Editor's notes.

- The numbering of sections for this title varies slightly from that used in other titles of the Code. In general, individual section numbers include the Georgia Code title number and the section number of the Uniform Commercial Code upon which the Code section is based.

Law reviews.

- For article examining scheme of this title, see 24 Ga. B.J. 330 (1962). For article, "Things Attached to Realty," see 15 Mercer L. Rev. 343 (1964). For article discussing Georgia commercial law in 1976 to 1977, see 29 Mercer L. Rev. 41 (1977). For annual survey of commercial law, see 35 Mercer L. Rev. 53 (1983). For annual survey on commercial law, see 36 Mercer L. Rev. 115 (1984). For article surveying commercial law in 1984-1985, see 37 Mercer L. Rev. 139 (1985). For annual survey of commercial law, see 38 Mercer L. Rev. 85 (1986). For annual survey of commercial law, see 39 Mercer L. Rev. 83 (1987). For annual survey of commercial law, see 40 Mercer L. Rev. 91 (1988). For survey article on commercial law, see 42 Mercer L. Rev. 107 (1990). For annual survey article on commercial law, see 45 Mercer L. Rev. 87 (1993). For annual survey article discussing commercial and banking law, see 49 Mercer L. Rev. 95 (1997). For annual survey article on commercial law, see 50 Mercer L. Rev. 193 (1998). For article, "'Dear Diary' Moments in the Semester of a UCC Law Professor," see 50 Mercer L. Rev. 603 (1999). For annual survey article discussing developments in commercial law, see 51 Mercer L. Rev. 165 (1999). For article, "Commercial Law," see 53 Mercer L. Rev. 153 (2001). For article, "The Myth of the Sharing Economy and its Implications for Regulating Innovation," see 67 Emory L.J. 197 (2017). For note discussing title and risk of loss under Uniform Commercial Code, see 26 Ga. B.J. 322 (1964).

JUDICIAL DECISIONS

Purpose.

- Uniform Commercial Code was developed and enacted to establish standard business laws throughout the United States, and uniform interpretation and application of the code promotes general welfare by simplifying interstate business activity. Citizens Bank v. Ansley, 467 F. Supp. 51 (M.D. Ga.), aff'd, 604 F.2d 669 (5th Cir. 1979).

Uniform Commercial Code was designed to avoid artificial pitfalls and technicalities. Citizens Bank v. Ansley, 467 F. Supp. 51 (M.D. Ga.), aff'd, 604 F.2d 669 (5th Cir. 1979).

Title 11 and Ch. 3, T. 40, must be construed in pari materia.

- O.C.G.A. T. 11 and Ch. 3, T. 40, were adopted at the same session of the Georgia General Assembly and they relate in part to the same subject matter and must be construed in pari materia. GMAC v. Whisnant, 387 F.2d 774 (5th Cir. 1968).

Special property class legislation.

- Though the commercial code applies to all commercial transactions in personal property in this state, some transactions are governed by laws dealing with special classes of property. Anderson v. Kensington Mtg. & Fin. Corp., 166 Ga. App. 604, 305 S.E.2d 128 (1983).

This title does not purport to change law relating to instruments transferring interests in land. Newton v. Allen, 220 Ga. 681, 141 S.E.2d 417 (1965).

Writing purporting to lease trees for turpentine purposes, not merely product thereof, was lease of realty, and did not constitute a contract for sale of personalty under O.C.G.A. T. 11. Newton v. Allen, 220 Ga. 681, 141 S.E.2d 417 (1965).

Cited in Timeplan Loan & Inv. Corp. v. Moorehead, 221 Ga. 648, 146 S.E.2d 748 (1966); Berman v. Airlift Int'l, Inc., 302 F. Supp. 1203 (N.D. Ga. 1969); Lashley v. Ford Motor Co., 359 F. Supp. 363 (M.D. Ga. 1972); Bank of S. v. Hammock, 140 Ga. App. 552, 231 S.E.2d 407 (1976); Patterson v. Professional Resources, Inc., 242 Ga. 459, 249 S.E.2d 248 (1978); FDIC v. Kucera Bldrs., Inc., 503 F. Supp. 967 (N.D. Ga. 1980); GECC v. Home Indem. Co., 168 Ga. App. 344, 309 S.E.2d 152 (1983); Arford v. Blalock, 199 Ga. App. 434, 405 S.E.2d 698 (1991).

RESEARCH REFERENCES

ALR.

- Excessiveness or inadequacy of attorney's fees in matters involving commercial and general business activities, 23 A.L.R.5th 241.

ARTICLE 1 GENERAL PROVISIONS

Part 1 General Provisions.
Part 2 General Definitions and Principles of Interpretation.
Part 3 Territorial Applicability and General Rules.
Law reviews.

- For note discussing the Uniform Commercial Code and consumer protection, see 25 Emory L.J. 445 (1976).

RESEARCH REFERENCES

Am. Jur. 2d.

- 15A Am. Jur. 2d, Commercial Code, § 1, 16 et seq.

PART 1 GENERAL PROVISIONS

Editor's notes.

- Ga. L. 2015, p. 996, § 1-1/SB 65, not codified by the General Assembly, provides that: "(a) This Act shall be known and may be cited as the 'Debtor-Creditor Uniform Law Modernization Act of 2015.'

"(b) To promote consistency among the states, it is the intent of the General Assembly to modernize certain existing uniform laws promulgated by the Uniform Law Commission affecting debtor and creditor rights, responsibilities, and relationships and other federally recognized laws affecting such rights, responsibilities, and relationships."

11-1-101. Short titles.

  1. This Title 11 shall be known as and may be cited as the "Uniform Commercial Code."
  2. This article shall be known as and may be cited as the "Uniform Commercial Code - General Provisions."

(Code 1933, § 109A-1 - 101, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2015, p. 996, § 3A-1/SB 65.)

The 2015 amendment, effective January 1, 2016, designated the existing provisions as subsection (a), and added subsection (b).

Law reviews.

- For article, "The Good Faith Purchase Idea and the Uniform Commercial Code," see 15 Ga. L. Rev. 605 (1981).

JUDICIAL DECISIONS

Effect of prior case law.

- Cases dealing with rescission and with measure of damages for breach of warranty decided prior to the adoption O.C.G.A. § 11-1-101 in 1962 are not controlling in cases arising under O.C.G.A. § 11-1-101. Jacobs v. Metro Chrysler-Plymouth, Inc., 125 Ga. App. 462, 188 S.E.2d 250 (1972).

Cited in Tidwell v. Slocumb (In re Ga. Steel, Inc.), 71 Bankr. 903 (Bankr. M.D. Ga. 1987); AgriCommodities, Inc. v. J. D. Heiskell & Co., 297 Ga. App. 210, 676 S.E.2d 847 (2009); Sun Nurseries, Inc. v. Lake Erma, LLC, 316 Ga. App. 832, 730 S.E.2d 556 (2012).

RESEARCH REFERENCES

Am. Jur. 2d.

- 11 Am. Jur. 2d, Bills and Notes, § 5.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 1:1.

C.J.S.

- 82 C.J.S., Statutes, §§ 217 et seq., 238.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 1-101.

ALR.

- Recognition of action for damages for wrongful foreclosure - general views, 81 A.L.R.6th 161.

Recognition of action for damages for wrongful foreclosure - types of actions, 82 A.L.R.6th 43.

11-1-102. Scope of article.

This article shall apply to a transaction to the extent that it is governed by another article of this title.

(Code 1981, §11-1-102, enacted by Ga. L. 2015, p. 996, § 3A-1/SB 65.)

Effective date.

- This Code section became effective January 1, 2016.

Editor's notes.

- Ga. L. 2015, p. 996, § 3A-1/SB 65, effective January 1, 2016, redesignated former Code Section 11-1-102 as present Code Section 11-1-103.

11-1-103. Rules of construction to promote purposes and policies; applicability of supplemental principles of law.

  1. This title shall be liberally construed and applied to promote its underlying purposes and policies which are:
    1. To simplify, clarify, and modernize the law governing commercial transactions;
    2. To permit the continued expansion of commercial practices through custom, usage, and agreement of the parties; and
    3. To make uniform the law among the various jurisdictions.
  2. Unless displaced by the particular provisions of this title, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating cause shall supplement its provisions.

(Code 1933, § 109A-1 - 102, enacted by Ga. L. 1962, p. 156, § 1; Code 1981, §11-1-103, as redesignated by Ga. L. 2015, p. 996, § 3A-1/SB 65.)

The 2015 amendment, effective January 1, 2016, redesignated former Code Section 11-1-102 as present Code Section 11-1-103 and rewrote this Code section.

Editor's notes.

- Former Code Section 11-1-103, pertaining to supplementary general principles of law applicable, was repealed by Ga. L. 2015, p. 996, § 3A-1/SB 65, effective January 1, 2016. The former Code section was based on Ga. L. 1962, p. 156, § 1.

Law reviews.

- For article on choice-of-law of contracts in Georgia, see 21 Mercer L. Rev. 389 (1970). 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 discussing the applicability of warranty provisions under the Uniform Commercial Code to domestic solar energy devices, see 30 Mercer L. Rev. 547 (1979). For article, "Computer Software: Does Article 2 of the Uniform Commercial Code Apply?," see 35 Emory L.J. 853 (1986). For article, "Contract Litigation and the Elite Bar in New York City, 1960-1980," see 39 Emory L.J. 413 (1990). For note, "Negotiable Promissory Notes Containing Time and Demand Provisions: The Need for Consistent Interpretation," see 19 Ga. L. Rev. 717 (1984). For note, "Enforcing Manufacturers' Warranty Exclusions Against Non-Privity Commercial Purchasers: The Need for Uniform Guidelines," see 20 Ga. L. Rev. 461 (1986).

JUDICIAL DECISIONS

Legislative intent.

- The passage of the Uniform Commercial Code by the legislature evinced an intent to have that body of law control all commercial transactions. City Dodge, Inc. v. Gardner, 232 Ga. 766, 208 S.E.2d 794 (1974).

Liberal construction.

- O.C.G.A. § 11-1-102 specifies that the Uniform Commercial Code shall be liberally construed and applied to promote its underlying purposes and policies, one of which, of course, is to broaden within the framework provided the protection of warranties beyond the original notion of privity of contract. Chastain v. Fuqua Indus., Inc., 156 Ga. App. 719, 275 S.E.2d 679 (1980).

Release of an "Assignment of Proceeds from the Sale of Dairy Products" constituted a waiver of the lienholder's security interest in milk products. Thomas v. Ralston Purina Co., 43 Bankr. 201 (Bankr. M.D. Ga. 1984).

Assignability statute not preempted by UCC.

- Lender's assignee had no standing to pursue a fraudulent transfer claim against a guarantor because such claims were not assignable under O.C.G.A. § 44-12-24; therefore, the assignee could not prevail on a legal malpractice action against attorneys who failed to timely assert a fraudulent transfer claim. O.C.G.A. § 44-12-24 was not preempted by 12 U.S.C. § 1821 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) or by O.C.G.A. § 11-1-103 of the Uniform Commercial Code. RES-GA McDonough, LLC v. Taylor English Duma LLP, 302 Ga. 444, 807 S.E.2d 381 (2017).

Customer's assent to limitations on warehouse receipt a jury question.

- In a dispute over a storage facility's storage of a customer's seed, in which the facility sought to bind the customer to limitations printed on the reverse of the facility's warehouse receipts, the trial court erred by concluding that evidence that the facility routinely mailed warehouse receipts to the facility's customers was sufficient to bind the customer as a matter of law; because the customer denied receiving the receipts, the customer's assent was a question for the jury. Turfgrass Group v. Ga. Cold Storage Co., 346 Ga. App. 659, 816 S.E.2d 716 (2018).

Cited in Maley v. National Acceptance Co., 250 F. Supp. 841 (N.D. Ga. 1966); Wooden v. Michigan Nat'l Bank, 117 Ga. App. 852, 162 S.E.2d 222 (1968); Reddick v. White Consol. Indus., Inc., 295 F. Supp. 243 (S.D. Ga. 1968); Steelman v. Associates Disct. Corp., 121 Ga. App. 649, 175 S.E.2d 62 (1970); In re Carmichael Enters., Inc., 334 F. Supp. 94 (N.D. Ga. 1971); Atkins v. Citizens & S. Nat'l Bank, 127 Ga. App. 348, 193 S.E.2d 187 (1972); In re Firth, 363 F. Supp. 369 (M.D. Ga. 1973); Barclays Bank v. Mercantile Nat'l Bank, 481 F.2d 1224 (5th Cir. 1973); Brannon v. First Nat'l Bank, 137 Ga. App. 275, 223 S.E.2d 473 (1976); Argonaut Ins. Co. v. C & S Bank, 140 Ga. App. 807, 232 S.E.2d 135 (1976); Pepsico Truck Rental, Inc. v. Eastern Foods, Inc., 145 Ga. App. 410, 243 S.E.2d 662 (1978); Booker v. Commercial Credit Corp., 9 Bankr. 710 (M.D. Ga. 1981); International Harvester Credit Corp. v. Clenny, 505 F. Supp. 983 (M.D. Ga. 1981); Varner v. Century Fin. Co., 738 F.2d 1143 (11th Cir. 1984); Dalton Point, L.P. v. Regions Bank, Inc., 287 Ga. App. 468, 651 S.E.2d 549 (2007); Ole Mexican Foods, Inc. v. Hanson Staple Co., 285 Ga. 288, 676 S.E.2d 169 (2009); SunTrust Bank v. Venable, 299 Ga. 655, 791 S.E.2d 5 (2016).

RESEARCH REFERENCES

Am. Jur. 2d.

- 11 Am. Jur. 2d, Bills and Notes, §§ 6, 19. 15A Am. Jur. 2d, Commercial Code, §§ 2 et seq., 15 et seq., 30. 67 Am. Jur. 2d, Sales, §§ 70, 71.

C.J.S.

- 31 C.J.S., Estoppel, §§ 55 et seq., 58 et seq., 86. 82 C.J.S., Statutes, § 309.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 1-102.

ALR.

- What language in conveyance or contract amounts to assumption of mortgage by grantee, 101 A.L.R. 281.

Effect on negotiability of instrument, under terms of UCC § 3-104(1), of statements expressly limiting negotiability or transferability, 58 A.L.R.4th 632.

11-1-104. Construction against implicit repeal.

This title being a general act intended as a unified coverage of its subject matter, no part of it shall be deemed to be impliedly repealed by subsequent legislation if such construction can reasonably be avoided.

(Code 1933, § 109A-1 - 104, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2015, p. 996, § 3A-1/SB 65.)

Editor's notes.

- Ga. L. 2015, p. 996, § 3A-1/SB 65, effective January 1, 2016, reenacted this Code section without change.

JUDICIAL DECISIONS

Cited in Cleveland Lumber Co. v. Proctor & Schwartz, Inc., 397 F. Supp. 1088 (N.D. Ga. 1975).

RESEARCH REFERENCES

Am. Jur. 2d.

- 15A Am. Jur. 2d, Commercial Code, §§ 25, 30.

C.J.S.

- 82 C.J.S., Statutes, § 287.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 1-104.

11-1-105. Severability.

If any provision or clause of this title or application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this title which can be given effect without the invalid provision or application, and to this end the provisions of this title are declared to be severable.

(Code 1933, § 109A-1 - 105, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 1978, p. 1081, § 2; Ga. L. 1992, p. 2685, § 1; Ga. L. 1993, p. 633, § 2; Ga. L. 1998, p. 1323, § 15; Ga. L. 2001, p. 362, § 2; Ga. L. 2015, p. 996, § 3A-1/SB 65.)

The 2001 amendment, effective July 1, 2001, substituted "Law governing perfection, the effect of perfection or nonperfection, and the priority of security interests and agricultural liens. Code Sections 11-9-301 through 11-9-307." for "Perfection provisions of the article of this title on secured transactions (Article 9 of this title). Code Section 11-9-103." in the sixth undesignated paragraph of subsection (2).

The 2015 amendment, effective January 1, 2016, rewrote this Code section.

Editor's notes.

- Ga. L. 1993, p. 633, which amended this Code section, provides, in § 5, not codified by the General Assembly, that: "This Act shall become effective on July 1, 1993, for all lease contracts that are first made or that first become effective between the parties on or after that date. This Act shall not apply to any lease first made or that first became effective between the parties before July 1, 1993, or to any extension, amendment, modification, renewal, or supplement of or to any such lease contract, unless the parties thereto specifically agree in writing that such lease contract, as extended, amended, modified, renewed, or supplemented, shall be governed by this Act."

Law reviews.

- For article on choice-of-law of contracts in Georgia, see 21 Mercer L. Rev. 389 (1970). For essay on Georgia conflict of laws questions in contracts cases in the eleventh circuit and certification reform, see 11 Ga. St. U.L. Rev. 531 (1995). For note on 1992 amendment of this Code section, see 9 Ga. St. U.L. Rev. 163 (1992). For note on 1993 amendment of this section, see 10 Ga. St. U.L. Rev. 34 (1993).

JUDICIAL DECISIONS

Contracting parties may choose applicable state law.

- O.C.G.A. § 11-1-105 allows contracting parties to make their own choice of the applicable state law. Crompton-Richmond Co. v. Briggs, 560 F.2d 1195 (5th Cir. 1977).

O.C.G.A. § 11-1-105 permits parties to provide by agreement which state's law shall govern their transaction but only if transaction bears "reasonable relation" to state so designated. United Counties Trust Co. v. Mac Lum, Inc., 643 F.2d 1140 (5th Cir. 1981); Manderson & Assocs. v. Gore, 193 Ga. App. 723, 389 S.E.2d 251 (1989).

The parties may by contract stipulate that the law of another jurisdiction will govern the transaction. Wallace v. Harrison, 166 Ga. App. 461, 304 S.E.2d 487 (1983).

Limitation on broad choice of law rule of subsection (1).

- Broad choice of law rule provided in O.C.G.A. § 11-1-105(1) is expressly limited by O.C.G.A. § 11-1-105(2), which states that for specific matters listed therein, other conflict of laws provisions located in the Code govern; among specific exclusions from general conflicts rule are article 9 secured transactions, which prior to 1978 were governed by conflicts or situs choice of law rule provided in O.C.G.A. § 11-9-102. United Counties Trust Co. v. Mac Lum, Inc., 643 F.2d 1140 (5th Cir. 1981).

Conflict of laws rule of forum state determines what state's substantive law applies.

- Where question of whether lessee was entitled to prevail on its failure of consideration defense in diversity action brought for breach of lease depended upon what state's substantive law applied, it was necessary to look to conflict of laws rule of forum state. United Counties Trust Co. v. Mac Lum, Inc., 643 F.2d 1140 (5th Cir. 1981).

Georgia adheres to the traditional choice of law system.

- Under this system tort actions are adjudicated according to the law of the place where the wrong occurred, and contract actions are regulated by the law of the state where the contract was made when matters of execution, interpretation, or validity are at issue, and by the law of the state where it is to be performed when the issue is one concerning performance. Wallace v. Harrison, 166 Ga. App. 461, 304 S.E.2d 487 (1983).

In a products liability diversity action brought on the theory of breach of implied warranty of merchantability, Georgia procedural law, which looked to the lex loci delicti, controlled the claim. Since the injury took place in Georgia, Georgia substantive law, which required privity, was applied. The plaintiff, who was an employee of the purchaser of the product, failed to satisfy this privity requirement. Morgan v. Mar-Bel, Inc., 614 F. Supp. 438 (N.D. Ga. 1985).

Contract may bear "appropriate relation" to Georgia, though entered into in another state.

- The phrase "applies to transactions bearing an appropriate relation to this state" means, that notwithstanding a contract has been entered into in another state, if it is litigated in Georgia and bears an "appropriate relation" to Georgia, its validity will be governed by Georgia law. Gulf Collateral, Inc. v. Morgan, 415 F. Supp. 319 (S.D. Ga. 1976).

"Appropriate relation," which means essentially the same as "significant contacts," is something more than minimum contacts. United Counties Trust Co. v. Mac Lum, Inc., 643 F.2d 1140 (5th Cir. 1981).

Sale-leaseback agreement.

- Absent effect designation, substantive law applied to sale-leaseback agreement is determined by "appropriate relation" test. United Counties Trust Co. v. Mac Lum, Inc., 643 F.2d 1140 (5th Cir. 1981).

Defective hand grenade bought in another state but injuring citizen in Georgia.

- Where plaintiff, a Georgia citizen who was injured by explosion of a defective hand grenade at an army base in Georgia, brought suit pursuant to O.C.G.A. § 9-10-91 against the hand grenade's manufacturer which was allegedly doing business in the State of Georgia, the transactions in which defendant manufactured and sold the defective hand grenades to the United States Army in the States of Tennessee and Texas, were "appropriately related" to the State of Georgia within the meaning of O.C.G.A. § 11-1-105. Whitaker v. Harvell-Kilgore Corp., 418 F.2d 1010 (5th Cir. 1969).

Repossessions of collateral located in Georgia.

- Absent an agreement that the law of another state shall govern, Georgia law applies to the repossession, resale, and right to a deficiency judgment where the collateral was located in Georgia at the time of the repossession and resale. Lewis v. First Nat'l Bank, 134 Ga. App. 798, 216 S.E.2d 347 (1975).

Unilateral reservation of rights in endorsing draft.

- In a tort action in Georgia, where defendant's insurer, a Florida corporation, tendered to plaintiff a draft payable through a Florida bank and plaintiff crossed out the printed endorsement/release before endorsing the draft to a body shop and added a handwritten endorsement reserving defendant's rights, the lex fori, i.e., the law of Georgia, should be applied where both parties are Georgia residents, since the relationship of the insurer to the parties and the action is that of defendant's agent for the payment of a sum or sums due plaintiff under the terms of the contract of insurance between defendant and the insurer and the collecting bank is the agent of the insurer. The residence of the agent or subagent is irrelevant, absent special circumstances. Wallace v. Harrison, 166 Ga. App. 461, 304 S.E.2d 487 (1983).

Foreign jurisdiction's applicable law.

- Where consignment agreement between foreign, debtor-aviation company and domestic aerospace corporation provided for its construction in accordance with the laws of the Province of Ontario, Canada, and the consignment transaction bore a reasonable relationship to Ontario, the court applied Ontario law to determine the validity and effect of the parties' interests. ATG Aerospace, Inc. v. High-Line Aviation Ltd., 149 Bankr. 730 (Bankr. N.D. Ga. 1992).

Cited in Eldon Indus., Inc. v. Paradies & Co., 397 F. Supp. 535 (N.D. Ga. 1975); Moore v. Emery (In re Am. Steel Prod., Inc.), 203 Bankr. 504 (Bankr. S.D. Ga. 1996).

RESEARCH REFERENCES

Am. Jur. 2d.

- 15A Am. Jur. 2d, Commercial Code, §§ 11 et seq., 41 et seq., 75. 16 Am. Jur. 2d, Conflict of Laws, §§ 2, 55. 67A Am. Jur. 2d, Sales, §§ 963-970, 981-985. 68A Am. Jur. 2d, Secured Transactions, §§ 8, 9.

C.J.S.

- 17 C.J.S., Contracts, § 13 et seq. 21 C.J.S., Courts, § 204.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 1-105.

ALR.

- Duty of one selling interest in property to another with view to their mutual exploitation of it to disclose what property cost him, 10 A.L.R. 193.

Conflict of law as to conditional sales of chattels, 25 A.L.R. 1153; 57 A.L.R. 535; 87 A.L.R. 1308; 148 A.L.R. 375; 13 A.L.R.2d 1312.

Law of the forum as governing the right to and rate of interest as damages for delay in payment of money or discharge of other obligations, 78 A.L.R. 1047.

Federal constitutional provisions as affecting right of court of forum, when entertaining jurisdiction of action on foreign contract or cause of action, to refuse, on ground of its own public policy or local statute, to give effect to provisions of the contract valid by its proper law or to other rights or obligations available under that law, 92 A.L.R. 932.

Conflict of laws as to chattel mortgages and conditional sales of chattels, 13 A.L.R.2d 1312.

Conflict of laws as to disposition of and relative rights to bank deposits in the names of more than one person, 25 A.L.R.2d 1240.

Law governing assignment of wages or salary, 1 A.L.R.3d 927.

Statute of frauds and conflict of laws, 47 A.L.R.3d 137.

What constitutes "reasonable" or "appropriate" relation to a transaction within the meaning of Uniform Commercial Code § 1-105(1), 63 A.L.R.3d 341.

Choice of law as to applicable statute of limitations in contract actions, 78 A.L.R.3d 639.

Choice of law as to application of comparative negligence doctrine, 86 A.L.R.3d 1206.

Conflict of laws as to validity and effect of arbitration provision in contract for purchase or sale of goods, products, or services, 95 A.L.R.3d 1145.

11-1-106. Use of singular and plural; gender.

In this title unless the statutory context otherwise requires:

  1. Words in the singular number include the plural, and words in the plural include the singular; and
  2. Words of any gender also refer to any other gender.

(Code 1933, § 109A-1 - 106, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2015, p. 996, § 3A-1/SB 65.)

The 2015 amendment, effective January 1, 2016, rewrote this Code section.

JUDICIAL DECISIONS

Cited in Emmons v. Burkett, 256 Ga. 855, 353 S.E.2d 908 (1987); Unique Designs, Inc. v. Pittard Mach. Co., 200 Ga. App. 647, 409 S.E.2d 241 (1991); White County Bank v. Noland Co., 214 Ga. App. 780, 449 S.E.2d 325 (1994); Latex Equip. Sales & Serv., Inc. v. Apache Mills, Inc., 225 Ga. App. 516, 484 S.E.2d 274 (1997).

RESEARCH REFERENCES

Am. Jur. 2d.

- 11 Am. Jur. 2d, Bills and Notes, § 19. 12 Am. Jur. 2d, Bills and Notes, § 627. 15A Am. Jur. 2d, Commercial Code, §§ 17, 24. 67A Am. Jur. 2d, Sales, § 987.

C.J.S.

- 2 C.J.S., Actions, §§ 5, 9.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 1-106.

ALR.

- Damages for breach by seller or former employee of covenant, express or implied, not to engage in like business or enter employment of competitor of covenantee, 127 A.L.R. 1152.

Awarding damages for delay, in addition to specific performance, of contract for sale of corporate stock, 28 A.L.R.3d 1401.

11-1-107. Section captions.

Section captions are parts of this title.

(Code 1933, § 109A-1 - 107, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2015, p. 996, § 3A-1/SB 65.)

The 2015 amendment, effective January 1, 2016, substituted the present provisions of this Code section for the former provisions, which read: "Any claim or right arising out of an alleged breach can be discharged in whole or in part without consideration by a written waiver or renunciation signed and delivered by the aggrieved party."

Law reviews.

- For note, "The Scope and Meaning of Waiver in Section 2-209 of the Uniform Commercial Code," see 5 Ga. L. Rev. 783 (1971).

RESEARCH REFERENCES

Am. Jur. 2d.

- 1 Am. Jur. 2d, Accord and Satisfaction, § 12. 11 Am. Jur. 2d, Bills and Notes, § 417. 12 Am. Jur. 2d, Bills and Notes, §§ 554, 555. 15A Am. Jur. 2d, Commercial Code, § 4. 28 Am. Jur. 2d, Estoppel and Waiver, § 162. 67 Am. Jur. 2d, Sales, §§ 20, 216, 224, 318, 519, 539, 575.

9A Am. Jur. Pleading and Practice Forms, Estoppel and Waiver, § 39.

C.J.S.

- 17B C.J.S., Contracts, § 557 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 1-107.

ALR.

- Agent's promise to make endorsement upon policy as a waiver or estoppel to assert provision that any privilege or permission shall be void unless in writing, 38 A.L.R. 636.

11-1-108. Relation to Electronic Signatures in Global and National Commerce Act.

This article modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7001, et seq., but shall not modify, limit, or supersede Section 101(c) of that act, 15 U.S.C. Section 7001(c), or authorize electronic delivery of any of the notices described in Section 103(b) of that act, 15 U.S.C. Section 7003(b).

(Code 1933, § 109A-1 - 108, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2015, p. 996, § 3A-1/SB 65.)

The 2015 amendment, effective January 1, 2016, substituted the present provisions of this Code section for the former provisions, which read: "If any provision or clause of this title or application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of the title which can be given effect without the invalid provision or application, and to this end the provisions of this title are declared to be severable."

RESEARCH REFERENCES

Am. Jur. 2d.

- 15A Am. Jur. 2d, Commercial Code, §§ 30, 31.

C.J.S.

- 82 C.J.S., Statutes, § 82 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 1-108.

11-1-109. Section captions.

Repealed by Ga. L. 2015, p. 996, § 3A-1/SB 65, effective January 1, 2016.

Editor's notes.

- This Code section was based on Code 1933, § 109A-1-109, enacted by Ga. L. 1962, p. 156, § 1.

PART 2 GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION

Editor's notes.

- Ga. L. 2015, p. 996, § 1-1/SB 65, not codified by the General Assembly, provides that: "(a) This Act shall be known and may be cited as the 'Debtor-Creditor Uniform Law Modernization Act of 2015.'

"(b) To promote consistency among the states, it is the intent of the General Assembly to modernize certain existing uniform laws promulgated by the Uniform Law Commission affecting debtor and creditor rights, responsibilities, and relationships and other federally recognized laws affecting such rights, responsibilities, and relationships."

Law reviews.

- For note, "Not So Good: The Classification of 'Smart Goods' Under UCC Article 2," see 34 Ga. St. U. L. Rev. 453 (2018).

11-1-201. General definitions.

