. Cited; buyer's right to retain and dispose of goods conditional on payment. Iola State Bank v. Bolan, 235 Kan. 175, 180, 679 P.2d 720 (1984).


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