Prior Uniform Statutory Provision: Sections 42 and 47(2), Uniform Sales Act.
Changes: Completely rewritten in this and other sections.
Purposes of Changes:
This section is drawn to reflect modern business methods of dealing at a distance rather than face to face. Thus:
1. Paragraph (a) provides that payment is due at the time and place "the buyer is to receive the goods" rather than at the point of delivery except in documentary shipment cases (paragraph (c)). This grants an opportunity for the exercise by the buyer of his or her preliminary right to inspection before paying even though under the delivery term the risk of loss may have previously passed to him or her or the running of the credit period has already started.
2. Paragraph (b) while providing for inspection by the buyer before he or she pays, protects the seller. He or she is not required to give up possession of the goods until he or she has received payment, where no credit has been contemplated by the parties. The seller may collect through a bank by a sight draft against an order bill of lading "hold until arrival; inspection allowed". The obligations of the bank under such a provision are set forth in part 5 of article 4. Under subsection (c), in the absence of a credit term, the seller is permitted to ship under reservation and if he or she does payment is then due where and when the buyer is to receive delivery of the tangible documents of title. In the case of an electronic document of title, payment is due when the buyer is to receive delivery of the electronic document and at the seller's place of business, or if none, the seller's residence. Delivery as to documents of title is stated in article 1, section 1-201.
3. Unless otherwise agreed, the place for the delivery of the documents and payment is the buyer's city but the time for payment is only after arrival of the goods, since under paragraph (b) and sections 2-512 and 2-513 the buyer is under no duty to pay prior to inspection. Tender of a document of title requires that the seller be ready, willing, and able to transfer possession of a tangible document of title or control of an electronic document of title to the buyer.
4. Where the mode of shipment is such that goods must be unloaded immediately upon arrival, too rapidly to permit adequate inspection before receipt, the seller must be guided by the provisions of this article on inspection which provide that if the seller wishes to demand payment before inspection, he or she must put an appropriate term into the contract. Even requiring payment against documents will not of itself have this desired result if the documents are to be held until the arrival of the goods. But under (b) and (c) if the terms are C.I.F., C.O.D., or cash against documents payment may be due before inspection.
5. Paragraph (d) states the common commercial understanding that an agreed credit period runs from the time of shipment or from that dating of the invoice which is commonly recognized as a representation of the time of shipment. The provision concerning any delay in sending forth the invoice is included because such conduct results in depriving the buyer of his or her full notice and warning as to when he or she must be prepared to pay.
Generally: Part 5.
Point 1: Section 2-509.
Point 2: Sections 2-505, 2-511, 2-512, and 2-513 and article 4.
Point 3: Sections 2-308(b), 2-512, and 2-513.
Point 4: Section 2-513(3)(b).
Definitional Cross References:
"Buyer". Section 2-103.
"Delivery". Section 1-201.
"Document of title". Section 1-201.
"Goods". Section 2-105.
"Receipt of goods". Section 2-103.
"Seller". Section 2-103.
"Send". Section 1-201.
"Term". Section 1-201.