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 AN 
 
 ACT TO 
 
 MAKE 
 
 UNIFOEM 
 
 THE 
 
 LAW 
 
 OF 
 
 SALES 
 
 
 OF 
 
 GOODS . 
 
 
 
 
 
 
 II 
 
(BnrupU Ham ^rlynnl Hthrary 
 
Cornell University Library 
 KF 915.C74 
 
 An act to make uniform the law of sales 
 
 3 1924 018 741 508 
 
 AN ACT 
 
 To Make Uniform 
 
 The Law of Sales of Goods 
 
 Approved by 
 
 Conference of Commissioners on 
 ^ Uniform State Laws 
 
 And Recommended for Adoption 
 In all the States 
 
 AUGUST, 1906 
 
 CHARLES THADDEUS TERRY 
 
 President 
 100 Broadway, New York, N. Y. 
 
 THE LORD BALTIMORE PRESS, BALTIMORE, MD., n. S. A. 
 

AN ACT 
 To Make Uniform the Law of Sales of Goods. 
 
 PART I. 
 Formation of the Contract. 
 
 Section 1. [Contracts to Sell and Sales.] (1) A contract 
 to sell goods is a contract whereby the seller agrees to transfer 
 the property in goods to the buyer for a consideration called the 
 price. 
 
 (3) A sale of goods is an agreement whereby the seller transfers 
 the property ia goods to the buyer for a consideration called the 
 price. 
 
 (3) A contract to sell or a sale may be absolute or conditional. 
 
 (4) There may be a contract to sell or a sale between one part 
 owner and another. 
 
 The most fundamental distinction in the law of sales is between a 
 contract to sell in the future and a present sale. The phrase " con- 
 tract of sale " used in the English Act has been discarded. An ex- 
 planation of the reasons on which this and the other sections of the 
 act are based, fuller than is possible in brief annotations, may be 
 found In Willlston on Sales. 
 
 Sec. 2. [Capacity — Liabilities for Necessaries.] Capacity 
 to buy and sell is regulated by the general law concerning capacity 
 to contract, and to transfer and acquire property. 
 
 Where necessaries are sold and delivered to an infant, or to a 
 person who by reason of mental incapacity or drunkenness is 
 incompetent to contract, he must pay a reasonable price therefor. 
 
 Necessaries in this section mean goods suitable to the condition 
 in life of such infant or other person, and to his actual require- 
 ments at the time of delivery. 
 
 This section states the prevailing, though not wholly uniform, 
 doctrine of the existing law. Mechem on Sales, §122 et seq. The 
 section follows verbatim section 2 of the English Act except that the 
 
words " the sale and " which precede the last word in the section are 
 omitted as introducing a possible ambiguity. 
 
 Formalities of the Contract. 
 
 Sec. 3. [Form of Contract or Sale.] Subject to the provisions 
 of this act and of any statute in that behalf, a contract to sell or a 
 sale may be made in writing (either with or without seal), or by 
 word of mouth, or partly in writing and partly by word of mouth, 
 or may be inferred from the conduct of the parties. 
 
 This follows the first part of section 3 of the English Act. That 
 act contains the following proviso which was omitted as unnecessary: 
 
 " Provided that nothing in this section shall affect the law relat- 
 ing to corporations." 
 
 Sec. 4. [Statute of Frauds.] (1) A contract to sell or a sale 
 of any goods or choses in action of the value of five hundred dollars 
 or upwards shall not be enforceable by action unless the buyer 
 shall accept part of the goods or choses in action so contracted to 
 be sold or sold, and actually receive the same, or give something 
 in earnest to bind the contract, or in part payment, or unless 
 some note or memorandum in writing of the contract or sale be 
 signed by the party to be charged or his agent in that behalf. 
 
 (3) The provisions of this section apply to every such contract 
 or sale, notwithstanding that the goods may be intended to be 
 delivered at some future time or may not at the time of such 
 contract or sale be actually made, procured, or provided, or fit or 
 ready for delivery, or some act may be requisite for the making or 
 completing thereof, or rendering the same fit for delivery ; but if 
 the goods are to be manufactured by the seller especially for the 
 buyer and are not suitable for sale to others in the ordinary course 
 of the seller's business, the provisions of this section shall not 
 apply. 
 
 (3) There is an acceptance of goods within the meaning of 
 this section when the buyer, either before or after delivery of the 
 goods, expresses by words or conduct his assent to becoming the 
 owner of those specific goods. 
 
 Ohio 12500.00; Connecticut $100.00. 
 
 Sub-section (1) of this section follows section 4 (1) of the English 
 Act with the exceptions stated below. 
 
The words of the section of the English Act are somewhat altered 
 from those of the seventeenth section of the Statute of Frauds, but 
 the changes are such as to express more accurately the construction 
 previously given by Lord Tenterden's Act and by the courts to the 
 Statute of Frauds. See Chalmers (5th ed.), 16. 
 
 In the United States a provision corresponding to the seventeenth 
 section of the Statute of Frauds exists in all the states but Alabama, 
 Arizona, Delaware, Illinois, Kentucky, Louisiana, New Mexico, North 
 Carolina, Ohio, Pennsylvania, Rhode Island, Tennessee, Texas, Vir- 
 ginia and West Virginia. 
 
 The words " or choses in action " have been inserted to settle a 
 doubt whether such property is within the statute. Similar words 
 or the broad term " personal property " are found In the Statutes of 
 Frauds now in force in about twenty of the states. Mechem on Sales, 
 §287. 
 
 The limit of price or value varies considerably in this country, 
 fifty dollars is the commonest limit, but as many important states 
 have no statute corresponding to this section of the Statute of Frauds, 
 it seemed wise to raise the limit of price considerably. Sub-section 
 (2) is intended to reproduce the rule laid down by Shaw, C. J., in 
 Mixer vs. Howarth, 21 Pick. 205, and by Ames, J., in Goddard vs. Bin- 
 ney, 115 Mass. 450 which has found most support In this country. 
 Mechem, §326. 
 
 Sub-section (3) differs from the corresponding English provision, 
 but represents the American rule, as well as the early English rule. 
 See Mechem, §357 et seq. 
 
 Subject Mattek of Contract. 
 
 Sec. 5. [Existing and Future Goods.] (1) The goods which 
 form the subject of a contract to sell may be either existing goods, 
 owned or possessed by the seller, or goods to be manufactured or 
 acquired by the seller after the making of the contract to sell, in 
 this act called " future goods." 
 
 (3) There may be a contract to sell goods, the acquisition of 
 which by the seller depends upon a contingency which may or may 
 not happen. 
 
 (3) Where the parties purport to effect a present sale of future 
 goods, the agreement operates as a contract to sell the goods. 
 
 This section follows section 5 of the English Act except that con- 
 tract to sell is here as elsewhere substituted for " contract of sale " 
 and "contract for the sale." Also in sub-section (3) "parties pur- 
 
port " is substituted for " seller purports." As the Intention of the 
 buyer is as important as that of the seller, the substituted expression 
 is the more accurate. 
 
 Sec. 6. [Undivided Shares.] (1) There may be a contract 
 to sell or a sale of an undivided share of goods. If the parties 
 intend to effect a present sale, the buyer, by force of the agreement, 
 becomes an owner in common with the owner or owners of the 
 remaining shares. 
 
 (2) In the case of fungible goods, there may be a sale of an 
 undivided share of a specific mass, though the seller purports to 
 sell and the buyer to buy a definite number, weight or measure 
 of the goods in the mass, and though the number, weight or 
 measure of the goods in the mass is undetermined. By such a sale 
 the buyer becomes owner in common of such a share of the mass 
 as the number, weight or measure bought bears to the number, 
 weight or measure of the mass. If the mass contains less than the 
 number, weight or measure bought, the buyer becomes the owner 
 of the whole mass and the seller is bound to make good the de- 
 ficiency from similar goods unless a contrary intent appears. 
 
 These provisions are new, and 6 (2) at least probably does not ex- 
 press the English law. It expresses the doctrine of Kimberly vs. 
 Patchin, 19 N. Y. 330, which is supported by the weight of recent 
 American authority, though there are adverse decisions. See 
 Mechem, §704 et seq. 
 
 Sec. 7. [Destruction of Goods Sold.] (1) Where the parties 
 purport to sell specific goods, and the goods without the knowledge 
 of the seller have wholly perished at the time when the agreement 
 is made, the agreement is void. 
 
 (3) Where the parties purport to sell specific goods, and the 
 goods without the knowledge of the seller have perished in part 
 or have wholly or in a material part so deteriorated in quality as 
 to be substantially changed in character, the buyer may at his 
 option treat the sale : 
 
 (a) As avoided, or 
 
 (6) As transferring the property in all of the existing goods 
 or in so much thereof as have not deteriorated, and as binding 
 the buyer to pay the full agreed price if the sale was indivisible, 
 
or to pay the agreed price for the goods in which the property 
 passes if the sale was divisible. 
 
 "Sub-section (1) corresponds to section 6 of the English Act. The 
 English section does not seem to cover the contingency of deteriora- 
 tion or partial destruction and sub-section (2) has been added for 
 that purpose. The section Is believed to express the existing law. 
 
 Sec. 8. [Destruction of Goods Contracted to be Sold.] (1) 
 Where there is a contract to sell specific goods, and subsequently, 
 but before the risk passes to the buyer, without any fault on the 
 part of the seller or the buyer, the goods wholly perish, the con- 
 tract is thereby avoided. 
 
 (3) Where there is a contract to sell specific goods, and sub- 
 sequently, but before the risk passes to the buyer, without any 
 fault of the seller or the buyer, part of the goods perish or the 
 whole or a material part of the goods so deteriorate in quality as 
 to be substantially changed in character, the buyer may at his 
 option treat the contract : 
 (a) As avoided, or 
 
 (6) As binding the seller to transfer the property in all of 
 the existing goods or ia so much thereof as have not deterio- 
 rated, and as binding the buyer to pay the full agreed price if 
 the contract was indivisible, or to pay the agreed price for so 
 much of the goods as the seller, by the buyer's option, is 
 bound to transfer if the contract was divisible. 
 
 Sub-section (1) corresponds to section 7 of the English Act. Sub- 
 section (2) is added to cover the case of deterioration or partial 
 destruction. The section is believed to express the existing law. 
 
 The Price. 
 
 Sec. 9. [Definition and Ascertainment of Price.] (1) The 
 price may be fixed by the contract, or may be left to be fixed in 
 such manner as may be agreed, or it may be determined by the 
 course of dealing between the parties. 
 
 (2) The price may be made payable in any personal property. 
 
