402.702 Seller's remedies on discovery of buyer's insolvency. - Wisconsin Statutes

402.702

402.702 Seller's remedies on discovery of buyer's insolvency.

402.702(1)

(1) Where the seller discovers the buyer to be insolvent the seller may refuse delivery except for cash including payment for all goods theretofore delivered under the contract, and stop delivery under s. 402.705.

402.702(2)

(2) Where the seller discovers that the buyer has received goods on credit while insolvent the seller may reclaim the goods upon demand made within 10 days after the receipt, but if misrepresentation of solvency has been made to the particular seller in writing within 3 months before delivery the 10-day limitation does not apply. Except as provided in this subsection the seller may not base a right to reclaim goods on the buyer's fraudulent or innocent misrepresentation of solvency or of intent to pay.

402.702(3)

(3) The seller's right to reclaim under sub. (2) is subject to the rights of a buyer in ordinary course or other good faith purchaser under s. 402.403. Successful reclamation of goods excludes all other remedies with respect to them.

402.702 - ANNOT.

History: 1991 a. 316.

402.702 - ANNOT.

A holder of a security interest in after-acquired collateral qualifies as a good faith purchaser under sub. (3). House of Stainless v. Marshall & Ilsley Bank, 75 Wis. 2d 264, 249 N.W.2d 561 (1977).

402.702 - ANNOT.

When a bank, as the transferee of the seller, did not rely on a balance sheet that misrepresented the buyer's insolvency and had no knowledge of the facts prior to the sale or delivery, it could not exercise the seller's right of reclamation. In re Hardin, 458 F.2d 938 (1972).