  1. Unless the context otherwise requires, words or phrases defined in this Code section, or in the additional definitions contained in other articles of this title that apply to particular articles or parts thereof, have the meanings stated.
  2. Subject to additional definitions contained in the other articles of this title that are applicable to specific articles or parts thereof, in this title:
    1. "Action" in the sense of a judicial proceeding includes recoupment, counterclaim, setoff, suit in equity, and any other proceedings in which rights are determined.
    2. "Aggrieved party" means a party entitled to pursue a remedy.
    3. "Agreement," as distinguished from "contract," means the bargain of the parties in fact as found in their language or inferred from other circumstances including course of performance, course of dealing, or usage of trade as provided in Code Section 11-1-303.
    4. "Bank" means a person engaged in the business of banking and includes a savings bank, savings and loan association, credit union, or trust company.
    5. "Bearer" means a person in control of a negotiable instrument, document of title, or certificated security payable to bearer or indorsed in blank.
    6. "Bill of lading" means a document evidencing the receipt of goods for shipment issued by a person engaged in the business of transporting or forwarding goods.
    7. "Branch" includes a separately incorporated foreign branch of a bank.
    8. "Burden of establishing" a fact means the burden of persuading the trier of fact that the existence of the fact is more probable than its nonexistence.
    9. "Buyer in ordinary course of business" means a person that buys goods in good faith without knowledge that the sale violates the rights of another person in the goods, and in the ordinary course from a person, other than a pawnbroker, in the business of selling goods of that kind. A person buys goods in the ordinary course if the sale to the person comports with the usual or customary practices in the kind of business in which the seller is engaged or with the seller's own usual or customary practices. A person that sells oil, gas, or other minerals at the wellhead or minehead is a person in the business of selling goods of that kind. A buyer in the ordinary course of business may buy for cash, by exchange of other property, or on secured or unsecured credit, and may acquire goods or documents of title under a preexisting contract for sale. Only a buyer that takes possession of the goods or has a right to recover the goods from the seller under Article 2 of this title may be a buyer in ordinary course of business. A person that acquires goods in a transfer in bulk or as security for or in total or partial satisfaction of a money debt is not a buyer in ordinary course of business.
    10. "Conspicuous," with reference to a term, means so written, displayed, or presented that a reasonable person against which it is to operate ought to have noticed it. Whether a term is "conspicuous" or not is a decision for the court. Conspicuous terms include the following:
      1. A heading in capitals equal to or greater in size than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same or lesser size; and
      2. Language in the body of a record or display in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from the surrounding text of the same size by symbols or other marks that call attention to the language.
    11. "Consumer" means an individual who enters into a transaction primarily for personal, family, or household purposes.
    12. "Contract," as distinguished from "agreement," means the total legal obligation that results from the parties' agreement as determined by this title and any other applicable law.
    13. "Creditor" includes a general creditor, a secured creditor, a lien creditor and any representative of creditors, including an assignee for the benefit of creditors, a trustee in bankruptcy, a receiver in equity, and an executor or administrator of an insolvent debtor's or assignor's estate.
    14. "Defendant" includes a person in the position of defendant in a counterclaim, cross-claim, or third-party claim.
    15. "Delivery" with respect to an instrument, document of title, or chattel paper means voluntary transfer of possession.
    16. "Document of title" includes a bill of lading, dock warrant, dock receipt, warehouse receipt, or order for delivery of goods and any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold, and dispose of the document and the goods it covers. To be a document of title, a document must purport to be issued by or addressed to a bailee and purport to cover goods in the bailee's possession which are either identified or are fungible portions of an identified mass.
    17. "Fault" means a default, breach, or wrongful act or omission.
    18. "Fungible goods" means:
      1. Goods of which any unit is, by nature or usage of trade, the equivalent of any other like unit; or
      2. Goods that by agreement are treated as equivalent.
    19. "Genuine" means free of forgery or counterfeiting.
    20. "Good faith," except as otherwise provided in Article 5 of this title, means honesty in fact and the observance of reasonable commercial standards of fair dealing.
    21. "Holder" means:
      1. The person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession; or
      2. The person in possession of a document of title if the goods are deliverable either to bearer or to the order of the person in possession.
    22. "Insolvency proceeding" includes any assignment for the benefit of creditors or other proceeding intended to liquidate or rehabilitate the estate of the person involved.
    23. "Insolvent" means:
      1. Having generally ceased to pay debts in the ordinary course of business other than as a result of bona fide dispute;
      2. Being unable to pay debts as they become due; or
      3. Being insolvent within the meaning of the federal bankruptcy law.
    24. "Money" means a medium of exchange authorized or adopted by a domestic or foreign government and includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more countries.
    25. "Organization" means a person other than an individual.
    26. "Party," as distinct from "third party," means a person who has engaged in a transaction or made an agreement subject to this title.
    27. "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, public corporation, or any other legal or commercial entity.
    28. "Present value" means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain by use of either an interest rate specified by the parties if that rate is not manifestly unreasonable at the time the transaction is entered into or, if an interest rate is not so specified, a commercially reasonable rate that takes into account the facts and circumstances at the time the transaction is entered into.
    29. "Purchase" means taking by sale, discount, negotiation, mortgage, pledge, lien, security interest, issue or reissue, gift, or any other voluntary transaction creating an interest in property.
    30. "Purchaser" means a person who takes by purchase.
    31. "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
    32. "Remedy" means any remedial right to which an aggrieved party is entitled with or without resort to a tribunal.
    33. "Representative" means a person empowered to act for another, including an agent, an officer of a corporation or association, and a trustee, executor or administrator of an estate.
    34. "Rights" includes remedies.
    35. "Security interest" means an interest in personal property or fixtures which secures payment or performance of an obligation. The term also includes any interest of a consignor and a buyer of accounts, chattel paper, a payment intangible, or a promissory note in a transaction that is subject to Article 9 of this title. The term does not include the special property interest of a buyer of goods on identification of those goods to a contract for sale under Code Section 11-2-401, but a buyer may also acquire a "security interest" by complying with Article 9 of this title. Except as otherwise provided in Code Section 11-2-505, the right of a seller or lessor of goods under Article 2 or 2A of this title to retain or acquire possession of the goods is not a "security interest," but a seller or lessor may also acquire a "security interest" by complying with Article 9 of this title. The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer under Code Section 11-2-401 is limited in effect to a reservation of a "security interest."

      Whether a transaction in the form of a lease creates a "security interest" shall be determined pursuant to Code Section 11-1-203.

    36. "Send" in connection with a writing, record, or notice means:
      1. To deposit in the mail or deliver for transmission by any other usual means of communication with postage or cost of transmission provided for and properly addressed and, in the case of an instrument, to an address specified thereon or otherwise agreed, or if there be none to any address reasonable under the circumstances; or
      2. In any other way to cause to be received any record or notice within the time it would have arrived if properly sent.
    37. "Signed" includes using any symbol executed or adopted with present intention to adopt or accept a writing.
    38. "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.
    39. "Surety" includes a guarantor or other secondary obligor.
    40. "Term" means that portion of an agreement that relates to a particular matter.
    41. "Unauthorized signature" means a signature made without actual, implied, or apparent authority. The term includes a forgery.
    42. "Warehouse receipt" means a receipt issued by a person engaged in the business of storing goods for hire.
    43. "Written" or "writing" includes printing, typewriting, or any other intentional reduction to tangible form.

(Code 1933, § 109A-1 - 201, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 1963, p. 188, § 1; Ga. L. 1978, p. 1081, §§ 3, 4; Ga. L. 1981, p. 634, § 2; Ga. L. 1985, p. 825, § 1; Ga. L. 1992, p. 6, § 11; Ga. L. 1992, p. 2626, § 1; Ga. L. 1993, p. 633, § 3; Ga. L. 1996, p. 1306, § 1; Ga. L. 2000, p. 136, § 11; Ga. L. 2001, p. 362, § 3; Ga. L. 2010, p. 481, § 2-1/HB 451; Ga. L. 2015, p. 996, § 3A-1/SB 65.)

The 2000 amendment, effective March 16, 2000, part of an Act to revise, modernize, and correct the Code, substituted "mean 'branch office' as that term is" for "mean not only 'branch bank,' but also 'bank office' and 'bank facility' as those terms are" in the last sentence of subsection (4).

The 2001 amendment, effective July 1, 2001, rewrote subsection (9), inserted "security interest," in subsection (32), and, in the first paragraph of subsection (37), deleted the former second sentence, which read "The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer (Code Section 11-2-401) is limited in effect to a reservation of a 'security interest.'", in the current second sentence, inserted "consignor and a", and substituted "accounts, chattel paper, a payment intangible, or a promissory note in a transaction that" for "accounts or chattel paper which", deleted the former fifth sentence, which read "Unless a consignment is intended as security, reservation of title thereunder is not a 'security interest,' but a consignment in any event is subject to the provisions on consignment sales (Code Section 11-2-326).", and added the last two sentences.

The 2010 amendment, effective May 27, 2010, in subsection (5), substituted "a person in control of a negotiable electronic document of title or" for "the" near the beginning, inserted "a negotiable tangible", and inserted "a"; substituted the present provisions of subsection (6) for the former provisions, which read: "'Bill of lading' means a document evidencing the receipt of goods for shipment issued by a person engaged in the business of transporting or forwarding goods, and includes an airbill. 'Airbill' means a document serving for air transportation as a bill of lading does for marine or rail transportation, and includes an air consignment note or air waybill."; rewrote subsection (10); substituted "to an electronic document of title means voluntary transfer of control and with respect to instruments, tangible" for "to instruments," in the middle of subsection (14); rewrote subsections (15), (20), (25), and (26); in subsection (27), substituted "the individual's" for "his" near the end of the first sentence and added the last two sentences; in subsection (38), substituted "a writing, a record, or notice means:" for "any writing or notice means" at the end of the introductory paragraph, designated the paragraphs, in paragraph (38)(a), inserted commas throughout, substituted "To deposit" for "to deposit" at the beginning and substituted "; or" for a period at the end, and, in paragraph (38)(b), substituted "In any other way to cause to be received any record" for "The receipt of any writing" at the beginning, deleted "at which" following "time" in the middle, and deleted "has the effect of a proper sending" following "properly" at the end; and substituted "document of title" for "receipt" in the middle of subsection (45). See the Editor's notes for applicability.

The 2015 amendment, effective January 1, 2016, rewrote this Code section.

Editor's notes.

- Ga. L. 1993, p. 633, which amended this Code section, provides, in § 5, not codified by the General Assembly: "This Act shall become effective on July 1, 1993, for all lease contracts that are first made or that first become effective between the parties on or after that date. This Act shall not apply to any lease first made or that first became effective between the parties before July 1, 1993, or to any extension, amendment, modification, renewal, or supplement of or to any such lease contract, unless the parties thereto specifically agree in writing that such lease contract, as extended, amended, modified, renewed, or supplemented, shall be governed by this Act."

Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.

Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.

U.S. Code.

- The bankruptcy law, referred to in paragraph (23) of this section, is codified as 11 U.S.C.S. § 101 et seq.

Law reviews.

- For article on the 1963 amendment to the Georgia Uniform Commercial Code, see 14 Mercer L. Rev. 378 (1963). For article, "Lease or Security Interest: A Classic Problem of Commercial Law," see 28 Mercer L. Rev. 599 (1977). For article on Georgia cases dealing with commercial law from June 1977 through May 1978, see 30 Mercer L. Rev. 15 (1978). For article, "The Good Faith Purchase Idea and the Uniform Commercial Code," see 15 Ga. L. Rev. 605 (1981). For article surveying developments in Georgia commercial law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 33 (1981). For article discussing judicial activism in cases involving claims and defenses under the Uniform Commercial Code, see 17 Ga. L. Rev. 569 (1983). For article, "Impracticability As Risk Allocation: The Effect of Changed Circumstances upon Contract Obligations for the Sale of Goods," see 22 Ga. L. Rev. 503 (1988). For note, "The Law of Evidence in the Uniform Commercial Code," see 1 Ga. L. Rev. 44 (1966). For note on 1992 amendment of this Code section, see 9 Ga. St. U.L. Rev. 168 (1992). For note on 1993 amendment of this section, see 10 Ga. St. U.L. Rev. 34 (1993). For comment on Sherrock v. Commercial Credit Corp., 290 A.2d 648 (Del. S. Ct. 1972), see 10 Ga. St. B.J. 110 (1973). For comment on Perini Corp. v. First Nat'l Bank, 553 F.2d 398 (5th Cir. 1977), see 27 Emory L.J. 393 (1978). For comment, "Lender Liability for Breach of the Obligation of Good Faith Performance," see 36 Emory L.J. 917 (1987).

JUDICIAL DECISIONS

General Consideration

UCC definitions inapplicable to criminal prosecution. Thogerson v. State, 224 Ga. App. 76, 479 S.E.2d 463 (1996).

The drawer of a check made payable to a third party was deemed to have used the instrument in contemplation of its presentment for payment upon the action of a collecting bank and, thus, was engaged in a transaction governed by the UCC subject to the damage limitation provision of O.C.G.A. § 11-4-103. Farr v. Trust Co. Bank, 220 Ga. App. 423, 469 S.E.2d 501 (1996).

Cited in Bennett v. Cannon, 114 Ga. App. 479, 151 S.E.2d 828 (1966); Scarboro v. Universal C.I.T. Credit Corp., 364 F.2d 10 (5th Cir. 1966); McDonald v. Peoples Auto. Loan & Fin. Corp., 115 Ga. App. 483, 154 S.E.2d 886 (1967); Sanders v. National Acceptance Co. of Am., 383 F.2d 606 (5th Cir. 1967); Decatur Coca-Cola Bottling Co. v. Variety Vending Corp., 277 F. Supp. 393 (N.D. Ga. 1967); Northside Bldg. & Inv. Co. v. Finance Co. of Am., 119 Ga. App. 131, 166 S.E.2d 608 (1969); First Nat'l Bank & Trust Co. v. Smithloff, 119 Ga. App. 284, 167 S.E.2d 190 (1969); First Nat'l Bank & Trust Co. v. McElmurray, 120 Ga. App. 134, 169 S.E.2d 720 (1969); Steelman v. Associates Disct. Corp., 121 Ga. App. 649, 175 S.E.2d 62 (1970); United States v. Big Z Whse., 311 F. Supp. 283 (S.D. Ga. 1970); Greater S. Distrib. Co. v. Usry, 124 Ga. App. 525, 184 S.E.2d 486 (1971); Rockwin Corp. v. Kincaid, 124 Ga. App. 570, 184 S.E.2d 509 (1971); International Harvester Credit Corp. v. Commercial Credit Equip. Corp., 125 Ga. App. 477, 188 S.E.2d 110 (1972); L.M. Berry & Co. v. Blackmon, 129 Ga. App. 347, 199 S.E.2d 610 (1973); Harris v. Hill, 129 Ga. App. 403, 199 S.E.2d 847 (1973); First Nat'l Bank & Trust Co. v. Olivetti Corp. of Am., 130 Ga. App. 896, 204 S.E.2d 781 (1974); Geohagan v. Commercial Credit Corp., 130 Ga. App. 828, 204 S.E.2d 784 (1974); REA Express, Inc. v. Ginn, 131 Ga. App. 33, 205 S.E.2d 94 (1974); Chrysler Corp. v. Wilson Plumbing Co., 132 Ga. App. 435, 208 S.E.2d 321 (1974); International Harvester Credit Corp. v. Associates Fin. Servs. Co., 133 Ga. App. 488, 211 S.E.2d 430 (1974); Kennedy v. Thruway Serv. City, Inc., 133 Ga. App. 858, 212 S.E.2d 492 (1975); Weaver v. Ralston Motor Hotel, Inc., 135 Ga. App. 536, 218 S.E.2d 260 (1975); Brannon v. First Nat'l Bank, 137 Ga. App. 275, 223 S.E.2d 473 (1976); Peoples Bank v. Northwest Ga. Bank, 139 Ga. App. 264, 228 S.E.2d 181 (1976); UIV Corp. v. Oswald, 139 Ga. App. 697, 229 S.E.2d 512 (1976); Rollins Communications, Inc. v. Georgia Inst. of Real Estate, Inc., 140 Ga. App. 448, 231 S.E.2d 397 (1976); Billas v. Dwyer, 140 Ga. App. 774, 232 S.E.2d 102 (1976); Jones v. Cranman's Sporting Goods, 142 Ga. App. 838, 237 S.E.2d 402 (1977); BVA Credit Corp. v. Mullins, 552 F.2d 1145 (5th Cir. 1977); Perini Corp. v. First Nat'l Bank, 553 F.2d 398 (5th Cir. 1977); Anthony v. Community Loan & Inv. Corp., 559 F.2d 1363 (5th Cir. 1977); Ginn v. Citizens & S. Nat'l Bank, 145 Ga. App. 175, 243 S.E.2d 528 (1978); B & P Lumber Co. v. First Nat'l Bank, 147 Ga. App. 762, 250 S.E.2d 505 (1978); Footpress Corp. v. Strickland, 242 Ga. 686, 251 S.E.2d 278 (1978); Barton v. Chemical Bank, 577 F.2d 1329 (5th Cir. 1978); Central Bank v. American Charms, Inc., 149 Ga. App. 218, 253 S.E.2d 857 (1979); Vincent Brass & Aluminum Co. v. Johnson, 149 Ga. App. 537, 254 S.E.2d 752 (1979); Cox Caulking & Insulating Co. v. Brockett Distrib. Co., 150 Ga. App. 424, 258 S.E.2d 51 (1979); Broun v. Bank of Early, 243 Ga. 319, 253 S.E.2d 755 (1979); Johnson v. Vincent Brass & Aluminum Co., 244 Ga. 412, 260 S.E.2d 325 (1979); Trust Co. Bank v. Atlanta IBM Employees Fed. Credit Union, 245 Ga. 262, 264 S.E.2d 202 (1980); First Bank v. Kilpatrick-Smith Constr. Co., 153 Ga. App. 112, 264 S.E.2d 576 (1980); Trust Co. of Ga. Bank v. Port Term. & Warehousing Co., 153 Ga. App. 735, 266 S.E.2d 254 (1980); Commercial Credit Equip. Corp. v. Bates, 154 Ga. App. 71, 267 S.E.2d 469 (1980); Clements v. Central Bank, 155 Ga. App. 27, 270 S.E.2d 194 (1980); Guthrie v. Pilgrim Realty Co., 156 Ga. App. 692, 275 S.E.2d 686 (1980); Trust Co. v. Milam, 4 Bankr. 621 (M.D. Ga. 1980); Mayo v. Bank of Carroll County, 157 Ga. App. 148, 276 S.E.2d 660 (1981); Trust Co. v. Cowart, 158 Ga. App. 488, 280 S.E.2d 886 (1981); First Nat'l Bank v. Rivercliff Hdwe., Inc., 161 Ga. App. 259, 287 S.E.2d 701 (1982); Sterling Nat'l Bank & Trust Co. v. Southwire Co., 713 F.2d 684 (11th Cir. 1983); Loeb v. G.A. Gertmenian & Sons (In re A.J. Nichols, Ltd.), 21 Bankr. 612 (Bankr. N.D. Ga. 1982); Ford v. Rollins Protective Servs. Co., 171 Ga. App. 882, 322 S.E.2d 62 (1984); Thomas v. Ralston Purina Co., 43 Bankr. 201 (Bankr. M.D. Ga. 1984); Edmondson v. Northrup King & Co., 817 F.2d 742 (11th Cir. 1987); Trust Co. Bank v. Henderson, 185 Ga. App. 367, 364 S.E.2d 289 (1987); Mark Singleton Buick, Inc. v. Taylor, 194 Ga. App. 630, 391 S.E.2d 435 (1990); Perimeter Ford, Inc. v. Edwards, 197 Ga. App. 747, 399 S.E.2d 520 (1990); Calhoon v. Mr. Locksmith Co., 200 Ga. App. 618, 409 S.E.2d 226 (1991); In re Leeds Bldg. Prods., Inc., 141 Bankr. 265 (Bankr. N.D. Ga. 1992); Perez-Medina v. First Team Auction, Inc., 206 Ga. App. 719, 426 S.E.2d 397 (1992); Tompkins v. Mayers, 209 Ga. App. 809, 434 S.E.2d 798 (1993); D.L. Lee & Sons v. ADT Sec. Sys., 916 F. Supp. 1571 (S.D. Ga. 1995); Lewis v. Lease Atlanta, Inc., 234 Ga. App. 812, 508 S.E.2d 188 (1998); Fedeli v. UAPA Ag. Chem., Inc., 237 Ga. App. 337, 514 S.E.2d 684 (1999); Trust Assoc. v. Snead, 253 Ga. App. 475, 559 S.E.2d 502 (2002); Gerber & Gerber, P.C. v. Regions Bank, 266 Ga. App. 8, 596 S.E.2d 174 (2004); Stein v. GEICO Indem. Ins. Co., 289 Ga. App. 739, 658 S.E.2d 153 (2008); In re Estate of Miraglia, 290 Ga. App. 28, 658 S.E.2d 777 (2008); Cars v. W. Funding II, 349 Ga. App. 517, 826 S.E.2d 370 (2019).

Agreement

Agreement governs rights and liabilities of parties.

- It is elementary that under the law of contracts the agreement itself governs the rights and liabilities of the parties. Nothing in the Uniform Commercial Code as adopted in Georgia requires a different result. Tri-County Livestock Auction Co. v. Bank of Madison, 228 Ga. 325, 185 S.E.2d 393 (1971).

Agreement not a lease.

- Claimant's unwritten agreement with an individual concerning a vehicle was not a lease because the claimant offered no evidence that the individual had the right to voluntarily terminate the individual's payment obligation under the agreement, i.e., to pay less than the full amount of consideration under the lease, or that the individual could purchase the vehicle only after paying additional consideration. United States v. Bushay, 34 F. Supp. 3d 1260 (N.D. Ga. Aug. 5, 2014).

Buyer in Ordinary Course of Business

Buyer's special relationship with seller does not preclude buyer from being buyer in the ordinary sense.

- Although the fact that a person had a special relationship with the seller would not preclude the person from being a buyer in the ordinary course, this factor, along with other factors that the sale was not handled in every material way as a sale out of inventory to any retail customer, may preclude such person from being a buyer in the ordinary course of business. Hanington v. Palmer, 103 Bankr. 348 (Bankr. M.D. Ga. 1989).

Knowledge of security interest.

- A buyer who merely knows of a security interest of another party covering certain goods constitutes a buyer in ordinary course of business and takes free of that security interest, whereas a buyer who knows that the sale actually violates some term of the security agreement not waived by the secured party takes subject to that security interest. First Nat'l Bank v. Atlanta Classic Cars, Inc., 184 Ga. App. 784, 363 S.E.2d 16 (1987).

Although a bank's security interests in equipment were properly perfected and remained so throughout a buyer's acquisition of the equipment from the debtor, those security interests were deemed never to have been perfected as against a purchaser for value when the bank failed to file timely continuation statements, under O.C.G.A. § 11-9-515(b), and the buyer took free of the security interests under O.C.G.A. § 11-9-317(b) because the buyer did not have actual knowledge of the security interests. Four County Bank v. Tidewater Equip. Co., 331 Ga. App. 753, 771 S.E.2d 437 (2015).

Fractionalizing not permitted.

- Fractionalizing was not allowed by O.C.G.A. § 11-1-201(9) to permit labeling a transferee a buyer in the ordinary course of business to the extent that the purchase price was not in satisfaction of a money debt, but not a buyer in the ordinary course of business to the extent that the purchase price was in satisfaction of a money debt. First Nat'l Bank v. Proceeding Ayres Aviation Holdings, Inc. (In re Ayres Aviation Holdings, Inc.), 342 Bankr. 104 (Bankr. M.D. Ga. 2006).

Because plaintiff cellular telephone trademark holder's packages contained terms and conditions inside and language on the outside of the packages that referenced those terms and conditions, there was a valid "shrink-wrap" contract between the holder and purchasers of the cell phones, and allegations that defendant competitor removed the phones from their original packaging and shipped the phones outside the United States sufficiently raised a reasonable expectation that discovery would reveal evidence that the competitor was aware of the terms and conditions, was afforded an opportunity to reject the terms and conditions, and failed to reject the terms and conditions, such that a breach of contract claim was plausible, and, because the allegations indicated a lack of good faith by the competitor, the bona fide purchaser for value and buyer in the ordinary course defenses under O.C.G.A. §§ 11-1-201 and11-2-403(1)(a) were not available. Tracfone Wireless, Inc. v. Zip Wireless Prods., 716 F. Supp. 2d 1275 (N.D. Ga. 2010).

Conspicuous Term or Clause

Disclaimer of implied warranty was adequate.

- Where the disclaimer was in letters larger than any other type on the form, where significant portions of the disclaimer were capitalized, thus distinguishing them from other language on the form, and where the language was conspicuously set forth, the limitation of the implied warranty of merchantability met the requirements of O.C.G.A. § 11-2-316(2). Harris v. Sulcus Computer Corp., 175 Ga. App. 140, 332 S.E.2d 660 (1985).

Warranty disclaimer language was "conspicuous" where it appeared in capital letters, in a separate paragraph on the front of an invoice, and in a type style which was otherwise employed on the form only with regard to language relating to the limitation of remedies. Apex Supply Co. v. Benbow Indus., Inc., 189 Ga. App. 598, 376 S.E.2d 694 (1988).

Roofing material vendor's disclaimer of warranty, which stated in capitalized letters that the vendor made no warranties, express or implied, including merchantability or fitness for a particular purpose, except as expressly stated therein, was sufficient to preclude an action against the vendor for breach of the implied warranties of merchantability and fitness. Steele v. Gold Kist, Inc., 186 Ga. App. 569, 368 S.E.2d 196, cert. denied, 186 Ga. App. 919, 368 S.E.2d 196 (1988).

Disclaimer inadequate.

- Where a paragraph in a lease purporting to disclaim implied warranties of merchantibility and fitness was in the same size font as the rest of the printed terms and, although separately numbered, was not otherwise set apart from the other paragraphs, the language was not "conspicuous" within the meaning of O.C.G.A. § 11-1-201(10). Bailey v. Tucker Equip. Sales, Inc., 236 Ga. App. 289, 510 S.E.2d 904 (1999).

A reasonable person would not necessarily have noticed and understood that, by the mere mention of "as is" in the context in which it appeared in a lease agreement, without any mention of any warranties or any disclaimers of warranties, he or she was agreeing to forego any rights to lease a piece of equipment in fit and suitable working condition. Bailey v. Tucker Equip. Sales, Inc., 236 Ga. App. 289, 510 S.E.2d 904 (1999).

Notice conspicuous.

- Limitation of liability language on a directory advertising order that appeared in all capital letters satisfied O.C.G.A. § 11-1-201(10). Elliott Irrigation Co. v. L. M. Berry & Co., F. Supp. 2d (N.D. Ga. Mar. 14, 2005).

Statement of payment in full conspicuous.

- Deposit of a check constituted an accord and satisfaction under O.C.G.A. § 11-3-311 of a settlement agreement in a debt dispute as a dispute under O.C.G.A. § 13-4-103(b)(1) existed as to the fee portion of the settlement and the letter sent with the check contained a conspicuous statement under O.C.G.A. § 11-1-201(10) that the tender of the check was full payment and satisfaction of the settlement. Blitch v. Walker Pharm., 295 Ga. App. 347, 671 S.E.2d 842 (2008).

Good Faith

Determination of "good faith" is a question of fact requiring consideration of all circumstances attending a transaction; however, where facts of relevant event are clear and fully developed in motion for summary judgment, it remains only for court to determine proper legal inference to be drawn from the facts. First Nat'l Bank v. Trust Co., 510 F. Supp. 651 (N.D. Ga. 1981).

The 1996 amendments of the UCC definitions of "good faith" and "holder in due course" (O.C.G.A. §§ 11-3-103 and11-3-302) did not apply retroactively to transactions before their effective date; rather, the definitions in O.C.G.A. §§ 11-1-201 and11-3-302 (former version) applied. Choo Choo Tire Serv., Inc v. Union Planters Nat'l Bank, 231 Ga. App. 346, 498 S.E.2d 799 (1998).

Illustrative cases.

- A bank was a good faith purchaser for value of certain cars under the following circumstances: The proprietor of a used-car business maintained a special checking account with the bank; the proprietor purchased cars from a car auction company with checks drawn upon this account; the proprietor then executed a promissory note to the bank, which loaned the proprietor the purchase price and took a security interest in the car; the account became overdrawn and the bank refused to honor the checks made out to the auction company. Georgia Cas. & Sur. Co. v. Tennille Banking Co. (In re Smith), 51 Bankr. 904 (Bankr. M.D. Ga. 1985).

Bank actions in failing to inform customers of a rule change on signature verification, allowing an employee of customer to place funds in a checking account from the customer's line of credit, and arranging personal loans for the employee were not evidence of a lack of good faith on the part of the bank in paying forged checks. Eason Publications, Inc. v. Nationsbank, 217 Ga. App. 726, 458 S.E.2d 899 (1995).

Holder

Bank is holder of instrument issued to it even if payee does not endorse it.

- Even if payee does not personally endorse an instrument, a bank is holder of that instrument as long as the instrument was issued to the bank. Pazol v. Citizens Nat'l Bank, 110 Ga. App. 319, 138 S.E.2d 442 (1964).

Bank not holder of instrument lacking joint payee's endorsement.

- A bank never became a holder in due course where a check made payable jointly to the bank's customer and a third party was never endorsed by the third party before deposit in the bank. Citizens & S. Nat'l Bank v. Sun Belt Elec. Constructors, Inc., 64 Bankr. 377 (Bankr. N.D. Ga. 1986).

The procedural benefit afforded by O.C.G.A. § 13-7-7 is not available to a party who is the original payee of negotiable paper even though the original payee may qualify as a "holder" under O.C.G.A. § 11-1-201. Jones v. FDIC, 151 Ga. App. 619, 260 S.E.2d 751 (1979).

A party can establish status as holder of instruments sued on by producing the instruments in evidence. James Talcott, Inc. v. Allahabad Bank, Ltd., 444 F.2d 451 (5th Cir.), cert. denied, 404 U.S. 940, 92 S. Ct. 280, 30 L. Ed. 2d 253 (1971).

Possession.

- Although the corporation met the requirements for being a holder in due course to the extent that it took the promissory note regarding the mortgage for value, in good faith, and without notice of any claim to the instrument, the corporation was not a holder in due course because it was not in possession of the promissory note at the time it purchased the mortgage; since it was not in possession, it failed to achieve holder-in-due-course status and the bank's security interest prevailed. Provident Bank v. Morequity, Inc., 262 Ga. App. 331, 585 S.E.2d 625 (2003).

Payee of a check who never received possession of the check and who was unaware that the check had been made out to the payee was not a "holder" of the check. Jenkins v. Wachovia Bank, Nat'l Ass'n, 309 Ga. App. 562, 711 S.E.2d 80 (2011).

Pursuant to O.C.G.A. § 11-1-201(20)(a), the holder of a check is entitled to negotiate the check, and a holder is one who has possession of the check. Sun Nurseries, Inc. v. Lake Erma, LLC, 316 Ga. App. 832, 730 S.E.2d 556 (2012).

Notice

Knowledge refers to actual knowledge.

- Knowledge of a fact is defined in the Uniform Commercial Code as actual knowledge. Hopkins v. Kemp Motor Sales, Inc., 139 Ga. App. 471, 228 S.E.2d 607 (1976).

Where security interest in an automobile was not properly recorded and was documented only in divorce decree's incorporated agreement, the secured party failed to carry burden of proving that buyer had actual knowledge of secured party's interest, even assuming the buyer had knowledge of the divorce. Freeman v. Bentley, 205 Ga. App. 409, 422 S.E.2d 435 (1992).

Shortly after a bank made a loan to a farmer, it mailed a cotton gin written notice of its security interest in the farmer's cotton crop. As the gin's president admitted reading the bank's letter, the gin had "actual knowledge" of the bank's security interest under O.C.G.A. § 11-1-201(25), (27), despite the president's claim that no documentation had been enclosed with the letter. Bank of Dawson v. Worth Gin Co., 295 Ga. App. 256, 671 S.E.2d 279 (2008).

Notice not required.

- Lessor was not required to comply with the notice provisions of O.C.G.A. §§ 10-1-36 and11-9-504 because the motor vehicle lease agreement the lessor entered into with the lessee was intended to be a true lease and not to evince a secured transaction; the lessor retained a meaningful reversionary interest in the car because the option price was more than nominal since the purchase option price was approximately one-third of the car's value, and the agreement contained no provision purporting to grant the lessee equity in the vehicle prior to exercise of the purchase option. Aniebue v. Jaguar Credit Corp., 308 Ga. App. 1, 708 S.E.2d 4 (2011).

Jury question.

- Where there is conflicting evidence on the nature and extent of the debtor's knowledge, the debtor should not be estopped from raising lack of notice as a defense. Rather, the question of "reasonable notification" should be submitted to the jury. Comfort Trane Air Conditioning Co. v. Trane Co., 592 F.2d 1373 (5th Cir. 1979).

Public Sale

When sale is commercially reasonable.

- Sale is commercially reasonable where it is done in public, during business hours, upon adequate notice within reasonable time of repossession, and under conditions reasonably calculated to bring fair market price. Hardin v. Norlin Music, Inc., 159 Ga. App. 167, 283 S.E.2d 21 (1981).

Burden of showing reasonable conduct of sale.

- Secured party bears burden under O.C.G.A. § 11-1-201(31.1) to show that sale was conducted in reasonable fashion. Hardin v. Norlin Music, Inc., 159 Ga. App. 167, 283 S.E.2d 21 (1981).

Opportunity for competitive bidding required.

- Where advertised sale under O.C.G.A. § 11-1-201(31.1) is held as scheduled, and proper notice is given, any person has right to enter competitive bid. Opportunity for competitive bidding is established and that is all that is required, even if no third party bids at sale. Hardin v. Norlin Music, Inc., 159 Ga. App. 167, 283 S.E.2d 21 (1981).

