Prior Uniform Statutory Provision: Sections 57-59, Uniform Sales Act; see also sections 12, 14, and 42, Uniform Bills of Lading Act and sections 9, 11, and 49, Uniform Warehouse Receipts Act.
Changes: This section continues and develops the above sections of the Uniform Sales Act in the light of the other uniform statutory provisions noted.
To make it clear that:
1. Subsection (1) applies the stoppage principle to other bailees as well as carriers.
It also expands the remedy to cover the situations, in addition to buyer's insolvency, specified in the subsection. But since stoppage is a burden in any case to carriers, and might be a very heavy burden to them if it covered all small shipments in all these situations, the right to stop for reasons other than insolvency is limited to carload, truckload, planeload, or larger shipments. The seller shipping to a buyer of doubtful credit can protect himself or herself by shipping C.O.D.
Where stoppage occurs for insecurity it is merely a suspension of performance, and if assurances are duly forthcoming from the buyer the seller is not entitled to resell or divert.
Improper stoppage is a breach by the seller if it effectively interferes with the buyer's right to due tender under the section on manner of tender of delivery. However, if the bailee obeys an unjustified order to stop he or she may also be liable to the buyer. The measure of his or her obligation is dependent on the provisions of the Documents of Title Article (section 7-303). Subsection (3)(b) therefor gives him or her a right of indemnity as against the seller in such a case.
2. "Receipt by the buyer" includes receipt by the buyer's designated representative, the subpurchaser, when shipment is made direct to him or her and the buyer himself or herself never receives the goods. It is entirely proper under this article that the seller, by making such direct shipment to the subpurchaser, be regarded as acquiescing in the latter's purchase and as thus barred from stoppage of the goods as against him or her.
As between the buyer and the seller, the latter's right to stop the goods at any time until they reach the place of final delivery is recognized by this section.
Under subsections (3)(c) and (d), the carrier is under no duty to recognize the stop order of a person who is a stranger to the carrier's contract. But the seller's right as against the buyer to stop delivery remains, whether or not the carrier is obligated to recognize the stop order. If the carrier does obey it, the buyer cannot complain merely because of that circumstance; and the seller becomes obligated under subsection (3)(b) to pay the carrier any ensuing damages or charges.
3. A diversion of a shipment is not a "reshipment" under subsection (2)(c) when it is merely an incident to the original contract of transportation. Nor is the procurement of "exchange bills" of lading which change only the name of the consignee to that of the buyer's local agent but do not alter the destination of a reshipment.
Acknowledgment by the carrier as a "warehouse" within the meaning of this article requires a contract of a truly different character from the original shipment, a contract not in extension of transit but as a warehouse.
4. Subsection (3)(c) makes the bailee's obedience of a notification to stop conditional upon the surrender of possession or control of any outstanding negotiable document.
5. Any charges or losses incurred by the carrier in following the seller's orders, whether or not he or she was obligated to do so, fall to the seller's charge.
6. After an effective stoppage under this section the seller's rights in the goods are the same as if he or she had never made a delivery.
Sections 2-702 and 2-703.
Point 1: Sections 2-503 and 2-609 and article 7.
Point 2: Section 2-103 and article 7.
Definitional Cross References:
"Buyer". Section 2-103.
"Contract for sale". Section 2-106.
"Document of title". Section 1-201.
"Goods". Section 2-105.
"Insolvent". Section 1-201.
"Notification". Section 1-201.
"Receipt" of goods. Section 2-103.
"Rights". Section 1-201.
"Seller". Section 2-103.