 (3) Where transferring or promising to transfer any interest 
 in real estate constitutes the whole or part of the consideration for 
 transferring or for promising to transfer the property in goods, 
 this act shall not apply. 
 
(4) Where the price is not determined in accordance with the 
 foregoing provisions the buyer must pay a reasonable price. 
 What is a reasonable price is a question of fact dependent on the 
 circumstances of each particular case. 
 
 Sub-sections (1) and (4) are substantially the same as section 8 of 
 the English Act. Sub-section (2) Is changed from the English law 
 which In section 1 (1) requires a "money consideration." As the 
 rules of law applicable to barter are the same as those applicable to 
 sale, it seemed desirable to bring cases of barter within the meaning 
 of sale in this draft. On the other hand, different principles are 
 often applicable where a bargain concerns real estate and such cases 
 are, therefore, expressly excluded by sub-section (3). 
 
 Sec. 10. [Sale at a Valuation.] (1) Where there is a con- 
 tract to sell or a sale of goods at a price or on terms to be fixeiiby 
 a third person, and such third person without fault of the seller 
 or the buyer, cannot or does not fix the price or terms, the con- 
 tract or the sale is thereby avoided ; but if the goods or any part 
 thereof have been delivered to and appropriated by the buyer he 
 must pay a reasonable price therefor. 
 
 (2) Where such third person is prevented from fixing the price 
 or terms by fault of the seller or the buyer, the party not in fault 
 may have such remedies against the party in fault as are allowed 
 by Parts IV and V of this act. 
 
 Slightly varied from section 9 of the English Act. 
 
 Conditions and Warranties. 
 
 Sec. 11. [Effect of Conditions.] (1) Where the obligation of 
 either party to a contract to sell or a sale is subject to any con- 
 dition which is not performed, such party may refuse to proceed 
 with the contract or sale or he may waive performance of the con- 
 dition. If the other party has promised that the condition should 
 happen or be performed, such first mentioned party may also treat 
 the non-performance of the condition as a breach of warranty. 
 
 (2) Where the property in the goods has not passed, the buyer 
 may treat the fulfillment by the seller of his obligation to furnish 
 goods as described and as warranted expressly or by implication 
 in the contract to sell as a condition of the obligation of the buyer 
 to perform his promise to accept and pay for the goods. 
 
Section 11 of the English Act authorizes not only the waiver of a 
 condition, but the election to treat any condition to be fulfilled by the 
 seller as a breach of warranty. The use of condition as including 
 promise or warranty does not seem happy. It is very unfortunate if 
 the distinction between conditions and promises should become 
 obliterated, for the legal ideas are distinct and should have distinct 
 names. 
 
 Sec. 13. [Definition of Express Warranty.] Any affirmation 
 of fact or any promise by the seller relating to the goods is an 
 express warranty if the natural tendency of such affirmation or 
 promise is to induce the buyer to purchase the goods, and if the 
 buyer purchases the goods relying thereon. No affirmation of the 
 value of the goods, nor any statement purporting to be a statement 
 of the seller's opinion only shall be construed as a warranty. 
 
 The English Act does not define when language amounts to war- 
 ranty. There is considerable division of authority on the point 
 On theory the fundamental basis for liability on warranty is the 
 justifiable reliance on the seller's assertions. Whether the buyer was 
 justified in his reliance depends not on the intent of the seller, but 
 on the natural tendency of his acts. As a practical matter, the 
 section as drawn does not seem to set up an unreasonably high 
 standard of morality. The tendency of the courts has been distinctly 
 in the direction of greater strictness against seller's statements. See 
 Mechem, p. 1072, note 1. 
 
 Sec. 13. [Implied Warranties of Title.] In a contract to sell 
 or a sale, unless a contrary intention appears, there is — 
 
 (1) An implied warranty on the part of the seller that in case 
 of a sale he has a right to sell the goods, and that in case of a con- 
 tract to sell he will have a right to sell the goods at the time when 
 the property is to pass; 
 
 (2) An implied warranty that the buyer shall have and enjoy 
 quiet possession of the goods as against any lawful claims existing 
 at the time of the sale; 
 
 (3) An implied warranty that the goods shall be free at the 
 time of the sale from any charge or encumbrance in favor of any 
 third person, not declared or known to the buyer before or at the 
 time when the contract or sale is made. 
 
 (4) This section shall not, however, be held to render liable 
 a sheriff, auctioneer, mortgagee, or other person professing to sell 
 
8 
 
 by virtue of authority in fact or law goods in which a third person 
 has a legal or equitable interest. 
 
 This section is copied from the English section 12, except (4), 
 which is an addition. There are a few American decisions and more 
 dicta that there is no warranty of title where the vendor is out of 
 possession. But the weight of recent authority is against this dis- 
 tinction. See Mechem, §1302. (4) represents the English as well as 
 the American law, and it seemed best to make an express provision. 
 
 Sec. 14. [Implied Warranty in Sale by Description.] Where 
 there is a contract to sell or a sale of goods by description, there 
 is an implied warranty that the goods shall correspond with the 
 description and if the contract or sale be by sample, as well as by 
 description, it is not sufficient that the bulk of the goods corre- 
 sponds with the sample if the goods do not also correspond with 
 the description. 
 
 This section is identical in meaning with section 13 of the English 
 Act. 
 
 Sec. 15. [Implied Warranties of Quality.] Subject to the 
 provisions of this act and of any statute in that behalf, there is no 
 implied warranty or condition as to the quality or fitness for any 
 particular purpose of goods supplied under a contract to sell or a 
 sale, except as follows: 
 
 (1) Where the buyer, expressly or by implication, makes 
 known to the seller the particular purpose for which the goods are 
 required, and it appears that the buyer relies on the seller's skill 
 or judgment (whether he be the grower or manufacturer or not), 
 there is an implied warranty that the goods shall be reasonably 
 fit for such purpose. 
 
 (2) Where the goods are bought by description from a seller 
 who deals in goods of that description (whether he be the grower 
 or manufacturer or not), there is an implied warranty that the 
 goods shall be of merchantable quality. 
 
 (3) If the buyer has examined the goods, there is no implied 
 warranty as regards defects which such examination ought to 
 have revealed. 
 
 (4) In the- case of a contract to sell or a sale of a specified 
 article under its patent or other trade name, there is no implied 
 warranty as to its fitness for any particular purpose. 
 
9 
 
 , (5) An implied warranty or condition as to quality or fitness 
 for a particular purpose may be annexed by the usage of trade. 
 
 :,, (6) An express warranty or condition does not negative a 
 warranty or condition implied under this act unless inconsistent 
 therewith. 
 This section follows section 14 of the English Act. 
 
 Sale bY Sample. 
 
 Sec. 16. [Implied Warranties in Sale by Sample.] In the 
 case of a contract to sell or a sale by sample : 
 
 (a) There is an implied warranty that the bulk shall corre- 
 spond with the sample in quality. 
 
 (6) There is an implied warranty that the buyer shall have 
 a reasonable opportunity of comparing the bulk with the 
 sample, except so far as otherwise provided in section 47 (3). 
 
 (c) If the seller is a dealer in goods of that kind, there is an 
 implied warranty that the goods shall be free from any defect 
 rendering them unmerchantable which would not be apparent 
 on reasonable examination of the sample. 
 This follows substantially section 15 of the English Act. 
 
 PART II. 
 
 Tbansfer oe Peoperty as. Between Seller and Buter. 
 
 Sec. 17. [No Property Passes until Goods are Ascertained.] 
 Where there is a contract, to sell unascertained goods no property, 
 in.rthe goods is, transfer red to the buyer unless and until the goods 
 are ascertained, but property in an undivided share of ascertained 
 goods may be transferred as provided in section 6. 
 
 This section follows section 16 of the English Act except for the 
 addition of the clause beginning " but," etc. See under section 6 for 
 explanation of the difference between English and American law on 
 the point referred to. 
 
 Sec. 18. [Property in Specific Goods Passes when Parties so 
 Intend.] (1) Where there is a contract to sell specific or ascer- 
 tained, goods, the property in them is transferred to the buyer at 
 such time as the parties to the contract intend it to be transferred. 
 
10 
 
 (3) For the purpose of ascertaining the intention of the 
 parties, regard shall be had to the terms of the contract, the con- 
 duct of the parties, usages of trade and the circumstances of the 
 case. 
 
 Follows section 17 of the English Act. 
 
 Sec. 19. [Eules for Ascertaining Intention.] Unless a differ- 
 ent intention appears, the following are rules for ascertaining the 
 intention of the parties as to the time at which the property in 
 the goods is to pass to the buyer. 
 
 Eule 1. Where there is an unconditional contract to sell 
 specific goods, in a deliverable state, the property in the goods 
 passes to the buyer when the contract is made and it is immaterial 
 whether the time of payment, or the time of delivery, or both, be 
 postponed. 
 
 Rule 2. Where there is a contract to sell specific goods and the 
 seller is bound to do something to the goods, for the purpose of 
 putting them into a deliverable state, the property does not pass 
 until such thing be done. 
 
 Eule 3. (1) When goods are delivered to the buyer "on sale 
 or return," or on other terms indicating an intention to make a 
 present sale, but to give the buyer an option to return the goods 
 instead of paying the price, the property passes to the buyer on 
 delivery, but he may revest the property in the seller by returning 
 or tendering the goods within the time fixed in the contract, or, if 
 no time has been fixed, within a reasonable time. 
 
 (2) When goods are delivered to the buyer on approval or on 
 trial or on satisfaction, or other similar terms, the property 
 therein passes to the buyer — 
 
 (a) When he signifies his approval or acceptance to the 
 
 seller or does any other act adopting the transaction ; 
 
 (6) If he does not signify his approval or acceptance to the 
 
 seller, but retains the goods without giving notice of rejection, 
 
 then if a time has been fixed for the return of the goods, on the 
 
 expiration of such time, and, if no time has been fixed, on the 
 
 expiration of a reasonable time. What is a reasonable time is 
 
 a question of fact. 
 
11 
 
 Eule 4. (1) Where there is a contract to sell unascertained 
 or future goods by description, and goods of that description and 
 in a deliverable state are unconditionally appropriated to the con- 
 tract, either by the seller with the assent of the buyer, or by the 
 buyer with the assent of the seller, the property in the goods there- 
 upon passes to the buyer. Such assent may be expressed or im- 
 plied, and may be given either before or after the appropriation is 
 made. 
 
