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buyer either (1) with or without justification, rejects the goods or otherwise refuses to receive or retain them, or (2) justifiably revokes acceptance of the goods. This revesting of title in the seller occurs automatically, by operation of law, and therefore is not a sale as defined in Article 2. [U.C.C. § 2-401(4) (1951); Acceptance and Rejection of Goods, Revoking Acceptance, infra .] Seller’s Creditors’ Rights as to Sold Goods Section 2-402 is the main provision in Article 2 addressing the rights of the seller’s creditors against any goods sold, provided the goods have been identified to the contract. Generally, and subject to the rules discussed below, the seller’s unsecured creditors’ rights to goods identified to a contract for sale are subject to the buyer’s right to recover the goods, as articulated in §§ 2- 502 (buyer’s rights on seller’s repudiation, nondelivery, or insolvency) and 2-716 (buyer’s right to specific performance or replevin). [U.C.C. § 2-402(1) (1951).] 1. Background to § 2-402 In understanding the operation of § 2-402, it may be helpful to consider the common-law backdrop against which the provision was promulgated. In assessing a seller’s financial health, the seller’s creditors often look to the amount and value of inventory in the seller’s possession. So, at common law, the seller’s retaining possession of goods that the seller had contracted to sell was often deemed or presumed fraudulent as to the seller’s creditors. Further, if the buyer permitted the seller to retain possession of those goods, the buyer was sometimes seen as participating in the deemed fraud upon the seller’s creditors. Accordingly, the common law sometimes subordinated the buyer’s rights in the goods to those of certain of the seller’s creditors, usually those who had obtained a judicial lien on the goods. Section 2-402’s purpose, then, is to alter these common-law allocations and thus facilitate legitimate, nonfraudulent commercial practices. [ See 2 Hawkland UCC Series § 2-402:1, Westlaw (database updated June 2021).] 2. Creditors to Whom § 2-402 Applies UCC Article 9 articulates the rights of a secured creditor with a consensual security interest in the goods, even as against the buyer. And a mere unsecured creditor with no judicial or similar lien on the goods has no right to the goods whatsoever. Thus, the creditors to whom § 2-402 applies will normally be general unsecured creditors who have obtained a judicial lien against the goods, often by levy and execution. [ See U.C.C. § 2-402(3)(a) (1951); 2 Hawkland UCC Series § 2-402:2, Westlaw (database updated June 2021).]
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