To require that secured party rebut mere supposition that bidding may have been chilled would be unfair. Hardin v. Norlin Music, Inc., 159 Ga. App. 167, 283 S.E.2d 21 (1981).

Security Interest

"Magic words" not required.

- Georgia law does not require "magic words" to create a valid security interest. Rather, the court must refer to the general law of contracts and determine whether the parties intended to create a security agreement. National Traveler, Inc. v. Paccom Leasing Corp., 110 Bankr. 619 (Bankr. M.D. Ga. 1990).

Filing requirements do not apply to leases.

- Where the agreement is a lease it is beyond the requirements for filing O.C.G.A. § 11-1-201. Sanders v. Commercial Credit Corp., 398 F.2d 988 (5th Cir. 1968).

A "lease intended as security" is one which has the ultimate intent of a sale. In re Atlanta Times, Inc., 259 F. Supp. 820 (N.D. Ga. 1966), aff'd sub nom. Sanders v. National Acceptance Co. of Am., 383 F.2d 606 (5th Cir. 1967).

Three elements for determining whether a lease is a security agreement: one, there must be an agreement by the lessee to pay lessor a set amount; two, amount must be equivalent to value of leased goods; and three, lessee must become owner or have option to become owner of leased goods. If any one of these elements is lacking, the lease is not a financing agreement but is a true lease. Trax, Inc. v. Wood, 7 Bankr. 543 (Bankr. N.D. Ga. 1980); Shamrock Rental Co. v. Huffman, 63 Bankr. 737 (Bankr. N.D. Ga. 1986).

Lease not a security agreement.

- In a Chapter 13 bankruptcy, in which an automobile lease required the debtor to surrender possession of vehicle at the end of the lease, unless the debtor exercised the debtor's option to purchase vehicle, and the debtor was not required to purchase the vehicle or renew the lease, and the debtor could not purchase the vehicle at the end of the lease for a nominal amount - rather, the end-of-lease purchase price exceeded the market value of the vehicle at that point - pursuant to O.C.G.A. § 11-1-201(37) (2002), the lease was a true lease, not a security agreement, and the debtor, thus, had to assume the lease or surrender the vehicle, rather than paying the lessor's claim in accordance with 11 U.S.C. § 1325(a)(5). Freeway Auto Credit v. Bonner (In re Bonner), Bankr. (Bankr. M.D. Ga. July 19, 2006).

Security agreement need not be in any particular form. The requirements are as follows: (1) there must be a writing; (2) the language must reflect an intent to create a security interest; (3) the writing must reasonably describe the collateral; and (4) the agreement must be signed by the debtor. Trust Co. Bank v. Walker, 35 Bankr. 237 (Bankr. N.D. Ga. 1983).

Article 9 applies to lease intended as security interest, but not to bona fide leases. United Counties Trust Co. v. Mac Lum, Inc., 643 F.2d 1140 (5th Cir. 1981).

While the terms of the agreement created a lease rather than a secured transaction, any ambiguity caused by the option purchase price at the end of the lease ceased to exist when the parties entered into the addendum, prior to performance by either party, which made the purchase price the fair market value. Summerhill Neighborhood Dev. Corp. v. Telerent Leasing Corp., 242 Ga. App. 142, 528 S.E.2d 889 (2000).

Name given to transaction by parties not conclusive.

- Whether lease is intended as security is to be determined by facts of each case; name which parties give it is not conclusive. Ford Motor Credit Co. v. Dowdy, 159 Ga. App. 666, 284 S.E.2d 679 (1981), overruled on other grounds, Adams v. D & D Leasing Co., 191 Ga. App. 121, 381 S.E.2d 94 (1989).

Motor vehicle lease agreement.

- Considering the facts of the case in light of the plain language of the Georgia Code, an agreement giving debtor right to possession and use of a new truck in return for certain payments constituted a lease under Georgia law, even though the contract did not give debtor the power to terminate the agreement prior to the expiration of the term of the agreement. In re Paz, 179 Bankr. 743 (Bankr. S.D. Ga. 1995).

The best test for determining the intent of an agreement which provides for an option to buy - that is, whether it is a lease or a security agreement - is a comparison of the option price with the market value of the equipment at the time the option is to be exercised. Such a comparison shows whether the lessee is paying actual value (evidencing a lease) or acquiring the property at a substantially lower price (evidencing a security agreement). Mejia v. Citizens & S. Bank, 175 Ga. App. 80, 332 S.E.2d 170 (1985).

When an alleged automobile lease agreement contains an option to purchase the leased vehicle, the "best test" for determining the agreement's purpose and the parties' contractual intent is a comparison of the option price with the market value of the equipment at the time the option is to be exercised. If the lessees can acquire the property under the purchase option for little or no additional consideration in relation to its true value, the lease is one intended for security. If the lessees are required to pay at least a reasonable price, if not a price equal to or greater than the actual value of the automobile, at option time in order to exercise their purchase option, the agreement is intended to be and is in fact a true lease and not a disguised security transaction. Woods v. General Elec. Credit Auto Lease, Inc., 187 Ga. App. 57, 369 S.E.2d 334 (1988).

Factors tending to establish that "lease" transaction is a conditional sale are: lessor's purchase of equipment from supplier; requirement that lessee be responsible for payment of all taxes, insurance and expenses for repairs, an initial down payment, and additional payment of security deposit. Ford Motor Credit Co. v. Dowdy, 159 Ga. App. 666, 284 S.E.2d 679 (1981), overruled on other grounds, Adams v. D & D Leasing Co., 191 Ga. App. 121, 381 S.E.2d 94 (1989).

Additional factors which tend to establish that a transaction is a conditional sale instead of a true lease include an initial down payment and the requirement that the lessee be responsible for payment of taxes and insurance. Walton v. Howard, 198 Ga. App. 804, 403 S.E.2d 90 (1991).

Lease creating security interest.

- A lease will create a security interest if: (a) it secures payment or performance of an obligation upon personal property reserved by the lease; and (b) the lease is intended as security. Such intention is to be determined objectively on the basis of the facts of the case. Citizens & S. Equip. Leasing, Inc. v. Atlanta Fed. Sav. & Loan Ass'n, 144 Ga. App. 800, 243 S.E.2d 243 (1978).

A lease-purchase agreement meeting the requirements of O.C.G.A. § 10-1-681 constituted a true lease, not a security agreement, and was subject to § 365 of the Bankruptcy Code, 11 U.S.C.S. § 365. Central Rents, Inc. v. Johnson, 203 Bankr. 498 (Bankr. S.D. Ga. 1996).

Lease disguised as security agreement.

- Creditor's unqualified right to require the debtor to repurchase equipment during or at termination of a purported lease, coupled with a letter agreement that was intended to insure the return of the creditor's investment and a return on the investment of a certain percentage indicated that the lease was a disguised security agreement. Moore v. Emery (In re Am. Steel Prod., Inc.), 203 Bankr. 504 (Bankr. S.D. Ga. 1996).

"Lease" which requires lessee to purchase the property upon cancellation.

- An agreement termed a "lease," which requires the lessee to purchase the vehicle upon cancellation, is equivalent to a secured sale, even though the lessor retains all indicia of ownership. Pierce v. Leasing Int'l, Inc., 142 Ga. App. 371, 235 S.E.2d 752 (1977).

Where a "lessee" has not been given an option to purchase collateral at a nominal price, but is under a contractual duty to make the purchase, it is the purchaser, and the "lessor" is the seller and secured party. USI Capital & Leasing v. Medical Oxygen Serv., Inc., 36 Bankr. 341 (Bankr. N.D. Ga. 1984).

Lease of equipment providing that title remain in lessor and for redelivery to lessor at expiration of term.

- A lease of equipment for five years at an agreed price, with title to the property remaining in the lessor and with delivery of possession of the equipment to lessor to be made at the expiration of the lease, cannot be construed as the creation of a security interest. McGuire v. Associates Capitol Servs. Corp., 133 Ga. App. 408, 210 S.E.2d 862 (1974).

Lessee becoming owner for nominal, or no, consideration upon compliance with lease.

- An agreement whereby upon compliance with the terms of a lease the lessee shall become or has the option to become the owner of the property for no additional consideration or for a nominal consideration makes the lease one intended for security. Mann Inv. Co. v. Columbia Nitrogen Corp., 173 Ga. App. 77, 325 S.E.2d 612 (1984).

A lease agreement covering machinery and equipment was a security instrument, rather than a true lease, where the agreement provided that "the Lessee shall have the option to purchase . . . for the sum of $1.00" and there was evidence which indicated the machinery and equipment were worth much more than $1.00 upon the termination date of the lease. Melton v. J.M. Kenith Co., 182 Ga. App. 184, 355 S.E.2d 115, overruled on other grounds, Bank S. v. Jones, 185 Ga. App. 125, 364 S.E.2d 281 (1987).

Computer equipment lease agreement was "true lease," where the terms of the lease required payment of more than a "nominal" price to exercise an option to purchase the equipment. Third Century, Inc. v. Morgan, 187 Ga. App. 718, 371 S.E.2d 262 (1988).

Rental purchase agreements between a rent-to-own business and renter were true leases where, even though they contained some provisions found in secured sales agreements, the renter could return the property without any further obligation, was not required to renew the agreements or purchase the property, or to make a down payment or security deposit, the company was responsible for maintaining and paying taxes on the property, and the agreements expressly provided that the renter intended to rent rather than purchase the property and would not own the property unless the renter bought it or acquired ownership as provided by the agreements. Mr. C's Rent to Own v. Jarrells, 205 Bankr. 994 (Bankr. M.D. Ga. 1997).

Contract to lease washing machine for one week, with option to renew lease "for an additional term at the conclusion of each term or rental period, by the payment to the lessor of the rental payment," was a "true lease" and no security interest was created therein. Elcan Invs., Inc. v. Kirk, 187 Ga. App. 676, 371 S.E.2d 146 (1988).

Telephone equipment lease agreement was a true lease, not a secured transaction, where the initial term was for five years and the lessee was not required to renew the lease or purchase the equipment at the end of the term and did not have the option to renew the lease or purchase the property at the end of the term for a nominal consideration. Carter v. Tokai Fin. Servs., Inc., 231 Ga. App. 755, 500 S.E.2d 638 (1998).

Agreement to "lease" equipment for a fixed period for an amount which approximated the original purchase price, with an option to purchase for no additional consideration, was a security agreement rather than a true lease. Tri Leasing Corp. v. Fulton Textiles, Inc., 116 Bankr. 302 (Bankr. N.D. Ga. 1990).

Three-year "lease agreement contract," by which "lessee" would make monthly payments and, at the end of the three years, without any additional payments, would own the leased equipment, was a security agreement and not a lease. National Traveler, Inc. v. Paccom Leasing Corp., 110 Bankr. 619 (Bankr. M.D. Ga. 1990).

Agreement which did not stipulate a purchase price but indicated an intent to negotiate a purchase price was a true lease, and not a conditional sale. Chapman v. Avco Fin. Servs. Leasing Co., 193 Ga. App. 147, 387 S.E.2d 391 (1989).

Farmers Home Administration.

- Despite the fact that the form executed by the debtors did not contain a clause that "granted" a security interest to the Farmers Home Administration (FmHA), considering other language in the form, including a heading "Security Agreement (chattels and crops)," a reference to the FmHA as the "Secured Party," and a provision which read: "It is the purpose and intent of this instrument that . . . this instrument shall secure payment of the note," the debtors did grant the FmHA a security interest in crops, livestock and offspring, farm equipment, and farm products. United States v. Hollie, 42 Bankr. 111 (Bankr. M.D. Ga. 1984).

Evidence indicative of motor vehicle lease agreement.

- In a "motor vehicle lease" agreement involving a question as to whether the agreement was really a security transaction, the fact that the original lessor was in the automobile rental business and that the lessor did not require a financing statement indicated that a true lease agreement was involved. Mejia v. Citizens & S. Bank, 175 Ga. App. 80, 332 S.E.2d 170 (1985).

Summary judgment premature without Bright-Line test.

- Trial court erred in entering summary judgment for a lessor without addressing whether the parties' contract for a car was a lease or a security agreement under the Bright-Line Test. Coleman v. DaimlerChrysler Servs. of N. Am., LLC, 276 Ga. App. 336, 623 S.E.2d 189 (2005).

Signature

Maker's intent.

- Whatever a maker intends as the maker's signature is the maker's signature and gives effect to the maker's contract. Kohlmeyer & Co. v. Bowen, 126 Ga. App. 700, 192 S.E.2d 400 (1972).

A complete signature is not necessary.

- Under O.C.G.A. § 11-1-201(39) a complete signature is not necessary to constitute an authentication, as it may be printed and may be on any part of the document including a billhead or letterhead. Evans v. Moore, 131 Ga. App. 169, 205 S.E.2d 507 (1974).

Signature of face does not authenticate title retention agreement on back.

- Placing of initials and/or signature on face of documents does not suffice to authenticate title retention agreement on reverse and as a consequence does not entitle it to priority over disputed collateral. Food Serv. Equip. Co. v. First Nat'l Bank, 121 Ga. App. 421, 174 S.E.2d 216 (1970).

Absence of notary seal.

- Jury verdict imposing liability on guarantors for a debt of a corporation was reversed where there was no evidence that the guarantors wrote their names on or otherwise signed the guaranty, where a witness's opinion that the guaranty "appeared" to be executed by the guarantors lacked any basis whatsoever, other than the fact that their names appeared on the signature lines, and where the notary attestation was invalid, if for no other reason, because the guaranty did not contain a notary seal. Friedrich v. APAC-Georgia, Inc., 265 Ga. App. 769, 595 S.E.2d 620 (2004).

Unauthorized Signature or Endorsement

Apparent authority to execute indorsements.

- Where its president-treasurer had at least apparent authority - if not actual authority - to execute indorsements, a corporation could not defeat such indorsements merely by alleging that in truth and in fact the officer had no such authority and that the officer's act in indorsing the paper had not been ratified. Bank S. v. Midstates Group, Inc., 185 Ga. App. 342, 364 S.E.2d 58 (1987); Holliday Constr. Co. v. Sandy Springs Assocs., 198 Ga. App. 20, 400 S.E.2d 380 (1990).

OPINIONS OF THE ATTORNEY GENERAL

A contract of guaranty is a collateral "obligation" which is just as enforceable as any other contract. 1971 Op. Att'y Gen. No. 71-69.

RESEARCH REFERENCES

Am. Jur. 2d.

- 11 Am. Jur. 2d, Bills and Notes, §§ 54, 84 et seq., 186, 236 et seq., 287 et seq., 361 et seq., 387. 12 Am. Jur. 2d, Bills and Notes, §§ 586, 631. 13 Am. Jur. 2d, Business Trusts, § 1. 15A Am. Jur. 2d, Commercial Code, § 1 et seq. 17A Am. Jur. 2d, Contracts, §§ 1-3. 27A Am. Jur. 2d, Equity, §§ 1, 207. 53A Am. Jur. 2d, Money, § 1. 67 Am. Jur. 2d, Sales, §§ 10-27, 31. 68A Am. Jur. 2d, Secured Transactions, § 31 et seq.

Status as "Buyer in Ordinary Course of Business," 2 POF2d 165.

Ratification of Forged or Unauthorized Signature, 7 POF2d 675.

14 Am. Jur. Pleading and Practice Forms, Insolvency, § 2.

C.J.S.

- 82 C.J.S., Statutes, § 309.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 1-201.

ALR.

- Character of bill of lading contemplated by a guaranty of payment of a draft with bill of lading attached, 13 A.L.R. 166.

Right of trustee in bankruptcy as regards property held in trust for bankrupt, 16 A.L.R. 552; 138 A.L.R. 1349.

Right of surety who discharges obligation due to government to be subrogated to priority or preference of latter, 24 A.L.R. 1502; 83 A.L.R. 1131.

Right of receiver, assignee, or trustee in bankruptcy to possession and administration of collateral validly pledged by his insolvent, 28 A.L.R. 409.

What money is legal tender, 31 A.L.R. 246.

Public records as affecting one's character as a holder in due course of negotiable paper, 37 A.L.R. 860.

Branch banks, 50 A.L.R. 1340; 136 A.L.R. 471.

Construction, application, and effect of statute relating to question as to time as essence of contract, 79 A.L.R. 410.

Who must sign and form of signature, in case of partnership, in order to comply with statute of frauds, 114 A.L.R. 1005.

Branch banks, 136 A.L.R. 471.

Right of trustee in bankruptcy as regards property held in trust for bankrupt, 138 A.L.R. 1349.

What constitutes a "public sale,", 4 A.L.R.2d 575.

Right to follow chattel into hands of purchaser who took in payment of pre-existing debt, 11 A.L.R.3d 1028.

Extent of duty of transferee of bulk sale to investigate regarding seller's creditors under Uniform Commercial Code Article 6, 67 A.L.R.3d 1056.

Construction and effect of UCC § 2-316(2) providing that implied warranty disclaimer must be "conspicuous,", 73 A.L.R.3d 248.

Who is "person in business of selling goods of that kind" within provision of UCC § 1-201(9) defining buyer in ordinary course of business for purposes of UCC § 9-307(1), 73 A.L.R.3d 338.

Maintenance of computer terminal in retail store for purpose of effecting transfer of funds between financial institution and its depositors as conduct of banking business by store, 73 A.L.R.3d 1282.

Equipment leases as security interest within Uniform Commercial Code § 1-201(37), 76 A.L.R.3d 11.

Who is "buyer in ordinary course of business" under the Uniform Commercial Code, 87 A.L.R.3d 11.

What constitutes "money" within meaning of Uniform Commercial Code, 40 A.L.R.4th 346.

11-1-202. Notice; knowledge.

  1. Subject to subsection (f) of this Code section, a person has "notice" of a fact if the person:
    1. Has actual knowledge of it;
    2. Has received a notice or notification of it; or
    3. From all the facts and circumstances known to the person at the time in question, has reason to know that it exists.
  2. "Knows" or "knowledge" means actual knowledge.
  3. "Discover," "learn," or words of similar import refer to knowledge rather than to reason to know.
  4. A person "notifies" or "gives" a notice or notification to another person by taking such steps as may be reasonably required to inform the other person in the ordinary course, whether or not the other person actually comes to know of it.
  5. Subject to subsection (f) of this Code section, a person "receives" a notice or notification when:
    1. It comes to that person's attention; or
    2. It is duly delivered in a form reasonable under the circumstances at the place of business through which the contract was made or at another location held out by that person as the place for receipt of such communications.
  6. Notice, knowledge, or a notice or notification received by an organization shall be effective for a particular transaction from the time it is brought to the attention of the individual conducting that transaction and, in any event, from the time it would have been brought to the individual's attention if the organization had exercised due diligence. An organization exercises due diligence if it maintains reasonable routines for communicating significant information to the person conducting the transaction and there is reasonable compliance with the routines. Due diligence does not require an individual acting for the organization to communicate information unless the communication is part of the individual's regular duties or the individual has reason to know of the transaction and that the transaction would be materially affected by the information.

(Code 1933, § 109A-1 - 202, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2015, p. 996, § 3A-1/SB 65; Ga. L. 2016, p. 864, § 11/HB 737.)

The 2015 amendment, effective January 1, 2016, substituted the present provisions of this Code section for the former provisions, which read: "A document in due form purporting to be a bill of lading, policy or certificate of insurance, official weigher's or inspector's certificate, consular invoice, or any other document authorized or required by the contract to be issued by a third party shall be prima facie evidence of its own authenticity and genuineness and of the facts stated in the document by the third party."

The 2016 amendment, effective May 3, 2016, part of an Act to revise, modernize, and correct the Code, substituted "a notice or notification" for "notice or notification" in subsection (e).

Cross references.

- Duty of certified public weigher to obtain official seal from Department of Agriculture, and as to effect of impressing of seal on certificates, § 10-2-45.

Law reviews.

- For note, "The Law of Evidence in the Uniform Commercial Code," see 1 Ga. L. Rev. 44 (1966).

RESEARCH REFERENCES

Am. Jur. 2d.

- 15A Am. Jur. 2d, Commercial Code, §§ 32, 51, 58.

C.J.S.

- 32A C.J.S., Evidence, §§ 819 et seq., 967.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 1-202.

ALR.

- Construction and effect of § 1-202 of the Uniform Commercial Code dealing with documents which are prima facie evidence of their own authenticity and genuineness, 72 A.L.R.3d 1243.

11-1-203. Lease distinguished from security interest.

  1. Whether a transaction in the form of a lease creates a security interest is determined by the facts of each case.
  2. A transaction in the form of a lease creates a security interest if the consideration that the lessee is to pay to the lessor for the right to possession and use of the goods is an obligation for the term of the lease and is not subject to termination by the lessee, and:
    1. The original term of the lease is equal to or greater than the remaining economic life of the goods;
    2. The lessee is bound to renew the lease for the remaining economic life of the goods or is bound to become the owner of the goods;
    3. The lessee has an option to renew the lease for the remaining economic life of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement; or
    4. The lessee has an option to become the owner of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement.
  3. A transaction in the form of a lease does not create a security interest merely because:
    1. The present value of the consideration the lessee is obligated to pay the lessor for the right to possession and use of the goods is substantially equal to or is greater than the fair market value of the goods at the time the lease is entered into;
    2. The lessee assumes risk of loss of the goods;
    3. The lessee agrees to pay, with respect to the goods, taxes, insurance, filing, recording, or registration fees, or service or maintenance costs;
    4. The lessee has an option to renew the lease or to become the owner of the goods;
    5. The lessee has an option to renew the lease for a fixed rent that is equal to or greater than the reasonably predictable fair market rent for the use of the goods for the term of the renewal at the time the option is to be performed; or
    6. The lessee has an option to become the owner of the goods for a fixed price that is equal to or greater than the reasonably predictable fair market value of the goods at the time the option is to be performed.
  4. Additional consideration is nominal if it is less than the lessee's reasonably predictable cost of performing under the lease agreement if the option is not exercised. Additional consideration is not nominal if:
    1. When the option to renew the lease is granted to the lessee, the rent is stated to be the fair market rent for the use of the goods for the term of the renewal determined at the time the option is to be performed; or
    2. When the option to become the owner of the goods is granted to the lessee, the price is stated to be the fair market value of the goods determined at the time the option is to be performed.
  5. The "remaining economic life of the goods" and "reasonably predictable" fair market rent, fair market value, or cost of performing under the lease agreement must be determined with reference to the facts and circumstances at the time the transaction is entered into.

(Code 1933, § 109A-1 - 203, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2015, p. 996, § 3A-1/SB 65.)

The 2015 amendment, effective January 1, 2016, substituted the present provisions of this Code section for the former provisions, which read: "Every contract or duty within this title imposes an obligation of good faith in its performance or enforcement."

Law reviews.

- For survey article on contracts - employment at will, see 34 Mercer L. Rev. 86 (1982). For article, "Baseline Questions in Legal Reasoning: The Example of Property in Jobs," see 23 Ga. L. Rev. 911 (1989). For annual survey article discussing the obligation of good faith, see 46 Mercer L. Rev. 95 (1994). For article, "Common Fact Patterns of Stock Broker Fraud and Misconduct," see 7 Ga. St. B.J. 14 (2002). For note, "The Growth of Lender Liability: An Economic Perspective," see 21 Ga. L. Rev. 723 (1987). For comment, "Lender Liability for Breach of the Obligation of Good Faith Performance," see 36 Emory L.J. 917 (1987).

JUDICIAL DECISIONS

Section construed.

- O.C.G.A. § 11-1-203 in effect states that what is not regulated by contract should be done in such a way as to show good faith in carrying out of what is expressed. Fulton Nat'l Bank v. Willis Denney Ford, Inc., 154 Ga. App. 846, 269 S.E.2d 916 (1980).

O.C.G.A. § 11-1-203 does not state a cause of action for which a claim of relief may be granted. Management Assistance, Inc. v. Computer Dimensions, Inc., 546 F. Supp. 666 (N.D. Ga. 1982), aff'd sub nom. Computer Dimensions v. Basic Four, 747 F.2d 708 (11th Cir. 1984).

No independent cause of action created by O.C.G.A. § 11-1-203. - Inasmuch as a borrower could not prevail on its breach of contract claim against a lender, it could not prevail on a cause of action based on the failure to act in good faith in performing the contract because there was no independent cause of action for breach of duty of good faith in performing a contract governed by the Uniform Commercial Code. Heritage Creek Dev. Corp. v. Colonial Bank, 268 Ga. App. 369, 601 S.E.2d 842 (2004).

Inapplicable in financing of residential lots.

- The implied covenant of good faith under the Uniform Commercial Code was inapplicable to a case involving the financing of residential lots, rather than the sale of goods. Lake Tightsqueeze, Inc. v. Chrysler First Fin. Servs. Corp., 210 Ga. App. 178, 435 S.E.2d 486 (1993).

Good faith required in foreclosing on security deed.

- Homeowner stated a claim for breach of contract and breach of the duty of good faith and fair dealing against the homeowner's mortgage lender based on the lender's legal duty in the security agreement to conduct the foreclosure of the property fairly, acting as the owner's agent. Stewart v. SunTrust Mortg., Inc., 331 Ga. App. 635, 770 S.E.2d 892 (2015).

Inapplicable to franchise agreement.

- Because a franchise agreement primarily governed issues regarding the proper operation of a franchise restaurant, advertising, the use of trademarks, trade names, and service marks, and the provisions regarding goods were incidental at best, the court concluded that non-sale aspects predominated the franchise agreement, and the duty of good faith and fair dealing embodied in O.C.G.A. § 11-1-203 did not apply. Am. Casual Dining, L.P. v. Moe's Southwest Grill, L.L.C., 426 F. Supp. 2d 1356 (N.D. Ga. 2006).

Substantial compliance with spirit of contract.

- "Good faith" is merely a shorter way of saying substantial compliance with the spirit, and not the letter only, of the contract. Crooks v. Chapman Co., 124 Ga. App. 718, 185 S.E.2d 787 (1971).

Banking provision enforceable subject to good faith requirement.

- Business checking account agreement containing provision that bank may charge any indebtedness of depositor to bank, whether or not matured, against account if the bank deems itself insecure with respect to any such indebtedness, is enforceable, subject to the general requirement of good faith in its enforcement as set forth in O.C.G.A. § 11-1-203. First Nat'l Bank v. Appalachian Indus., Inc., 146 Ga. App. 630, 247 S.E.2d 422 (1978).

No bad faith discharge of notes due to charge backs under factoring agreement.

- Delta Diversified, Inc. v. Citizens & S. Nat'l Bank, 171 Ga. App. 625, 320 S.E.2d 767 (1984).

Good faith not violated.

- Bank's failure to foreclose sooner on secured collateral did not constitute a breach of good faith and fair dealing owed to guarantors. Greenwald v. Columbus Bank & Trust Co., 228 Ga. App. 527, 492 S.E.2d 248 (1997).

When plaintiff Jobber petroleum distributors' only allegations of wrongdoing was defendant oil company's purported recapture of the cost of a prompt-pay discount when setting its price, and the parties' contract imposed no limits on the costs that could be recouped in setting the price, the good-faith safe harbor provided in O.C.G.A. § 11-2-305(2) applied; O.C.G.A. § 11-2-103 did not support imposing fundamental substantive limitations on the pricing methodology set out in the contract. Autry Petroleum Co. v. BP Prods. North America, Inc., F.3d (11th Cir. June 26, 2009)(Unpublished).

Cited in Geohagan v. Commercial Credit Corp., 130 Ga. App. 828, 204 S.E.2d 784 (1974); Central Soya Co. v. Bundrick, 137 Ga. App. 63, 222 S.E.2d 852 (1975); Interstate Sec. Police, Inc. v. Citizens & S. Emory Bank, 237 Ga. 37, 226 S.E.2d 583 (1976); Henderson Few & Co. v. Rollins Communications, Inc., 148 Ga. App. 139, 250 S.E.2d 830 (1978); Fratelli Gardino v. Caribbean Lumber Co., 447 F. Supp. 1337 (S.D. Ga. 1978); Brack v. Brownlee, 246 Ga. 818, 273 S.E.2d 390 (1980); Smithloff v. Benson, 173 Ga. App. 870, 328 S.E.2d 759 (1985); West v. Koufman, 259 Ga. 505, 384 S.E.2d 664 (1989); Four County Bank v. Tidewater Equip. Co., 331 Ga. App. 753, 771 S.E.2d 437 (2015).

RESEARCH REFERENCES

Am. Jur. 2d.

- 11 Am. Jur. 2d, Banks and Financial Institutions, § 918. 11 Am. Jur. 2d, Bills and Notes, §§ 276, 283, 295 et seq. 12 Am. Jur. 2d, Bills and Notes, § 586. 15A Am. Jur. 2d, Commercial Code, § 20. 17A Am. Jur. 2d, Contracts, § 342. 67 Am. Jur. 2d, Sales, §§ 21-23.

C.J.S.

- 17B C.J.S., Contracts, § 562.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 1-203.

ALR.

- Enforceability of transaction entered into pursuant to referral sales arrangement, 14 A.L.R.3d 1420.

Failure to deliver ordered merchandise to customer on date promised as unfair or deceptive trade practice, 7 A.L.R.4th 1257.

11-1-204. Value.

Except as otherwise provided in Articles 3, 4, 5, and 6 of this title, a person gives value for rights if the person acquires them:

  1. In return for a binding commitment to extend credit or for the extension of immediately available credit, whether or not drawn upon and whether or not a charge-back is provided for in the event of difficulties in collection;
  2. As security for, or in total or partial satisfaction of, a preexisting claim;
  3. By accepting delivery under a preexisting contract for purchase; or
  4. In return for any consideration sufficient to support a simple contract.

(Code 1981, §11-1-204, enacted by Ga. L. 2015, p. 996, § 3A-1/SB 65.)

Effective date.

- This Code section became effective January 1, 2016.

Editor's notes.

- Ga. L. 2015, p. 996, § 3A-1/SB 65, effective January 1, 2016, redesignated former Code Section 11-1-204 as present Code Section 11-1-205.

11-1-205. Reasonable time; seasonableness.

  1. Whether a time for taking any action required by this title is reasonable depends on the nature, purpose, and circumstances of such action.
  2. An action is taken "seasonably" if it is taken at or within the time agreed, or if no time is agreed, at or within a reasonable time.

(Code 1933, § 109A-1 - 204, enacted by Ga. L. 1962, p. 156, § 1; Code 1981, §11-1-205, as redesignated by Ga. L. 2015, p. 996, § 3A-1/SB 65.)

The 2015 amendment, effective January 1, 2016, redesignated former Code Section 11-1-204 as present Code Section 11-1-205; and substituted the present provisions of this Code section for the former provisions, which read: "(1) Whenever this title requires any action to be taken within a reasonable time, any time which is not manifestly unreasonable may be fixed by agreement.

"(2) What is a reasonable time for taking any action depends on the nature, purpose, and circumstances of such action.

"(3) An action is taken 'seasonably' when it is taken at or within the time agreed or if no time is agreed at or within a reasonable time."

Editor's notes.

- Former Code Section 11-1-205, pertaining to course of dealing and usage of trade, was repealed by Ga. L. 2015, p. 996, § 3A-1/SB 65, effective January 1, 2016. The former Code section was based on Ga. L. 1962, p. 156, § 1.

JUDICIAL DECISIONS

"Reasonable time" does not mean "immediately." Trailmobile Div. of Pullman, Inc. v. Jones, 118 Ga. App. 472, 164 S.E.2d 346 (1968); Solomon Refrigeration, Inc. v. Osburn, 148 Ga. App. 772, 252 S.E.2d 686 (1979).

