Colorado § 4-2-706 - Seller's resale including contract for resale.

§ 4-2-706. Seller's resale including contract for resale.

(1) Under the conditions stated in section 4-2-703 on seller's remedies, the seller may resell the goods concerned or the undelivered balance thereof. Where the resale is made in good faith and in a commercially reasonable manner the seller may recover the difference between the resale price and the contract price together with any incidental damages allowed under the provisions of this article (section 4-2-710), but less expenses saved in consequence of the buyer's breach.

(2) Except as otherwise provided in subsection (3) of this section or unless otherwise agreed, resale may be at public or private sale, including sale by way of one or more contracts to sell or of identification to an existing contract of the seller. Sale may be as a unit or in parcels and at any time and place and on any terms but every aspect of the sale including the method, manner, time, place, and terms must be commercially reasonable. The resale must be reasonably identified as referring to the broken contract, but it is not necessary that the goods be in existence or that any or all of them have been identified to the contract before the breach.

(3) Where the resale is at private sale, the seller must give the buyer reasonable notification of his intention to resell.

(4) Where the resale is at public sale:

(a) Only identified goods can be sold, except where there is a recognized market for a public sale of futures in goods of the kind; and

(b) It must be made at a usual place or market for public sale if one is reasonably available, and, except in the case of goods which are perishable or threaten to decline in value speedily, the seller must give the buyer reasonable notice of the time and place of the resale; and

(c) If the goods are not to be within the view of those attending the sale, the notification of sale must state the place where the goods are located and provide for their reasonable inspection by prospective bidders; and

(d) The seller may buy.

(5) A purchaser who buys in good faith at a resale takes the goods free of any rights of the original buyer even though the seller fails to comply with one or more of the requirements of this section.

(6) The seller is not accountable to the buyer for any profit made on any resale. A person in the position of a seller (section 4-2-707) or a buyer who has rightfully rejected or justifiably revoked acceptance must account for any excess over the amount of his security interest, as hereinafter defined (subsection (3) of section 4-2-711).

Source: L. 65: p. 1336, § 1. C.R.S. 1963: § 155-2-706.

ANNOTATION

Law reviews. For article, "Buyer-Secured Party Conflicts Under Section 9-307(1) of the Uniform Commercial Code", see 46 U. Colo. L. Rev. 333 (1974-75).

Annotator's note. Since § 4-2-706 is similar to repealed § 121-1-60, CRS 53 (uniform sales act), a relevant case construing this provision of § 4-2-706 has been included in the annotations to this section.

The seller in possession may sell the goods on the buyer's account where the property in the goods has passed to the buyer who then wrongfully refuses to pay for them. Howse v. Crumb, 143 Colo. 90, 352 P.2d 285 (1960).

When seller sells good on buyer's account, the measure of damage is the contract price less the amount of recovery on the resale. Howse v. Crumb, 143 Colo. 90, 352 P.2d 285 (1960).

Measure of damage based on contract price less the amount of recovery on resale may differ from damages for nonacceptance. The measure of the seller's claim when based on the contract price less the net proceeds of a resale may in fact be different from the measure of damages provided in the case of nonacceptance of the goods under § 4-2-708 where the measure is the difference between the contract price and the fair market price at the time when the goods ought to have been accepted. Howse v. Crumb, 143 Colo. 90, 352 P.2d 285 (1960).

The seller is bound to exercise reasonable care and judgment in reselling the goods. Howse v. Crumb, 143 Colo. 90, 352 P.2d 285 (1960).

The statutory requirement of reasonable care and judgment is a codification of the common law. Howse v. Crumb, 143 Colo. 90, 352 P.2d 285 (1960).

Buyer may not select disadvantageous time to resell. Although a difference in the amount of recovery under this section providing for resale and that of § 4-2-708 providing damages for nonacceptance of goods may exist, it is clear that the statute does not contemplate putting the seller in the position of being able to penalize the buyer by selecting a disadvantageous time to resell the goods. Howse v. Crumb, 143 Colo. 90, 352 P.2d 285 (1960).

Initially the burden is on the seller to prove that the resale was made with reasonable care and judgment. Howse v. Crumb, 143 Colo. 90, 352 P.2d 285 (1960).

Once the seller has introduced evidence establishing that fairness and good faith was observed, the buyer has the burden of showing that it was not fair and in good faith. Howse v. Crumb, 143 Colo. 90, 352 P.2d 285 (1960).

Issue determined by trier of facts. Determination of the issue of whether the resale was made with reasonable care and judgment is for the trier of the facts. Howse v. Crumb, 143 Colo. 90, 352 P.2d 285, (1960).

Proper measure of trade-in upon resale of repossessed vehicle is discussed in A & P Trucking v. Phil Long Ford, Inc., 676 P.2d 1267 (Colo. App. 1984).