Printable Format84-2a-511. Merchant lessee's duties as to rightfully rejected goods. (1) Subject to any security interest of a lessee (K.S.A. 84-2a-508(5)), if a lessor or a supplier has no agent or place of business at the market of rejection, a merchant lessee, after rejection of goods in such merchant lessee's possession or control, shall follow any reasonable instructions received from the lessor or the supplier with respect to the goods. In the absence of those instructions a merchant lessee shall make reasonable efforts to sell, lease, or otherwise dispose of the goods for the lessor's account if they threaten to decline in value speedily. Instructions are not reasonable if on demand indemnity for expenses is not forthcoming.
(2) If a merchant lessee (subsection (1) or any other lessee (K.S.A. 84-2a-512) disposes of goods, such merchant lessee is entitled to reimbursement either from the lessor or the supplier or out of the proceeds for reasonable expenses of caring for and disposing of the goods and, if the expenses include no disposition commission, to such commission as is usual in the trade, or if there is none, to a reasonable sum not exceeding 10% of the gross proceeds.
(3) In complying with this section or K.S.A. 84-2a-512, the lessee is held only to good faith. Good faith conduct hereunder is neither acceptance or conversion nor the basis of an action for damages.
(4) A purchaser who purchases in good faith from a lessee pursuant to this section or K.S.A. 84-2a-512 takes the goods free of any rights of the lessor and the supplier even though the lessee fails to comply with one or more of the requirements of this article.
History: L. 1991, ch. 295, ยง 59; February 1, 1992.
KANSAS COMMENT, 1996
This section is based largely on section 84-2-603. Subsection (1) imposes on merchant lessees the duty to follow reasonable instructions from the lessor concerning the goods, and, in the absence of instructions, to dispose of for the lessor's account goods that threaten to decline in value speedily. Subsection (2) entitles a merchant lessee that disposes of goods for the lessor's account to reimbursement from the sales proceeds for its expenses. It makes express that a non-merchant lessee that disposes of goods under section 84-2-512(1) also is entitled to reimbursement. Subsection (3) protects the lessee against claims for damages by the lessor or having its actions treated as acceptance of the goods, requiring only that the lessee act in good faith. Subsection (4) adds a provision derived from 84-2-706(5), dealing with resale by a seller in the event of the buyer's breach. As applied here, it protects a good faith purchaser of resold goods against claims by the lessor, even if the lessee fails to follow the requirements of this Article in dealing with the goods.