What is a reasonable time is ordinarily a matter of fact to be determined by jury under particular circumstances of the case. Trailmobile Div. of Pullman, Inc. v. Jones, 118 Ga. App. 472, 164 S.E.2d 346 (1968); Solomon Refrigeration, Inc. v. Osburn, 148 Ga. App. 772, 252 S.E.2d 686 (1979).

Notice of rejection not reasonable under circumstances involved.

- Economy Forms Corp. v. Kandy, Inc., 391 F. Supp. 944 (N.D. Ga. 1974), aff'd, 511 F.2d 1400 (5th Cir. 1975).

One opportunity to cure was unreasonable.

- Motor coach buyer's revocation of acceptance claim under O.C.G.A. § 11-2-608(1)(b) failed because the buyer's providing only one opportunity to repair before the extent of the defect was truly apparent was not reasonable under O.C.G.A. § 11-1-204; the futility exception to providing an opportunity to cure did not apply because there was no evidence that the buyer knew prior to revocation that the seller would have been unable to repair the coach. Car Transp. Brokerage Co. v. Blue Bird Body Co., F.3d (11th Cir. Apr. 10, 2009)(Unpublished).

Cited in Alimenta (U.S.A.), Inc. v. Cargill, Inc., 861 F.2d 650 (11th Cir. 1988); Amatulli Imports, Inc. v. House of Persia, Inc., 191 Ga. App. 827, 383 S.E.2d 192 (1989); Wal-Mart Stores, Inc. v. Wheeler, 262 Ga. App. 607, 586 S.E.2d 83 (2003).

RESEARCH REFERENCES

Am. Jur. 2d.

- 15A Am. Jur. 2d, Commercial Code, §§ 26, 117. 17A Am. Jur. 2d, Contracts, §§ 478, 479. 67 Am. Jur. 2d, Sales, § 72.

C.J.S.

- 86 C.J.S., Time, § 4.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 1-204.

ALR.

- Constitutionality of statute regulating time-measuring instruments or devices, 37 A.L.R. 134.

Time for exercise of reserved option to terminate, cancel, or rescind contract, 164 A.L.R. 1014.

Time within which buyer must make inspection, trial, or test to determine whether goods are of requisite quality, 52 A.L.R.2d 900.

Time for revocation of acceptance of goods under UCC § 2-608(2), 65 A.L.R.3d 354.

11-1-206. Presumptions.

Whenever this title creates a "presumption" with respect to a fact, or provides that a fact is "presumed," the trier of fact must find the existence of the fact presumed unless and until evidence is introduced that supports a finding of its nonexistence.

(Code 1933, § 109A-1 - 206, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 1998, p. 1323, § 16; Ga. L. 2015, p. 996, § 3A-1/SB 65.)

The 2015 amendment, effective January 1, 2016, substituted the present provisions of this Code section for the former provisions, which read: "(1) Except in the cases described in subsection (2) of this Code section a contract for the sale of personal property is not enforceable by way of action or defense beyond $5,000.00 in amount or value of remedy unless there is some writing which indicates that a contract for sale has been made between the parties at a defined or stated price, reasonably identifies the subject matter, and is signed by the party against whom enforcement is sought or by his authorized agent.

"(2) Subsection (1) of this Code section does not apply to contracts for the sale of goods (Code Section 11-2-201) nor of securities (Code Section 11-8-113) nor to security agreements (Code Section 11-9-203)."

Cross references.

- Statute of frauds generally, § 13-5-30 et seq.

JUDICIAL DECISIONS

A school tuition payment is a payment for services rather than for the purchase of personal property. The inclusion of such incidental items as uniforms, lockers, books, etc. in the tuition fee clearly would not reduce the essential character of the transaction to a sale of personal property. Bishop v. Westminster Schools, Inc., 196 Ga. App. 891, 397 S.E.2d 143 (1990).

Effect of performance by a party.

- The statute of frauds does not bar enforcement of a contract which has been fully performed on one side. Bishop v. Westminster Schools, Inc., 196 Ga. App. 891, 397 S.E.2d 143 (1990).

Cited in L.M. Berry & Co. v. Blackmon, 129 Ga. App. 347, 199 S.E.2d 610 (1973).

RESEARCH REFERENCES

Am. Jur. 2d.

- 72 Am. Jur. 2d, Statute of Frauds, §§ 110, 111.

C.J.S.

- 77A C.J.S., Sales, § 68 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 1-206.

ALR.

- Oral contract to enter into written contract as within statute of frauds, 58 A.L.R. 1015.

Statute of frauds: sufficiency of identification of vendor or purchaser in memorandum, 70 A.L.R. 196.

Who must sign and form of signature, in case of partnership, in order to comply with statute of frauds, 114 A.L.R. 1005.

Terms "bags," "bales," "cars," or other terms indefinite as to quantity or weight, as satisfying statute of frauds, 129 A.L.R. 1230.

Contract to fill in land as one for sale of goods within statute of frauds, 161 A.L.R. 1158.

Statute of frauds: validity of lease or sublease subscribed by one of the parties only, 46 A.L.R.3d 619.

Construction and application of statute of frauds provision under UCC § 1-206 governing personal property not otherwise covered, 62 A.L.R.5th 137.

11-1-207. through 11-1-209.

Repealed by Ga. L. 2015, p. 996, § 3A-1/SB 65, effective January 1, 2016.

Editor's notes.

- These Code sections were based on Code 1933, §§ 109A-1 - 207 through 109A-1 - 209, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 1978, p. 1081, § 7; Ga. L. 1996, p. 1306, § 2.

PART 3 TERRITORIAL APPLICABILITY AND GENERAL RULES

Editor's notes.

- This part became effective January 1, 2016.

Ga. L. 2015, p. 996, § 1-1/SB 65(a), not codified by the General Assembly, provides that: "This Act shall be known and may be cited as the 'Debtor-Creditor Uniform Law Modernization Act of 2015.'

"(b) To promote consistency among the states, it is the intent of the General Assembly to modernize certain existing uniform laws promulgated by the Uniform Law Commission affecting debtor and creditor rights, responsibilities, and relationships and other federally recognized laws affecting such rights, responsibilities, and relationships."

11-1-301. Territorial applicability; parties' power to choose applicable law.

  1. Except as otherwise provided in this Code section, when a transaction bears a reasonable relation to this state and also to another state or nation the parties may agree that the law either of this state or of such other state or nation shall govern their rights and duties.
  2. In the absence of an agreement under subsection (a) of this Code section, and except as provided in subsection (c) of this Code section, this title applies to transactions bearing an appropriate relation to this state.
  3. If one of the following provisions of this title specifies the applicable law, that provision governs and a contrary agreement is effective only to the extent permitted by the law so specified:
    1. Code Section 11-2-402;
    2. Code Sections 11-2A-105 and 11-2A-106;
    3. Code Section 11-4-102;
    4. Code Section 11-4A-507;
    5. Code Section 11-5-116;
    6. Code Section 11-6-103;
    7. Code Section 11-8-110; or
    8. Code Sections 11-9-301 through 11-9-307.

(Code 1981, §11-1-301, enacted by Ga. L. 2015, p. 996, § 3A-1/SB 65.)

11-1-302. Variation by agreement.

  1. Except as otherwise provided in subsection (b) of this Code section or elsewhere in this title, the effect of provisions of this title may be varied by agreement.
  2. The obligations of good faith, diligence, reasonableness, and care prescribed by this title may not be disclaimed by agreement. The parties may by agreement determine the standards by which the performance of such obligations is to be measured if such standards are not manifestly unreasonable. Whenever this title requires an action to be taken within a reasonable time, a time that is not manifestly unreasonable may be fixed by agreement.
  3. The presence in certain provisions of this title of the phrase "unless otherwise agreed" or words of similar import does not imply that the effect of other provisions may not be varied by agreement under this Code section.

(Code 1981, §11-1-302, enacted by Ga. L. 2015, p. 996, § 3A-1/SB 65.)

11-1-303. Course of performance, course of dealing, and usage of trade.

  1. A "course of performance" is a sequence of conduct between the parties to a particular transaction that exists if:
    1. The agreement of the parties with respect to the transaction involves repeated occasions for performance by a party; and
    2. The other party, with knowledge of the nature of the performance and opportunity for objection to it, accepts the performance or acquiesces in it without objection.
  2. A "course of dealing" is a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.
  3. A "usage of trade" is any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question. The existence and scope of such a usage must be proved as facts. If it is established that such a usage is embodied in a trade code or similar record, the interpretation of the record is a question of law.
  4. A course of performance or course of dealing between the parties or usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware is relevant in ascertaining the meaning of the parties' agreement, may give particular meaning to specific terms of the agreement, and may supplement or qualify the terms of the agreement. A usage of trade applicable in the place in which part of the performance under the agreement is to occur may be so utilized as to that part of the performance.
  5. Except as otherwise provided in subsection (f) of this Code section, the express terms of an agreement and any applicable course of performance, course of dealing, or usage of trade shall be construed whenever reasonable as consistent with each other. If such a construction is unreasonable:
    1. Express terms prevail over course of performance, course of dealing, and usage of trade;
    2. Course of performance prevails over course of dealing and usage of trade; and
    3. Course of dealing prevails over usage of trade.
  6. Subject to Code Section 11-2-209, a course of performance is relevant to show a waiver or modification of any term inconsistent with the course of performance.
  7. Evidence of a relevant usage of trade offered by one party shall not be admissible unless that party has given the other party notice that the court finds sufficient to prevent unfair surprise to the other party.

(Code 1981, §11-1-303, enacted by Ga. L. 2015, p. 996, § 3A-1/SB 65.)

11-1-304. Obligation of good faith.

Every contract or duty within this title imposes an obligation of good faith in its performance and enforcement.

(Code 1981, §11-1-304, enacted by Ga. L. 2015, p. 996, § 3A-1/SB 65.)

11-1-305. Remedies to be liberally administered.

  1. The remedies provided by this title shall be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed but neither consequential or special damages nor penal damages may be had except as specifically provided in this title or by other rule of law.
  2. Any right or obligation declared by this title shall be enforceable by action unless the provision declaring it specifies a different and limited effect.

(Code 1981, §11-1-305, enacted by Ga. L. 2015, p. 996, § 3A-1/SB 65.)

11-1-306. Waiver or renunciation of claim or right after breach.

A claim or right arising out of an alleged breach may be discharged in whole or in part without consideration by agreement of the aggrieved party in an authenticated record.

(Code 1981, §11-1-306, enacted by Ga. L. 2015, p. 996, § 3A-1/SB 65.)

11-1-307. Prima-facie evidence by third party documents.

A document in due form purporting to be a bill of lading, policy or certificate of insurance, official weigher's or inspector's certificate, consular invoice, or any other document authorized or required by the contract to be issued by a third party shall be prima-facie evidence of its own authenticity and genuineness and of the facts stated in the document by the third party.

(Code 1981, §11-1-307, enacted by Ga. L. 2015, p. 996, § 3A-1/SB 65.)

11-1-308. Performance or acceptance under reservation of rights.

  1. A party who, with explicit reservation of rights, performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved. Such words as "without prejudice," "under protest," or the like are sufficient.
  2. Subsection (a) of this Code section shall not apply to an accord and satisfaction.

(Code 1981, §11-1-308, enacted by Ga. L. 2015, p. 996, § 3A-1/SB 65.)

11-1-309. Option to accelerate at will.

A term providing that one party or that party's successor in interest may accelerate payment or performance or require collateral or additional collateral "at will" or when the party "deems itself insecure" or words of similar import shall be construed to mean that the party shall have power to do so only if that party in good faith believes that the prospect of payment or performance is impaired. The burden of establishing lack of good faith is on the party against whom the power has been exercised.

(Code 1981, §11-1-309, enacted by Ga. L. 2015, p. 996, § 3A-1/SB 65.)

11-1-310. Subordinated obligations.

An obligation may be issued as subordinated to performance of another obligation of the person obligated, or a creditor may subordinate its right to performance of an obligation by agreement with either the person obligated or another creditor of the person obligated. Such a subordination does not create a security interest as against either the common debtor or a subordinated creditor.

(Code 1981, §11-1-310, enacted by Ga. L. 2015, p. 996, § 3A-1/SB 65.)

ARTICLE 2 SALES

Part 1 Short Title, General Construction, and Subject Matter.
Part 2 Form, Formation, and Readjustment of Contract.
Part 3 General Obligation and Construction of Contract.
Part 4 Title, Creditors, and Good Faith Purchasers.
Part 5 Performance.
Part 6 Breach, Repudiation, and Excuse.
Part 7 Remedies.
Cross references.

- Effect of unsolicited sending of goods, §§ 10-1-50,10-1-51.

Deceptive or unfair trade and consumer practices generally, § 10-1-370 et seq.

Law reviews.

- For article, "Negotiable Instruments Problems in the Financing of Home Improvements," see 11 Mercer L. Rev. 316 (1960). For article advocating repudiation of the patent danger rule as a manufacturer's defense to personal injury suits resulting from product defects, see 29 Mercer L. Rev. 583 (1978). For article, "The Applicability of The Uniform Commercial Code to Construction Contracts," see 28 Emory L.J. 335 (1979). For article discussing the application of Article 2 of the Uniform Commercial Code to contracts for the installation and customization of a computer system, see 20 Ga. St. B.J. 6 (1983). For article, "Computer Software: Does Article 2 of the Uniform Commercial Code Apply?," see 35 Emory L.J. 853 (1986). For article, "Contract Litigation and the Elite Bar in New York City, 1960-1980," see 39 Emory L.J. 413 (1990). For article, "Contribution Arguments in Commercial Law," see 42 Emory L.J. 897 (1993). For annual survey article discussing developments in commercial law, see 51 Mercer L. Rev. 165 (1999). For article, "Consumers Surfing for Sales in Cyberspace: What Constitutes Acceptance and What Legal Terms and Conditions Bind the Consumer," see 16 Ga. St. U.L. Rev. 741 (2000). For article, "Rethinking the Commercial Law Treaty," see 45 Ga. L. Rev. 343 (2011). For note discussing the Uniform Commercial Code and consumer protection, see 25 Emory L.J. 445 (1976).

JUDICIAL DECISIONS

Coverage of article.

- Since adoption of Georgia Uniform Commercial Code, every contract for sale of goods is governed by Article 2 of the Code, and this is true whether action brought with respect to such contract is deemed to be one in equity or in law. Mansfield Propane Gas Co. v. Folger Gas Co., 231 Ga. 868, 204 S.E.2d 625 (1974).

Cited in Foster v. National Ideal Co., 119 Ga. App. 773, 168 S.E.2d 872 (1969); Solomon Refrigeration, Inc. v. Osburn, 148 Ga. App. 772, 252 S.E.2d 686 (1979).

RESEARCH REFERENCES

ALR.

- Construction and effect of Uniform Commercial Code Art. 2, dealing with sales, 17 A.L.R.3d 1010; 42 A.L.R.3d 182; 66 A.L.R.3d 145; 66 A.L.R.3d 190; 73 A.L.R.3d 248; 88 A.L.R.3d 416; 90 A.L.R.3d 1141; 91 A.L.R.3d 1237; 93 A.L.R.3d 584; 96 A.L.R.3d 299; 96 A.L.R.3d 1275; 97 A.L.R.3d 908; 98 A.L.R.3d 586; 4 A.L.R.4th 85; 4 A.L.R.4th 912; 26 A.L.R.4th 294; 30 A.L.R.4th 396; 36 A.L.R.4th 544; 44 A.L.R.4th 110; 45 A.L.R.4th 1126; 51 A.L.R.4th 537; 82 A.L.R.4th 709, 38 A.L.R.5th 191.

Contractual liquidated damages provisions under Uniform Commercial Code Article 2, 98 A.L.R.3d 586.

What constitutes a transaction, a contract for sale, or a sale within the scope of UCC Article 2, 4 A.L.R.4th 85.

Finance company's liability in connection with consumer fraud practices of party selling goods or services, 18 A.L.R.4th 824.

PART 1 SHORT TITLE, GENERAL CONSTRUCTION, AND SUBJECT MATTER

11-2-101. Short title.

This article shall be known and may be cited as "Uniform Commercial Code - Sales."

(Code 1933, § 109A-2 - 101, enacted by Ga. L. 1962, p. 156, § 1.)

Law reviews.

- For article, "The Good Faith Purchase Idea and the Uniform Commercial Code," see 15 Ga. L. Rev. 605 (1981). For comment, "Medical Expert Systems and Publisher Liability: A Cross-Contextual Analysis," see 43 Emory L.J. 731 (1994).

JUDICIAL DECISIONS

Coverage of article.

- Article 2 of the Georgia Commercial Code, O.C.G.A. § 11-2-101 et seq., applied to a contract because the sale of goods, the dirt which the seller offered to furnish to the buyer, was the predominant purpose of the contemplated transaction. Furthermore, the trial court did not err in putting the question of predominant purpose to the jury because the evidence permitted a rational jury to resolve this issue in a way that would lead to a conclusion that the sale of goods under O.C.G.A. § 11-2-107(1) was the predominant purpose of the contemplated transaction. Paramount Contr. Co. v. DPS Indus., 309 Ga. App. 113, 709 S.E.2d 288 (2011).

Cited in Rollins Communications, Inc. v. Georgia Inst. of Real Estate, Inc., 140 Ga. App. 448, 231 S.E.2d 397 (1976); Citicorp Indus. Credit, Inc. v. Rountree, 185 Ga. App. 417, 364 S.E.2d 65 (1987); Jones v. Baran Co., LLC, 290 Ga. App. 578, 660 S.E.2d 420 (2008).

RESEARCH REFERENCES

Am. Jur. 2d.

- 15A Am. Jur. 2d, Commercial Code, § 69. 64 Am. Jur. 2d, Public Works and Contracts, § 17.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:2.

C.J.S.

- 82 C.J.S., Statutes, §§ 217 et seq., 238.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-101.

ALR.

- Preemption of strict liability in tort by provisions of UCC Article 2, 15 A.L.R.4th 791.

Impracticability of performance of sales contract under UCC § 2-615, 55 A.L.R.5th 1.

11-2-102. Scope; certain security and other transactions excluded from this article.

Unless the context otherwise requires, this article applies to transactions in goods; it does not apply to any transaction which although in the form of an unconditional contract to sell or present sale is intended to operate only as a security transaction nor does this article impair or repeal any statute regulating sales to consumers, farmers, or other specified classes of buyers.

(Code 1933, § 109A-2 - 102, enacted by Ga. L. 1962, p. 156, § 1.)

Cross references.

- Deceptive or unfair consumer practices, § 10-1-393.

Law reviews.

- For article on choice-of-law of contracts in Georgia, see 21 Mercer L. Rev. 389 (1970). For article, "Computer Software: Does Article 2 of the Uniform Commercial Code Apply?," see 35 Emory L.J. 853 (1986). For article, "Impracticability As Risk Allocation: The Effect of Changed Circumstances upon Contract Obligations for the Sale of Goods," see 22 Ga. L. Rev. 503 (1988). For comment on Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975), appearing below, see 27 Mercer L. Rev. 347 (1975). For comment making comparative analysis of negotiability of promissory notes payable in specifics between Georgia and other jurisdictions, see 4 Ga. B.J. 5 (1942).

JUDICIAL DECISIONS

Legislative intent was that Article 2 of Uniform Commercial Code apply only to "sales." Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975).

Contract to sell future crop is sale of goods within scope of O.C.G.A. § 11-2-102. R.N. Kelly Cotton Merchant, Inc. v. York, 379 F. Supp. 1075 (M.D. Ga. 1973), aff'd, 494 F.2d 41 (5th Cir. 1974).

Sale of horse for recreational use.

- A transaction for purchase of a horse, apparently for recreational use, while possibly a casual sale, nevertheless, is provided for in the Uniform Commercial Code and is a transaction in goods. Key v. Bagen, 136 Ga. App. 373, 221 S.E.2d 234 (1975).

Purchase and processing of car skeletons.

- Seller's testimony established that the UCC applied to an oral agreement concerning the purchase and processing of car skeletons, as car skeletons or other scrap were considered "goods" under O.C.G.A. § 11-2-102. Henry v. Blankenship, 284 Ga. App. 578, 644 S.E.2d 419 (2007).

Contracts for services and labor.

- Where agreement is one for furnishing of services and labor, the Uniform Commercial Code is clearly inapplicable. Dixie Lime & Stone Co. v. Wiggins Scale Co., 144 Ga. App. 145, 240 S.E.2d 323 (1977).

A contract for services and labor with an incidental furnishing of equipment and materials is not a transaction involving the sale of "goods" and is not controlled by the Uniform Commercial Code. OMAC, Inc. v. Southwestern Mach. & Tool Works, Inc., 189 Ga. App. 42, 374 S.E.2d 829 (1988).

Use of attachment hardware incidental to installation of 2,200 gallon tank on vehicle, when both tank and vehicle are supplied by purchaser of installation, is not sufficient to cause transaction to be characterized as a "sale of goods" rather than a "sale of services." W.B. Anderson Feed & Poultry Co. v. Georgia Gas Distribs., Inc., 164 Ga. App. 96, 296 S.E.2d 395 (1982).

If two purchase orders constitute but a single contract between the parties which involves furnishing both labor and materials, the UCC does not apply. American Aluminum Prods. Co. v. Binswanger Glass Co., 194 Ga. App. 703, 391 S.E.2d 688 (1990).

Medical center's furnishing of facility for use in connection with surgery to install a plate device to stabilize plaintiff's spine was a transaction involving "services and labor with an incidental furnishing of equipment and materials" and, as such, not covered under the Uniform Commercial Code. McCombs v. Southern Regional Medical Ctr., Inc., 233 Ga. App. 676, 504 S.E.2d 747 (1998).

Services of production and distribution.

- Services always play an important role in use of goods, whether it is service of transforming raw material into some usable product or service of distributing usable product to a point where it can easily be obtained by the consumer, and such services do not remove a contract from coverage under this article. Cleveland Lumber Co. v. Proctor & Schwartz, Inc., 397 F. Supp. 1088 (N.D. Ga. 1975).

Oral agreement between manufacturer and distributor for the manufacture of a special grade of fertilizer to be sold by the distributor was covered by the UCC whether it was classified as one for the sale of fertilizer or as a distributorship agreement. PCS Joint Venture, Ltd. v. Davis, 219 Ga. App. 519, 465 S.E.2d 713 (1995).

Delivery of items in exchange for payment and release of claims.

- A letter agreement providing for delivery of certain items in exchange for some payment and the release of various claims was a transaction in goods within the U.C.C. Management Assistance, Inc. v. Computer Dimensions, Inc., 546 F. Supp. 666 (N.D. Ga. 1982), aff'd sub nom. Computer Dimensions v. Basic Four, 747 F.2d 708 (11th Cir. 1984).

Action for commission due under agreement.

- Trial court properly denied lessor's motion to strike lessee's counterclaim for commission due under oral agreement to sell aircraft since a commission is earned by providing services and the Uniform Commercial Code statute of frauds is applicable to transactions in goods. Harris v. Clark, 157 Ga. App. 549, 278 S.E.2d 132 (1981).

Furnishing of blood by hospital in course of treatment.

- The furnishing of blood by a hospital in the course of treatment is not a sales transaction covered by an implied warranty under O.C.G.A. § 11-2-314. Lovett v. Emory Univ., Inc., 116 Ga. App. 277, 156 S.E.2d 923 (1967).

Sale of accounting firm.

- The Uniform Commercial Code did not apply to the sale of an accounting firm since the furnishing of services was the predominant element of the contract. Crews v. Wahl, 238 Ga. App. 892, 520 S.E.2d 727 (1999).

Sale of windows.

- Where the predominant character of the transaction was the sale of windows, though a substantial amount of service was involved in installing the windows, the trial court erred in holding that the UCC did not apply. J. Lee Gregory, Inc. v. Scandinavian House, 209 Ga. App. 285, 433 S.E.2d 687 (1993).

The Uniform Commercial Code applied to a contract for the sale of windows, where the Contractor's bid did not segregate the total price of the windows from the total price of the services to be rendered; and where, even though a substantial amount of service was involved in installing the windows, the predominant character of the transaction was the sale of goods. D.N. Garner Co. v. Georgia Palm Beach Aluminum Window Corp., 233 Ga. App. 252, 504 S.E.2d 70 (1998).

Sale of real estate.

- Sellers' claim of unconscionability based upon Article 2 failed for two reason: first, the contract at issue was for the sale of realty, not kaolin; and, second, even if the contract was considered to be for the sale of minerals thereon, severance was to be by the buyer, not the seller. Garbutt v. Southern Clays, Inc., 894 F. Supp. 456 (M.D. Ga. 1995).

Secured transactions.

- While it appeared that O.C.G.A. § 9-3-24, rather than O.C.G.A. § 11-2-725, would most likely apply to defendant collection attorney's state court deficiency action against plaintiff consumer, and it was not for the federal court to say what the Georgia courts would hold, the uncertainty meant there was no intentional unfair conduct and the consumer's Fair Debt Collection Practices Act claim was dismissed; language in O.C.G.A. § 11-2-201 excluded "secured transactions" from § 11-2-201. Almand v. Reynolds & Robin, P.C., 485 F. Supp. 2d 1361 (M.D. Ga. 2007).

Cited in Wooden v. Michigan Nat'l Bank, 117 Ga. App. 852, 162 S.E.2d 222 (1968); First Nat'l Bank & Trust Co. v. Smithloff, 119 Ga. App. 284, 167 S.E.2d 190 (1969); Mitchell-Huntley Cotton Co. v. Lawson, 377 F. Supp. 661 (M.D. Ga. 1973); R.N. Kelly Cotton Merchant, Inc. v. York, 379 F. Supp. 1075 (M.D. Ga. 1973); R.N. Kelly Cotton Merchant, Inc. v. York, 494 F.2d 41 (5th Cir. 1974); Duval & Co. v. Malcom, 233 Ga. 784, 214 S.E.2d 356 (1975); Space Leasing Assocs. v. Atlantic Bldg. Sys., 144 Ga. App. 320, 241 S.E.2d 438 (1977); Crider v. First Nat'l Bank, 144 Ga. App. 536, 241 S.E.2d 638 (1978); Cash v. Armco Steel Corp., 462 F. Supp. 272 (N.D. Ga. 1978); Mail Concepts, Inc. v. Foote & Davies, Inc., 200 Ga. App. 778, 409 S.E.2d 567 (1991).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, § 63.

C.J.S.

- 77A C.J.S., Sales, § 1 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-102.

ALR.

- Negotiability of title-retaining note, 28 A.L.R. 699; 44 A.L.R. 1397; 44 A.L.R.2d 71.

What amounts to a conditional sale, 43 A.L.R. 1247; 92 A.L.R. 304; 175 A.L.R. 1366.

Electricity, gas, or water furnished by public utility as "goods" within provisions of Uniform Commercial Code, Article 2 on sales, 48 A.L.R.3d 1060.

Applicability of UCC Article 2 to mixed contracts for sale of goods and services, 5 A.L.R.4th 501.

11-2-103. Definitions and index of definitions.

  1. In this article unless the context otherwise requires:
  1. "Buyer" means a person who buys or contracts to buy goods.
  2. Reserved.
  3. "Receipt" of goods means taking physical possession of them.
  4. "Seller" means a person who sells or contracts to sell goods.

    "Acceptance." Code Section 11-2-606.

    "Banker's credit." Code Section 11-2-325.

    "Between merchants." Code Section 11-2-104.

    "Cancellation." Code Section 11-2-106(4).

    "Commercial unit." Code Section 11-2-105.

    "Confirmed credit." Code Section 11-2-325.

    "Conforming to contract." Code Section 11-2-106.

    "Contract for sale." Code Section 11-2-106.

    "Cover." Code Section 11-2-712.

    "Entrusting." Code Section 11-2-403.

    "Financing agency." Code Section 11-2-104.

    "Future goods." Code Section 11-2-105.

    "Goods." Code Section 11-2-105.

    "Identification." Code Section 11-2-501.

    "Installment contract." Code Section 11-2-612.

    "Letter of credit." Code Section 11-2-325.

    "Lot." Code Section 11-2-105.

    "Merchant." Code Section 11-2-104.

    "Overseas." Code Section 11-2-323.

    "Person in position of seller." Code Section 11-2-707.

    "Present sale." Code Section 11-2-106.

    "Sale." Code Section 11-2-106.

    "Sale on approval." Code Section 11-2-326.

    "Sale or return." Code Section 11-2-326.

    "Termination." Code Section 11-2-106.

    "Check." Code Section 11-3-104.

    "Consignee." Code Section 11-7-102.

    "Consignor." Code Section 11-7-102.

    "Consumer goods." Code Section 11-9-102.

    "Dishonor." Code Section 11-3-502.

    "Draft." Code Section 11-3-104.

Other definitions applying to this article or to specified parts thereof, and the Code sections in which they appear are:

"Control" as provided in Code Section 11-7-106 and the following definitions in other articles of this title apply to this article:

In addition Article 1 of this title contains general definitions and principles of construction and interpretation applicable throughout this article.

(Code 1933, § 109A-2 - 103, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2001, p. 362, § 4; Ga. L. 2010, p. 481, § 2-2/HB 451; Ga. L. 2015, p. 996, § 3B-1/SB 65.)

The 2001 amendment, effective July 1, 2001, in subsection (3), substituted "Code Section 11-9-102" for "Code Section 11-9-109" in the paragraph relating to consumer goods and substituted "Code Section 11-3-502" for "Code Section 11-3-507" in the paragraph relating to dishonor.

The 2010 amendment, effective May 27, 2010, substituted "'Control' as provided in Code Section 11-7-106 and the" for "The" at the beginning of subsection (3). See the Editor's notes for applicability.

The 2015 amendment, effective January 1, 2016, in subsection (b), substituted "Reserved" for "'Good faith' in the case of a merchant means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade".

Editor's notes.

- Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.

Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.

Ga. L. 2015, p. 996, § 1-1/SB 65, not codified by the General Assembly, provides: "(a) This Act shall be known and may be cited as the 'Debtor-Creditor Uniform Law Modernization Act of 2015.'

"(b) To promote consistency among the states, it is the intent of the General Assembly to modernize certain existing uniform laws promulgated by the Uniform Law Commission affecting debtor and creditor rights, responsibilities, and relationships and other federally recognized laws affecting such rights, responsibilities, and relationships."

Law reviews.

- For article, "Contract Litigation and the Elite Bar in New York City, 1960-1980," see 39 Emory L.J. 413 (1990). For comment on Sherrock v. Commercial Credit Corp., 290 A.2d 648 (Del. S. Ct. 1972), see 10 Ga. St. B.J. 110 (1973). For comment, "Lender Liability for Breach of the Obligation of Good Faith Performance," see 36 Emory L.J. 917 (1987).

JUDICIAL DECISIONS

Employee charging gasoline in employer's name.

- Employee is not a "buyer," but acts as agent of employer when employee charges gasoline in employer's name and employer pays for it, even though the fuel is not delivered directly to employer but is instead consumed by employee's operation of a truck. Weaver v. Ralston Motor Hotel, Inc., 135 Ga. App. 536, 218 S.E.2d 260 (1975).

"Good Faith."

- The definition of "good faith" in O.C.G.A. § 11-2-103 applies only to merchants engaged in the sale of goods and does not apply in an action involving the status of a bank as a "holder in due course" under UCC Article 3. Choo Choo Tire Serv., Inc v. Union Planters Nat'l Bank, 231 Ga. App. 346, 498 S.E.2d 799 (1998).

Motor home seller's renewed motion for judgment as a matter of law was denied because the buyers presented sufficient evidence to support the jury verdict in their favor as to the state law breach of implied warranty claims as the buyers presented evidence showing that they were the real buyers of the motor home even though the legal transaction was done in the name of a corporate entity and the seller could not challenge the buyers' standing to assert breach of warranty claims because the seller assured the buyers that they were covered under the motor home's warranty and that the warranty was being honored; testimony of the seller's service manager, that the buyers were entitled to the benefits of the warranty, was sufficient to establish that they were "buyers" under O.C.G.A. § 11-2-103. Gill v. Bluebird Body Co., F. Supp. 2d (M.D. Ga. Jan. 21, 2005).