 (2) Where, in pursuance of a contract to s6ll, the seller delivers 
 the goods to the buyer, or to a carrier or other bailee (whether 
 named by the buyer or not) for the purpose of transmission to or 
 holding for the buyer, he is presumed to have unconditionally 
 appropriated the goods to the contract, except in the cases pro- 
 vided for in the next rale and in section 20. This presumption 
 is applicable, although by the terms of the contract, the buyer is 
 to pay the price before receiving delivery of the goods, and the 
 goods are marked with the words " collect on delivery " or their 
 equivalents. 
 
 Eule 5. If the contract to sell requires the seller to deliver the 
 goods to the buyer, or at a particular place, or to pay the freight 
 or cost of transportation to the buyer, or to a particular place, the 
 property does not pass until the goods have been delivered to the 
 buyer or reached the place agreed upon. 
 
 This section follows section 18 of the English Act with some 
 changes. The first rule is altered by omitting from the end the words 
 " and the buyer has notice thereof." The insertion of these words 
 in the English Act changed the English law, which had never re- 
 quired notice (see Chalmers, p. 46), in order to make it conform to 
 the Scotch law. There seems no good reason for postponing the 
 transfer of title to this extent. There is no American authority 
 for it. 
 
 The English Rule 3 which is omitted is as follows : 
 
 " Where there is a contract for the sale of specific goods in a de- 
 liverable state, but the seller is bound to weigh, measure, test, or do 
 some other act or thing with reference to the goods for the purpose 
 of ascertaining the price, the property does not pass until such act 
 or thing be done." 
 
 This rule of presumption is artificial and has been discarded in 
 New York and some other states. See Mechem, §515 et seq. It was, 
 therefore, deemed wise to omit it. 
 
12 
 
 Rule 3 (1) is not In the English Act. In that act, a "sale or re- 
 turn " Is included in the provision corresponding to Rule 3 (2) 
 of this draft (section 18, Rule 4 of English Act), thereby making the 
 same presumption apply to such sales as to sales on trial. The dis- 
 tinction between a sale with a right to return and a sale to take 
 effect on approval has not been taken in the English decisions, 
 though Chalmers notices it in his annotation. 9 Harv. L. Rev. 110, n. 
 3. The distinction has been taken in this country (Mechem, |657 
 et seq., §675 et seq.), and it seems proper to indicate it in this draft. 
 
 Rule 3 (2) is the same as Rule 4 of the English Act, except that 
 the words " on trial or on satisfaction " are substituted for " on sale 
 or return." 
 
 In Rule 4(2) the last sentence Is not in the English Act. It settles 
 a disputed question in accordance with the weight of authority. See 
 4 Columbia L. Rev., 541; Mechem, §§733, 741. 
 
 Rule 5 is not in the English Act, but It represents the existing law. 
 
 Sec. 30. [Reservation of Eight of Possession or Property 
 when Goods are Shipped.] (1) Where there is a contract to sell 
 specific goods, or where goods are subsequently appropriated to 
 the contract, the seller may, by the terms of the contract or ap- 
 propriation, reserve the right of possession or property in the 
 goods until certain conditions have been fulfilled. The right of 
 possession or property may be thus reserved notwithstanding the 
 delivery of the goods to the buyer or to a carrier or other bailee for, 
 the purpose of transmission to the buyer. 
 
 (2) Where goods are shipped, and by the bill of lading the 
 goods are deliverable to the seller or his agent, or to the order of 
 the seller or of his agent, the seller thereby reserves the property 
 in the goods. But if, except for the form of the bill of lading, the 
 property would have passed to the buyer on shipment of the goods, 
 the seller's property in the goods shall be deemed to be only for the 
 purpose of securing performance by the buyer of his obligations 
 under the contract. 
 
 (3) Where goods are shipped, and by the bill of lading the 
 goods are deliverable to the order of the buyer or of his agent, 
 but possession of the bill of lading is retained by the seller or his 
 agent, the seller thereby reserves a right to the possession of the 
 goods as against the buyer. 
 
13 
 
 (4) Where the seller of goods draws on the buyer for the price 
 and transmits the bill of exchange and bill of lading together to 
 the buyer to secure acceptance or payment of the bill of exchange, 
 the buyer is bound to return the bill of lading if he does not honor 
 the bill of exchange, and if he wrongfully retains the bill of lading 
 he acquires no added right thereby. If, however, the bill of lading 
 provides that the goods are deliverable to the buyer or to the order 
 of the buyer, or is indorsed in blank, or to the buyer by the 
 consignee named therein, one who purchases in good faith, for 
 value, the bill of lading, or goods from the buyer will obtain the 
 property in the goods, although the bill of exchange has not been 
 honored, provided that such purchaser has received delivery of 
 the bill of lading indorsed by the consignee named therein, or 
 of the goods, without notice of the facts making the transfer 
 wrongful. 
 
 Sub-section (1) follows with some change of expression, section 
 19 of the English Act except that for the somewhat loose phrase 
 " right of disposal " is substituted " possession of property." 
 
 The first sentence of sub-section (2) is in the English Act, except 
 that " property in the goods " is substituted for " right of disposal." 
 The remainder of the sub-section is new. 
 
 Sub-section (3) is not in the English Act, but is thought to be war- 
 ranted by the existing law. 
 
 Sub-section (4) substantially follows the English Act as far as the 
 words " If, however," The proviso beginning " If, however," is not 
 in the English Act It expresses, nevertheless, the English law, 
 because of the last factors' act. Cahn vs. Packet Co. (1899), 1 Q. B. 
 643. It undoubtedly is in accordance with mercantile understanding 
 and convenience. The seller has trusted the buyer with the posses- 
 sion of the document of title and should bear the consequences. See 
 Mechem, §166. 
 
 Sec. 21. [Sale by Auction.] In the case of sale by auction — 
 (1) Where goods are put up for sale by auction in lots, each 
 lot is the subject of a separate contract of sale. 
 
 (3) A sale by auction is complete when the auctioneer an- 
 nounces its completion by the fall of the hammer, or in other 
 customary manner. Until such announcement is made, any 
 bidder may retract his bid ; and the auctioneer may withdraw the 
 goods from sale unless the auction has been announced to be with- 
 out reserve. 
 
14 
 
 (3) A right to bid may be reserved expresslyby or on behalf 
 of the seller. 
 
 (4) Where notice has not been given that a sale by auction is 
 subject to a right to bid on behalf of the seller, it shall not be 
 lawful for the seller to bid himself or to employ or induce any 
 person to bid at such sale on his behalf, or for the auctioneer to 
 employ or induce any person to bid at such sale on behalf of the 
 seller or knowingly to take any bid from the seller or any person 
 employed by him. Any sale contravening this rule may be treated 
 as fraudulent by the buyer. 
 
 This follows section 58 of the English Act, and Is believed to ex- 
 press the existing law. 
 
 Sec. 22. [Eisk of Loss.] Unless otherwise agreed, the goods 
 remain at the seller's risk until the property therein is transferred 
 to the buyer, but when the property therein is transferred to the 
 buyer the goods are at the buyer's risk whether delivery has been 
 made or not, except that — 
 
 (a) Where delivery of the goods has been made to the buyer, 
 or to a bailee for the buyer, in pursuance of the contract and 
 the property in the goods has been retained by the seller merely 
 to secure performance by the buyer of his obligations under the 
 contract, the goods are at the buyer's risk from the time of 
 such delivery. 
 
 (6) Where delivery has been delayed through the fault of 
 either buyer or seller the goods are at the risk of the party in 
 fault as regards any loss which might not have occurred but for 
 such fault. 
 
 The exception (o) is not contained in the English Act. Otherwise 
 the section is in substance the same as section 20 of the English Act 
 The new exception represents the weight of authority and seems 
 sound on principle. The principal situation at which It is aimed is 
 where a conditional sale has been made, the goods, delivered to the 
 buyer, and very likely in use by him. The title is retained instead 
 of taking a mortgage back, as would be done In the case of real estate. 
 The beneficial interest is in the buyer, and the risk should be on him. 
 See 9 Harv. L. Rev. 109; Mechem, §635. 
 
 Where goods are sent in compliance with an order, but marked 
 " C. 0. D.," even though the effect of this were to withhold the title 
 
15 
 
 (as to which, however, see section 19, Rule [2]), the risk would 
 be thrown on the buyer. See Mechem, §740, note (p. 616). 
 
 Transfer of Title. 
 
 Sec. 23. [Sale by a Person not the Owner.] (1) Subject to 
 the provisions of this act, where goods are sold by a person who 
 is not the owner thereof, and who does not sell them under the 
 authority or with the consent of the owner, the buyer acquires no 
 better title to the goods than the seller had, unless the owner of 
 the goods is by his conduct precluded from denying the seller's 
 authority to sell., 
 
 (2) Nothing in this act, however, shall affect : 
 (a) The provisions of any factors' acts, recording acts, or 
 
 any enactment enabling the apparent owner of goods to dispose 
 
 of them as if he were the true owner thereof. 
 
 (6) The validity of any contract to sell or sale under any 
 
 special common law or statutory power of sale or under the 
 
 order of a court of competent jurisdiction. 
 
 This follows section 21 of the English Act, except in (2) (o) "re- 
 cording acts " has been added. 
 
 Sec. 24. [Sale by One having a Voidable Title.] Where the 
 seller of goods has a voidable title thereto, but his title has not 
 been avoided at the time of the sale, the buyer acquires a good 
 title to the goods, provided he buys them in good faith, for value, 
 and without notice of the seller's defect of title. 
 
 This follows section 23 of the English Act. Section 22 of that act 
 relates to sales in market overt and Is omitted here. 
 
 Sec. 25. [Sale by Seller in Possession of Goods Already Sold.] 
 Where a person having sold goods continues in possession of the 
 goods, or of negotiable documents of title to the goods, the deliver}' 
 or transfer by that person, or by an agent acting for him, of the 
 goods or documents of title under any sale, pledge, or other dis- 
 position thereof, to any person receiving and paying value for the 
 same in good faith and without notice of the previous sale, shall 
 have the same efifect as if the person making the delivery or 
 transfer were expressly authorized by the owner of the goods to 
 make the same. 
 
16 
 
 This follows section 25 (1) of the English Act. It is comparatively 
 new to the English law, being first enacted in the Factors' Act of 
 1889. But, so far as purchasers are concerned. It states in effect 
 the principle commonly laid down in this country, that delivery is 
 not necessary between the parties, but Is as against third persons. 
 The rights of creditors are dealt with in the next section. 
 
 Sec. 26. [Creditors' Eights Against Sold Goods in Seller's 
 Possession.] Where a person having sold goods continues in 
 possession of the goods, or of negotiable documents of title to the 
 goods and such retention of possession is fraudulent in fact or is 
 deemed fraudulent under any rule of law, a creditor or creditors 
 of the seller may treat the sale as void. 
 
