CO Code § 4-2-507 (2021)
2021 Colorado Code|Title 4 - Uniform Commercial Code|Article 2 - Sales|Part 5 - Performance|§ 4-2-507. Effect of Seller's Tender - Delivery on Condition

  Tender of delivery is a condition to the buyer's duty to accept the goods and, unless otherwise agreed, to his duty to pay for them. Tender entitles the seller to acceptance of the goods and to payment according to the contract.    Where payment is due and demanded on the delivery to the buyer of goods or documents of title, his right as against the seller to retain or dispose of them is conditional upon his making the payment due.     History. Source: L. 65: P. 1324, § 1. C.R.S. 1963: § 155-2-507. History. Source: L. 65: P. 1324, § 1. C.R.S. 1963: § 155-2-507.    OFFICIAL COMMENT   Prior Uniform Statutory Provision: See Sections 11, 41, 42 and 69, Uniform Sales Act.   Purposes:   1. Subsection (1) continues the policies of the prior uniform statutory provisions with respect to tender and delivery by the seller. Under this Article the same rules in these matters are applied to present sales and to contracts for sale. But the provisions of this subsection must be read within the framework of the other sections of this Article which bear upon the question of delivery and payment.   2. The “unless otherwise agreed” provision of subsection (1) is directed primarily to cases in which payment in advance has been promised or a letter of credit term has been included. Payment “according to the contract” contemplates immediate payment, payment at the end of an agreed credit term, payment by a time acceptance or the like. Under this Act, “contract” means the total obligation in law which results from the parties' agreement including the effect of this Article. In this context, therefore, there must be considered the effect in law of such provisions as those on means and manner of payment and on failure of agreed means and manner of payment.   3. Subsection (2) deals with the effect of a conditional delivery by the seller and in such a situation makes the buyer's “right as against the seller” conditional upon payment. These words are used as words of limitation to conform with the policy set forth in the bona fide purchase sections of this Article. Should the seller after making such a conditional delivery fail to follow up his rights, the condition is waived. This subsection (2) codifies the cash seller's right of reclamation which is in the nature of a lien. There is no specific time limit for a cash seller to exercise the right of reclamation. However, the right will be defeated by delay causing prejudice to the buyer, waiver, estoppel, or ratification of the buyer's right to retain possession. Common law rules and precedents governing such principles are applicable (Section 1-103). If third parties are involved, Section 2-403(1) protects good faith purchasers. See PEB Commentary No. 1, dated March 10, 1990 Appendix V, infra . Cross References:   Point 1: Sections 4-2-310 , 4-2-503 , 4-2-511 , 4-2-601 and 4-2-711 to 4-2-713 .   Point 2: Sections 4-1-201 , 4-2-511 and 4-2-614 .   Point 3: Sections 4-2-401 , 4-2-403 , and 4-2-702(1)(b) .   Definitional Cross References:   “Buyer”. Section 4-2-103 .   “Contract”. Section 4-1-201 .   “Delivery”. Section 4-1-201 .   “Document of title”. Section 4-1-201 .   “Goods”. Section 4-2-105 .   “Rights”. Section 4-1-201 .   “Seller”. Section 4-2-103 .   ANNOTATION   The operator of a livestock ring is a “seller” within the meaning of the UCC. Ranchers Farmers Livestock Auction Co. v. Honey, 38 Colo. App. 69, 552 P.2d 313 .   Right to reclaim not right to secure payment. The right to reclaim created by subsection (2) of this section is a right to undo the transaction, not a right to “secure” payment of the price as required by the definition of “security interest” under § 4-1-201 (37) . Guy Martin Buick, Inc. v. Colo. Springs Nat'l Bank, 184 Colo. 166 , 519 P.2d 354 (1974).   Right to reclaim was not intended to be security interest. The right to reclaim goods sold in a cash sale transaction, as set forth in the UCC, is not and was not intended to be a security interest. Guy Martin Buick, Inc. v. Colo. Springs Nat'l Bank, 184 Colo. 166 , 519 P.2d 354 (1974).   The right to reclaim is not a species of interest in the goods which is the result of a transaction “intended to create a security interest” and is not created by contract as contemplated within the meaning of § 4-9-102 . Guy Martin Buick, Inc. v. Colo. Springs Nat'l Bank, 184 Colo. 166 , 519 P.2d 354 (1974).   Creation of security interest might allow more than mere recovery of goods. Section 4-2-702(3) states that successful reclamation “excludes all other remedies”, and the creation of a security interest out of the right to reclaim might allow recovery which would be greater than the mere recovery of goods originally transferred. Guy Martin Buick, Inc. v. Colo. Springs Nat'l Bank, 184 Colo. 166 , 519 P.2d 354 (1974).   Right not interest listed as having priority over unperfected security interest. The right to reclaim goods conveyed as part of a cash sale transaction is not one of the interests which is listed as having priority over an unperfected security interest. Guy Martin Buick, Inc. v. Colo. Springs Nat'l Bank, 184 Colo. 166 , 519 P.2d 354 (1974).   Normally, purchaser may retain or dispose of goods once purchase price tendered. Normally, a seller's demand for payment upon delivery in a cash sale transaction would allow a purchaser of goods to retain or dispose of the goods as he saw fit once the agreed-to purchase price was tendered. Guy Martin Buick, Inc. v. Colo. Springs Nat'l Bank, 184 Colo. 166 , 519 P.2d 354 (1974).   Where payment is due and is demanded on delivery of documents of title to the buyer of goods, his right as against the seller to retain or dispose of them is conditioned upon his making the payment due. Ranchers Farmers Livestock Auction Co. v. Honey, 38 Colo. App. 69, 552 P.2d 313, cert. dismissed, 191 Colo. 503 , 553 P.2d 799 (1976).   When seller presented buyer's check, which was dishonored, buyer no longer had the right to retain or dispose of the goods, and seller had the right to reclaim. Guy Martin Buick, Inc. v. Colo. Springs Nat'l Bank, 32 Colo. App. 235, 511 P.2d 912 (1973), aff'd, 184 Colo. 166 , 519 P.2d 354 (1974).   Under this section a seller may reclaim goods which he has sold to the buyer when the latter's check has been dishonored. Ranchers Farmers Livestock Auction Co. v. Honey, 38 Colo. App. 69, 552 P.2d 313, cert. dismissed, 191 Colo. 503 , 553 P.2d 799 (1976).   Payment by check is only conditional and is defeated by dishonor of the check on due presentment. Ranchers Farmers Livestock Auction Co. v. Honey, 38 Colo. App. 69, 552 P.2d 313, cert. dismissed, 191 Colo. 503 , 553 P.2d 799 (1976).