Consumers, whose O.C.G.A. § 11-2-103 claim for breach of express warranty was unsuccessful, but whose claim for breach of implied warranty of merchantability was successful, were entitled to reasonable attorney's fees based upon a rate that was about average for other consumer law attorneys in Georgia; however, the number of compensable hours was reduced to exclude work done on the unsuccessful claims. Gill v. Bluebird Body Co., 353 F. Supp. 2d 1265 (M.D. Ga. Jan. 28, 2005).

No support for limitations.

- When plaintiff Jobber petroleum distributors' only allegations of wrongdoing was defendant oil company's purported recapture of the cost of a prompt-pay discount when setting its price, and the parties' contract imposed no limits on the costs that could be recouped in setting the price, the good-faith safe harbor provided in O.C.G.A. § 11-2-305(2) applied; O.C.G.A. § 11-2-103 did not support imposing fundamental substantive limitations on the pricing methodology set out in the contract. Autry Petroleum Co. v. BP Prods. North America, Inc., F.3d (11th Cir. June 26, 2009)(Unpublished).

Cited in Tennessee-Virginia Constr. Co. v. Willingham, 117 Ga. App. 290, 160 S.E.2d 444 (1968); Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975); Fratelli Gardino v. Caribbean Lumber Co., 587 F.2d 204 (5th Cir. 1979); Mail Concepts, Inc. v. Foote & Davies, Inc., 200 Ga. App. 778, 409 S.E.2d 567 (1991); Imex Int'l v. Wires Eng'g, 261 Ga. App. 329, 583 S.E.2d 117 (2003).

RESEARCH REFERENCES

Am. Jur. 2d.

- 15A Am. Jur. 2d, Commercial Code, §§ 36, 52. 67 Am. Jur. 2d, Sales, §§ 10-15.

C.J.S.

- 77A C.J.S., Sales, § 1 et seq. 82 C.J.S., Statutes, § 309.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-103.

ALR.

- What constitutes a transaction, a contract for sale, or a sale within the scope of UCC Article 2, 4 A.L.R.4th 85.

What constitutes "goods" within the scope of UCC Article 2, 4 A.L.R.4th 912.

Applicability of UCC Article 2 to mixed contracts for sale of goods and services, 5 A.L.R.4th 501.

11-2-104. Definitions: "merchant"; "between merchants"; "financing agency."

  1. "Merchant" means a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill.
  2. "Financing agency" means a bank, finance company, or other person who in the ordinary course of business makes advances against goods or documents of title or who by arrangement with either the seller or the buyer intervenes in ordinary course to make or collect payment due or claimed under the contract for sale, as by purchasing or paying the seller's draft or making advances against it or by merely taking it for collection whether or not documents of title accompany or are associated with the draft. "Financing agency" includes also a bank or other person who similarly intervenes between persons who are in the position of seller and buyer in respect to the goods (Code Section 11-2-707).
  3. "Between merchants" means in any transaction with respect to which both parties are chargeable with the knowledge or skill of merchants.

(Code 1933, § 109A-2 - 104, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2010, p. 481, § 2-3/HB 451.)

The 2010 amendment, effective May 27, 2010, inserted "or are associated with" near the end of the first sentence of subsection (2). See the Editor's notes for applicability.

Editor's notes.

- Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.

Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.

Law reviews.

- For article discussing the implied warranty of fitness for a particular purpose, see 9 Ga. L. Rev. 149 (1974). For article discussing modification of consumer warranty provisions of the U.C.C. by the Magnuson-Moss Act (15 U.S.C. §§ 2301-2312) with special emphasis on attempted disclaimers, see 27 Mercer L. Rev. 1111 (1976). For article surveying developments in Georgia commercial law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 33 (1981). For comment on Sherrock v. Commercial Credit Corp., 290 A.2d 648 (Del. S. Ct. 1972), see 10 Ga. St. B.J. 110 (1973).

JUDICIAL DECISIONS

Farming corporation as "merchant."

- Evidence supported a finding that defendant farming corporation was a "merchant" bound by an oral agreement to sell 5,000 bushels of soybeans, which agreement was confirmed in writing to which the corporation made no response. Thunderbird Farms, Inc. v. Abney, 178 Ga. App. 335, 343 S.E.2d 127 (1986).

"Merchants" as including farmers who orally "book" crops.

- Construing "merchants" in O.C.G.A. § 11-2-104(1) as not excluding as a matter of law farmers who orally "book" crops such as soybeans for sale protects them equally as well as the buyer. If the market price declines after the booking, they are assured of the higher booking price; the buyer cannot renege, as O.C.G.A. § 11-2-201(2) would apply. Goldkist, Inc. v. Brownlee, 182 Ga. App. 287, 355 S.E.2d 773 (1987).

No dispute as to merchant status.

- Although usually whether a party was a "merchant" for purposes of sale transactions under the Uniform Commercial Code was a question of law for a court, in a disputed peanut commodities transaction, there was no dispute that the parties were both merchants. Brooks Peanut Co. v. Great S. Peanut, LLC, 322 Ga. App. 801, 746 S.E.2d 272 (2013).

Attorney fees.

- Consumers, whose O.C.G.A. § 11-2-104 claim for breach of implied warranty of merchantability was successful, were entitled to reasonable attorney's fees based upon a rate that was about average for other consumer law attorneys in Georgia; however, the number of compensable hours was reduced to exclude work done on the unsuccessful claims. Gill v. Bluebird Body Co., 353 F. Supp. 2d 1265 (M.D. Ga. Jan. 28, 2005).

Cited in Greater S. Distrib. Co. v. Usry, 124 Ga. App. 525, 184 S.E.2d 486 (1971); Trust Co. v. Montgomery, 136 Ga. App. 742, 222 S.E.2d 196 (1975); Blaylock v. Georgia Mut. Ins. Co., 239 Ga. 462, 238 S.E.2d 105 (1977); Patron Aviation, Inc. v. Teledyne Indus., Inc., 154 Ga. App. 13, 267 S.E.2d 274 (1980); Bicknell v. Joyce Sportswear Co., 173 Ga. App. 897, 328 S.E.2d 564 (1985); Sweetapple Plastics, Inc. v. Philip Shuman & Sons, 77 Bankr. 304 (Bankr. M.D. Ga. 1987); Perimeter Ford, Inc. v. Edwards, 197 Ga. App. 747, 399 S.E.2d 520 (1990); Imex Int'l v. Wires Eng'g, 261 Ga. App. 329, 583 S.E.2d 117 (2003); In re Tucker, Bankr. (Bankr. M.D. Ga. June 25, 2013).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 24, 25, 64-69.

C.J.S.

- 77A C.J.S., Sales, § 1 et seq. 82 C.J.S., Statutes, § 309.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-104.

ALR.

- Charging merchant with using false weights or measures as libel or slander, 13 A.L.R. 1019; 106 A.L.R. 437.

Liability of savings bank to depositor for amounts withdrawn by depositor's agent without presentation of passbook, 139 A.L.R. 835.

Who is "merchant" under UCC § 2-314(1) dealing with implied warranties of merchantability, 91 A.L.R.3d 876.

Farmers as "merchants" within provisions of UCC Article 2, dealing with sales, 95 A.L.R.3d 484.

11-2-105. Definitions: transferability; "goods"; "future" goods; "lot"; "commercial unit."

  1. "Goods" means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities (Article 8 of this title), and things in action. "Goods" also includes the unborn young of animals and growing crops and other identified things attached to realty as described in the Code section on goods to be severed from realty (Code Section 11-2-107).
  2. Goods must be both existing and identified before any interest in them can pass. Goods which are not both existing and identified are "future" goods. A purported present sale of future goods or of any interest therein operates as a contract to sell.
  3. There may be a sale of a part interest in existing identified goods.
  4. An undivided share in an identified bulk of fungible goods is sufficiently identified to be sold although the quantity of the bulk is not determined. Any agreed proportion of such a bulk or any quantity thereof agreed upon by number, weight, or other measure may to the extent of the seller's interest in the bulk be sold to the buyer who then becomes an owner in common.
  5. "Lot" means a parcel or a single article which is the subject matter of a separate sale or delivery, whether or not it is sufficient to perform the contract.
  6. "Commercial unit" means such a unit of goods as by commercial usage is a single whole for purposes of sale and division of which materially impairs its character or value on the market or in use. A commercial unit may be a single article (as a machine) or a set of articles (as a suite of furniture or an assortment of sizes) or a quantity (as a bale, gross, or carload) or any other unit treated in use or in the relevant market as a single whole.

(Code 1933, § 109A-2 - 105, enacted by Ga. L. 1962, p. 156, § 1.)

Law reviews.

- For article discussing the applicability of warranty provisions under the Uniform Commercial Code to domestic solar energy devices, see 30 Mercer L. Rev. 547 (1979). For article, "Computer Software: Does Article 2 of the Uniform Commercial Code Apply?," see 35 Emory L.J. 853 (1986). For comment, "Damage Awards and Computer Systems - Trends," see 35 Emory L.J. 255 (1986).

JUDICIAL DECISIONS

General Consideration

Cited in Lunsford v. Wilson, 113 Ga. App. 602, 149 S.E.2d 515 (1966); Reddick v. White Consol. Indus., Inc., 295 F. Supp. 243 (S.D. Ga. 1968); R.N. Kelly Cotton Merchant, Inc. v. York, 379 F. Supp. 1075 (M.D. Ga. 1973); R.N. Kelly Cotton Merchant, Inc. v. York, 494 F.2d 41 (5th Cir. 1974); Duval & Co. v. Malcom, 233 Ga. 784, 214 S.E.2d 356 (1975); Cone Mills Corp. v. A.G. Estes, Inc., 399 F. Supp. 938 (N.D. Ga. 1975); Space Leasing Assocs. v. Atlantic Bldg. Sys., 144 Ga. App. 320, 241 S.E.2d 438 (1977); Lipson v. Hawthorne Indus., Inc., 148 Ga. App. 751, 252 S.E.2d 639 (1979); Smith v. Dixon Ford Tractor Co., 160 Ga. App. 885, 288 S.E.2d 599 (1982); Goldkist, Inc. v. Brownlee, 182 Ga. App. 287, 355 S.E.2d 773 (1987); ATG Aerospace, Inc. v. High-Line Aviation Ltd., 149 Bankr. 730 (Bankr. N.D. Ga. 1992); Southern Tank Equip. Co. v. Zartic, Inc., 221 Ga. App. 503, 471 S.E.2d 587 (1996); SunTrust Bank v. Venable, 299 Ga. 655, 791 S.E.2d 5 (2016).

Goods

Effect of services of production and distribution of goods.

- Services always play an important role in use of goods, whether it is service of transforming raw material into some usable product or service of distributing usable product to a point where it can easily be obtained by the consumer, and such services do not remove a contract from coverage under this article. Cleveland Lumber Co. v. Proctor & Schwartz, Inc., 397 F. Supp. 1088 (N.D. Ga. 1975).

Items sold are still "goods" within the definition of O.C.G.A. § 11-2-105(1) even though service may play a role in their ultimate use. Cleveland Lumber Co. v. Proctor & Schwartz, Inc., 397 F. Supp. 1088 (N.D. Ga. 1975).

Test for "goods."

- Whether a product is manufactured is not the test for the definition of "goods" under the commercial code, but rather whether the items are movable at the time of identification of the contract. Willis Mining, Inc. v. Noggle, 235 Ga. App. 747, 509 S.E.2d 731 (1998).

Oral agreement between manufacturer and distributor for the manufacture of a special grade of fertilizer to be sold by the distributor was covered by the UCC whether it was classified as one for the sale of fertilizer, or as a distributorship agreement. PCS Joint Venture, Ltd. v. Davis, 219 Ga. App. 519, 465 S.E.2d 713 (1995).

Fact that contract involves substantial amounts of labor does not remove it from definition of goods under O.C.G.A. § 11-2-105(1). Cleveland Lumber Co. v. Proctor & Schwartz, Inc., 397 F. Supp. 1088 (N.D. Ga. 1975).

Granite blocks.

- Because granite blocks were movable at the time of identification of the contract, they were "goods" under O.C.G.A. § 11-2-105, and an implied warranty of merchantability applied to their sale. Willis Mining, Inc. v. Noggle, 235 Ga. App. 747, 509 S.E.2d 731 (1998).

Ships are "goods" under the Uniform Commercial Code. R.C. Craig, Ltd. v. Ships of Sea, Inc., 345 F. Supp. 1066 (S.D. Ga. 1972), later proceeding, 401 F. Supp. 1051 (S.D. Ga. 1975).

Growing crops, including cotton, are "goods" within contemplation of O.C.G.A. § 11-2-105. Harris v. Hine, 232 Ga. 183, 205 S.E.2d 847 (1974).

Sale of horse for recreational use.

- Transaction for purchase of a horse, apparently for recreational use, while possibly a casual sale, nevertheless, is provided for in the Uniform Commercial Code and is a transaction in goods. Key v. Bagen, 136 Ga. App. 373, 221 S.E.2d 234 (1975).

The sale of water is the sale of goods whether delivery is made through a waterworks system or in bottles. Hence, the sale of water by a municipality is the sale of goods and a transaction which is governed by Art. 2 of the UCC. Zepp v. Mayor of Athens, 180 Ga. App. 72, 348 S.E.2d 673 (1986).

Future Goods

Contracts for future delivery of commodities where parties contemplate actual delivery are valid. Taunton v. Allenberg Cotton Co., 378 F. Supp. 34 (M.D. Ga. 1973).

Contract to sell future crop is sale of goods within scope of O.C.G.A. § 11-2-105. R.N. Kelly Cotton Merchant, Inc. v. York, 379 F. Supp. 1075 (M.D. Ga. 1973), aff'd, 494 F.2d 41 (5th Cir. 1974); Seminole Peanut Co. v. Goodson, 176 Ga. App. 42, 335 S.E.2d 157 (1985).

Contract for sale of crops is not invalid merely because contract was executed before crop in question was planted. Mitchell-Huntley Cotton Co. v. Lawson, 377 F. Supp. 661 (M.D. Ga. 1973).

Contract for sale of goods not yet in existence.

- Although a contract may be invalid because its execution was fraudulently induced, it will not be inoperative because it involves goods which are nonexistent at the time of the execution of the contract. Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).

A contract to sell, as distinguished from an actual sale, can relate to a commodity which is not in existence at the time the contract is executed. Taunton v. Allenberg Cotton Co., 378 F. Supp. 34 (M.D. Ga. 1973).

Fungible Goods

Sale of fungible goods without specific identification.

- O.C.G.A. § 11-2-105 does not forbid sale of fungible goods without specific identification. Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).

Peanuts were a farm commodity, and peanuts were also "goods" for purposes of applying the Statute of Frauds within the Uniform Commercial Code. Brooks Peanut Co. v. Great S. Peanut, LLC, 322 Ga. App. 801, 746 S.E.2d 272 (2013).

OPINIONS OF THE ATTORNEY GENERAL

Advertising transactions are not sales of goods, but rather contracts for work, labor, and materials.

- Descriptions of sales of goods in O.C.G.A. §§ 11-2-105 and11-2-106 do not cover advertising transactions, which are more like services intended to give public notice; as opposed to sales of goods, they are contracts for work, labor, and materials. 1972 Op. Att'y Gen. No. 72-96.

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 45, 46.

C.J.S.

- 77A C.J.S., Sales, § 1 et seq. 82 C.J.S., Statutes, § 309.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-105.

ALR.

- Partition: division of building, 28 A.L.R. 727.

Electricity, gas, or water furnished by public utility as "goods" within provisions of Uniform Commercial Code, Article 2 on sales, 48 A.L.R.3d 1060.

What constitutes "goods" within the scope of UCC Article 2, 4 A.L.R.4th 912.

Applicability of UCC Article 2 to mixed contracts for sale of goods and services, 5 A.L.R.4th 501.

Conveyance of land as including mature but unharvested crops, 51 A.L.R.4th 1263.

What constitutes "future goods" within scope of U.C.C. Article 2, 48 A.L.R.6th 475.

Electricity, gas, or water furnished by public utility or alternative supplier as "goods" within provisions of Uniform Commercial Code, Article 2 on sales, 97 A.L.R.6th 1.

11-2-106. Definitions: "contract"; "agreement"; "contract for sale"; "sale"; "present sale"; "conforming" to contract; "termination"; "cancellation."

  1. In this article unless the context otherwise requires "contract" and "agreement" are limited to those relating to the present or future sale of goods. "Contract for sale" includes both a present sale of goods and a contract to sell goods at a future time. A "sale" consists in the passing of title from the seller to the buyer for a price (Code Section 11-2-401). A "present sale" means a sale which is accomplished by the making of the contract.
  2. Goods or conduct including any part of a performance are "conforming" or conform to the contract when they are in accordance with the obligations under the contract.
  3. "Termination" occurs when either party pursuant to a power created by agreement or law puts an end to the contract otherwise than for its breach. On "termination" all obligations which are still executory on both sides are discharged but any right based on prior breach or performance survives.
  4. "Cancellation" occurs when either party puts an end to the contract for breach by the other and its effect is the same as that of "termination" except that the canceling party also retains any remedy for breach of the whole contract or any unperformed balance.

(Code 1933, § 109A-2 - 106, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2002, p. 415, § 11.)

The 2002 amendment, effective April 18, 2002, part of an Act to revise, modernize, and correct the Code, substituted "canceling" for "cancelling" in subsection (4).

Law reviews.

- For article, "Buyer's Right of Rejection: A Quarter Century Under the Uniform Commercial Code, and Recent International Developments," see 13 Ga. L. Rev. 805 (1979). For article, "Computer Software: Does Article 2 of the Uniform Commercial Code Apply?," see 35 Emory L.J. 853 (1986). For comment on Fender v. Colonial Stores, Inc., 138 Ga. App. 31, 225 S.E.2d 691 (1976), see 28 Mercer L. Rev. 751 (1977).

JUDICIAL DECISIONS

General Consideration

Oral agreement between manufacturer and distributor for the manufacture of a special grade of fertilizer to be sold by the distributor was covered by the UCC whether it was classified as one for the sale of fertilizer or as a distributorship agreement. PCS Joint Venture, Ltd. v. Davis, 219 Ga. App. 519, 465 S.E.2d 713 (1995).

Contracts for future delivery of commodities where parties contemplate actual delivery are valid. Taunton v. Allenberg Cotton Co., 378 F. Supp. 34 (M.D. Ga. 1973).

Sale of crops to be planted in future.

- Contract for sale of crops is not invalid merely because it was executed before crop in question was planted. Mitchell-Huntley Cotton Co. v. Lawson, 377 F. Supp. 661 (M.D. Ga. 1973).

Cited in Byrd v. Moore Ford Co., 116 Ga. App. 292, 157 S.E.2d 41 (1967); R.N. Kelly Cotton Merchant, Inc. v. York, 379 F. Supp. 1075 (M.D. Ga. 1973); Sylvester Motor & Tractor Co. v. Farmers Bank, 153 Ga. App. 614, 266 S.E.2d 293 (1980); International Harvester Credit Corp. v. Associates Fin. Servs. Co., 133 Ga. App. 488, 211 S.E.2d 430 (1974); Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975); Cone Mills Corp. v. A.G. Estes, Inc., 399 F. Supp. 938 (N.D. Ga. 1975); Fender v. Colonial Stores, Inc., 138 Ga. App. 31, 225 S.E.2d 691 (1976); Sylvester Motor & Tractor Co. v. Farmers Bank, 153 Ga. App. 614, 266 S.E.2d 293 (1980); Johnson v. State, 154 Ga. App. 353, 268 S.E.2d 406 (1980); Madewell v. Marietta Dodge, Inc., 506 F. Supp. 286 (N.D. Ga. 1980); Freeman v. State, 163 Ga. App. 71, 292 S.E.2d 563 (1982); American Whse. & Moving Serv. of Atlanta, Inc. v. Floyd's Diesel Serv., Inc., 164 Ga. App. 106, 296 S.E.2d 64 (1982); Robinson v. State, 164 Ga. App. 652, 297 S.E.2d 751 (1982); Mail Concepts, Inc. v. Foote & Davies, Inc., 200 Ga. App. 778, 409 S.E.2d 567 (1991).

Contract for Sale

Promises to buy and sell.

- Promise to buy certain goods is good consideration for promise to sell those goods. Mitchell-Huntley Cotton Co. v. Lawson, 377 F. Supp. 661 (M.D. Ga. 1973).

Delivery of goods pursuant to offer to pay in future.

- Where defendant offered to pay in future for goods to be delivered presently, and seller agreed, delivered the merchandise to defendant, and did not retain any security interest therein, there was a completed "sale" of the goods in question, and defendant had not only rightful possession of the items, but title to them as well. Elliott v. State, 149 Ga. App. 579, 254 S.E.2d 900 (1979).

Auto lease agreement.

- Lease agreement for automobile, even though it places burden of repairs, taxes, insurance, etc., upon lessee is not a sale under O.C.G.A. § 11-2-106. Mays v. Citizens & S. Nat'l Bank, 132 Ga. App. 602, 208 S.E.2d 614 (1974), overruled on other grounds, Mock v. Canterbury Realty Co., 152 Ga. App. 872, 264 S.E.2d 489 (1980).

Buyer as titled owner.

- Although a warranty of merchantability was implied in any sale of goods under O.C.G.A. § 11-2-314, the warranty only ran to a buyer in privity of contract with the seller and did not pass to a second or subsequent purchaser; thus, buyers who were not placed on the title and the title transferees had no cause of action against the seller under Georgia law under O.C.G.A. § 11-2-106(1) for breach of implied warranties because of their lack of privity as original purchasers. Gill v. Blue Bird Body Co., F.3d (11th Cir. June 17, 2005).

An agreement for the installation and maintenance of a protective alarm system was not a sale and, as a result, the implied warranty and other U.C.C. considerations were not applicable. D.L. Lee & Sons v. ADT Sec. Sys., 916 F. Supp. 1571 (S.D. Ga. 1995).

Conforming to Contract

Encompasses totality of seller's contracts.

- Nonconformity cannot be viewed as a question of the quantity and quality of goods alone or of breaches of warranties, but of the performance of the totality of the seller's contractual undertaking. Esquire Mobile Homes, Inc. v. Arrendale, 182 Ga. App. 528, 356 S.E.2d 250 (1987).

OPINIONS OF THE ATTORNEY GENERAL

Advertising transactions are not sales of goods but rather contracts for work, labor, and materials.

- Descriptions of sales of goods in O.C.G.A. §§ 11-2-105 and11-2-106 do not cover advertising transactions, which are more like sales intended to give public notice; as opposed to a sale of goods, it is a contract for work, labor, and materials. 1972 Op. Att'y Gen. No. 72-96.

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 26, 27.

C.J.S.

- 77A C.J.S., Sales, §§ 3, 4.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-106.

ALR.

- What constitutes a contract for sale under Uniform Commercial Code § 2-314, 78 A.L.R.3d 696.

What constitutes a transaction, a contract for sale, or a sale within the scope of UCC Article 2, 4 A.L.R.4th 85.

What constitutes "goods" within the scope of UCC Article 2, 4 A.L.R.4th 912.

Applicability of UCC Article 2 to mixed contracts for sale of goods and services, 5 A.L.R.4th 501.

11-2-107. Goods to be severed from realty; recording.

  1. A contract for the sale of timber, minerals, or the like (including oil and gas) or a structure or its materials to be removed from realty is a contract for the sale of goods within this article if they are to be severed by the seller but until severance a purported present sale thereof which is not effective as a transfer of an interest in land is effective only as a contract to sell.
  2. A contract for the sale apart from the land of growing crops or other things attached to realty and capable of severance without material harm thereto but not described in subsection (1) of this Code section is a contract for the sale of goods within this article whether the subject matter is to be severed by the buyer or by the seller even though it forms part of the realty at the time of contracting, and the parties can by identification effect a present sale before severance.
  3. The provisions of this Code section are subject to any third party rights provided by the law relating to realty records, and the contract for sale may be executed and recorded as a document transferring an interest in land and shall then constitute notice to third parties of the buyer's rights under the contract for sale.

(Code 1933, § 109A-2 - 107, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 1978, p. 1081, § 5.)

JUDICIAL DECISIONS

Applicability of the Georgia Commercial Code to a contract for dirt.

- Article 2 of the Georgia Commercial Code, O.C.G.A. § 11-2-101 et seq., applied to a contract because the sale of goods, the dirt which the seller offered to furnish to the buyer, was the predominant purpose of the contemplated transaction. Furthermore, the trial court did not err in putting the question of predominant purpose to the jury because the evidence permitted a rational jury to resolve this issue in a way that would lead to a conclusion that the sale of goods under O.C.G.A. § 11-2-107(1) was the predominant purpose of the contemplated transaction. Paramount Contr. Co. v. DPS Indus., 309 Ga. App. 113, 709 S.E.2d 288 (2011).

Contract for sale of standing timber to be severed before title passes.

- A contract of sale for timber which is attached to the soil, but which is presently to be severed and converted into personalty before title passes to purchaser, is an executory sale of personalty, and not of an interest in land. Pope v. Barnett, 45 Ga. App. 59, 163 S.E. 517 (1932) (decided prior to adoption of Uniform Commercial Code).

Contract for sale of milk.

- Although quantity was unknown at time seller agreed to sell, the contract was binding on seller where amount of "milk base" was determinable under standards set by federal government. The agreement was much like an offer under O.C.G.A. § 11-2-107(2) to purchase a growing crop, for while the exact quantity is not known, it is ascertainable and determinable. Hale v. Higginbotham, 228 Ga. 823, 188 S.E.2d 515 (1972).

Dirt was a good.

- Dirt was a "good" only if the dirt was severed from the land by the seller, O.C.G.A. § 11-2-107(1), so the separation of fill dirt from the land was a necessary component of the sale of dirt, not the dirt's transportation to a construction site after sale. Paramount Contr. Co. v. DPS Indus., 309 Ga. App. 113, 709 S.E.2d 288 (2011).

Cited in Lunsford v. Wilson, 113 Ga. App. 602, 149 S.E.2d 515 (1966); Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974); Grant v. Bell, 150 Ga. App. 141, 257 S.E.2d 12 (1979); R.N. Kelly Cotton Merchant, Inc. v. York, 379 F. Supp. 1075 (M.D. Ga. 1973); R.N. Kelly Cotton Merchant, Inc. v. York, 494 F.2d 41 (5th Cir. 1974); Garbutt v. Southern Clays, Inc., 894 F. Supp. 456 (M.D. Ga. 1995).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 54 to 59.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-107.

ALR.

- Pavement, flooring, platform, walks, and the like as fixtures, 13 A.L.R. 1454.

Rights of parties to a timber contract upon failure of purchaser to remove timber within time fixed or within a reasonable time, 42 A.L.R. 641; 71 A.L.R. 143; 164 A.L.R. 423.

Storage tank or other apparatus of gasoline station as fixture, 52 A.L.R. 798; 99 A.L.R. 69.

Sale of standing timber as affecting judgment or other lien upon the land, 122 A.L.R. 517.

Term "land" or "real property" employed in contract or conveyance as covering mineral interests constructively severed from the land, 123 A.L.R. 848.

Right to partition in kind of mineral or oil and gas land, 143 A.L.R. 1092.

Mistake as to existence, practicability of removal, or amount of minerals as ground for relief from mineral lease, 163 A.L.R. 878.

Construction of deed of undivided interest in land, as to fractional interest in oil, gas, or other minerals, or in royalty, reserved or excepted, 163 A.L.R. 1132.

Basis of computation of cotenant's accountability for minerals and timber removed from the property, 5 A.L.R.2d 1368.

Sale or contract for sale of standing timber as within provisions of statute of frauds respecting sale or contract of sale of real property, 7 A.L.R.2d 517.

Revocation of license to cut and remove timber as affecting rights in respect of lumber cut but not removed, 26 A.L.R.2d 1194.

Construction and effect of provision in timber deed or contract that lands shall be cut over only once, or the like, 57 A.L.R.2d 827.

Size and kind of trees contemplated by contracts or deeds in relation to standing timber, 72 A.L.R.2d 727.

Construction of oil and gas lease as to the lessee's right and duty of geophysical or seismograph exploration or survey, 28 A.L.R.3d 1426.

What constitutes "goods" within the scope of UCC Article 2, 4 A.L.R.4th 912.

Applicability of UCC Article 2 to mixed contracts for sale of goods and services, 5 A.L.R.4th 501.

PART 2 FORM, FORMATION, AND READJUSTMENT OF CONTRACT

Cross references.

- Rules for interpretation of contracts generally, § 13-2-2.

Elements and formation of contracts generally, Ch. 3, T. 13.

11-2-201. Formal requirements; statute of frauds.

  1. Except as otherwise provided in this Code section a contract for the sale of goods for the price of $500.00 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing.
  2. Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) of this Code section against such party unless written notice of objection to its contents is given within ten days after it is received.
  3. A contract which does not satisfy the requirements of subsection (1) of this Code section but which is valid in other respects is enforceable:
  1. If the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller's business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement; or
  2. If the party against whom enforcement is sought admits in his pleading, testimony, or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or
  3. With respect to goods for which payment has been made and accepted or which have been received and accepted (Code Section 11-2-606).

(Code 1933, § 109A-2 - 201, enacted by Ga. L. 1962, p. 156, § 1.)

Cross references.

- Statute of frauds generally, § 13-5-30 et seq.

Law reviews.

- For article discussing applicability of Uniform Commercial Code statute of frauds to construction contracts, see 28 Emory L.J. 335 (1979). For survey article on construction law for the period from June 1, 2002 through May 31, 2003, see 55 Mercer L. Rev. 85 (2003). For article, "The Cost of Consent: Optimal Standardization in the Law of Contract," see 58 Emory L.J. 1401 (2009). For note, "The Scope and Meaning of Waiver in Section 2-209 of the Uniform Commercial Code," see 5 Ga. L. Rev. 783 (1971). For comment, "The Subcontractor's Bid: An Option Contract Arising Through Promissory Estoppel," see 34 Emory L.J. 421 (1985). For comment, "Boats Against the Current: the Courts and the Statute of Frauds," see 47 Emory L.J. 253 (1998).

JUDICIAL DECISIONS

General Consideration

Editor's notes.

- In light of the similarity of the provisions, decisions under former Code 1933, §§ 20-401(7) and 96-101 are included in the annotations for this section.

Action for commission due under oral agreement.

- Trial court properly denied lessor's motion to strike lessee's counterclaim for commission due under oral agreement to sell aircraft since a commission is earned by providing services and Uniform Commercial Code statute of frauds is applicable to transactions in goods. Harris v. Clark, 157 Ga. App. 549, 278 S.E.2d 132 (1981).

Oral authorization to agent to give lessee of personalty option to buy.

- Where owner of personal property orally authorizes agent to lease it to another for a period of three months and orally authorizes the agent to give to sublessee option to buy, option price being more than $5750.00, the option so given by agent is not binding on owner since the agent's authority rested in parol, in absence of facts sufficient to work an estoppel or show ratification of a completed sale. Collier v. Wilson-Weesner-Wilkinson Co., 58 Ga. App. 44, 197 S.E. 516 (1938) (decided under former Code 1933, § 20-401).

No mention of personalty in deed or contract for sale of farm.

- Where deed to farm land was delivered in accordance with contract of sale and purchase price paid, and where no mention was made in either deed or contract of sale of personalty alleged to have gone with farm, there was no "sale" of personalty and subsequent delivery of such personalty to vendee upon vendee's representation that it was part of the transaction did not prevent its recovery by vendor. Gostin v. Scott, 80 Ga. App. 630, 56 S.E.2d 778 (1949) (decided under former Code 1933, § 96-101).