 The law in this country as to the effect of retention of possession 
 on the rights of creditors Is in such conflict and the different rules 
 are locally so, firmly fixed that it seemed unwise to try to provide a 
 uniform rule. All states, however, agree that if the retention Is 
 fraudulent In fact, the sale Is void as to creditors. The draft, there- 
 fore, so provides, and as to other cases — cases of constructive fraud — 
 adopts the locally prevailing rule. 
 
 Sec. 27. [Definition of Negotiable Documents of Title.] A 
 document of title in which it is stated that the goods referred to 
 therein will be delivered to the bearer, or to the order of any 
 person named in such document is a negotiable document of title. 
 
 This definition, following as it does the definition of negotiable 
 promises to pay money, represents the mercantile understanding in 
 regard to documents of title. 
 
 Sec. 28. [Negotiation of Negotiable Documents by Delivery.] 
 A negotiable document of title may be negotiated by delivery — 
 (a) Where by the terms of the document the carrier, ware- 
 houseman or other bailee issuing the same undertakes to deliver 
 the goods to the bearer, or 
 
 (6) Where by the terms of the document the carrier, ware- 
 houseman or other bailee issuing the same undertakes to deliver 
 the goods to the order of a specified person, and such person or 
 a subsequent indorsee of the document has indorsed it in blank 
 or to bearer. 
 
 Where by the terms of a negotiable document of title the goods 
 are deliverable to bearer or where a negotiable document of title 
 
17 
 
 has been indorsed in blank or to bearer, any holder may indorse 
 ihe same to himself or to any other specified person, and in such 
 case the document shall thereafter be negotiated only by the in- 
 dorsement of such indorsee. 
 
 Here too, both mercantile practice and the analogy of hills and 
 notes are followed. 
 
 Sec. 29. [Negotiation of Negotiable Documents by Indorse- 
 ment.] A negotiable document of title may be negotiated by the 
 indorsement of the person to whose order the goods are by the 
 terms of the document deliverable. Such indorsement may be in 
 blank, to bearer or to a specified person. If indorsed to a specified 
 person, it may be again negotiated by the indorsement of such 
 person in blank, to bearer or to another specified person. Sub- 
 sequent negotiation may be made in like manner. 
 
 The note to the preceding section is again applicable. 
 
 Sec. 30. [Negotiable Documents of Title Marked "Not 
 Negotiable."] If a document of title which contains an under- 
 taking by a carrier, warehouseman or other bailee to deliver the 
 goods to the bearer, to a specified person or order, or to the order 
 of a specified person, or which contains words of like import, has 
 placed upon it the words " not negotiable," " non-negotiable " or 
 the like, such a document may nevertheless be negotiated by the 
 holder and is a negotiable document of title within the meaning 
 of this act. But nothing in this act contained shall be construed 
 as limiting or defining the effect upon the obligations of the 
 carrier, warehouseman, or other bailee issuing a document of title 
 of placing thereon the words " not negotiable " " non-negotiable," 
 or the like. 
 
 It has been until recently the custom of the railroads to stamp 
 upon bills of lading, even though running to order or assigns, the 
 words " not negotiable." How far the carrier is justified in attempt- 
 ing to limit its liability by such a device may be questioned, but as 
 this act Is concerned not with the liability of the carrier but with the 
 rights of the various holders of the bill of lading as against each 
 other, it seemed wise to provide merely that as between those parties 
 the words "not negotiable" do not change the legal effect of the 
 document 
 
18 
 
 Sec. 31. [Transfer of Non- Negotiable Documents.] A docu- 
 ment of title which is not in such form that it can be negotiated 
 by delivery may be transferred by the holder by delivery to a 
 purchaser or donee. A non-negotiable document cannot be nego- 
 tiated and the indorsement of such a document gives the trans- 
 feree no additional right. 
 
 The distinction between warehouse receipts and bills of lading 
 negotiable in form and those which are not does not seem to be 
 observed in the English decisions; but it is observed in this country 
 both in the usages of warehousemen and carriers and in the decisions 
 of the courts. See Hallgarten vs. Oldham, 135 Mass. 1; Gill vs. Frank, 
 12 Oreg. 507; Forbes vs. Boston & Lowell R. R., 133 Mass. 154; Litch- 
 field Bank vs. Elliott, 83 Minn. 469. 
 
 Sec. 32. [Who may Negotiate a Document.] A negotiable 
 document of .title may be negotiated — 
 
 (a) By the owner thereof, or 
 
 (b) By any person to whom the possession or custody of the 
 document has been entrusted by the owner, if, by the terms of 
 the document the bailee issuing the document undertakes to 
 deliver the goods to the order of the person to whom the posses- 
 sion or custody of the document has been entrusted, or if at 
 the time of such entrusting the document is in such form that 
 it may be negotiated by delivery. 
 
 By this section a negotiable document of title is not given the full 
 negotiability of a bill of exchange, inasmuch as neither a thief nor a 
 flnder is within the terms of the section. By the Uniform Bills of 
 Lading Act, however, the Commissioners on Uniform State Laws 
 adopted the principle of full negotiability. In a jurisdiction where it 
 is desired that the Sales Act and the Bills of Lading Act should both 
 be passed and should be in harmony, the following substitute is sug- 
 gested for section 32 of the Sales Act as above printed: 
 
 Sec. 32. [Who may Negotiate a Document.] A negotiable docu- 
 ment may be negotiated by any person in possession of the same, 
 however such possession may have been acquired if, by the terms of 
 the document, the bailee issuing it undertakes to deliver the goods 
 to the order of such person, or if at the time of negotiation the docu- 
 ment is in such form that it may be negotiated by delivery. 
 
 Sec. 33. [Rights of Person to Whom Document has been 
 Negotiated.] A person to whom a negotiable document of title 
 has been duly negotiated acquires thereby; 
 
19 
 
 (a) Such title to the goods as the person negotiating the 
 document to him had or had ability to convey to a purchaser in 
 good faith for value and also such title to the goods as the 
 ' person to whose order the goods v?ere to be delivered by the 
 terms of the document had or had ability to convey to a pur- 
 chaser in good faith for value, and 
 
 (6) The direct obligation of the bailee issuing the document 
 to hold possession of the goods for him according to the terms 
 of the document as fully as if such bailee had contracted directly 
 with him. 
 
 This section follows the custom of merchants. It makes the docu- 
 ment represent the depositor's right in the goods, so that a purchaser 
 of the document, If he acquires a good title thereto, acquires not 
 simply the rights of his vendor, but whatever property the original 
 depositor had, that being what the document represented. 32 (6) 
 makes the obligation of the warehouseman in regard to the goods 
 negotiable. 
 
 Many states already have statutes making warehouse receipts ne- 
 gotiable. Mohun on Warehousemen, 944; and some states have 
 statutes in regard to bills of lading, ibid., 848, but these, statutes have 
 generally been so brief and general in terms that they have been 
 variously construed and have to some extent failed of their purpose. 
 See Shaw vs. Railroad Co., 101 U. S. 557. 
 
 Sec. 34. [Eights of Person to Whom Document has been 
 Transferred.] A person to whom a document of title has been 
 transferred, but not negotiated, acquires thereby, as against the 
 transferor, the title to the goods, subject to the terms of any 
 agreement with the transferor, 
 
 If the document is non-negotiable, such person also acquires 
 the right to notify the bailee who issued the document of the 
 transfer .thereof, and thereby to acquire the direct obligation of 
 such bailee to hold possession of the goods for hihi according to 
 the terms of the document. 
 
 Prior to the notification of such bailee by the transferor or 
 transferee of a non-negotiable document of title, the title of the 
 transferee to the goods and the right to acquire the obligation of 
 such bailee may be defeated by the levy of an attachment or ex- 
 ecution upon the goods by a creditor of the transferor, or by a 
 notification to such' bailee by the transferor or a subsequent pur- 
 
20 
 
 chaser from the transferor of a subsequent sale of the goods by the 
 transferor. 
 
 This section states tlie right of any purchaser of bailed goods. One 
 who purchases, therefore, a non-negotiable document of title would 
 gain nothing from the transfer of the document except evidence. 
 
 Sec. 35. [Transfer of Negotiable Document without Indorse- 
 ment.] Where a negotiable document of title is transferred for 
 value by delivery, and the indorsement of the transferor is essen- 
 tial for negotiation, the transferee acquires a right against the 
 transferor to compel him to indorse the document unless a con- 
 trary intention appears. The negotiation shall take effect as of 
 the time when the indorsement is actually made. 
 
 This follows the analogy of bills and notes. Crawford, Neg. Inst 
 Law, §79. 
 
 Sec. 36. [Warranties on Sale of Document.] A person who 
 for value negotiates or transfers a document of title by indorse- 
 ment or delivery, including one who assigns for value a claim 
 secured by a document of title unless a contrary intention appears^ 
 warrants : 
 
 (a) That the document is genuine; 
 
 (6) That he has a legal right to negotiate or transfer it; 
 
 (c) That he has knowledge of no fact which would impair 
 the validity or worth of the document, and 
 
 (d) That he has a right to transfer the title to the goods and 
 that the goods are merchantable or fit for a particular purpose, 
 whenever such warranties would have been implied if the con- 
 tract of the parties had been to transfer without a document 
 of title the goods represented thereby. 
 
 This section except (d) follows the Negotiable Instruments Law, 
 Crawford, §115. (d) It is believed states the existing law. 
 
 Sec. 37. [Indorser not a Guarantor.] The indorsement of a 
 document of title shall not make the indorser liable for any failure 
 on the part of the bailee who issued the document or previous 
 indorsers thereof to fulfill their respective obligations. 
 
 Mercantile usage in regard to documents of title differs from that 
 In regard to bills and notes in the matter to which this section relates. 
 
21 
 
 It states the existing law, even in jurisdictions where statutes have 
 made documents of title negotiable. 
 
 Shaw vs. Railroad Co., 101 U. S. 557; Mida vs. Geissmann, 17 111. 
 App., 207. 
 
 Sec. 38. [When Negotiation not Impaired by Fraud, Mistake 
 or DuTess.] The validity of the negotiation of a negotiable docu- 
 ment of title is not impaired by the fact that the negotiation was 
 a breach of duty on the part of the person making the negotiation, 
 or by the fact that the owner of the document was induced by 
 fraud, mistake or duress to entrust the possession or custody 
 thereof to such person, if the person to whom the document was 
 negotiated or a person to whom the document was subsequently 
 negotiated paid value therefor, without notice of the breach of 
 duty, or fraud, mistake or duress. 
 
 This section merely elaborates for the sake of clearness certain 
 special cases within the terms of section 32. 
 
