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This entry was published on 2014-09-22
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SECTION 2-702
Seller's Remedies on Discovery of Buyer's Insolvency
Uniform Commercial Code (UCC) CHAPTER 38, ARTICLE 2, PART 7
Section 2--702. Seller's Remedies on Discovery of Buyer's Insolvency.

(1) 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
(Section 2--705).

(2) 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.

(3) The seller's right to reclaim under subsection (2) is subject to
the rights of a buyer in ordinary course or other good faith purchaser
under this Article (Section 2--403). Successful reclamation of goods
excludes all other remedies with respect to them.