"Letter of intent" stating terms for proposed sale of plant and equipment therein, which sale was to be contingent on a future agreement as to an inventory of assets, involved a "package deal" for real estate and goods and was thus governed by (and failed under) O.C.G.A. § 13-5-30 rather than the less stringent standards of O.C.G.A. § 11-2-201. Beaulieu of Am., Inc. v. Coronet Indus., Inc., 173 Ga. App. 556, 327 S.E.2d 508 (1985).

Delivery and acceptance of goods removes transaction from statute of frauds.

- Where transfer of title to personal property is consummated by delivery and acceptance there is no requirement of law that it be in writing. Jack Fred Co. v. Lago, 96 Ga. App. 675, 101 S.E.2d 165 (1957) (decided under former § 20-401(7)).

Sufficient evidence that bank was holder of note.

- In a bank's suit against the guarantor of a note, the affidavit of the bank's vice-president established that the note was among the bank's business records and in the bank's possession; as such, the bank submitted competent proof that the bank was the holder of the note for purposes of the bank's summary judgment motion. Salahat v. FDIC, 298 Ga. App. 624, 680 S.E.2d 638 (2009).

Cited in Evans Implement Co. v. Thomas Indus., Inc., 117 Ga. App. 279, 160 S.E.2d 462 (1968); Hale v. Higginbotham, 228 Ga. 823, 188 S.E.2d 515 (1972); Kenimer v. Thompson, 128 Ga. App. 253, 196 S.E.2d 363 (1973); L.M. Berry & Co. v. Blackmon, 129 Ga. App. 347, 199 S.E.2d 610 (1973); Giant Peanut & Grain Co. v. Long Mfg. Co., 129 Ga. App. 685, 201 S.E.2d 26 (1973); R.L. Kimsey Cotton Co. v. Ferguson, 233 Ga. 962, 214 S.E.2d 360 (1975); Hagan v. Jockers, 138 Ga. App. 847, 228 S.E.2d 10 (1976); Smith v. Hornbuckle, 140 Ga. App. 871, 232 S.E.2d 149 (1977); Whitehead v. Capital Auto. Co., 239 Ga. 460, 238 S.E.2d 104 (1977); Hip Pocket, Inc. v. Levi Strauss & Co., 144 Ga. App. 792, 242 S.E.2d 305 (1978); Hatley v. Frey, 145 Ga. App. 658, 244 S.E.2d 604 (1978); Custom Radio Whsles., Inc. v. Hamilton/Avnet Elecs., 147 Ga. App. 110, 248 S.E.2d 187 (1978); Skyway Cycle Sales, Inc. v. Gordon, 148 Ga. App. 150, 251 S.E.2d 118 (1978); Jem Patents, Inc. v. Frost, 156 Ga. App. 311, 274 S.E.2d 707 (1980); Madewell v. Marietta Dodge, Inc., 506 F. Supp. 286 (N.D. Ga. 1980); David J. Joseph Co. v. S & M Scrap Metal Co., 163 Ga. App. 685, 295 S.E.2d 860 (1982); Integrated Micro Sys. v. NEC Home Elec. (USA), Inc., 174 Ga. App. 197, 329 S.E.2d 554 (1985); Seminole Peanut Co. v. Goodson, 176 Ga. App. 42, 335 S.E.2d 157 (1985); Atlanta Dairies Coop. v. Grindle, 182 Ga. App. 409, 356 S.E.2d 42 (1987); Kal-O-Mine Indus., Inc. v. Camp (In re Lumpkin Sand & Gravel, Inc.), 104 Bankr. 529 (Bankr. M.D. Ga. 1989); Isbell v. Credit Nation Lending Serv., LLC, 319 Ga. App. 19, 735 S.E.2d 46 (2012); Brooks Peanut Co. v. Great S. Peanut, LLC, 322 Ga. App. 801, 746 S.E.2d 272 (2013).

Requisites of Writing

Requirements for writing to be sufficient.

- Three definite and invariable requirements as to a writing are made by O.C.G.A. § 11-2-201(1): first, it must evidence a contract for the sale of goods; second, it must be "signed," which includes any authentication which identifies the party to be charged; and third, it must specify a quantity. Jinright v. Russell, 123 Ga. App. 706, 182 S.E.2d 328 (1971); Harris v. Hine, 232 Ga. 183, 205 S.E.2d 847 (1974); O.N. Jonas Co. v. Badische Corp., 706 F.2d 1161 (11th Cir. 1983).

Written contract enforceable if showing agreement, basis for relief, and signed by party charged.

- Written agreement signed by party against whom enforcement is sought constitutes valid, enforceable contract if it shows that a contract has been agreed to and there is a reasonably certain basis for granting relief. Mitchell-Huntley Cotton Co. v. Lawson, 377 F. Supp. 661 (M.D. Ga. 1973).

A series of writings may properly be considered to prove the existence of a contract for the sale of goods for the price of $500 or more. Roboserve, Ltd. v. Tom's Foods, Inc., 940 F.2d 1441 (11th Cir. 1991).

Required writing need not contain all material terms of contract and material terms stated need not be precise. All that is required is that the writing afford a basis for believing that the offered oral evidence rests on a real transaction. Harris v. Hine, 232 Ga. 183, 205 S.E.2d 847 (1974); O.N. Jonas Co. v. Badische Corp., 706 F.2d 1161 (11th Cir. 1983); Lipsey Motors v. Karp Motors, Inc., 194 Ga. App. 15, 389 S.E.2d 537 (1989); Roboserve, Ltd. v. Tom's Foods, Inc., 940 F.2d 1441 (11th Cir. 1991).

Only term which must appear in writing is the quantity term which need not be accurately stated, but recovery is limited to amount stated. The price, time, and place of payment or delivery, general quality of the goods, or any particular warranties may all be omitted. Alice v. Robett Mfg. Co., 328 F. Supp. 1377 (N.D. Ga. 1970), aff'd, 445 F.2d 316 (5th Cir. 1971).

Unsigned invoice is not a writing in confirmation of a contract under O.C.G.A. § 11-2-201. Jackson v. Meadows, 153 Ga. App. 1, 264 S.E.2d 503 (1980).

Invoices on printed forms bearing sender's name and address.

- Invoices which are sent on printed forms bearing a party's name and address are "sufficient against the sender" and thus may be considered a written confirmation of an alleged contract within meaning of O.C.G.A. § 11-2-201. Jem Patents, Inc. v. Frost, 147 Ga. App. 839, 250 S.E.2d 547 (1978).

Complete signature of seller is not necessary to constitute authentication. Troutt v. Nash AMC/Jeep, Inc., 157 Ga. App. 399, 278 S.E.2d 54 (1981).

Where the seller does not sign the sales contract, that fact would not render its provisions unenforceable against the buyer as there is no question that the buyer signed it and that it in fact constitutes the agreement under which the sale was made. Frick Forest Prods., Inc. v. International Hardwoods, Inc., 161 Ga. App. 359, 288 S.E.2d 625 (1982).

Purchase orders of the buyer which were not signed by any employee or authorized agent of the manufacturer did not satisfy the requirements of O.C.G.A. § 11-2-201(1). Entertainment Sales Co. v. SNK, Inc., 232 Ga. App. 669, 502 S.E.2d 263 (1998).

Signature may be printed and may be on any part of document, including billhead or letterhead. Troutt v. Nash AMC/Jeep, Inc., 157 Ga. App. 399, 278 S.E.2d 54 (1981).

A writing is "signed" if it bears any authentication which identifies the party to be charged on the contract. Roboserve, Ltd. v. Tom's Foods, Inc., 940 F.2d 1441 (11th Cir. 1991).

Writing insufficient to evidence contract for the sale of goods. See Alice v. Robett Mfg. Co., 328 F. Supp. 1377 (N.D. Ga. 1970), aff'd, 445 F.2d 316 (5th Cir. 1971).

Letter stating buyer's willingness to purchase seller's output where seller had not begun producing goods.

- Letter outlining nature of buyer's operations, seller's efforts and expertise, and stating that buyer had informed seller of buyer's being "willing and able to purchase" all seller's output at a cost no greater than buyer's own cost of production is, as a matter of law, insufficient as a writing under O.C.G.A. § 11-2-201, because at time the letter was written, seller had taken no action to begin producing goods referred to in the letter. Accordingly, no contract could have existed at the time the letter was written. Maderas Tropicales v. Southern Crate & Veneer Co., 588 F.2d 971 (5th Cir. 1979).

Signed check used as down payment on store, with notation "For Binder on Store," meets all requirements of a writing sufficient to indicate that contract for sale was made between parties. The check does not prove a contract, but would authorize introduction of oral evidence toward that end. Jinright v. Russell, 123 Ga. App. 706, 182 S.E.2d 328 (1971).

Merchants' Confirmations

One party signing written confirmation.

- O.C.G.A. § 11-2-201 allows formation of enforceable contract even though only one party signs written confirmation. Edwards v. Wilbur-Ellis Co., 379 F. Supp. 1404 (N.D. Ga. 1974).

Effect of failure to answer written confirmation within 10 days of receipt.

- Between merchants, failure to answer written confirmation of contract within 10 days of receipt is tantamount to a writing under O.C.G.A. § 11-2-201(2) and is sufficient against both parties under O.C.G.A. § 11-2-201(1). The only effect, however, is to take away from the party who fails to answer the defense of the statute of frauds; burden of persuading trier of fact that a contract was in fact made orally prior to written confirmation is unaffected. Edwards v. Wilbur-Ellis Co., 379 F. Supp. 1404 (N.D. Ga. 1974).

Written confirmation between merchants enforceable only as to quantity specified.

- Between merchants, requirement of a writing is satisfied by a writing in confirmation of contract which is received within a reasonable time by party against whom enforcement is sought and which is sufficient to bind the sender, but is enforceable only with respect to quantity of goods shown in the writing. Maderas Tropicales v. Southern Crate & Veneer Co., 588 F.2d 971 (5th Cir. 1979).

Confirmation order of broker sufficient writing.

- As there was evidence from which it could be inferred that a peanut commodities broker's confirmation order was a writing that was signed by both parties to the transaction, through the broker as their agent, and that the confirmation was signed by the sender's agent such that it was sufficient against the sender, the seller could not rely on a defense under the Statute of Frauds to the buyer's claims. Brooks Peanut Co. v. Great S. Peanut, LLC, 322 Ga. App. 801, 746 S.E.2d 272 (2013).

Invoices held to be written confirmation of the contract between merchants within the meaning of O.C.G.A. § 11-2-201(2). Dalesso v. Reliable-Triple Cee of N. Jersey, Inc., 167 Ga. App. 372, 306 S.E.2d 415 (1983).

Where the sale of goods involves two parties who are merchants, the invoices for the sale constitute written confirmation of the agreement; in addition, buyer's acceptance of the delivered goods takes the agreement out of the statute of frauds due to partial performance. Bicknell v. Joyce Sportswear Co., 173 Ga. App. 897, 328 S.E.2d 564 (1985).

Italian companies that sold goods to a Georgia corporation were not required to obtain a certificate of authority from the State of Georgia prior to doing business in Georgia, and Georgia courts had jurisdiction over actions which the Italian companies filed against the Georgia corporation after they delivered goods, submitted invoices for payment, but were not fully paid. Imex Int'l v. Wires Eng'g, 261 Ga. App. 329, 583 S.E.2d 117 (2003).

Farming corporation as "merchant."

- Evidence supported a finding that defendant farming corporation was a "merchant" bound by an oral agreement to sell 5,000 bushels of soybeans, which agreement was confirmed in writing to which the corporation made no response. Thunderbird Farms, Inc. v. Abney, 178 Ga. App. 335, 343 S.E.2d 127 (1986).

Preprinted "limited warranty" language.

- Under O.C.G.A. § 13-2-2(7), preprinted "limited warranty" language on the back of a confirmation had no effect because it directly contradicted the full warranty language that was typed on the front of the preprinted confirmation form; the court erred when it relied on this warranty to bar claims for lost profits or other special damages. Authentic Architectural Millworks, Inc. v. SCM Group USA, Inc., 262 Ga. App. 826, 586 S.E.2d 726 (2003).

"Merchants" as including farmers who orally "book" crops.

- Construing "merchants" in O.C.G.A. § 11-2-104(1) as not excluding as a matter of law farmers who orally "book" crops such as soybeans for sale protects them equally as well as the buyer. If the market price declines after the booking, they are assured of the higher booking price; the buyer cannot renege as O.C.G.A. § 11-2-201 would apply. Goldkist, Inc. v. Brownlee, 182 Ga. App. 287, 355 S.E.2d 773 (1987).

Deposition testimony of merchant's representative sufficient to form oral agreement.

- When a car dealer admitted that a contract existed for the sale of a specific quantity of goods, namely, one vehicle, via the dealer's representative's deposition, but on different terms and conditions than those alleged by the car's potential buyer, the oral agreement between the parties was enforceable under the exception to the statute of frauds set forth in O.C.G.A. § 11-2-201(3)(b). Jones v. Baran Co., LLC, 290 Ga. App. 578, 660 S.E.2d 420 (2008).

Objection requirements of O.C.G.A. §§ 11-2-201(2),11-2-202, and11-2-207 applied to work orders issued by a home improvement store to a contractor for the purchase of carpeting because the contractor's installation service was incidental to the purchase of carpeting by the store's customers. On the other hand, change orders that dealt with services that the contractor was asked to provide over and above the initial installation of the carpeting were not subject to the requirements of the Uniform Commercial Code. Ricciardelli v. Home Depot U.S.A., Inc., F. Supp. 2d (DC Jan. 15, 2009).

Actions

When insufficient contract enforceable.

- A contract which is otherwise insufficient may still be enforceable if party against whom enforcement is sought admits by pleading or testimony that a contract of sale was in fact made. Jackson v. Meadows, 153 Ga. App. 1, 264 S.E.2d 503 (1980).

A contract which is within statute of frauds at time of filing petition or cross action can become enforceable by admissions in the case itself by party charged, but not by admissions made outside the case prior to filing of petition or cross action. Garrison v. Piatt, 113 Ga. App. 94, 147 S.E.2d 374 (1966).

Failure to object to goods constituted acceptance and formed contract.

- Under the merchant rule in O.C.G.A. § 11-2-201(2), a hospital's failure to object in writing to a medical supplier's invoice for pumps within ten days of receipt constituted the hospital's acceptance of the goods and formed an enforceable contract, even though the hospital's purchase order noted that the purchase was contingent on approval by the hospital's board of directors. Ardus Med., Inc. v. Emanuel County Hosp. Auth., 558 F. Supp. 2d 1301 (S.D. Ga. 2008).

Party admitting contract may not claim benefit of statute of frauds.

- Party charged cannot admit fact of parol contract and at same time claim benefit of statute of frauds. Garrison v. Piatt, 113 Ga. App. 94, 147 S.E.2d 374 (1966).

O.C.G.A. § 11-2-201(3)(b) was designed to prevent the statute of frauds itself from becoming an aid to fraud, by prohibiting one claiming the benefit of the statute who admits in the case the oral contract sued upon. Garrison v. Piatt, 113 Ga. App. 94, 147 S.E.2d 374 (1966).

An oral agreement for the sale of a horse for $35,000 was enforceable under O.C.G.A. § 11-2-201(3)(b); the seller admitted that a contract was made for the sale of one horse. Rowland v. Scarborough Farms, LLC, 285 Ga. App. 831, 648 S.E.2d 151 (2007).

Petition for enforcement of contract otherwise valid not demurrable.

- Because it is clearly the intent of the legislature that enforceability of contract, which on its face may be within statute of frauds, is tested by answer, testimony, or plea of party charged, and not merely by allegations in the petition or cross action brought to enforce the contract, it follows that a petition upon such a contract which is valid in other respects is not demurrable because it shows on its face that it is within the statute of frauds. Garrison v. Piatt, 113 Ga. App. 94, 147 S.E.2d 374 (1966).

Agreement found outside of statute of frauds due to partial performance. See Dan Gurney Indus., Inc. v. Southeastern Wheels, Inc., 168 Ga. App. 504, 308 S.E.2d 637 (1983).

Parol defense.

- In action on account by seller, O.C.G.A. § 11-2-201 does not prohibit setting up by parol evidence a defense based upon term of contract of sale as to when payments on account become due. Giant Peanut Co. v. Carolina Chems., Inc., 129 Ga. App. 718, 200 S.E.2d 918 (1973).

Secured transactions.

- While it appeared that O.C.G.A. § 9-3-24, rather than O.C.G.A. § 11-2-725, would most likely apply to defendant collection attorney's state court deficiency action against plaintiff consumer, and it was not for the federal court to say what the Georgia courts would hold, the uncertainty meant there was no intentional unfair conduct and the consumer's Fair Debt Collection Practices Act claim was dismissed; language in O.C.G.A. § 11-2-201 excluded "secured transactions" from § 11-2-201. Almand v. Reynolds & Robin, P.C., 485 F. Supp. 2d 1361 (M.D. Ga. 2007).

Summary judgment.

- Lender and attorney were properly granted summary judgment against a home buyer's breach of contract, fraud, and conspiracy claims, as: (1) there was no evidence of a written purchase agreement for the home and the land it was placed on; and (2) a simple reading of the contract by the buyer would have protected against any alleged misrepresentations; moreover, to the extent that the home buyer's claim of a conspiracy depended upon the viability of the fraud and breach of contract claims, it also failed. Parrish v. Jackson W. Jones, P.C., 278 Ga. App. 645, 629 S.E.2d 468 (2006).

Because an oral contract concerning the disposal of car skeletons on property operated as a junkyard did not violate the O.C.G.A. §§ 11-2-201 and11-2-725, the trial court erred in granting summary judgment against a seller on his counterclaim for fraud, due to the option holder's repudiation of the contract in filing for specific performance. Henry v. Blankenship, 284 Ga. App. 578, 644 S.E.2d 419 (2007).

RESEARCH REFERENCES

Am. Jur. 2d.

- 15A Am. Jur. 2d, Commercial Code, § 94. 67 Am. Jur. 2d, Sales, §§ 180-207. 73 Am. Jur. 2d, Statute of Frauds, §§ 427, 428, 497 et seq.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:11.

C.J.S.

- 77A C.J.S., Sales, § 68 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-201.

ALR.

- Acceptance of checks by telegraph or telephone, 2 A.L.R. 1146; 13 A.L.R. 989.

Admissibility of parol evidence to vary or explain the contract implied from the regular endorsement of a bill or note, 4 A.L.R. 764; 11 A.L.R. 637; 22 A.L.R. 527; 35 A.L.R. 1120; 54 A.L.R. 999; 92 A.L.R. 721.

When goods remaining in custody of seller or some third person deemed to have been received by buyer, within exception to statute of frauds, 4 A.L.R. 902.

Installation of fixtures as part performance which will take parol lease out of statute of frauds, 10 A.L.R. 1495.

Effect of the statute of frauds upon the right to modify, by subsequent parol agreement, a written contract required by the statute to be in writing, 17 A.L.R. 10; 29 A.L.R. 1095; 80 A.L.R. 539; 118 A.L.R. 1511.

Statute of frauds: warranty or guaranty in respect of the subject-matter of a contract between third persons, which does in terms embrace such an obligation, 19 A.L.R. 1033.

Admission by pleading of a parol contract as preventing pleader from taking advantage of the statute of frauds, 22 A.L.R. 723.

Pleadings, depositions, testimony, or statements in court as constituting a sufficient writing within the statute of frauds, 22 A.L.R. 735.

Effect of statute of frauds upon the right to modify by subsequent parol agreement, a written contract required by the statute to be in writing, 29 A.L.R. 1095; 80 A.L.R. 539; 118 A.L.R. 1511.

Trade custom or usage to explain or supply essential terms in writing required by statute of frauds (or Sales Act) in sale of goods, 29 A.L.R. 1218.

Necessity of statement in writing of consideration or price for sale of goods or choses in action in order to satisfy statute of frauds, 30 A.L.R. 1163; 59 A.L.R. 1422.

Oral contract to enter into written contract as within statute of frauds, 58 A.L.R. 1015.

Contracts relating to corporate stock as within provisions of statute of frauds dealing with sales of goods, etc., 59 A.L.R. 597.

Doctrine of part performance as sustaining action at law based on contract within statute of frauds, 59 A.L.R. 1305.

Necessity and sufficiency of statement in writing of consideration or price for sale of goods or choses in action in order to satisfy statute of frauds, 59 A.L.R. 1422.

Oral agreement between joint obligors as to extent of liability inter se, 65 A.L.R. 822.

Statute of frauds: sufficiency of identification of vendor or purchaser in memorandum, 70 A.L.R. 196.

Failure to comply with statute of frauds as to a part of a contract within the statute as affecting the enforceability of another part not covered by the statute, 71 A.L.R. 479.

Reformation of memorandum relied upon to take an oral contract out of the statute of frauds, 73 A.L.R. 99.

Extrinsic writing referred to in written agreement as part thereof for purposes of statute of frauds, 73 A.L.R. 1383.

Oral promise of officer, director, or stockholder in relation to bank deposit as within statute of frauds, 95 A.L.R. 1137.

Requirement of written contract as condition to mechanic's lien as affected by an oral modification, or a modification partly oral and partly written, of a written contract, or a subsequent modification in writing not registered or filed as required by statute, 108 A.L.R. 434.

Acceptance which will take oral sale or contract for sale of goods out of statute of frauds as affected by cancelation of order or repudiation of contract before goods were shipped or delivered to buyer, 113 A.L.R. 810.

Effect of statute of frauds upon the right to modify by subsequent parol agreement a written contract required by the statute to be in writing, 118 A.L.R. 1511.

Statute of frauds as applied to agreements of repurchase or repayment on sale of corporate stock or other personal property, 121 A.L.R. 312.

Provision in sale contract to effect that only conditions incorporated therein shall be binding, 127 A.L.R. 132; 133 A.L.R. 1360.

Terms "bags," "bales," "cars," or other terms indefinite as to quantity or weight, as satisfying statute of frauds, 129 A.L.R. 1230.

Statute of frauds as applicable to a contract to be responsible for another's funeral expenses, 134 A.L.R. 633.

Contract to fill in land as one for sale of goods within statute of frauds, 161 A.L.R. 1158.

Printed, stamped, or typewritten name as satisfying requirement of statute of frauds as regards signature, 171 A.L.R. 334.

Deposit in mail or notice of claim required as condition of action against, or liability of, governmental body, as a giving of notice within required period, 175 A.L.R. 299.

Memorandum which will satisfy statute of frauds, as predicable in whole or part upon writings prior to the oral agreement, 1 A.L.R.2d 841; 30 A.L.R.2d 972.

Undelivered lease or contract (other than for sale of land), or undelivered memorandum thereof, as satisfying statute of frauds, 12 A.L.R.2d 508.

Effect of attempted cancelation or erasure in memorandum otherwise sufficient to satisfy statute of frauds, 31 A.L.R.2d 1112.

Buyer's note as payment within contemplation of statute of frauds, 81 A.L.R.2d 1355.

Applicability of parol evidence rule in favor of or against one not a party to contract of release, 13 A.L.R.3d 313.

Construction and application of UCC § 2-201(3)(b) rendering contract of sale enforceable notwithstanding statute of frauds, to extent it is admitted in pleading, testimony, or otherwise in court, 88 A.L.R.3d 416.

Farmers as "merchants" within provisions of UCC Article 2, dealing with sales, 95 A.L.R.3d 484.

Construction and application of UCC § 2-201(3)(c) rendering contract of sale enforceable notwithstanding statute of frauds with respect to goods for which payment has been made and accepted or which have been received and accepted, 97 A.L.R.3d 908.

Promissory estoppel as basis for avoidance of UCC statute of frauds (UCC § 2-201), 29 A.L.R.4th 1006.

Sales: "specially manufactured goods" statute of frauds exception in UCC § 2-201(3)(a), 45 A.L.R.4th 1126.

Sales: construction of statute of frauds exception under UCC § 2-201(2) for confirmatory writing between merchants, 82 A.L.R.4th 709, 38 A.L.R.5th 191.

Satisfaction of statute of frauds by e-mail, 110 A.L.R.5th 277.

Applicability of UCC Article 2 to mixed contracts for sale of consumer goods and services, 1 A.L.R.7th 3.

Applicability of UCC Article 2 to mixed contracts for sale of goods and services: distributorship, franchise, and similar business contracts, 8 A.L.R.7th 4.

Applicability of UCC Article 2 to mixed contracts for sale of business goods and services: manufacturing, construction, and similar contracts, 15 A.L.R.7th 7.

11-2-202. Final written expression; parol or extrinsic evidence.

Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented:

  1. By course of performance, course of dealing, or usage of trade (Code Section 11-1-303); and
  2. By evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.

(Code 1933, § 109A-2 - 202, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2015, p. 996, § 3B-2/SB 65.)

The 2015 amendment, effective January 1, 2016, substituted the present provisions of paragraph (a) for the former provisions, which read: "By course of dealing or usage of trade (Code Section 11-1-205) or by course of performance (Code Section 11-2-208); and".

Editor's notes.

- Ga. L. 2015, p. 996, § 1-1/SB 65, not codified by the General Assembly, provides: "(a) This Act shall be known and may be cited as the 'Debtor-Creditor Uniform Law Modernization Act of 2015.'

"(b) To promote consistency among the states, it is the intent of the General Assembly to modernize certain existing uniform laws promulgated by the Uniform Law Commission affecting debtor and creditor rights, responsibilities, and relationships and other federally recognized laws affecting such rights, responsibilities, and relationships."

Law reviews.

- For article, "Consumer Protection Against Sellers Misrepresentations," see 20 Mercer L. Rev. 414 (1969). For article, "Impracticability As Risk Allocation: The Effect of Changed Circumstances upon Contract Obligations for the Sale of Goods," see 22 Ga. L. Rev. 503 (1988).

JUDICIAL DECISIONS

General Consideration

No other construction of contract allowed.

- Where the language of the contract is plain, unambiguous, and capable of only one reasonable interpretation, no other construction is permissible. Golden Peanut Co. v. Hunt, 203 Ga. App. 469, 416 S.E.2d 896 (1992).

Parol evidence of prior agreement not effective to vary terms of writing.

- Parol evidence as to terms of agreement made prior to execution of document is not effective to vary terms of written contract. Romines v. Wagstaff Motor Co., 120 Ga. App. 608, 171 S.E.2d 752 (1969); Hill Aircraft & Leasing Corp. v. Planes, Inc., 158 Ga. App. 151, 279 S.E.2d 250 (1981).

Express terms of written contract generally may not be materially varied by parol evidence of prior agreement or of contemporaneous oral agreement between parties. Cone Mills Corp. v. A.G. Estes, Inc., 399 F. Supp. 938 (N.D. Ga. 1975).

Parties bound by writing.

- In dispute over meaning of contract and subsequent acts of parties to it during execution thereof which is not over language of the contract, a party is bound by what has been reduced to writing. R.S. Helms, Inc. v. GST Dev. Co., 135 Ga. App. 845, 219 S.E.2d 458 (1975).

O.C.G.A. § 11-2-306(1) precludes a finding that a contract for requirements is too indefinite, since the quantity is determined by the actual good faith requirements of the particular party. O.N. Jonas Co. v. Badische Corp., 706 F.2d 1161 (11th Cir. 1983).

Cited in Economy Forms Corp. v. Kandy, Inc., 391 F. Supp. 944 (N.D. Ga. 1974); Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975); Richards & Assocs. v. Fidelity Sound, Inc., 137 Ga. App. 752, 224 S.E.2d 832 (1976); Atlanta Army & Navy Store, Inc. v. Stuckman, 143 Ga. App. 850, 240 S.E.2d 220 (1977); Corbett v. North Fla. Clarklift, Inc., 155 Ga. App. 701, 272 S.E.2d 563 (1980); Troutt v. Nash AMC/Jeep, Inc., 157 Ga. App. 399, 278 S.E.2d 54 (1981); Chatham v. Southern Ry., 157 Ga. App. 831, 278 S.E.2d 717 (1981); David J. Joseph Co. v. S & M Scrap Metal Co., 163 Ga. App. 685, 295 S.E.2d 860 (1982); W. Linton Howard, Inc. v. Gibbs Mach., Inc., 169 Ga. App. 627, 314 S.E.2d 259 (1984).

Legislative Intent

Oral contracts enforceable.

- Existence of O.C.G.A. § 11-2-202 indicates that terms of oral contracts are enforceable under Uniform Commercial Code. Edwards v. Wilbur-Ellis Co., 379 F. Supp. 1404 (N.D. Ga. 1974).

O.C.G.A. § 11-2-202 requires courts to apply to contracts the meaning intended by parties. See R.N. Kelly Cotton Merchant, Inc. v. York, 379 F. Supp. 1075 (M.D. Ga. 1973), aff'd, 494 F.2d 41 (5th Cir. 1974).

Section intended to prevent false claims of oral warranties.

- O.C.G.A. § 11-2-202 was intended to allow sellers to prevent buyers from making false claims of oral warranties in contract actions. City Dodge, Inc. v. Gardner, 232 Ga. 766, 208 S.E.2d 794 (1974).

Liberalization of parole evidence rule.

- O.C.G.A. § 11-2-202 was intended to liberalize common-law parol evidence rule to allow evidence of agreements outside contract without a prerequisite finding that contract was ambiguous. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

Admission of evidence contradicting express terms of contract ignores purpose of section.

- To admit evidence of agreement contradicting express terms of contract would clearly eviscerate purpose of O.C.G.A. § 11-2-202. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

Construction and Application

Consideration given to official comments.

- O.C.G.A. § 11-2-202 was adopted verbatim from § 2-202 of the Uniform Commercial Code and therefore, in its application by Georgia courts, intentions of drafters of the Uniform Commercial Code as evidenced in official comments to it should be given due consideration. Warren's Kiddie Shoppe, Inc. v. Casual Slacks, Inc., 120 Ga. App. 578, 171 S.E.2d 643 (1969).

Effect of allowing challenges to specific agreements by extrinsic evidence.

- In contracts which set out fairly specific quantity, price, and time specifications, to allow such specific agreements to be challenged by extrinsic evidence might jeopardize certainty of contractual duties which parties have right to rely on. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

Unreasonable construction of contract.

- Construction of contract which negates its express terms, allowing unilateral abandonment of specifications, is patently unreasonable. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

Contracts to be interpreted in light of commercial setting.

- O.C.G.A. § 11-2-202 requires that contracts be interpreted in light of commercial context in which they were written and not by rules of legal construction. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

Evidence admissible to show written confirmation incorrectly stated terms of prior oral agreement.

- Recognizing extensive use of oral contracts in securities and commodities markets it is clear that if use of oral contracts is to be fostered, party seeking to enforce oral contract should not be prevented from doing so merely because an alleged written confirmation incorrectly stated terms of prior oral contract. If the law was construed differently, a party to an oral contract could easily elude enforcement by sending a confirmatory memorandum which incorrectly stated all terms of prior oral contract. Edwards v. Wilbur-Ellis Co., 379 F. Supp. 1404 (N.D. Ga. 1974).

Contract established by memorandum, correspondence, and agreement despite indefinite quantity term.

- Where the evidence demonstrated that both parties intended a requirements contract based on purchaser's good faith needs for the trademarked yarns and the existence of this contract was established by a memorandum, the correspondence between the parties, and a trademark licensing agreement which was to remain in effect subject to cancellation by either party on 90 days' notice, the indefiniteness of the written quantity term did not invalidate the contract. O.N. Jonas Co. v. Badische Corp., 706 F.2d 1161 (11th Cir. 1983).

Actual agreement not contained in one document.