 Sec. 39. [Attachment or Levy upon Goods for which a Nego- 
 tiable Document has been Issued.] If goods are delivered to a 
 bailee by the owner or by a person whose act in conveying the title 
 to them to a purchaser in good faith for value would bind the 
 owner and a negotiable document of title is issued for them they 
 cannot thereafter, while in the possession of such bailee, be at- 
 tached by garnishment or otherwise or be levied upon under an 
 execution unless the document be first surrendered to the bailee or 
 its negotiation enjoined. The bailee shall in no case be compelled 
 to deliver up the actual possession of the goods until the document 
 is surrendered to him or impounded by the court. 
 
 If the mercantile theory of documents of title, such as bills of 
 lading and warehouse receipts, were carried to its logical extent, no 
 attachment of the goods represented by the document or levy upon 
 them could b6 permitted while the negotiable document was out- 
 standing. 
 
 It was thought best in this draft not to take the extreme position 
 that no attachment, garnishment or levy could be made on property 
 for which a negotiable document was outstanding, but to cover the 
 essential practical point by making it a condition of the validity of 
 such seizure that the negotiation of the document be enjoined or the 
 document impounded. The following section expressly gives the 
 court full power to aid, by injunction and otherwise, a creditor seek- 
 ing to get at a negotiable document and the property covered thereby. 
 
32 
 
 Sec. 40. [Creditors' Eemedies to Eeach Negotiable Docu- 
 ments.] A creditor whose debtor is the owner of a negotiable doc- 
 ument of title shall be entitled to such aid from courts of appro- 
 priate jurisdiction by injunction and otherwise in attaching such 
 document or in satisfying the claim by means thereof as is allowed 
 at law or in equity in regard to property which cannot readily 
 be attached or levied upon by ordinary legal process. 
 
 As the right of legal garnishment of balled property is limited by 
 the preceding section, section 40 gives the creditor such rights as are 
 included under the heads of bills of equitable attachment or in aid 
 of execution. 
 
 PART III. 
 Perfohmance of the Contract. 
 
 Sec. 41. [Seller must Deliver and Buyer Accept Goods.] It 
 is the duty of the seller to deliver the goods, and of the buyer to 
 accept and pay for them, in accordance with the terms of the con- 
 tract to sell or sale. 
 
 This follows section 26 of the English Act. 
 
 Sec. 42. [Delivery and Payment are Concurrent Conditions.] 
 Unless otherwise agreed, delivery of the goods and payment of the 
 price are concurrent conditions; that is to say, the seller must be 
 ready and willing to give possession of the goods to the buyer in 
 exchange for the price and the buyer must be ready and willing 
 to pay the price in exchange for possession of the goods. 
 
 This follows section 27 of the English Act. 
 
 Sec. 43. [Place, Time and Manner of Delivery.] (1) 
 Whether it is for the buyer to take possession of the goods or for 
 the seller to send them to the buyer is a question depending in 
 each case on the contract, express or implied, between the parties. 
 Apart from any such contract, express or implied, or usage of 
 trade to the contrary, the place of delivery is the seller's place of 
 business if he have one, and if not his residence ; but in case of 
 a contract to sell or a sale of specific goods, which to the knowledge 
 of the parties when the contract or the sale was made were in 
 some other place, then that place is the place of delivery. 
 
33 
 
 (2) Where by a contract to sell or a sale the seller is bound to 
 send the goods to the buyer, but no time for sending them is fixed, 
 the seller is bound to send them within a reasonable time. 
 
 (3) Where the goods at the time of sale are in the possession 
 of a third person, the seller has not fulfilled his obligation to 
 deliver to the buyer unless and until such third person acknowl- 
 edges to the buyer that he holds the goods on the buyer's behalf ; 
 but as against all others than the seller the buyer shall be regarded 
 as having received delivery from the time when such third person 
 first has notice of the sale. Nothing in this section, however, shall 
 affect the operation of the issue or transfer of any document of 
 title to goods. 
 
 (4) Demand or tender of delivery may be treated as ineffec- 
 tual unless made at a reasonable hour. What is a reasonable hour 
 is a question of fact. 
 
 (5) Unless otherwise agreed, the expenses of and incidental to 
 putting the goods into a deliverable state must be borne by the 
 seller. 
 
 This is the same as section 29 of the English Act, except that the 
 second half of sub-section (3) has been added. The section Is be- 
 lieved to state the existing law. 
 
 Sec. 44. [Delivery of Wrong Quantity.] (1) Where the 
 seller delivers to the buyer a quantity of goods less than he con- 
 tracted to sell, the buyer may reject them, but if the buyer accepts 
 or retains the goods so delivered, knowing that the seller is not 
 going to perform the contract in full, he must pay for them at the 
 contract rate. If, however, the buyer has used or disposed of the 
 goods delivered before he knows that the seller is not going to 
 perform his contract in full, the buyer shall not be liable for 
 more than the fair value to him of the goods so received. 
 
 (3) Where the seller delivers to the buyer a quantity of goods 
 larger than he contracted to sell, the buyer may accept the goods 
 included in the contract and reject the rest, or he may reject the 
 whole. If the buyer accepts the whole of the goods so delivered he 
 must pay for them at the contract rate. 
 
 (3) Where the seller delivers to the buyer the goods he con- 
 tracted to sell mixed with goods of a different description not 
 
24 
 
 included in the contract, the buyer may accept the goods which 
 are in accordance with the contract and reject the rest, or he may 
 reject the whole. 
 
 (4) The provisions of this section are subject to any usage of 
 trade, special agreement, or course of dealing between the parties. 
 
 This follows section 30 of the English Act, and is in accordance 
 with the weight of authority. See Mechem, §1157 et seq. 
 
 Sec. 45. [Delivery in Instalments.] (1) Unless otherwise 
 agreed, the buyer of goods is not bound to accept delivery thereof 
 by instalments. 
 
 (2) Where there is a contract to sell goods to be delivered by 
 stated instalments, which are to be separately paid for, and the 
 seller makes defective deliveries in respect of one or more instal- 
 ments, or the buyer neglects or refuses to take delivery of or pay 
 for one or more instalments, it depends in each case on the terms 
 of the. contract and the circumstances of the case, whether the 
 breach of contract is so material as to justify the injured party in 
 refusing to proceed further and suing for damages for breach of 
 the entire contract, or whether the breach is severable, giving rise 
 to a claim for compensation, but not to a right to treat the whole 
 contract as broken. 
 
 This section is slightly altered from section 31 of the English Act. 
 The English Act, following prior English decisions, makes repudia- 
 tion by one party the test of the right of the. other to refuse to go on. 
 The section here given makes the materiality of the breach the test 
 This is in accord with the weight of American authority. Norrington 
 vs. Wright, 115 U. S. 188, 14 Harv. L. Rev. 323. 
 
 Sec. 46. [Delivery to a Carrier on Behalf of the Buyer.] (1) 
 Where, in pursuance of a contract to sell or a sale, the seller is 
 authorized or required to send the goods to the buyer, delivery of 
 the goods to a carrier, whether named by the buyer or not, for the 
 purpose of transmission to the buyer is deemed to be a delivery of 
 the goods to the buyer, except in the cases provided for in section 
 19, Eule 5, or unless a contrary intent appears. 
 
 (2) Unless otherwise authorized by the buyer, the seller must 
 make such contract with the carrier on behalf of the buyer as may 
 be reasonable, having regard to the nature of the goods and the 
 
25 
 
 other circumstances of the case. If the teller omit so to do, arid 
 the goods are lost or damaged in course of transit, the buyer may 
 decline to treat the delivery to the carrier as a delivery to himself, 
 or may hold the seller responsible in damages. 
 
 (3) Unless otherwise agreed, where goods are sent by the 
 seller to the buyer under circumstances ia which the seller kriows 
 or ought to know that it is usual to insure, the seller must give 
 such notice to the buyer as may enable him to insure them during 
 their transit, and, if .the seller fails to do so, the goods shall be 
 deemed to be at his risk during such transit. 
 
 These paragraphs follow with slight changes section 32 of the Eng- 
 lish Act. (1) is familiar law. (2) and t3) are probably in accord- 
 ance with the business usage, but there Is little in the way of positive 
 law on the subject. See Chalmers (5th ed.), p. 73. 
 
 SEa 47. [Eight to Examine the Goods.] (1) Where goods 
 are delivered to the buyer, which he has not previously examined, 
 he is not deemed to have accepted them unless and until he has 
 had a reasonable opportunity of examining them for the purpose 
 of ascertaining whether they are in conformity with the contract. 
 
 (2) Unless otherwise agreed, when the seller tenders delivery 
 of goods to the buyer, he is bound, on request, to afford the buyer 
 a reasonable opportunity of examining the goods for the purpose 
 of ascertaining whether they are in conformity with the contract. 
 
 (3) Where goods are delivered to a carrier by the seller, in 
 accordance with an order from or agreement with the buyer, upon 
 the terms that the goods shall not be delivered by the carrier to 
 the buyer until he has paid the price, whether such terms are 
 indicated by marking the goods with the words " collect on de- 
 livery," or otherwise, the buyer is not entitled to examine the 
 goods before payment of the price in the absence of agreement 
 permitting such examination. 
 
 Section 47 (1) and (2) follow section 34 of the English Act, and 
 state the American law also. Mechem, •|-1375 et seg. Sub-section (3) 
 is new. It states the actual practice of the large express compainies 
 and probably states the existing law. Wiltse vs. Barnes, 46 la. 210. 
 
 Sec. 48. [What Constitutes Acceptance.] The buyer is 
 diSemed to have accepted the goods when he intimates to the seller 
 
26 
 
 that he has accepted them, or when the goods have been delivered 
 to him, and he does any act in relation to them which is incon- 
 sistent with the ownership of the seller, or when, after the lapse 
 of a reasonable time, he retains the goods without intimating to 
 the seller that he has rejected them. 
 
 This follows section 35 of the English Act, and represents the 
 American law also. Mechem, §1379 et seq. 
 
 Sec. 49. [Acceptance does not Bar Action for Damages.] 
 In the absence of express or implied agreement of the parties, 
 acceptance of „the goods by the buyer shall not discharge the seller 
 from liability in damages or other legal remedy for breach of any 
 promise or warranty in the contract to sell or the sale. But, if, 
 after acceptance of the goods, the buyer fail to give notice to the 
 seller of the breach of any promise or warranty within a reason- 
 able time after the buyer knows, or ought to know of such breach, 
 the seller shall not be liable therefor. 
 
