GA Code § 11-2-702 (2021)
2021 Georgia Code|Title 11 - Commercial Code|Article 2 - Sales|Part 7 - Remedies|§ 11-2-702. Seller's Remedies on Discovery of Buyer's Insolvency

  Where the seller discovers the buyer to be insolvent he may refuse delivery except for cash including payment for all goods theretofore delivered under the contract, and stop delivery under this article (Code Section 11-2-705).   Where the seller discovers that the buyer has received goods on credit while insolvent he may reclaim the goods upon demand made within ten days after the receipt, but if misrepresentation of solvency has been made to the particular seller in writing within three months before delivery the ten-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.   The seller's right to reclaim under subsection (2) of this Code section is subject to the rights of a buyer in ordinary course or other good faith purchaser or lien creditor under this article (Code Section 11-2-403). Successful reclamation of goods excludes all other remedies with respect to them.    (Code 1933, § 109A-2 - 702, enacted by Ga. L. 1962, p. 156, § 1.)   Law reviews.   - For article discussing the resolution of conflicting claims to goods between an unsecured seller of goods and a creditor of a buyer claiming under an after-acquired property clause, see 28 Mercer L. Rev. 625 (1977). For article surveying recent judicial developments in commercial law, see 31 Mercer L. Rev. 13 (1979).   JUDICIAL DECISIONS   Right of reclamation subject to rights of good faith purchasers.    - Right to reclamation of delivered goods by seller on discovery of purchaser's insolvency is primarily a right between seller and purchaser, and is subject to paramount rights of a buyer in ordinary course of business or other good faith purchaser. B & P Lumber Co. v. First Nat'l Bank, 147 Ga. App. 762, 250 S.E.2d 505 (1978).   Good faith purchaser defeats seller's reclamation rights.    - Where the record contained nothing to refute the affidavit of the defendant company's president to the effect that it had no actual knowledge of facts which would prevent it from being considered a good faith purchaser, pursuant to the clear and unequivocal language of O.C.G.A. § 11-2-702(3), whatever reclamation rights the plaintiff might have had in the property were cut off by the foreclosure sale at which the defendant purchased the appliances and furnishings. Weinberg/Matheson Equities, Inc. v. Charles S. Martin Distrib. Co., 180 Ga. App. 182, 348 S.E.2d 723 (1986).   Reclamation rights not extended to proceeds.    - A seller, who has foregone the available option of perfecting its own interests under the UCC, enjoys a remedy under O.C.G.A. § 11-2-702 only to the extent that the provision grants such a seller a right to reclaim the goods from the buyer or purchasers who have proceeded other than in good faith; the UCC creates no reclamation rights which extend to proceeds. Dixie Bonded Whse. & Grain Co. v. Allstate Fin. Corp., 755 F. Supp. 1543 (M.D. Ga.), aff'd, 944 F.2d 819 (11th Cir. 1991).   Reclamation where secured creditor with prior claim exists.    - A seller may have a right to reclaim pursuant to O.C.G.A. § 11-2-702, notwithstanding the existence of a secured creditor with a prior claim, in which case, the seller may then be entitled to a lien or administrative priority claim, pursuant to 11 U.S.C.S. § 546(c)(2), but only if the seller can establish that the seller's right to reclaim has some value outside of the bankruptcy context. In re Leeds Bldg. Prods., Inc., 141 Bankr. 265 (Bankr. N.D. Ga. 1992).    Cited in Chastain-Roberts Co. v. Better Brands, Inc., 141 Ga. App. 186, 233 S.E.2d 5 (1977); Northwestern Nat'l Sales, Inc. v. Commercial Cold Storage, Inc., 162 Ga. App. 741, 293 S.E.2d 30 (1982); Graniteville Co. v. Bleckley Lumber Co., 944 F.2d 819 (11th Cir. 1991); Eastman Cutting Room Sales Corp. v. Ottenheimer & Co., 221 Ga. App. 659, 472 S.E.2d 494 (1996).   RESEARCH REFERENCES   Am. Jur. 2d.   - 67 Am. Jur. 2d, Sales, § 673. 67A Am. Jur. 2d, Sales, §§ 1025-1050. 68A Am. Jur. 2d, Secured Transactions, § 867.   6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:658.   U.L.A.   - Uniform Commercial Code (U.L.A.) § 2-702.   ALR.    - Duty of purchaser on credit to accept seller's offer to deliver for cash, 1 A.L.R. 436; 46 A.L.R. 1192.    Right of seller to rescind or refuse further deliveries upon the buyer's failure to pay for instalments, 14 A.L.R. 1209; 75 A.L.R. 609.    Right of seller to enforce contract for sale on credit as contract for cash because of buyer's insolvency, 58 A.L.R. 1301; 117 A.L.R. 1105.    Right to rescind sale and reclaim goods for buyer's fraud as to his financial condition as against trustee in bankruptcy under American act, 59 A.L.R. 418.    Buyer's insolvency as affecting rights and obligations of parties to sale of goods on credit before delivery thereof, 117 A.L.R. 1105.