- Trial court correctly considered matters outside a buyer's request for quotation (RFQ) to determine the intended final obligations of the buyer and a seller under their agreement because the evidence supported the trial court's finding that the parties' actual agreement was not contained in any one document, such as the RFQ, since the RFQ anticipated that necessary terms such as material specifications, quantities, pricing information, and delivery dates would be supplied as part of the bidding and ordering process; because before, during, and after accepting the seller's bid, the buyer was aware of the seller's overseas supply chain and did not object to the seller's stated reliance on a promised three-month forecast to obtain material, the trial court did not err in construing the written terms of the contract in light of that understanding and thereby denying the buyer cover damages for items exceeding the usage data provided to the seller. Scovill Fasteners, Inc. v. Northern Metals, Inc., 303 Ga. App. 246, 692 S.E.2d 840 (2010).

Where parties disagree on terms, evidence of prior oral agreement admissible.

- O.C.G.A. § 11-2-202 forbids use of evidence of prior agreements only with respect to terms in confirmatory memoranda to which parties agree, and where parties disagree on every term in alleged confirmatory memorandum, this section will not prohibit use of evidence of any prior agreement. Edwards v. Wilbur-Ellis Co., 379 F. Supp. 1404 (N.D. Ga. 1974).

Where implied warranties are properly excluded, evidence of prior or contemporaneous parol agreements not admissible.

- Where provisions of contract meet requirements of O.C.G.A. § 11-2-316 and no implied warranty arises out of the transaction, either as to merchantability or as to fitness for a particular purpose, evidence of a contradictory prior or contemporaneous parol agreement is prohibited. Avery v. Aladdin Prods. Division, Nat'l Serv. Indus., Inc., 128 Ga. App. 266, 196 S.E.2d 357 (1973).

Evidence of samples admitted to support claim of breach of express warranty by sample.

- Because there was no indication that the written contract was a complete and exclusive statement of the agreement between the parties, and because the terms expressed by the sample did not contradict those in the written contract, the parol evidence rule did not prevent the admission of evidence of peanut samples sent by the seller to describe what the buyer would receive in bulk shipment to provide a foundation for the claim against the seller for breach of express warranty by sample. Alimenta (U.S.A.), Inc. v. Anheuser-Busch Cos., 803 F.2d 1160 (11th Cir. 1986).

Unambiguous agreement cannot be modified.

- Where the clear intention of the parties was that if they could not agree upon a price, seller could then entertain bona fide purchase offers from any third party, buyer cannot modify that unambiguous agreement by use of parol evidence to additionally require the bona fide offer to come from a federally registered peanut handler. Golden Peanut Co. v. Hunt, 203 Ga. App. 469, 416 S.E.2d 896 (1992).

The phrase "local taxes," as used in contracts which excluded local taxes from the lump sum purchase price for advertising signs, did not include state sales taxes, where the phrase was at best an ambiguous phrase, admitting of no single, reasonable meaning, without resort to construction. Outdoor Displays Welding & Fabrication, Inc. v. United States Enters., Inc., 84 Bankr. 260 (Bankr. S.D. Ga. 1988).

Parol evidence admissible if no final sales price.

- Where written contracts were not intended by the parties as a complete and exclusive statement of the agreed upon terms, because only a floor price, rather than the final sales price, was stated, parol evidence as to the parties' prescribed method for fixing the final price was admissible. Golden Peanut Co. v. Bass, 275 Ga. 145, 563 S.E.2d 116 (2002), cert. denied, 537 U.S. 886, 123 S. Ct. 32, 154 L. Ed. 2d 146 (2002).

Usage of Trade, Course of Dealing, and Course of Performance

Customs of trade considered in interpreting contract terms.

- Customs of trade should be relevant to interpretation of certain terms of contract, and should be considered in determining what variation in specifications is considered acceptable. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

Contracts are to be interpreted with assumption that usages of trade were taken for granted when document was phrased. Unless carefully negated they become an element of meaning of words used. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

Modification need not be in writing.

- Modification or restitution of the remedy available for breach of warranty need not be in writing. Parole evidence to show the usage of the trade to explain or supplement the available remedies for breach of warranty was improperly excluded. Topeka Mach. Exch., Inc. v. Stoler Indus., Inc., 220 Ga. App. 799, 470 S.E.2d 250 (1996).

When contract terms and trade usage construed as consistent.

- The express terms of a contract and trade usage shall be construed as consistent with each other only when such construction is reasonable and a construction which negates the express terms of the contract by allowing unilateral abandonment of its specifications is patently unreasonable. Golden Peanut Co. v. Hunt, 203 Ga. App. 469, 416 S.E.2d 896 (1992).

Assumption that parties intend specific price and quantity terms observed.

- Though courts are free to apply custom and trade usage in interpreting terms, it should be assumed that specifications in contract as to quantity and price are intended to be observed by parties and unilateral right to make major departure from such specifications must be expressly agreed to in written contract. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

No need to negate applicability of trade usage to preserve written price and quantity terms.

- If clause expressly negating applicability of trade usage is necessary to preserve specified price and quantity terms of a contract, the purposes of the Uniform Commercial Code will be quickly frustrated, for while consideration of commercial custom is an important aid in interpretation of terms of a contract, parties will have no choice but to foreclose use of such an aid if inevitable result of such consideration is to have explicit contracts negated by an evidentiary free-for-all. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 589 F.2d 1154 (5th Cir. 1978).

Complete and Exclusive Agreements

Effect of merger and disclaimer clauses.

- In contract actions, effect of merger and disclaimer clauses must be determined under provisions of Uniform Commercial Code. City Dodge, Inc. v. Gardner, 232 Ga. 766, 208 S.E.2d 794 (1974).

Contract clause specifying that conditions not incorporated in contract will not be recognized indicates that writing was intended to be complete and exclusive statement of terms of agreement. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

Where writing appears to be complete and certain agreement and there is no evidence or allegation of fraud or accident, contract will be presumed to contain entire agreement, and parol evidence of prior or contemporaneous representations or statements will not be considered to add to, take from, or vary written instruments involved. R.S. Helms, Inc. v. GST Dev. Co., 135 Ga. App. 845, 219 S.E.2d 458 (1975).

"Consistent additional terms" refers to matters not dealt with in written contract.

- Evidence which may be admitted under O.C.G.A. § 11-2-202(b) pertains to agreements covering matters not dealt with in the written contract. Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

O.C.G.A. § 11-2-202(b) cannot be used merely as an alternative means of introducing evidence of trade usage. See Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975), aff'd, 569 F.2d 1154 (5th Cir. 1978).

Fraud

Charge of fraud, if adequately alleged, may be established by parol evidence. See Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).

Even though contract is in writing, fact that it was induced by false representations may be shown by parol or extrinsic evidence as a sheer matter of necessity. Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).

Evidence of fraud in procurement of contract.

- Though terms of agreement may indicate existence of valid contract, it will not stand in face of proof evidencing fraud in its procurement. Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).

Evidence that material term was founded on misrepresentations or was inserted or omitted fraudulently.

- Fact that contract is in writing does not preclude introduction of evidence to show that material stipulation therein was founded on misrepresentations and fraud of one party, or was inserted or omitted by fraudulent means. Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974).

Tort action for fraudulent misrepresentation not precluded.

- The Uniform Commercial Code does not preclude an action in tort based upon fraudulent misrepresentation inducing sale where plaintiff proves by preponderance of evidence the elements of fraud and deceit recognized under Georgia law, and such a tort action cannot be controlled by the terms of the contract itself. City Dodge, Inc. v. Gardner, 232 Ga. 766, 208 S.E.2d 794 (1974).

Procedure

Objection requirements of O.C.G.A. §§ 11-2-201(2),11-2-202, and11-2-207 applied to work orders issued by a home improvement store to a contractor for the purchase of carpeting because the contractor's installation service was incidental to the purchase of carpeting by the store's customers. On the other hand, change orders that dealt with services that the contractor was asked to provide over and above the initial installation of the carpeting were not subject to the requirements of the Uniform Commercial Code. Ricciardelli v. Home Depot U.S.A., Inc., F. Supp. 2d (DC Jan. 15, 2009).

Jury questions.

- Evidence of trade usage of terms is admissible to construe a contract, and whether delivery terms of contract have been breached presents issue of fact for jury. Warren's Kiddie Shoppe, Inc. v. Casual Slacks, Inc., 120 Ga. App. 578, 171 S.E.2d 643 (1969).

Question of reliance on alleged fraudulent misrepresentation in tort cases cannot be determined by provisions of contract sought to be rescinded but is a question of fact for jury. City Dodge, Inc. v. Gardner, 232 Ga. 766, 208 S.E.2d 794 (1974).

RESEARCH REFERENCES

Am. Jur. 2d.

- 15A Am. Jur. 2d, Commercial Code, § 69. 29A Am. Jur. 2d, Evidence, § 1095. 67 Am. Jur. 2d, Sales, §§ 317-347. 68A Am. Jur. 2d, Secured Transactions, § 164. 72 Am. Jur. 2d, Statute of Frauds, §§ 216, 260.

C.J.S.

- 32A C.J.S., Evidence, §§ 1168 et seq., 1183.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-202.

ALR.

- Admissibility of parol evidence to show that a bill or note was conditional, or given for a special purpose, 20 A.L.R. 421; 54 A.L.R. 702; 75 A.L.R. 1519; 105 A.L.R. 1346.

Oral agreement between joint obligors as to extent of liability inter se, 65 A.L.R. 822.

Parol-evidence rule: evidence of agreements as to manner or medium of payment of bill or note, or as to credit, setoff, or counterclaim with respect to the same, 71 A.L.R. 548.

Effect of statute of frauds upon the right to modify by subsequent parol agreement, a written contract required by the statute to be in writing, 80 A.L.R. 539; 118 A.L.R. 1511.

Parol evidence rule as affecting extrinsic evidence to show or to negative usury, 104 A.L.R. 1261.

Requirement of written contract as condition of mechanic's lien as affected by an oral modification, or a modification partly oral and partly written, of a written contract, or a subsequent modification in writing not registered or filed as required by statute, 108 A.L.R. 434.

Provision in sale contract to effect that only conditions incorporated therein shall be binding, 133 A.L.R. 1360.

Conflict of laws as to usage and custom, with respect to interpretation or performance of a contract, 60 A.L.R.2d 467.

Admissibility of oral evidence to show that a writing was a sham agreement not intended to create legal relations, 71 A.L.R.2d 382.

Application of parol evidence rule of UCC § 2-202 where fraud or misrepresentation is claimed in sale of goods, 71 A.L.R.3d 1059.

Modern status of rules governing legal effect of failure to object to admission of extrinsic evidence violative of parol evidence rule, 81 A.L.R.3d 249.

Affirmations or representations made after the sale is closed as basis of warranty under UCC § 2-313(1)(a), 47 A.L.R.4th 189.

Applicability of UCC Article 2 to mixed contracts for sale of consumer goods and services, 1 A.L.R.7th 3.

Applicability of UCC Article 2 to mixed contracts for sale of goods and services: distributorship, franchise, and similar business contracts, 8 A.L.R.7th 4.

Applicability of UCC Article 2 to mixed contracts for sale of business goods and services: manufacturing, construction, and similar contracts, 15 A.L.R.7th 7.

11-2-203. Seals inoperative.

The affixing of a seal to a writing evidencing a contract for sale or an offer to buy or sell goods does not constitute the writing a sealed instrument and the law with respect to sealed instruments does not apply to such a contract or offer.

(Code 1933, § 109A-2 - 203, enacted by Ga. L. 1962, p. 156, § 1.)

Cross references.

- Legal status of contracts under seal generally, § 13-1-4.

JUDICIAL DECISIONS

Cited in McLean v. Gray, 180 Ga. App. 794, 350 S.E.2d 815 (1986).

RESEARCH REFERENCES

Am. Jur. 2d.

- 17A Am. Jur. 2d, Contracts, § 116. 67 Am. Jur. 2d, Sales, §§ 106, 107.

C.J.S.

- 77A C.J.S., Sales, § 1 et seq. 78A C.J.S., Seals, §§ 1, 2.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-203.

ALR.

- Necessity of consideration to support option under seal, 2 A.L.R. 631; 21 A.L.R. 137.

11-2-204. Formation in general.

  1. A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.
  2. An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.
  3. Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

(Code 1933, § 109A-2 - 204, enacted by Ga. L. 1962, p. 156, § 1.)

Law reviews.

- For comment on Fender v. Colonial Stores, Inc., 138 Ga. App. 31, 225 S.E.2d 691 (1976), see 28 Mercer L. Rev. 751 (1977).

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity of the provisions, decisions under former Code 1933, § 96-101 are included in the annotations for this section.

Common-law rule not abrogated.

- The so called "gap filler" provision in O.C.G.A. § 11-2-204(3) does not obliterate the common law rule that the first requirement of law of a valid contract is that there must be a meeting of the minds of the parties and mutuality, and the agreement must be expressed plainly and explicitly enough to show what the parties agree upon; a contract cannot be enforced if its terms are incomplete or incomprehensible. Drug Line v. Sero-Immuno Diagnostics, Inc., 217 Ga. App. 530, 458 S.E.2d 170 (1995).

Formalities required for contract formation reduced.

- The Uniform Commercial Code makes contracts easier to form and imposes a wider range of options than before; parties may form a contract through conduct rather than merely through the exchange of communications constituting "offer and acceptance." D.N. Garner Co. v. Georgia Palm Beach Aluminum Window Corp., 233 Ga. App. 252, 504 S.E.2d 70 (1998).

In a case in which a steel company signed a purchase order from a general contractor after it had rejected the terms of the purchase order and had submitted a counter-offer to the general contractor, a district court, in granting summary judgment in favor of the general contractor, correctly concluded that the record evidence disclosed no material fact in dispute; no reasonable jury could find that the general contractor and the steel company agreed to terms of a steel supply contract for the construction project. The requirement for a meeting of the minds necessary under O.C.G.A. § 13-3-2 had not been met, and there was no agreement between the parties under O.C.G.A. § 11-2-204. South Cent. Steel, Inc. v. McKnight Constr. Co., F.3d (11th Cir. Jan. 25, 2008)(Unpublished).

No meeting of the minds or mutuality established.

- In a cottonseed buyer's suit for breach of contract against a cottonseed seller, the trial court properly granted summary judgment to the seller as no mutuality as to the contract terms existed since the buyer never obtained credit approval. Further, the buyer's reliance on the purported promise was unreasonable as a matter of law; thus, promissory estoppel did not apply as the buyer never received credit approval, which was an essential element of the cottonseed business. AgriCommodities, Inc. v. J. D. Heiskell & Co., 297 Ga. App. 210, 676 S.E.2d 847 (2009).

Valid, enforceable contract.

- Written agreement signed by party against whom enforcement is sought constitutes valid, enforceable contract if the writing shows that a contract has been agreed to and there is a reasonably certain basis for granting relief. Mitchell-Huntley Cotton Co. v. Lawson, 377 F. Supp. 661 (M.D. Ga. 1973).

When a car dealer admitted that a contract existed for the sale of a specific quantity of goods, namely, one vehicle, via the dealer's representative's deposition, but on different terms and conditions than those alleged by the car's potential buyer, the oral agreement between the parties was enforceable under the exception to the statute of frauds set forth in O.C.G.A. § 11-2-201(3)(b). Jones v. Baran Co., LLC, 290 Ga. App. 578, 660 S.E.2d 420 (2008).

Under O.C.G.A. § 11-2-204(3), a contract between a hospital and medical supplier consisting of a contingency-based purchase order and an invoice did not fail for indefiniteness because, by the deliverance of the goods and the acceptance of the goods without protest in writing within ten days of receipt, the parties were deemed to have agreed upon quantity and price terms. Ardus Med., Inc. v. Emanuel County Hosp. Auth., 558 F. Supp. 2d 1301 (S.D. Ga. 2008).

Acceptance letter manifested contractual intent. See J. Lee Gregory, Inc. v. Scandinavian House, 209 Ga. App. 285, 433 S.E.2d 687 (1993).

Price may be left for ascertainment by certain and exact method.

- If price of goods is fixed and delivery is perfect a contract is executed. Fact that price is to be ascertained by a certain and exact method subsequent to contract does not affect validity or completeness of the sale, nor does fact that sale is on credit. Comstock v. Tarbush, 73 Ga. App. 724, 37 S.E.2d 925 (1946)(decided under former Code 1933, § 96-101).

Where parties consented as to goods to be sold, price, and delivery, sale was completed. Cordell v. Macon Coca-Cola Bottling Co., 56 Ga. App. 117, 192 S.E. 228 (1937)(decided under former Code 1933, § 96-101).

Contract for cotton was binding, though cotton not planted at time.

- Where written contracts, on their face, show clearly that parties intended to enter into contracts for sale of cotton, and testimony of all of parties indicated that each intended to make a binding contract for sale of cotton at time contracts were executed, then it is clear that contracts were formed regardless of whether the cotton had in fact been planted at time of execution. R.N. Kelly Cotton Merchant, Inc. v. York, 379 F. Supp. 1075 (M.D. Ga. 1973), aff'd, 494 F.2d 41 (5th Cir. 1974).

Evidentiary issues.

- Summary judgment was precluded where material issues of fact existed as to whether there was an acceptance of a written offer of a manufacturer to furnish and install windows for a project and whether the offer was for a particular window model or for windows meeting project specifications. D.N. Garner Co. v. Georgia Palm Beach Aluminum Window Corp., 233 Ga. App. 252, 504 S.E.2d 70 (1998).

Cited in Taunton v. Allenberg Cotton Co., 378 F. Supp. 34 (M.D. Ga. 1973); Promech Corp. v. Brodhead-Garrett Co., 131 Ga. App. 314, 205 S.E.2d 511 (1974); Duval & Co. v. Malcom, 233 Ga. 784, 214 S.E.2d 356 (1975); Deck House, Inc. v. Scarborough, Sheffield & Gaston, Inc., 139 Ga. App. 173, 228 S.E.2d 142 (1976); Unique Designs, Inc. v. Pittard Mach. Co., 200 Ga. App. 647, 409 S.E.2d 241 (1991).

RESEARCH REFERENCES

Am. Jur. 2d.

- 15A Am. Jur. 2d, Commercial Code, § 69. 67 Am. Jur. 2d, Sales, §§ 102, 103.

C.J.S.

- 77A C.J.S., Sales, § 29 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-204.

ALR.

- Acting on order for goods as an acceptance thereof, 29 A.L.R. 1352.

Nature, construction, and effect of "lay away" or "will call" plan or system, 10 A.L.R.3d 456.

Output contracts under § 2-306(1) of Uniform Commercial Code, 30 A.L.R.4th 396.

"And/or,", 154 A.L.R. 866.

Applicability of UCC Article 2 to mixed contracts for sale of consumer goods and services, 1 A.L.R.7th 3.

Applicability of UCC Article 2 to mixed contracts for sale of goods and services: distributorship, franchise, and similar business contracts, 8 A.L.R.7th 4.

Applicability of UCC Article 2 to mixed contracts for sale of business goods and services: manufacturing, construction, and similar contracts, 15 A.L.R.7th 7.

11-2-205. Firm offers.

An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.

(Code 1933, § 109A-2 - 205, enacted by Ga. L. 1962, p. 156, § 1.)

JUDICIAL DECISIONS

Cited in R.N. Kelly Cotton Merchant, Inc. v. York, 379 F. Supp. 1075 (M.D. Ga. 1973); Southern Concrete Servs., Inc. v. Mableton Contractors, 407 F. Supp. 581 (N.D. Ga. 1975); Western Publishing Co. v. International Horizons, Inc., 21 Bankr. 414 (N.D. Ga. 1982).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 138, 139.

C.J.S.

- 77A C.J.S., Sales, § 32 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-205.

11-2-206. Offer and acceptance in formation of contract.

  1. Unless otherwise unambiguously indicated by the language or circumstances:
  1. An offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;
  2. An order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or nonconforming goods, but such a shipment of nonconforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.

Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.

(Code 1933, § 109A-2 - 206, enacted by Ga. L. 1962, p. 156, § 1.)

Law reviews.

- For comment on Fender v. Colonial Stores, Inc., 138 Ga. App. 31, 225 S.E.2d 691 (1976), see 28 Mercer L. Rev. 751 (1977). For comment, "Boats Against the Current: the Courts and the Statute of Frauds," see 47 Emory L.J. 253 (1998).

JUDICIAL DECISIONS

Cited in Duval & Co. v. Malcom, 233 Ga. 784, 214 S.E.2d 356 (1975); Fender v. Colonial Stores, Inc., 138 Ga. App. 31, 225 S.E.2d 691 (1976); Marvin L. Walker & Assocs. v. A.L. Buschman, Inc., 147 Ga. App. 851, 250 S.E.2d 532 (1978).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 140-152.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:38.

C.J.S.

- 77A C.J.S., Sales, § 29 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-206.

ALR.

- Acceptance of offer with condition which law would imply, 1 A.L.R. 1508.

Acknowledging receipt of order for goods as an acceptance completing the contract, 10 A.L.R. 683.

Acting on order for goods as an acceptance thereof, 19 A.L.R. 476; 29 A.L.R. 1352.

Time when offer or proposition is mailed, or when it is received through mail, as commencement of period allowed for acceptance, 72 A.L.R. 1214.

Silence when offer is made or failure to reject it as an acceptance which will consummate a bilateral contract, 77 A.L.R. 1141.

Construction and application of UCC § 2-201(3)(c) rendering contract of sale enforceable notwithstanding statute of frauds with respect to goods for which payment has been made and accepted or which have been received and accepted, 97 A.L.R.3d 908.

11-2-207. Additional terms in acceptance or confirmation.

  1. A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
  2. The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:
  1. The offer expressly limits acceptance to the terms of the offer;
  2. They materially alter it; or
  3. Notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this title.

(Code 1933, § 109A-2 - 207, enacted by Ga. L. 1962, p. 156, § 1.)

Law reviews.

- For article, "Impracticability As Risk Allocation: The Effect of Changed Circumstances upon Contract Obligations for the Sale of Goods," see 22 Ga. L. Rev. 503 (1988). For note, "Enforcing Manufacturers' Warranty Exclusions Against Non-Privity Commercial Purchasers: The Need for Uniform Guidelines," see 20 Ga. L. Rev. 461 (1986).

JUDICIAL DECISIONS

When section applicable.

- Only where all traditional criteria are met showing that contract was made does O.C.G.A. § 11-2-207 become applicable. Duval & Co. v. Malcom, 233 Ga. 784, 214 S.E.2d 356 (1975).

Material alteration.

- A jurisdiction clause making the law of New York applicable to the transaction constitutes a material alteration and does not become part of the contract. Sweetapple Plastics, Inc. v. Philip Shuman & Sons, 77 Bankr. 304 (Bankr. M.D. Ga. 1987).

Purchase order as contract.

- Where the purchase order from a general contractor contained terms at variance with the initial proposal from the subcontractor, and following receipt of the purchase order, the subcontractor lodged no objection to its terms, but proceeded to manufacture the parts ordered and sent a supervisor to the job site, the trial court did not err in finding that the purchase order (including the plans and specs), rather than the proposal, constituted the contract between the parties. American Aluminum Prods. Co. v. Binswanger Glass Co., 194 Ga. App. 703, 391 S.E.2d 688 (1990).

Options incorporated into contract.

- Where the options reserved in the letter of intent did not expressly make the acceptance of plaintiff's offer conditional and did not demonstrate a lack of contractual intent, they became a part of the contract. J. Lee Gregory, Inc. v. Scandinavian House, 209 Ga. App. 285, 433 S.E.2d 687 (1993).

Written agreement, rather than oral agreement, was contract to be followed.

- Jury's finding that the aircraft purchase agreement (APA), rather than an oral agreement, was the contract between the parties was supported by the evidence because the plaintiff's own complaint asserted that the APA was the agreement between the parties and the Uniform Commercial Code, specifically O.C.G.A. § 11-2-207, requires the writing to be followed. Eagle Jets, LLC v. Atlanta Jet, Inc., 321 Ga. App. 386, 740 S.E.2d 439 (2013).

Objection requirements of O.C.G.A. §§ 11-2-201(2),11-2-202, and11-2-207 applied to work orders issued by a home improvement store to a contractor for the purchase of carpeting because the contractor's installation service was incidental to the purchase of carpeting by the store's customers. On the other hand, change orders that dealt with services that the contractor was asked to provide over and above the initial installation of the carpeting were not subject to the requirements of the Uniform Commercial Code. Ricciardelli v. Home Depot U.S.A., Inc., F. Supp. 2d (DC Jan. 15, 2009).

Cited in Frey v. Friendly Motors, Inc., 129 Ga. App. 636, 200 S.E.2d 467 (1973); Pirrone v. Monarch Wine Co., 497 F.2d 25 (5th Cir. 1974); Ewing Bros. v. Ball Computer Prods., Inc., 148 Ga. App. 410, 251 S.E.2d 347 (1978).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 153-174.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-207.

ALR.

- Circumstances supporting inference of original offerer's acceptance of counteroffer or assent to conditions attached by offeree to his acceptance, 135 A.L.R. 821.

Difference between offer and acceptance as regards place of payment or of delivery as variance preventing consummation of contract, 3 A.L.R.2d 256.

What are additional terms materially altering contract within meaning of UCC § 2-207(2)(b), 72 A.L.R.3d 479.

Farmers as "merchants" within provisions of UCC Article 2, dealing with sales, 95 A.L.R.3d 484.

What constitutes acceptance "expressly made conditional" converting it to rejection and counteroffer under UCC § 2-207 (1), 22 A.L.R.4th 939.

11-2-208. Course of performance or practical construction.

Reserved. Repealed by Ga. L. 2015, p. 996, § 3B-3/SB 65, effective January 1, 2016.

Editor's notes.

- This Code section was based on Code 1933, § 109A-2 - 208, enacted by Ga. L. 1962, p. 156, § 1.

Ga. L. 2015, p. 996, § 3B-3/SB 65 provides for the repeal of this Code section, effective January 1, 2016.

11-2-209. Modification, rescission, and waiver.

  1. An agreement modifying a contract within this article needs no consideration to be binding.
  2. A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.
  3. The requirements of the statute of frauds section of this article (Code Section 11-2-201) must be satisfied if the contract as modified is within its provisions.
  4. Although an attempt at modification or rescission does not satisfy the requirements of subsection (2) or (3) of this Code section it can operate as a waiver.
  5. A party who has made a waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.

(Code 1933, § 109A-2 - 209, enacted by Ga. L. 1962, p. 156, § 1.)

Cross references.

- Effect of mutual departure from contract terms, § 13-4-4.

Law reviews.

- For article discussing exclusion or modification of warranties under the U.C.C., see 1 Ga. St. B.J. 191 (1964). For article, "Impracticability As Risk Allocation: The Effect of Changed Circumstances upon Contract Obligations for the Sale of Goods," see 22 Ga. L. Rev. 503 (1988). For note, "The Scope and Meaning of Waiver in Section 2-209 of the Uniform Commercial Code," see 5 Ga. L. Rev. 783 (1971).

JUDICIAL DECISIONS

Test of good faith for modifications.

- Effective use of bad faith to escape performance on original contract terms is barred, and extortion of "modification" without legitimate commercial reason is ineffective as a violation of duty of good faith. Fratelli Gardino v. Caribbean Lumber Co., 587 F.2d 204 (5th Cir. 1979).

Waiver of breach.

- One having accepted benefits arising under contract after being notified of anticipated breach, and not having given notice of intention to rely on its exact terms, but having continued to accept benefits thereunder, may not recover for such alleged breach or failure to perform fully order the complete terms of the original agreement. Acceptance of such benefits after notice of an alleged breach will constitute waiver of breach. B-Lee's Sales Co. v. Shelton, 141 Ga. App. 870, 234 S.E.2d 702 (1977).

Cited in Lunsford v. Wilson, 113 Ga. App. 602, 149 S.E.2d 515 (1966); Ryder Truck Lines v. Scott, 129 Ga. App. 871, 201 S.E.2d 672 (1973); Pirrone v. Monarch Wine Co., 497 F.2d 25 (5th Cir. 1974); Cook-Davis Furn. Co. v. Duskin, 134 Ga. App. 264, 214 S.E.2d 565 (1975); Trust Co. v. Montgomery, 136 Ga. App. 742, 222 S.E.2d 196 (1975); Fratelli Gardino v. Caribbean Lumber Co., 447 F. Supp. 1337 (S.D. Ga. 1978); Dan Gurney Indus., Inc. v. Southeastern Wheels, Inc., 168 Ga. App. 504, 308 S.E.2d 637 (1983); Integrated Micro Sys. v. NEC Home Elec. (USA), Inc., 174 Ga. App. 197, 329 S.E.2d 554 (1985).

RESEARCH REFERENCES

Am. Jur. 2d.

- 15A Am. Jur. 2d, Commercial Code, § 4. 67 Am. Jur. 2d, Sales, §§ 348-374.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:60. 9A Am. Jur. Pleading and Practice Forms, Estoppel and Waiver, § 39.

C.J.S.

- 37 C.J.S., Frauds, Statute of, § 232. 77A C.J.S., Sales, § 109 et seq. 78 C.J.S., Sales, § 565.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-209.

ALR.

- Promise of additional compensation for completing building or construction contract, 25 A.L.R. 1450; 55 A.L.R. 1333; 138 A.L.R. 136.

Necessity of independent consideration to support a modification of the price in a contract of sale, 34 A.L.R. 511.

Consideration for modification of terms of existing tenancy, 43 A.L.R. 1451; 93 A.L.R. 1404.

Duty to minimize damages by accepting offer modified by party who has breached contract of sale, 46 A.L.R. 1192.

Action involving rescission or right to rescind contract and to recover amount paid thereunder as one at law or in equity, 95 A.L.R. 1000.

Action based on rescission of contract as one arising on contract, express or implied, within the meaning of attachment statute, 95 A.L.R. 1028.

Pecuniary damage as essential to rescission of contract for purchase of real or personal property, 106 A.L.R. 125.

Repossession of chattels by seller upon their return or abandonment by buyer as effecting a mutual rescission or as evidence thereof, 106 A.L.R. 703.

Requirement of written contract as condition of mechanic's lien as affected by an oral modification, or a modification partly oral and partly written, of a written contract, or a subsequent modification in writing not registered or filed as required by statute, 108 A.L.R. 434.

Timeliness of tender or offer of return of consideration for release or compromise, required as a condition of setting it aside, 53 A.L.R.2d 757.

Validity and effect of provision in contract against mechanic's lien, 76 A.L.R.2d 1087; 75 A.L.R.3d 505.

Enforceability of voluntary promise of additional compensation because of unforeseen difficulties in performance of existing contract, 85 A.L.R.3d 259.

Affirmations or representations made after the sale is closed as basis of warranty under UCC § 2-313(1)(a), 47 A.L.R.4th 189.

11-2-210. Delegation of performance; assignment of rights.

  1. A party may perform his duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his original promisor perform or control the acts required by the contract. No delegation of performance relieves the party delegating of any duty to perform or any liability for breach.
  2. Except as otherwise provided in Code Section 11-9-406, unless otherwise agreed all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on the other party by the contract, or impair materially the other party's chance of obtaining return performance. A right to damages for breach of the whole contract or a right arising out of the assignor's due performance of the assignor's entire obligation can be assigned despite agreement otherwise.
  3. The creation, attachment, perfection, or enforcement of a security interest in the seller's interest under a contract is not a transfer that materially changes the duty of or increases materially the burden or risk imposed on the buyer or impairs materially the buyer's chance of obtaining return performance within the purview of subsection (2) of this Code section unless, and then only to the extent that, enforcement actually results in a delegation of material performance of the seller. Even in that event, the creation, attachment, perfection, and enforcement of the security interest remain effective, but (i) the seller is liable to the buyer for damages caused by the delegation to the extent that the damages could not reasonably be prevented by the buyer, and (ii) a court having jurisdiction may grant other appropriate relief, including cancellation of the contract for sale or an injunction against enforcement of the security interest or consummation of the enforcement.
  4. Unless the circumstances indicate the contrary a prohibition of assignment of "the contract" is to be construed as barring only the delegation to the assignee of the assignor's performance.
  5. An assignment of "the contract" or of "all my rights under the contract" or an assignment in similar general terms is an assignment of rights and unless the language or the circumstances (as in an assignment for security) indicate the contrary, it is a delegation of performance of the duties of the assignor and its acceptance by the assignee constitutes a promise by the assignee to perform those duties. This promise is enforceable by either the assignor or the other party to the original contract.
  6. The other party may treat any assignment which delegates performance as creating reasonable grounds for insecurity and may without prejudice to his or her rights against the assignor demand assurances from the assignee (Code Section 11-2-609).