 This section is not contained in the English Act, but section 11 (1) 
 (a) of that act seems to authorize the buyer to accept goods and 
 nevertheless hold the seller liable in damages. The latter half of the 
 section in this draft imposes a qualification sanctioned by good busi- 
 ness practice and to some extent by law, both in this country and in 
 Europe. 
 
 The law in this country is in great conflict. See Mechem, §1388 
 et seq. 
 
 Sec. 50..i; [Buyer is not Bound to Eeturn Goods Wrongly De- 
 livered.] Unless otherwise agreed, where goods are delivered to 
 the buyer, and he refuses to accept them, having the right so to do, 
 he is not bound to return them to the seller, but it is sufficient if 
 he notifies the seller that he refuses to accept them. 
 
 This follows section 36 of the English Act. Such American author- 
 ity as there is is in accord. Mechem, §1403. 
 
 Sec. 51. [Buyer's Liability for Failing to Accept Delivery.] 
 When the seller is ready and willing to deliver the goods, and 
 requests the buyer to take delivery, and the buyer does not within 
 a reasonable time after such request take delivery of the goods, he 
 is liable to the seller for any loss occasioned by his neglect or re- 
 fusal to take delivery, and also for a reasonable charge for tbe care 
 
27 
 
 and custody of the goods. . If the neglect or refusal of the buyer to 
 take delivery amounts to a repudiation or breach of the entire con- 
 tract, the seller shall havp the right against the goods and on the 
 contract hereinafter provided in favor of the seller when the buyer 
 is in. default. 
 
 This follows substantially section 37 of the English Act, except for 
 the addition of breach of the entire contract as an equivalent of re- 
 pudiation. See note to section 45. 
 
 PART iv. 
 Eights of Unpaid Selleb Against thk Goods. 
 
 Sec. 53. [Definition of Unpaid Seller.] (1) The seller 
 of. goods is deemed to be an unpaid seller within the meaning of 
 this act — 
 
 (a) When the whole of the price has not been paid or 
 tendered. 
 
 (6) When a bill of exchange or other negotiable instrument 
 has been received as conditional payment, and the condition on 
 which it was received has been broken by reason of the dishonor 
 of the instument, the insolvency of the buyer, or otherwise. 
 (2) In this part of this act the term "seller" includes an 
 agent of the seller to whom the bill of lading has been indorsed, 
 or a consignor or agent who has himself paid, or is directly respon- 
 sible for, the price, or any other person who is in the position of a 
 seller. 
 
 This follows section 38 of the English Act, except that in (1) (6) 
 " has beeii broken " is substituted for " has not been fulfilled " and 
 " the insolvency of the buyer " has been inserted. 
 
 Sec. 53. [Kemedies of an Unpaid Seller.] (1) Subject to 
 the provisions of this act, notwithstanding that the property in 
 the goods may have passed to the buyer, the unpaid seller of goods, 
 as such, has — 
 
 (a) A lien on the goods or right to retain them for the price 
 while he is in possession of them ; 
 
 (6) in case of the insolvency of the buyer, a right of stop- 
 ping the goods in transitu after he has parted with the posses- 
 sion of them ; 
 
28 
 
 ' (c) A right of resale as limited by this act; 
 
 (d) A right to rescind the sale as limited by this act. 
 
 (2) Where the property in goods has not passed to the buyer, 
 the unpaid seller has, in addition to his other remedies, a right 
 of withholding delivery similar to and coextensive with his rights 
 of lien and stoppage in transitu where the property has passed to 
 the buyer. 
 
 This follows section 39 of the English Act, except for the insertion 
 of 1 (d), which is in conformity with the American law and with 
 business usage. Mechem, §1682. 
 
 Unpaid Skllek's Lien. 
 
 Sec. 54. [When Eight of Lien may be Exercised.] (1) Sub- 
 ject to the provisions of this act, the unpaid seller of goods who is 
 in possession of them is entitled to retain possession of them 
 until payment or tender of the price in the following cases, 
 namely : 
 
 (a) Where the goods have been sold without any stipulation 
 as to credit; 
 
 (6) Where the goods have been sold on credit, but the term 
 of credit has expired ; 
 
 (c) Where the buyer becomes insolvent. 
 (2) The seller may exercise his right of lien notwithstanding 
 that he is in possession of the goods as agent or bailee for the 
 buyer. 
 This follows section 41 of the English Act. 
 
 Sec. 55. [Lien After Part Delivery.] Where an unpaid seller 
 has made part delivery of the goods, he may exercise his right of 
 lien on the remainder, unless such part delivery has been made 
 under such circumstances as to show an intent to waive the lien 
 or right of retention. 
 
 This follows section 42 of the English Act. 
 
 Sec. 56. [When Lien is Lost.] (1) The unpaid seller of 
 goods loses his lien thereon — 
 
 (a) When he delivers the goods to a carrier or other bailee 
 for the purpose of transmission to the buyer without reserving 
 
39:, 
 
 the property in the goods or the right to the possession thereof; 
 (6) When the buyer or his agent lawfully obtains possessipn 
 of the goods; 
 
 (c) By waiver thereof. 
 (2) The unpaid seller of goods, having a lien thereon, does not 
 lose his lien by reason only that he has obtained judgment or 
 decree for the price of the goods. 
 This substantially follows section 43 of the English Act. 
 
 Stoppage in Transitu. 
 
 Sec. 57. [Seller may stop Goods on Buyer's Insolvency.] Sub- 
 ject to the provisions of this act, when the buyer of goods is or 
 becomes insolvent, the unpaid seller who has parted with the pos- 
 session of the goods has the right of stopping them in transitu,' 
 that is to say, he may resume possession of the goods at any time 
 while they are in transit, and he will then become entitled to the 
 same rights in regard to the goods as he would have had if he' hd.d 
 never parted with the possession. 
 
 This follows section 44 of the English Act with two exceptions. In 
 the last clause the English Act reads, " and may retain them until 
 payment or tender of the price." But the seller under such circum- 
 stances has also the right to resell, and under this draft the right to 
 rescind the sale. In the second line the words " is or " have been 
 inserted, so as to make it clear that the seller's right exists even 
 though the buyer were insolvent as the time of the sale. See Mechem, 
 §1541. 
 
 Sec. 58. [When Goods are in Transit.] (1) Goods are in 
 transit within the meaning of section 5? — 
 
 (a) From the time when they are delivered to a carrier by 
 
 land or water, or other bailee for the purpose of transmission 
 
 to the buyer, until the buyer, or his agent in that behalf, takes 
 
 delivery of them from such carrier or other bailee ; 
 
 (&) If the goods are rejected by the buyer, and the carrier 
 
 or other bailee continues in possession of them, even if the seller 
 
 has refused to receive them back. 
 
 (2) Goods are no longer in transit within the meaning of 
 section 57, 
 
30 
 
 (a) If the buyer, or his agent in that behalf, obtains delivery 
 of the goods before their arrival at the appointed destination ; 
 
 (6) If, after the arrival of the goods at the appointed des- 
 tination, the carrier or other bailee acknowledges to the buyer 
 or his agent that he holds the goods on his behalf and continues 
 in possession of them as bailee for the buyer or his agent ; and it 
 is immaterial that a further destination for the goods may 
 have been indicated by the buyer ; 
 
 (c) If the carrier or other bailee wrongfully refuses to de- 
 liver the goods to the buyer or his agent in that behalf. 
 
 (3) If goods are delivered to a ship chartered by the buyer, it 
 is a question depending on the circumstances of the particular 
 case, whether they are in the possession of the master as a carrier 
 or as agent of the buyer. 
 
 (4) If part delivery of the goods has been made to the buyer, 
 or his agent in that behalf, the remainder of the goods may be 
 stopped in transitu, unless such part delivery has been made under 
 such circumstances as to show an agreement with the buyer to 
 give up possession of the whole of the goods. 
 
 This follows section 45 of the English Act, but with considerable 
 changes in wording and arrangement. The section is believed to 
 state the existing law. 
 
 Sec. 59. [Ways of Exercising the Right to Stop.] (1) The 
 unpaid seller may exercise his right of stoppage in transitu either 
 by obtaining actual possession of the goods or by giving notice of 
 his claim to the carrier or other bailee in whose possession the 
 goods are. Such notice may be given either to the person in 
 actual possession of the goods or to his principal. In the latter 
 case the notice, to be efEectual, must be given at such time and 
 under such circumstances that the principal, by the exercise of 
 reasonable diligence, may prevent a delivery to the buyer. 
 
 (2) When notice of stoppage in transitu is given by the seller 
 to the carrier, or other bailee in possession of the goods, he must 
 redeliver the goods to, or according to the directions of, the seller. 
 The expenses of such delivery must be borne by the seller. If, 
 however, a negotiable document of title representing the goods 
 has been issued by the carrier or other bailee, he shall not be 
 
31 
 
 obliged to deliver or justified in delivering the goods to the seller 
 unless such document is first surrendered for cancellation. 
 
 This follows section 46 of the English Act, except the final proviso. 
 The carrier should he liable to a bona fide transferee of its bill of 
 lading, and unquestionably would be at common law if the transferee 
 took for value before the stoppage. Even though the transferee took 
 after the notice of stoppage, he is protected by section 62. The car- 
 rier therefore ought not to be obliged or allowed to surrender the 
 goods unless the document of title is surrendered. 
 
 Eesale by the Seller. 
 
 Sec. 60. [When and how Eesale may be Made.] (1) Where 
 the goods are of a perishable nature, or where the seller ex- 
 pressly reserves the right of resale in case the buyer should 
 make default, or where the buyer has been in default in the 
 payment of the price an unreasonable time, an unpaid seller 
 having a right of lien or having stopped the goods in transitu may 
 resell the goods. He shall not thereafter be liable to the original 
 buyer upon the contract to sell or the sale or for any profit made 
 by such resale, but may recover from the buyer damages for any 
 loss occasioned by the breach of the contract or the sale. 
 
 (3) Where a resaleis made, as authorized in this section, the 
 buyer acquires a good title as against the original buyer. 
 
 (3) It is not essential to the validity of a resale that notice of 
 an intention to resell the goods be given by the seller to the origi- 
 nal buyer. But where the right to resell is not based on the 
 perishable nature of the goods or upon an express provision of 
 the contract or the sale, the giving or failure to give such notice 
 shall be relevant in any issue involving the question whether the 
 buyer had been in default an unreasonable time before the resale 
 was made. 
 
 (4) It is not essential to the validity of a resale that notice of 
 the time and place of such resale should be given by the seller to 
 tiie original buyer. 
 
 (5) The seller is bound to exercise reasonable care and judg- 
 ment in making a resale, and subject to this requirement may 
 make a resale either by public or private sale. 
 
32 
 
 This section differs considerably from section 48 of the English 
 Act. The wording of that section did not seem wholly adequate. 
 
