Sales and Leases | 155
In a shipment contract, the seller must (unless otherwise agreed) (1) put the goods in a reasonable carrier’s possession and (2) make a reasonable contract for the goods’ transportation. Reasonableness, in turn, is evaluated considering the goods’ nature and the other surrounding circumstances. In addition, the seller must acquire and promptly tender or deliver, in the correct form, any document (1) needed for the buyer to acquire possession of the goods or (2) that the agreement or any relevant trade usage otherwise requires. Finally, the seller must notify the buyer promptly of the shipment. If the seller fails to notify the buyer of the shipment, or else fails to make a proper contract for the goods’ shipment, the buyer may reject the goods on that basis only if it results in material delay or loss. [U.C.C. § 2-504 (1951); Rules if Seller Is Authorized or Required to Ship the Goods by Carrier, supra .] 4. Seller’s Obligations if Goods Are in a Bailee’s Possession and Are to Be Delivered without Being Moved Special rules apply if a bailee (such as a warehouseman) possesses the goods, and the goods are to be delivered without their being moved. Here, to make proper tender, the seller must generally either (1) tender a negotiable document of title ( e.g. , a warehouse receipt) that covers the goods or (2) procure the bailee’s acknowledgement of the buyer’s right to possess the goods. [U.C.C. § 2-503(4)(a) (1951); 2 Hawkland UCC Series § 2-503:4, Westlaw (database updated June 2021).] a. Tender of Nonnegotiable Document of Title or Written Instructions to Deliver Notwithstanding the abovementioned rules, absent the buyer’s seasonable objection, tender suffices if the seller tenders to the buyer either a nonnegotiable document of title or written directions to the bailee to deliver the goods. Once the bailee receives notification of the buyer’s rights, those rights become fixed against the bailee and all third parties (subject to the rules in Article 9 on consensual security interests). Even so, risk of loss to the goods, as well as risk of the bailee’s failure to honor the nonnegotiable document of title or to obey the written directions, stays on the seller for a time reasonably necessary for the buyer to present the nonnegotiable document of title or written directions. Should the bailee fail to honor the nonnegotiable document of title or to obey the directions, tender is defeated. [U.C.C. § 2-503(4)(b) (1951); 2 Hawkland UCC Series § 2-503:4, Westlaw (database updated June 2021).] 5. Tender of Delivery in a Destination Contract In a destination contract, tender occurs once the carrier tenders the goods to the buyer at the destination. The goods must conform to the contract and be made available at a reasonable place and time, and the seller must give the buyer notice sufficient for the buyer to take delivery. Of course, the seller must also tender any document of title necessary for the buyer
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