Printable Format84-2-705. 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 the seller discovers the buyer to be insolvent (K.S.A. 84-2-702, and amendments thereto) and may stop delivery of carload, truckload, planeload or larger shipments of express or freight when the buyer repudiates or fails to make a payment due before delivery or if for any other reason the seller has a right to withhold or reclaim the goods.
(2) As against such buyer the seller may stop delivery until:
(a) Receipt of the goods by the buyer; or
(b) acknowledgment to the buyer by any bailee of the goods except a carrier that the bailee holds the goods for the buyer; or
(c) such acknowledgment to the buyer by a carrier by reshipment or as a warehouse; or
(d) negotiation to the buyer of any negotiable document of title covering the goods.
(3) (a) To stop delivery the seller must so notify as to enable the bailee by reasonable diligence to prevent delivery of the goods.
(b) After such notification the bailee must hold and deliver the goods according to the directions of the seller but the seller is liable to the bailee for any ensuing charges or damages.
(c) If a negotiable document of title has been issued for goods the bailee is not obliged to obey a notification to stop until surrender of possession or control of the document.
(d) A carrier who has issued a nonnegotiable bill of lading is not obliged to obey a notification to stop received from a person other than the consigner.
History: L. 1965, ch. 564, § 101; L. 2007, ch. 90, § 58; July 1, 2008.
KANSAS COMMENT, 1996
1. This section sets out the seller's right to stop goods in transit. For a description of the right at common law, see Kansas Comment 1983 to this section. This section permits the seller to stop delivery of goods in the possession of a carrier or other bailee when it discovers that the buyer is insolvent. See H. Lynn White, Inc. v. Leftwich, 2 K.A.2d 341, 579 P.2d 164 (1978) (installer of carpet not bailee so not liable for failure to honor seller's demand to withhold delivery). It also permits the seller to stop delivery of carload, truckload, planeload, or larger shipments when the buyer repudiates or fails to pay or if for any reason the seller has the right to reclaim or withhold the goods. The limitation to carload or similar shipments eases the burden on the carrier, which otherwise would have to separate the seller's goods from the rest of the carload. The buyer's creditors and purchasers from the buyer are subject to the seller's right to stop delivery under this section. See In re Morrison Indus., L.P., 175 Bankr. Rep. 5 (W.D.N.Y. 1994).
2. Subsection (2) states time limitations upon exercise of the right to stoppage. Subsection (3) states the notice requirements to which the seller must conform in stopping delivery of the goods and also states the obligations of the bailee.
CASE ANNOTATIONS
1. Party to whom direct shipment made not liable for disregarding seller's demand to withhold delivery; no bailment relationship. White, Inc. v. Leftwich, 2 Kan. App. 2d 341, 342, 343, 344, 579 P.2d 164.
2. Non-UCC option not available to seller stopping common carrier from delivering goods to insolvent buyer. Petroleum Products v. Mid-America Pipeline, 815 F. Supp. 1421, 1423 (1993).
3. Seller lost right to stop delivery because of debtor's insolvency when livestock were constructively delivered to debtor. Kunkel v. Sprauge Nat. Bank, 128 F.3d 636, 643 (1997).