 Section 48 (2) of the English Act seems to provide that the resale, 
 whether rightly made or not, so long as it is made by a seller having 
 a lien, gives a good title, and section 8 of the Factor's Act of 1889, 
 providing that any seller in possession has power to make a valid 
 sale or pledge, squares with this; but the provision seems somewhat 
 drastic for this country. See Mechem, § 1644. The requirements 
 as to delivery and change of possession in this draft would generally 
 protect the purchaser on the resale if he got delivery, and this seems 
 far enough to go. 
 
 The point covered by (3) is much disputed. The English law re- 
 quires notice where the goods are not perishable, and some cases so 
 hold in this country. Others reach a contrary result. See Mechem, 
 §1633. On the one hand, it seems undesirable to make a resale 
 invalid under all circumstances for lack of notice. The lapse of time 
 or other circumstances might make it highly unjust to allow the 
 buyer later, when perhaps market prices had risen, to make such a 
 claim. On the other hand, it seems desirable that notice should gen- 
 erally be given. The provision suggested will have the effect, it is 
 hoped, of making notice necessary unless the default of the buyer is 
 very clear and long continued. (4) expresses the law. Mechem, 
 S1637. 
 
 Rescission by the Seller. 
 
 Sec. 61. [When and how the Seller may Rescind the Sale.] 
 (1) An unpaid seller having a right of lien or having stopped 
 the goods in transitu, may rescind the transfer of title and resume 
 the property in the goods, where he expressly reserved the right 
 to do so in case the buyer should make default, or where the buyer 
 has been in default in the payment of the price an unreasonable 
 time. The seller shall not thereafter be liable to the buyer upon 
 the contract to sell or the sale, but may recover from the buyer 
 damages for any loss occasioned by the breach of the contract or 
 the sale. 
 
 (2) The transfer of title shall not be held to have been re- 
 scinded by an unpaid seller until he has manifested by notice to 
 the buyer or by some other overt act an intention to rescind. It 
 is not necessary that such overt act should be communicated to the 
 buyer, but the giving or failure to give notice to the buyer of the 
 
33 
 
 intention to rescind shall be relevant in any issue involving itl^e 
 question whether the buyer had been in default an unreasonable 
 time before the right of rescission was asserted. 
 
 This section is not contained in the English Act, and the remedy 
 for which the section provides is not allowed by English law. Itfs 
 allowed in this country, and seems fully justified by mercantile cus- 
 tom and convenience; Mechem, §§1681, 1682; Burdick, p. 243. 
 
 Sec. 62. [Eifect of Sale of Goods Subject to Lien or Stoppage 
 in Transitu.] Subject to the provisions of this act, the unpaid 
 seller's right of lien or stoppage in transitu is not affected by any 
 sale, or other disposition of the goods which the buyer may have 
 made, unless the seller has asgented thereto. 
 
 If, however, a negotiable document of title has been issued for 
 goods, no seller's lien or right of stoppage in transitu shall defeat 
 the right of any purchaser for value in good faith to whom such 
 document has been negotiated, whether such negotiation be prior 
 or subsequent to the notification to the carrier, or other bailee who 
 issued such document, of the seller's claim to a lien or right of 
 stoppage in transitu. 
 
 This section is based on section 47 of the English Act. The second 
 paragraph is, however, made more far reaching than in the English 
 Act in order to cover a case which does not seem to have arisen or to 
 have been considered in England, namely, where a bill of lading is 
 transferred to an innocent purchaser for value after notice to stop 
 has been given. The only case in Newhall vs. Central Pac. R. R., 51 
 Cal. 345, which properly protects the purchaser. 
 
 PART V. 
 
 Actions foe Breach of the Contract. 
 
 Eemedies of the Seller. 
 
 Sec 63. [Action, for the Price.] (1) Where, under a con- 
 tract to sell or a sale, the property in the goods has passed to t^ie 
 buyer, and the buyer wrongfully neglects or refuses to pay for the 
 goods a,ccording to the terms of the contract or the sale, the. seller 
 may maintain an action against him for the price of the goods. 
 
 (2) Where, under a contract to sell or a sale, the price is pay- 
 able on a day certain, irrespective of delivery or of transfer of titl^. 
 
34 
 
 and the buyer wrongfully neglects or refuses to pay such price, the 
 seller may maintain an action for the price, although the property 
 in the goods has not passed, and the goods have not been appro- 
 priated to the contract. But it shall be a defense to such an action 
 that the seller at any time before judgment in such action has 
 manifested an inability to perform the contract or the sale on his 
 part or an intention not to perform it. 
 
 (3) Although the property in the goods has not passed, if they 
 cannot readily be resold for a reasonable price, and if the provi- 
 sions of section 64 (4) are not applicable, the seller may offer to 
 deliver the goods to the buyer, and, if the buyer refuses to receive 
 them, may notify the buyer that the goods are thereafter held by 
 the seller as bailee for the buyer. Thereafter the seller may treat 
 the goods as the buyer's and may maintain an action for the price. 
 
 (1) and the first half of (2) follow the English Act. The addition 
 to (2) beginning " but," etc., is believed to be jtistified by the weight 
 of American authority. 
 
 (3) is not law in England, nor is it in a number of American states. 
 On the other hand, the New York court, in an often quoted passage, 
 allows the remedy to an unpaid vendor generally without any qualifi- 
 cation as to the nature of the goods. It is also allowed in the civil 
 law. The rule suggested goes as far as convenience requires, for if 
 the goods can readily be resold, the action for damages affords ade- 
 quate relief. See Mechem, §1694. 
 
 Sec. 64. [Action for Damages for Non-Acceptance of the 
 Goods.] (1) Where the buyer wrongfully neglects or refuses to 
 accept and pay for the goods, the seller may maintain an action 
 against him for damages for non-acceptance. 
 
 (2) The measure of damages is the estimated loss directly and 
 naturally resulting, in the ordinary course of events, from the 
 buyer's breach of contract. 
 
 (3) Where there is an available market for the goods in ques- 
 tion, the measure of damages is, in the absence of special circum- 
 stances, showing proximate damage of a greater amount, the 
 difference between the contract price and the market or curtent 
 price at the time or times when the goods ought to have been 
 accepted, or, if no time was fixed for acceptance, then at the time 
 of the refusal to accept. 
 
35 
 
 (4) If, while labor or expense of material amount are necessary 
 on the part of the seller to enable him to fulfill his obligations 
 under the contract to sell or the sale, the buyer repudiates the 
 contract or the sale, or notifies the seller to proceed no further 
 therewith, the buyer shall be liable to the seller for no greater 
 damages than the seller would have suffered if he did nothing 
 towards carrying out the contract or the sale after receiving notice 
 of the buyer's repudiation or countermand. The profit the seller 
 would have made if the contract or the sale had been fully per- 
 formed shall be considered in estimating such damages. 
 
 This follows section 50 of the English Act, except (4), which is 
 added. (4) is not law in England, but it is in this country except in 
 Illinois. See 14 Harv. L. Rev. 422; Mechem, §1700 et seq. The pro- 
 vision does not require the seller to cease performance in every case. 
 There may he cases where the damage caused by stopping perform- 
 ance would be greater than that caused by finishing the necessary 
 work. See Southern Cotton Oil Co. vs. Heflin, 99 Fed. Rep. 339. In 
 such a case the seller might complete performance, and recover dam- 
 ages based on completed performance. 
 
 Sec. 65. [When Seller may Eescind Contract or Sale.] Where 
 the goods have not been delivered to the buyer, and the buyer has 
 repudiated the contract to sell or sale, or has manifested his in- 
 ability to perform his obligations thereunder, or has committed 
 a material breach thereof, the seller may totally rescind the con- 
 tract or the sale by giving notice of his election so to do to the 
 buyer. 
 
 Section 61 allows the seller to rescind the transfer of title in the 
 ca«es there covered. The rescission of all contractual obligation 
 between the parties — a more extensive right — is covered by this 
 section, which, is believed to express the American law. 
 
 Remedies of the Boyek. 
 
 Sec. 66. [Action for Converting or Detaining Goods.] Where 
 the property in the goods has passed to the buyer and the seller 
 wrongfully neglects or refuses to deliver the goods, the buyer may 
 maintain any action allowed by law to the owner of goods of 
 similar kind when wrongfully converted or withheld. 
 
36 
 
 Th.Is section, which Is not contained In the English Act, allows 
 trover, replevin, equitable, or other relief, as the local law may 
 warrant. 
 
 Sec. 67. [Action for Failing to Deliver Goods.] (1) Where 
 the property in the goods has not passed to the buyer, and the 
 seller wrongfully neglects or refuses to deliver the goods, the 
 buyer may maintain an action against the seller for damages for 
 non-delivery. 
 
 (2) The measure of damages is the loss directly and naturally 
 resulting in the ordinary course of events, from the seller's breach 
 of contract. 
 
 (3) Where there is an available market for the goods in ques- 
 tion, the measure of damages, in the absence of special circum- 
 stances showing proximate damages of a greater amount, is the 
 difference between the contract price and the market or current 
 price of the goods at the time or times when they ought to have 
 been delivered, or, if no time was fixed, then at the time of the 
 refusal to deliver. 
 
 This follows section 51 of the English Act. 
 
 Sec. 68. [Specific Performance.] Where the seller has broken 
 a contract to deliver specific or ascertained goods, a court having 
 the powers of a court of equity may, if it thinks fit, on the ap- 
 plication of the buyer, by its judgment or decree direct that the 
 contract shall be performed specifically, without giving the seller 
 the option of retaining the goods on payment of damages. The 
 judgment or decree may be unconditional, or upon such terms and 
 conditions as to damages, payment of the price and otherwise, as 
 to the court may seem just. 
 
 This follows, with slight changes In wording, section 52 of the 
 English Act. 
 
 Sec. 69. [Eemedies for Breach of Warranty.] (1) Where 
 there is a breach of warranty by the seller, the buyer may, at his 
 election — 
 
 (a) Accept or keep the goods and set up against the seller, 
 
 the breach of warranty by way of recoupment in diminution or 
 
 extinction of the price ; 
 
37 
 
 (6) Accept or keep the goods and maintain an action algainst 
 the seller for damages for the breach of warranty; 
 
 (c) Eefuse to accept the goods, if the property therein has 
 not passed, and maintain an action against the seller for 
 damages for the breach of warranty ; 
 
 (d) Eescind the contract to sell or the sale and refuse to 
 receive the goods, or if the goods have already been received, 
 return them or offer to return them to the seller and recover the 
 price or any part thereof which has been paid. 
 
