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This entry was published on 2014-09-22
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Merchant Lessee's Duties as to Rightfully Rejected Goods
Uniform Commercial Code (UCC) CHAPTER 38, ARTICLE 2-A, PART 5
Section 2-A-511. Merchant Lessee's Duties as to Rightfully Rejected


(1) Subject to any security interest of a lessee (Section 2-A-508(5)),
if a lessor or a supplier has no agent or place of business at the
market of rejection, a merchant lessee, after rejection of goods in his
or her possession or control, shall follow any reasonable instructions
received from the lessor or the supplier with respect to the goods. In
the absence of those instructions, a merchant lessee shall make
reasonable efforts to sell, lease, or otherwise dispose of the goods for
the lessor's account if they threaten to decline in value speedily.
Instructions are not reasonable if on demand indemnity for expenses is
not forthcoming.

(2) If a merchant lessee (subsection (1)) or any other lessee (Section
2-A-512) disposes of goods, he or she is entitled to reimbursement
either from the lessor or the supplier or out of the proceeds for
reasonable expenses of caring for and disposing of the goods and, if the
expenses include no disposition commission, to such commission as is
usual in the trade, or if there is none, to a reasonable sum not
exceeding 10 percent of the gross proceeds.

(3) In complying with this section or Section 2-A-512, the lessee is
held only to good faith. Good faith conduct hereunder is neither
acceptance or conversion nor the basis of an action for damages.

(4) A purchaser who purchases in good faith from a lessee pursuant to
this section or Section 2-A-512 takes the goods free of any rights of
the lessor and the supplier even though the lessee fails to comply with
one or more of the requirements of this Article.