Okla. Stat. tit. 12A § 2-706

Current through Laws 2024, c. 453.

Section 2-706 - Seller's Resale Including Contract for Resale

(1) Under the conditions stated in Section 2-703 on seller's remedies, the seller may resell the goods concerned or the undelivered balance thereof. Where the resale is made in good faith and in a commercially reasonable manner the seller may recover the difference between the resale price and the contract price together with any incidental damages allowed under the provisions of this article (Section 2-710), but less expenses saved in consequence of the buyer's breach.

(2) Except as otherwise provided in subsection (3) or unless otherwise agreed resale may be at public or private sale including sale by way of one or more contracts to sell or of identification to an existing contract of the seller. Sale may be as a unit or in parcels and at any time and place and on any terms but every aspect of the sale including the method, manner, time, place and terms must be commercially reasonable. The resale must be reasonably identified as referring to the broken contract, but it is not necessary that the goods be in existence or that any or all of them have been identified to the contract before the breach.

(3) Where the resale is at private sale the seller must give the buyer reasonable notification of his intention to resell.

(4) Where the resale is at public sale

(a) only identified goods can be sold except where there is a recognized market for a public sale of futures in goods of the kind; and

(b) it must be made at a usual place or market for public sale if one is reasonably available and except in the case of goods which are perishable or threaten to decline in value speedily the seller must give the buyer reasonable notice of the time and place of the resale; and

(c) if the goods are not to be within the view of those attending the sale the notification of sale must state the place where the goods are located and provide for their reasonable inspection by prospective bidders; and

(d) the seller may buy.

(5) A purchaser who buys in good faith at a resale takes the goods free of any rights of the original buyer even though the seller fails to comply with one or more of the requirements of this section.

(6) The seller is not accountable to the buyer for any profit made on any resale. A person in the position of a seller (Section 2-707) or a buyer who has rightfully rejected or justifiably revoked acceptance must account for any excess over the amount of his security interest, as hereinafter defined (subsection (3) of Section 2-711).

Okla. Stat. tit. 12A, § 2-706

Laws 1961, p. 97, § 2-706.

Oklahoma Code Comment

Prior Statutory Provisions:

23 Okl.St.Ann. §§ 31 , 32, 91.

42 Okl.St.Ann. § 29 .

55 Okl.St.Ann. § 19.

Text and derivation of prior provisions, see Appendix at end of Title 12A.

Comment:

(1) The Commercial Code does not permit an action for the contract price except in a few limited cases. See Section 2-709 . It makes no distinction between a sale under a vendor's lien and otherwise. In fact, the term "vendor's lien" is not even used in the Commercial Code. In all cases, the seller may sell the goods and recover the difference in the contract price and the price realized from the sale provided that the resale was made in a commercially reasonable manner. This, then, is a departure from previous Oklahoma law as cited under section 2-703 .

(2) This section provides the manner of resale. It permits a sale by public or private sale, and the manner is restricted only by the requirement that it be commercially reasonable. It also makes an important provision: it permits the seller to identify goods to the contract, and to sell the goods so identified. This is contra to previous Oklahoma law in sales under a vendor's lien, in which the sale must have been by public auction, with notices given to the buyer, and other formalities followed. However, in cases of resale under 23 Okl.St.Ann. § 32, repealed by the Commercial Code the language of the Oklahoma decisions is almost identical with the code. In Gaines Bros. & Co. v. Citizens' Bank, 84 Okl. 265, 204 P. 112 (1922) the court said ". . . the vendor has the right to exercise his discretion within reasonable bounds; and whether this discretion is exercised properly and in good faith are questions of fact for the jury."

(3) Notice of resale was not previously required in Oklahoma, except of a sale in satisfaction of a pledgor's lien under 55 Okl.St.Ann. § 19 (now repealed).

(4) The only comparable previous provision in Oklahoma was 55 Okl.St.Ann. § 19 (now repealed). There are several important points to note in this section. First, there is no fixed time for notice to be given to the buyer, only "reasonable notice." There is also no absolute requirement of notice to the general public. The sale, according to paragraphs (1) and (2) must be "commercially reasonable," and therefore any notice which satisfies that requirement is sufficient. Also, there is no requirement that the sale be made at the place of breach, or of delivery, only that it be "at a usual place or market." If there is no such place at the place of delivery, the seller may transport the goods to a market place and charge the reasonable cost of transportation to the buyer.

(5) Even though the seller has wrongfully sold the goods or failed to comply with the requirements of this section, the buyer at the resale acquires good title.

(6) A seller is not accountable to the buyer for any profit. Therefore, if the contract price was $1,000 but the goods were sold on a rising market for $1,500 the profit belongs to the seller. However, if the contract price was $1000, $500 of which has been paid in advance, and the goods sold for $1,000, the $500 over and above the unpaid balance is not "profit," and the seller must account to the buyer therefor. One having only a security interest is not entitled to a profit.