 (2) When the buyer has claimed and been granted a remedy 
 in any one of these ways, no other remedy can thereafter be 
 granted. 
 
 (3) Where the goods have been delivered to the buyer, he 
 cannot rescind the sale if he knew of the breach of warranty when 
 he accepted the goods, or if he fails to notify the seller within a 
 reasonable time of the election to rescind, or if he fails to return 
 or to offer to return the goods to the seller in substantially as good 
 condition as they were in at the time the property was transferred 
 to the buyer. But if deterioration or injury of the goods is due 
 to the breach of warranty, such deterioration or injury shall not 
 prevent the buyer from returning or offering to return the goods 
 to the seller and rescinding the sale. 
 
 (4) Where the buyer is entitled to rescind the sale and elects 
 to do so, the buyer shall cease to be liable for the price upon re- 
 turning or offering to return the goods. If the price or any part 
 thereof has already been paid, the seller shall be liable to repay so 
 much thereof as has been paid, concurrently with the return of 
 the goods, or immediately after an offer to return the goods in 
 exchange for repayment of the price. 
 
 (5) Where the buyer is entitled to rescind the sale and elects 
 to do so, if the seller refuses to accept an offer of the buyer to 
 return the goods, the buyer shall thereafter be deemed to hold 
 the goods as bailee for the seller, but subject to a lien to secure the 
 repayment of any portion of the price which has been paid, and 
 with the remedies for the enforcement of such lien allowed to an 
 unpaid seller by section 53. 
 
38 
 
 (6) The measure of damages for breach of warranty is the loss 
 directly and naturally resulting, in the ordinary course of events, 
 from the breach of warranty. 
 
 (7) In the case of breach of warranty of quality, such loss, in 
 the absence of special circumstances showing proximate damage 
 of a greater amount, is the difference between the value of the 
 goods at the time of delivery to the buyer and the value they would 
 have had if they had answered to the warranty. 
 
 This section differs materially from the corresponding section of 
 the English Act — section 53. This draft allows rescission as a rem- 
 edy for breach of warranty. The English law does not. In defence 
 of the remedy of rescission, see an article by the draftsman in 16 
 Harv. L. Rev. 465. Further, the English Act, following Mendel vs. 
 Steel, 8 M. & W. 858, allows the buyer to recoup his damages in an 
 action for the price and thereafter to bring an action for damages. 
 This seems erroneous, see Watkins vs. American Bank, 134 Fed. 
 Rep. 36 (C.C.A.), and has been changed in this draft. 
 
 Sec. 70. [Interest and Special Damages.] Nothing ia this 
 act shall affect the right of the buyer or the seller to recover 
 interest or special damages in any case where by law interest or 
 special damages may be recoverable, or to recover money paid 
 where the consideration for the payment of it has failed. 
 
 This follows section 54 of the English Act. 
 
 PART VI. 
 
 Interpeetation. 
 
 Sec. 71. [Variation of Implied Obligations.] Where any 
 right, duty or liability would arise under a contract to sell or a 
 sale by implication of law, it may be negatived or varied by 
 express agreement or by the course of dealing between the parties, 
 or by custom, if the custom be such as to bind both parties to the 
 contract or the sale. 
 
 This follows section 55 of the English Act. 
 
 Sec. 72. [Eights may be Enforced by Action.] Where any 
 right, duty or liability is declared by this act, it may, unless other- 
 wise by this act provided, be enforced by action. 
 
 This follows section 57 of the English Act. 
 
39 
 
 Sec. 73. [Eule for Cases not Provided for by this Act.] In 
 any case not provided for in this act, the rules of law and equity, 
 including the law merchant, and in particular the rules relating 
 to the law of principal and agent and to the eilect of fraud, mis- 
 representation, duress or coercion, mistake, bankruptcy, or other 
 invalidating cause, shall continue to apply to contracts to sell and 
 to sales of goods. 
 
 This provision seems obviously desirable. 
 
 Sec. 74. [Interpretation Shall Give Effect to Purpose of Uni- 
 formity.] This act shall be so interpreted and construed, as to 
 eilectuate its general purpose to make uniform the laws of those 
 states which enact it. 
 
 The rule in this section obviously states a proper principle in re- 
 gard to a statute the primary object of which is to make the law 
 uniform. The same provisions will be found in the Uniform Transfer 
 of Stock Act, Uniform Warehouse Receipts Act and the Uniform Bills 
 of Lading Act The Courts of last Resort have applied this rule to the 
 Uniform Negotiable Instruments Act. This principle was long ago 
 recognized In Swift vs. Tyson (1842) 16 Peters 1, 19, 20. 
 
 Sec. 75. [Provisions not Applicable to Mortgages.] The 
 provisions of this act relating to contracts to sell and to sales do 
 not apply, unless so stated, to any transaction in the form of a 
 contract to sell or a sale which is intended to operate by way of 
 mortgage, pledge, charge, or other security. 
 
 This follows section 60 (2) of the English Act, except for the words 
 " unless so stated." Though the draft does not generally purport to 
 deal with the peculiar rules of mortgage law, there are a few places in 
 which mortgage relations or similar ones are covered, e. fir., sections 
 20 (2), 22 (a). 
 
 Sec. 76. [Definitions.] (1) In this act, unless the context 
 or subject matter otherwise requires — 
 
 " Action " includes counterclaim, set-off and suit in equity. 
 
 " Buyer " means a person who buys or agrees to buy goods or 
 any legal successor in interest of such person. 
 
 " Defendant " includes a plaintiff against whom a right of set- 
 off or counterclaim is asserted. 
 
 " Delivery " means voluntary transfer of possession from one 
 person to another. 
 
40 
 
 " Divisible contract to sell or sale " means a contract to sell or 
 a sale in which by its terms the price for a portion or portions of 
 the goods less than the whole is fixed or ascertainable by com- 
 putation. 
 
 " Document of title to goods " includes any bill of lading, dock 
 warrant, warehouse receipt or order for the delivery of goods, or 
 any other document used in the ordinary course of business in the 
 sale or transfer of goods, as proof of the possession or control of 
 the goods, or authorizing or purporting to authorize the possessor 
 of the document to transfer or receive, either by indorsement or 
 by delivery, goods represented by such document. 
 
 " Fault " means wrongful act or default. 
 
 " Fungible goods " means goods of which any unit is from its 
 nature or by mercantile usage treated as the equivalent of any 
 other unit. 
 
 " Future goods " means goods to be manufactured or acquired 
 by the seller after the making of the contract of sale. 
 
 " Goods " include all chattels personal other than things in 
 action and money. The term includes emblements, industrial 
 growing crops, and things attached to or forming part of the land 
 which are agreed to be severed before sale or under the contract of 
 sale. 
 
 " Order " in sections of this act relating to documents of title 
 means an order by indorsement on the document. 
 
 " Person " includes a corporation or partnership or two or more 
 persons having a joint or common interest. 
 
 " Plaintiff " includes defendant asserting a right of set-off or 
 counterclaim. 
 
 " Property " means the general property in goods, and not 
 merely a special property. 
 
 " Purchaser " includes mortgagee and pledgee. 
 
 " Purchases " includes taking as a mortgagee or as a pledgee. 
 
 " Quality of goods " includes their state or condition. 
 
 "Sale" includes a bargain and sale as well as a sale and 
 delivery. 
 
 " Seller " means a person who sells or agrees to sell goods, or 
 any legal successor in the interest of such person. 
 
41 
 
 " Specific goods " means goods identified and agreed upon at 
 the time a contract to sell or a sale is made. 
 
 "Value" is any consideration sufficient to support a simple 
 contract. An antecedent or pre-existing claim, whether for 
 money or not, constitutes value where goods or documents of titles 
 are taken either in satisfaction thereof or as security therefor. 
 
 (2) A thing is done " in good faith " within the meaning of 
 this act when it is in fact done honestly, whether it be done 
 negligently or not. 
 
 (3) A person is insolvent within the meaning of this act who 
 either has ceased to pay his debts in the ordinary course of business 
 or cannot pay his debts as they become due, whether he has com- 
 mitted an act of bankruptcy or not, and whether he is insolvent 
 within the meaning of the federal bankruptcy law or not. 
 
 (4) Goods are in a " deliverable state " withia the meaning of 
 this act when they are in such a state that the buyer would, under 
 the contract, be bound to take delivery of them. 
 
 The only one of these defluitions requiring comment is that of 
 value, which follows the weight of authority at common law and the 
 provision of the Uniform Negotiable Instruments Act as intended by 
 its framers. In regard to property other than negotiable instruments 
 the law of many states does not regard an antecedent debt as value; 
 but it seems desirable to have a single rule for what constitutes valu- 
 able consideration, and mercantile convenience support the one 
 adopted. It is supported, moreover, by the law of England and a few 
 of our states. See Williston on Sales, §619. 
 
 Sec. 76a. [Act does not Apply to Existing Sales or Contracts 
 to Sell.] None of the provisions of this act shall apply to any sale, 
 or to any contract to sell, made prior to the taking effect of this 
 act. 
 
 This section was added in 1909 primarily to avoid a question which 
 was raised in Massachusetts where the act was passed without this 
 section. It was questioned whether section 4 of the act as it related 
 to the enforcement of a sale, or contract to sell, rather than to its 
 original validity, did not apply to any litigation arising after the 
 passage of the act without reference to when the sale or contract to 
 sell which was the subject of the litigation, arose. See Williston on 
 Sales, p. 1042. A similar section is found in all the other Uniform 
 Acts. 
 
4:3 
 
 Sec. 76b. [No Repeal of Uniform Warehouse Receipt Act or 
 Uniform Bills of Lading Act.] Nothing in this act or in any re- 
 pealing clause thereof shall be construed to repeal or limit any 
 of the provisions of the Act to Make Uniform the Law of Ware- 
 house Receipts, or of the Act to Make Uniform the Law of Bills 
 of Lading. 
 
 This section was added in 1909 especially to avoid the possible 
 effect of section 32 of the Uniform Sales Act upon section 31 of the 
 Uniform Bills of Lading Act. Where neither the Uniform Warehouse 
 Receipts Act nor the Uniform Bills of Lading Act has been passed 
 prior to ' ae passage of the Uniform Sales Act, this section may be 
 omitted. 
 
 Sec. 77. [Inconsistent Legislation Repealed.] All acts or 
 parts of acts inconsistent with this act are hereby repealed except 
 as provided in section 76b. 
 
 Sec. 78. [Time When the Act Takes Effect.] This act shall 
 
 take effect on the day of one thousand nine 
 
 hundred and 
 
 Sec. 79. [Name of Act.] This act may be cited as the Uni- 
 form Sales Act.