(Code 1933, § 109A-2 - 210, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2001, p. 362, § 5.)

The 2001 amendment, effective July 1, 2001, in subsection (2), in the first sentence, substituted "Except as otherwise provided in Code Section 11-9-406, unless" for "Unless" at the beginning, substituted "the other party by the contract" for "him by his contract", and substituted "the other party's" for "his", and substituted "the assignor's" for "his" in the second sentence; added subsection (3); redesignated former subsections (3) through (5) as present subsections (4) through (6), respectively; substituted "the assignee" for "him" in subsection (5); and inserted "or her" in subsection (6).

Cross references.

- Substitution of party obligated to perform under contract, § 13-4-20.

JUDICIAL DECISIONS

Claim for breach of warranty is assignable.

- An assignment of a claim for an existing breach of warranty is specifically authorized by O.C.G.A. § 11-2-210(2). Irvin v. Lowe's of Gainesville, Inc., 165 Ga. App. 828, 302 S.E.2d 734 (1983).

While a warranty cannot be assigned, the Uniform Commercial Code, O.C.G.A. § 11-1-101 et seq., does authorize the assignment of a purchaser's claim for an existing breach of the warranty - this assignment of the purchaser's claim, indeed, is expressly authorized by O.C.G.A. § 11-2-210(2) - any language, however informal, will be sufficient to constitute a legal assignment, if it shows the intention of the owner of the right to transfer it instantly, so that it will be the property of the transferee. Plaintiff's subrogation receipts clearly constituted sufficient evidence of a legal assignment of the implied warranty claim. Kraft Reinsurance Ir., Ltd. v. Pallets Acquisitions, LLC, F. Supp. 2d (N.D. Ga. Sept. 30, 2011).

Warranty is not assignable.

- The case of Stewart v. Gainesville Glass Co., 131 Ga. App. 747, 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578, 212 S.E.2d 377 (1975), does not hold that a claim for breach of warranty may not be assigned but holds merely that the warranty itself may not be assigned. Irvin v. Lowe's of Gainesville, Inc., 165 Ga. App. 828, 302 S.E.2d 734 (1983).

In sale of personal property, warranty is not negotiable or assignable and does not run with article sold. Kaiser Aluminum & Chem. Corp. v. Ingersoll-Rand Co., 519 F. Supp. 60 (S.D. Ga. 1981).

Any assignment of warranties materially changes risks and burdens of original seller under terms of O.C.G.A. § 11-2-210. Kaiser Aluminum & Chem. Corp. v. Ingersoll-Rand Co., 519 F. Supp. 60 (S.D. Ga. 1981).

Assignment of joint savings account.

- Once savings account has been assigned to third party, joint owners cannot withdraw funds from said account without permission of assignee unless one waives or releases assignment. Copeland v. Peachtree Bank & Trust Co., 150 Ga. App. 262, 257 S.E.2d 353 (1979).

Repudiation of subcontract.

- Trial court could not have properly granted summary judgment against a general contractor by reason of its apparent acquiescence in a subcontractor's breach of the subcontract by reason of its assignment because the contractor testified that it had a substantial interest in maintaining the subcontractor as the performer of the subcontract under O.C.G.A. § 11-2-210(1), and that it looked for, but was unable to retain, any other asphalt provider besides the assignee; the subcontractor could not prevail on summary judgment in the wake of its repudiation of the subcontract, including the provision not to delegate performance. Western Sur. Co. v. APAC-Southeast, Inc., 302 Ga. App. 654, 691 S.E.2d 234, cert. denied, No. S10C1140, 2010 Ga. LEXIS 673 (Ga. 2010).

Cited in Mingledorff's, Inc. v. Hicks, 133 Ga. App. 27, 209 S.E.2d 661 (1974); Greene v. Citizens & S. Bank, 134 Ga. App. 73, 213 S.E.2d 175 (1975); Crider v. First Nat'l Bank, 144 Ga. App. 536, 241 S.E.2d 638 (1978); Callaway Blue Springs, LLLP v. West Basin Capital, LLC, 341 Ga. App. 535, 801 S.E.2d 325 (2017).

RESEARCH REFERENCES

Am. Jur. 2d.

- 6 Am. Jur. 2d, Assignments, §§ 21 et seq., 113 et seq., 133, 161, 162. 67 Am. Jur. 2d, Sales, §§ 375-386. 68A Am. Jur. 2d, Secured Transactions, §§ 434 et seq., 569 et seq.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:75.

C.J.S.

- 77A C.J.S., Sales, §§ 88, 89.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-210.

ALR.

- Assignability of contract to furnish all of buyer's requirement or to take all of seller's output, 39 A.L.R. 1192.

Rights and duties in respect of property as between seller and seller's assignee on conditional sale of property, 65 A.L.R. 783.

Agreement or order to pay obligations out of the proceeds of any sale or mortgage of property that may be made, as creating an equitable assignment of such proceeds, 101 A.L.R. 81.

PART 3 GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT

Cross references.

- Rules for interpretation of contracts generally, § 13-2-2.

Law reviews.

- For article critically analyzing the distinction in theories of recovery of damages caused by defective products between personal injury cases and economic losses and suggesting a policy basis for deciding the latter, see 29 Mercer L. Rev. 493 (1978). For note, "Products Liability in Georgia," see 12 Ga. L. Rev. 83 (1977). For note, "Enforcing Manufacturers' Warranty Exclusions Against Non-Privity Commercial Purchasers: The Need for Uniform Guidelines," see 20 Ga. L. Rev. 461 (1986).

RESEARCH REFERENCES

ALR.

- Validity, construction, and application of computer software licensing agreements, 38 A.L.R.5th 1.

Products liability: computer hardware and software, 59 A.L.R.5th 461.

11-2-301. General obligations of parties.

The obligation of the seller is to transfer and deliver and that of the buyer is to accept and pay in accordance with the contract.

(Code 1933, § 109A-2 - 301, enacted by Ga. L. 1962, p. 156, § 1.)

Law reviews.

- For article, "Impracticability As Risk Allocation: The Effect of Changed Circumstances upon Contract Obligations for the Sale of Goods," see 22 Ga. L. Rev. 503 (1988).

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity of the provisions, decisions under former Code 1933, § 96-107 are included in the annotations for this section.

Unexplained failure to deliver.

- While delivery of property is not essential to passage of title to grantee, such delivery usually accompanies a transfer of title and absence of delivery calls for explanation. Failure to deliver property sold, when unexplained, is a badge of fraud, and a circumstance tending, when taken in connection with other circumstances, to show that title did not pass. Wallis v. Bellah, 59 Ga. App. 633, 1 S.E.2d 773 (1939) (decided under former Code 1933, § 96-107).

Where plaintiff purchases machinery already in husband's possession.

- Where plaintiff purchased from defendant certain farm machinery which had theretofore been purchased by her husband, to be used by him in operating a farm belonging to plaintiff, which machinery was in possession of her husband on farm, and parties did not contemplate that machinery was to be delivered to wife at any other place, there was no merit to contention that before plaintiff could be held liable on such contract of purchase it had to appear that defendant actually repossessed machinery from husband and thereafter made actual physical delivery to wife. Johnson v. Hinson, 188 Ga. 639, 4 S.E.2d 561 (1939) (decided under former Code 1933, § 96-107).

Cited in Undercofler v. Eastern Air Lines, 221 Ga. 824, 147 S.E.2d 436 (1966); Mitchell-Huntley Cotton Co. v. Lawson, 377 F. Supp. 661 (M.D. Ga. 1973); Promech Corp. v. Brodhead-Garrett Co., 131 Ga. App. 314, 205 S.E.2d 511 (1974); Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974); Amatulli Imports, Inc. v. House of Persia, Inc., 191 Ga. App. 827, 383 S.E.2d 192 (1989).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 123-128.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:88.

C.J.S.

- 77A C.J.S., Sales, §§ 158 et seq., 189, 197, 208 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-301.

ALR.

- Duty of principal to fill orders under sales-agency contract, 52 A.L.R. 557.

Inability of a seller of a commodity manufactured or produced by a third person to obtain the same from the latter as a defense to an action by the buyer for breach of the contract, 80 A.L.R. 1177.

Mutuality and enforceability of contract to furnish another with his needs, wants, desires, requirements and the like, of certain commodities, 26 A.L.R.2d 1139.

Repossession by secured seller as affecting his right to recover on note or other obligation given as a down payment, 49 A.L.R.3d 364.

11-2-302. Unconscionable contract or clause.

  1. If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.
  2. When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the court in making the determination.

(Code 1933, § 109A-2 - 302, enacted by Ga. L. 1962, p. 156, § 1.)

Law reviews.

- For article, "Consumer Protection Against Sellers Misrepresentations," see 20 Mercer L. Rev. 414 (1969). For article, "The Unconscionability Offense," see 4 Ga. L. Rev. 469 (1970). For article discussing interpretation in Georgia of insurance policies containing evidentiary conditions, see 12 Ga. L. Rev. 783 (1978). For article discussing the anachronistic nature of the Georgia contracts code as dramatized by comparing the doctrine of consideration as it is formulated in the restatements of contracts and in Title 20 of the Georgia Code of 1933, and the interpretative approach Georgia courts have taken in dealing with such code, see 13 Ga. L. Rev. 499 (1979). For article, "The Future Use of Unconscionability and Impracticability as Contract Doctrines," see 40 Mercer L. Rev. 937 (1989). For article, "Contract Litigation and the Elite Bar in New York City, 1960-1980," see 39 Emory L.J. 413 (1990). For article, "Giving Unconscionability More Muscle: Attorney's Fees as a Remedy for Contractual Overreaching," see 44 Ga. L. Rev. 317 (2010). For note, "Pyramid Marketing Plans and Consumer Protection: State and Federal Regulation," see 21 J. of Pub. L. 445 (1972).

JUDICIAL DECISIONS

General Consideration

"Unconscionable" defined.

- "Unconscionable" under O.C.G.A. § 11-2-302 means "one-sided contracts." R.C. Craig, Ltd. v. Ships of Sea, Inc., 345 F. Supp. 1066 (S.D. Ga. 1972), later proceeding, 401 F. Supp. 1051 (S.D. Ga. 1975).

An unconscionable contract is such an agreement as no sane man not acting under a delusion would make, and that no honest man would take advantage of. R.L. Kimsey Cotton Co. v. Ferguson, 233 Ga. 962, 214 S.E.2d 360 (1975); Stefan Jewelers, Inc. v. Electro-Protective Corp., 161 Ga. App. 385, 288 S.E.2d 667 (1982).

Section not intended merely to relieve party from bad bargain.

- If court determines as a matter of law that provision of a contract is unconscionable when made, it may, among other things, so limit the application of any unconscionable provision to avoid an unconscionable result, but O.C.G.A. § 11-2-302 is not designed merely to relieve a party of a bad bargain. Romine, Inc. v. Savannah Steel Co., 117 Ga. App. 353, 160 S.E.2d 659 (1968).

Limitation of warranty held unconscionable.

- A general limitation of warranty, if construed so as to limit remedy in all events, would be unconscionable under O.C.G.A. § 11-2-302. Jacobs v. Metro Chrysler-Plymouth, Inc., 125 Ga. App. 462, 188 S.E.2d 250 (1972).

Cited in Holcomb v. Approved Bancredit Corp., 225 Ga. 271, 167 S.E.2d 655 (1969); Avery v. Aladdin Prods. Div., Nat'l Serv. Indus., Inc., 128 Ga. App. 266, 196 S.E.2d 357 (1973); Westinghouse Credit Corp. v. Chapman, 129 Ga. App. 830, 201 S.E.2d 686 (1973); Mitchell-Huntley Cotton Co. v. Lawson, 377 F. Supp. 661 (M.D. Ga. 1973); F.N. Roberts Pest Control Co. v. McDonald, 132 Ga. App. 257, 208 S.E.2d 13 (1974); R.C. Craig, Ltd. v. Ships of Sea, Inc., 401 F. Supp. 1051 (S.D. Ga. 1975); Fratelli Gardino v. Caribbean Lumber Co., 447 F. Supp. 1337 (S.D. Ga. 1978); Holman Motor Co. v. Evans, 169 Ga. App. 610, 314 S.E.2d 453 (1984).

Application

O.C.G.A. § 11-2-302 does not by its terms apply to transactions not involving a sale. Interstate Sec. Police, Inc. v. Citizens & S. Emory Bank, 237 Ga. 37, 226 S.E.2d 583 (1976).

Discretion of courts over enforcement of sales contracts.

- While it is a general rule in this state that parties may contract as they please subject to the exceptions of O.C.G.A. § 13-8-1 et seq., O.C.G.A. § 11-2-302 modifies this general rule that parties are free to make whatever contracts they please so long as there is no fraud or illegality by giving the courts discretion to refuse to enforce sales contracts under Georgia Uniform Commercial Code, in whole or in part, which they find to be "unconscionable." Chrysler Corp. v. Wilson Plumbing Co., 132 Ga. App. 435, 208 S.E.2d 321 (1974).

Exclusion or modification of warranty.

- Although a seller may exclude or modify warranties, a court may refuse to enforce an exclusion or modification on the basis of unconscionability. Mullis v. Speight Seed Farms, Inc., 234 Ga. App. 27, 505 S.E.2d 818 (1998).

Test for unconscionability.

- The basic test is whether, in light of general commercial background and commercial needs of particular trade or case, clauses involved are so one-sided as to be unconscionable under circumstances existing at the time of making of contract. R.L. Kimsey Cotton Co. v. Ferguson, 233 Ga. 962, 214 S.E.2d 360 (1975).

Deletion of unconscionable clauses.

- O.C.G.A. § 11-2-302 allows a court to determine whether any clause in a contract is unconscionable at the time it was made and, if so, to allow the contract to be construed with the offending clause deleted. Jacobs v. Metro Chrysler-Plymouth, Inc., 125 Ga. App. 462, 188 S.E.2d 250 (1972).

A limitation of remedies in a commercial setting is not considered unconscionable. Hall v. Fruehauf Corp., 179 Ga. App. 362, 346 S.E.2d 582 (1986).

Nonresidents not allowed to assert that city water fees were unconscionable.

- Nonresident plaintiffs, having no enforceable right to be supplied with water from a city at any price, were not allowed to assert that it was "unconscionable" that they were not being supplied with water for a fee that was less than that assessed by the authorities legally authorized to determine the rate to be charged. Zepp v. Mayor of Athens, 180 Ga. App. 72, 348 S.E.2d 673 (1986).

Contract provision not unconscionable.

- Contract provision that provider of burglar alarm service "shall not be liable for" and jeweler "waives any rights against [provider] on account of any loss" was not unconscionable, particularly with reference to a theft by a third party, seemingly performed by professionals, in cutting the phone lines on which the service was based, thereafter cutting into the roof of the building, bypassing this protective barrier and then cutting the wire to the outside alarm bell. Stefan Jewelers, Inc. v. Electro-Protective Corp., 161 Ga. App. 385, 288 S.E.2d 667 (1982).

Plaintiffs failed to state a claim for breach of express warranty against a vehicle manufacturer and distributor when they did not allege that they presented their vehicles for repairs within the warranty period, and the court would not use the unconscionability provisions of O.C.G.A. § 11-2-302, Cal. Civ. Code § 1670.5, Fla. Stat. § 672.302, 810 ILCS 5/2-302, and Va. Code Ann. § 8.2-302 to strike the time and mileage limitations. Defendants' knowledge of the alleged defect at the time of sale, standing alone, was insufficient to render the time and mileage limitations unconscionable. McCabe v. Daimler AG, F. Supp. 2d (N.D. Ga. June 7, 2013).

Guaranty not unconscionable.

- When the owner of a Chapter 11 debtor signed a personal guaranty of the debtor's debt, which included a waiver of defenses clause, in return for the withdrawal of a motion by a creditor for the appointment of a trustee, the guaranty was not unconscionable because the guaranty went through several iterations, the owner read the guaranty's final terms, and the owner discussed the guaranty with counsel. Abdulla v. Klosinski, F. Supp. 2d (S.D. Ga. Sept. 25, 2012).

Bank charges not unconscionable.

- While plaintiff bank customers alleged defendant bank had a practice of manipulating the posting of transactions to impose overdraft fees, there was no substantive unconscionability under O.C.G.A. § 11-2-302 as the deposit agreement was consistent with O.C.G.A. § 11-4-303(b) as to the order items were paid. White v. Wachovia Bank, N.A., 563 F. Supp. 2d 1358 (N.D. Ga. 2008).

Warranty excluding consequential damages not unconscionable.

- A warranty on a television set which excluded all incidental and consequential damages was not unconscionable under both a procedural and substantive analysis. NEC Technologies, Inc. v. Nelson, 267 Ga. 390, 478 S.E.2d 769 (1996).

Provision in California lender's contract allowing repossession of automobile if removed from California more than 30 days was not unconscionable. Francis v. Union Bank, 183 Ga. App. 84, 357 S.E.2d 837, cert. denied, 183 Ga. App. 906, 357 S.E.2d 837 (1987).

Motor vehicle title pawn transaction.

- Although O.C.G.A. § 11-2-302 by its terms applies to transactions involving a sale, there is nothing unconscionable about a pawn ticket that authorizes the pawnbroker to sell the pawned vehicle following the debtor's default. Hooks v. Cobb Ctr. Pawn & Jewelry Brokers, Inc., 241 Ga. App. 305, 527 S.E.2d 566 (1999).

Liability limited to purchase price.

- A disclaimer of liability for breach of warranty by a tobacco seed manufacturer, which stated that liability would be limited to the purchase price, was unconscionable and would not be enforced; an absence of liability on the part of the manufacturer would leave farmers with no recourse for a loss caused by a crop failure, and the allocation of risk for ineffective seeds is better shouldered by the manufacturer than the consumer. Mullis v. Speight Seed Farms, Inc., 234 Ga. App. 27, 505 S.E.2d 818 (1998).

RESEARCH REFERENCES

Am. Jur. 2d.

- 17A Am. Jur. 2d, Contracts, § 295. 67 Am. Jur. 2d, Sales, §§ 233-239.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:92.

C.J.S.

- 77A C.J.S., Sales, § 79. 81 C.J.S., Specific Performance, §§ 48, 49.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-302.

ALR.

- Incontestable clause as excluding a defense based upon public policy, 35 A.L.R. 1491; 170 A.L.R. 1040.

Enforceability of transaction entered into pursuant to referral sales arrangement, 14 A.L.R.3d 1420.

"Unconscionability" as ground for refusing enforcement of contract for sale of goods or agreement collateral thereto, 18 A.L.R.3d 1305.

Punitive damages for wrongful seizure of chattel by one claiming security interest, 35 A.L.R.3d 1016.

Validity of disclaimer of warranty clauses in sale of new automobile, 54 A.L.R.3d 1217.

Enforceability, insofar as restrictions would be unreasonable, of contract containing unreasonable restrictions on competition, 61 A.L.R.3d 397.

Validity and construction of "no damage" clause with respect to delay in building or construction contract, 74 A.L.R.3d 187.

Practices forbidden by state deceptive trade practice and consumer protection acts, 89 A.L.R.3d 449.

Construction and effect of new motor vehicle warranty limiting manufacturer's liability to repair or replacement of defective parts, 2 A.L.R.4th 576.

Unconscionability, under UCC § 2-302 or § 2-719(3), of disclaimer of warranties or limitation or exclusion of damages in contract subject to UCC Article 2 (Sales), 38 A.L.R.4th 25.

"Unconscionability," under UCC § 2-302, of bank's letter of credit or other financing arrangements, 15 A.L.R.5th 365.

Electricity, gas, or water furnished by public utility or alternative supplier as "goods" within provisions of Uniform Commercial Code, Article 2 on sales, 97 A.L.R.6th 1.

11-2-303. Allocation or division of risks.

Where this article allocates a risk or a burden as between the parties "unless otherwise agreed," the agreement may not only shift the allocation but may also divide the risk or burden.

(Code 1933, § 109A-2 - 303, enacted by Ga. L. 1962, p. 156, § 1.)

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 425-427.

C.J.S.

- 77A C.J.S., Sales, § 79.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-303.

ALR.

- Right of buyer and seller inter se as affected by invalidity of, or subsequent changes or developments with respect to, tax, 132 A.L.R. 706.

11-2-304. Price payable in money, goods, realty, or otherwise.

  1. The price can be made payable in money or otherwise. If it is payable in whole or in part in goods each party is a seller of the goods which he is to transfer.
  2. Even though all or part of the price is payable in an interest in realty the transfer of the goods and the seller's obligations with reference to them are subject to this article, but not the transfer of the interest in realty or the transferor's obligations in connection therewith.

(Code 1933, § 109A-2 - 304, enacted by Ga. L. 1962, p. 156, § 1.)

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 208-212.

C.J.S.

- 33 C.J.S., Exchange of Property, § 1 et seq. 77A C.J.S., Sales, §§ 94 et seq., 208 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-304.

ALR.

- Right of purchaser to opportunity to pay in cash where tender has been made in other medium, 23 A.L.R. 630; 46 A.L.R. 914.

Validity and effect of provision of sale contract making price dependent on tariff duties or changes in tariff, 70 A.L.R. 1444.

Contracts for payment in gold or silver, or in gold or silver coin ("gold coin" clauses), 84 A.L.R. 1499; 86 A.L.R. 1172; 88 A.L.R. 1532; 92 A.L.R. 1525; 95 A.L.R. 1383; 101 A.L.R. 1318; 114 A.L.R. 820.

11-2-305. Open price term.

  1. The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery if:
  1. Nothing is said as to price; or
  2. The price is left to be agreed by the parties and they fail to agree; or
  3. The price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded.

A price to be fixed by the seller or by the buyer means a price for him to fix in good faith.

When a price left to be fixed otherwise than by agreement of the parties fails to be fixed through fault of one party the other may at his option treat the contract as canceled or himself fix a reasonable price.

Where, however, the parties intend not to be bound unless the price be fixed or agreed and it is not fixed or agreed there is no contract. In such a case the buyer must return any goods already received or if unable so to do must pay their reasonable value at the time of delivery and the seller must return any portion of the price paid on account.

(Code 1933, § 109A-2 - 305, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2002, p. 415, § 11.)

The 2002 amendment, effective April 18, 2002, part of an Act to revise, modernize, and correct the Code, substituted "canceled" for "cancelled" in subsection (3).

Law reviews.

- For article, "Contract Litigation and the Elite Bar in New York City, 1960-1980," see 39 Emory L.J. 413 (1990).

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity between the provisions, decisions under former Code 1933, § 96-101 are included in the annotations for this section.

Necessity to show agreement on price.

- Contract, if otherwise sufficient, need not show that there has been an agreement on price. Jackson v. Meadows, 153 Ga. App. 1, 264 S.E.2d 503 (1980).

If contracts do not specify price, O.C.G.A. § 11-2-305 requires that price be "reasonable." Spartan Grain & Mill Co. v. Ayers, 517 F.2d 214 (5th Cir. 1975).

Price is not absolutely essential in contract for sale of goods. Peach State Meat Co. v. Excel Corp., 860 F. Supp. 849 (M.D. Ga. 1994).

Contract to sell water at fixed price.

- O.C.G.A. § 11-2-305 comes into play only where a contract for sale is concluded with an open-price term. Where water is offered for sale by a city at a fixed price and nonresident plaintiffs accept the offer at that fixed price, it cannot be said that the city sells water to plaintiffs pursuant to an open price term contract. Zepp v. Mayor of Athens, 180 Ga. App. 72, 348 S.E.2d 673 (1986).

Proof of price necessary to prove case concerning indebtedness.

- Price was one essential of contract for sale of goods giving rise to alleged indebtedness, which was denied by defendant in its answer, and proof of price, as amount sued for, was necessary to prove case as alleged; where evidence was insufficient to establish that defendant owed plaintiff any definite amount, as contract price of goods or as market value of goods, nonsuit was proper. Wolfe v. Brown-Wright Hotel Supply Corp., 87 Ga. App. 12, 73 S.E.2d 82 (1952) (decided under former Code 1933, § 96-101).

Good-faith safe harbor applied in petroleum distribution.

- When plaintiff Jobber petroleum distributors' only allegations of wrongdoing was defendant oil company's purported recapture of the cost of a prompt-pay discount when setting its price, and the parties' contract imposed no limits on the costs that could be recouped in setting the price, the good-faith safe harbor provided in O.C.G.A. § 11-2-305(2) applied; O.C.G.A. § 11-2-103 did not support imposing fundamental substantive limitations on the pricing methodology set out in the contract. Autry Petroleum Co. v. BP Prods. North America, Inc., F.3d (11th Cir. June 26, 2009)(Unpublished).

Cited in First Nat'l Bank & Trust Co. v. Olivetti Corp. of Am., 130 Ga. App. 896, 204 S.E.2d 781 (1974); Deck House, Inc. v. Scarborough, Sheffield & Gaston, Inc., 139 Ga. App. 173, 228 S.E.2d 142 (1976); Spartan Grain & Mill Co. v. Ayers, 581 F.2d 419 (5th Cir. 1978); Robinson v. Stevens Indus., Inc., 162 Ga. App. 132, 290 S.E.2d 336 (1982); Billings Cottonseed, Inc. v. Albany Oil Mill, Inc., 173 Ga. App. 825, 328 S.E.2d 426 (1985).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 213-223.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:107.

C.J.S.

- 77A C.J.S., Sales, § 94 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-305.

ALR.

- Construction of "cost plus" contracts, 2 A.L.R. 126; 27 A.L.R. 48.

Validity and enforceability of contract which expressly leaves open terms of payment for future negotiation, 49 A.L.R. 1464.

Sale agreement fixing price at resale price less specified per cent as indefinite, 57 A.L.R. 747.

Validity of contract which leaves amount to be paid in performance thereof to promisor's determination, 92 A.L.R. 1396.

Validity of sales contract as affected by provision therein giving buyer power to control price to be paid for goods, 49 A.L.R.2d 508.

Construction and application of UCC § 2-305 dealing with open price term contracts, 91 A.L.R.3d 1237.

Electricity, gas, or water furnished by public utility or alternative supplier as "goods" within provisions of Uniform Commercial Code, Article 2 on sales, 97 A.L.R.6th 1.

11-2-306. Output, requirements, and exclusive dealings.

  1. A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded.
  2. A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.

(Code 1933, § 109A-2 - 306, enacted by Ga. L. 1962, p. 156, § 1.)

JUDICIAL DECISIONS

O.C.G.A. § 11-2-306 is applicable regardless of character of seller or buyer. Romine, Inc. v. Savannah Steel Co., 117 Ga. App. 353, 160 S.E.2d 659 (1968).

O.C.G.A. § 11-2-306(1) precludes a finding that a contract for requirements is too indefinite, since the quantity is determined by the actual good faith requirements of the particular party. O.N. Jonas Co. v. Badische Corp., 706 F.2d 1161 (11th Cir. 1983).

Contract established by memorandum, correspondence, and agreement despite indefinite quantity term.

- Where the evidence demonstrated that both parties intended a requirements contract based on purchaser's good faith needs for the trademarked yarns and the existence of this contract was established by a memorandum, the correspondence between the parties, and a trademark licensing agreement which was to remain in effect subject to cancellation by either party on 90 days' notice, the indefiniteness of the written quantity term did not invalidate the contract. O.N. Jonas Co. v. Badische Corp., 706 F.2d 1161 (11th Cir. 1983).

Actual requirements disproportionate to estimation.

- Where quantity actually delivered and accepted to meet requirements of the buyer is unreasonably disproportionate to estimated requirements, the lot price for estimated total requirements is not a lot price for actual requirements, although it may serve to establish a unit price therefor. Romine, Inc. v. Savannah Steel Co., 117 Ga. App. 353, 160 S.E.2d 659 (1968).

Good faith duty to perform.

- Where plaintiffs entered into a three-year "Output and Requirements Contract and Security Agreement" with defendant, under which defendant was to furnish all the supplies, materials, labor, advice, etc., needed to produce and harvest pecans from pecan groves owned and leased by plaintiffs and to market all the pecans produced from the groves, regardless of whether this contract fell under O.C.G.A. §§ 11-2-306 or13-4-20, defendant had a duty to perform in good faith. Flynn v. Gold Kist, Inc., 181 Ga. App. 637, 353 S.E.2d 537 (1987).

Where under a contract to produce, harvest and market pecans from plaintiffs' groves, plaintiffs claimed that they were overcharged for oil and lubricants, while defendant was not required under the contract to purchase these products at the lowest possible price, it was required to exercise good faith in making these purchases. Flynn v. Gold Kist, Inc., 181 Ga. App. 637, 353 S.E.2d 537 (1987).

Contract promising to purchase "seed which, from time to time, [buyer] reasonably requires" was not promise to purchase exclusively from seller and did not support seller's reciprocal promise to supply all of buyer's needs for seed; thus, no valid "requirements contract" was created. Billings Cottonseed, Inc. v. Albany Oil Mill, Inc., 173 Ga. App. 825, 328 S.E.2d 426 (1985).

Supply contract clause of a real estate sales contract providing that the parties would enter into a supply contract, whereby the buyer would purchase gasoline from the seller for 10 years at a cost of one cent per gallon above the seller's cost, could not be considered a valid "requirements" contract because it did not provide that the buyer would obtain gasoline from the seller exclusively. Smith Serv. Oil Co. v. Parker, 250 Ga. App. 270, 549 S.E.2d 485 (2001).

Contract in restraint of trade unenforceable.

- Oral agreement between a manufacturer and distributor for the manufacture and sale of fertilizer was unenforceable because it did not contain any territorial limitations on the distributor's exclusive sales rights. PCS Joint Venture, Ltd. v. Davis, 219 Ga. App. 519, 465 S.E.2d 713 (1995).

Cited in Harris v. Hine, 232 Ga. 183, 205 S.E.2d 847 (1974); Duval & Co. v. Malcom, 233 Ga. 784, 214 S.E.2d 356 (1975); R.L. Kimsey Cotton Co. v. Ferguson, 233 Ga. 962, 214 S.E.2d 360 (1975); Cox Caulking & Insulating Co. v. Brockett Distrib. Co., 150 Ga. App. 424, 258 S.E.2d 51 (1979); Integrated Micro Sys. v. NEC Home Elec. (USA), Inc., 174 Ga. App. 197, 329 S.E.2d 554 (1985); Halley v. Harden Oil Co., 182 Ga. App. 784, 357 S.E.2d 138 (1987); Roboserve, Ltd. v. Tom's Foods, Inc., 940 F.2d 1441 (11th Cir. 1991); Peach State Meat Co. v. Excel Corp., 860 F. Supp. 849 (M.D. Ga. 1994).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 288, 289.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:143.

C.J.S.

- 77A C.J.S., Sales, §§ 178, 179.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-306.

ALR.

- Divisibility of contract to furnish material for a specific construction, 2 A.L.R. 687.

Rights and remedies upon cancelation of sales agency, 32 A.L.R. 209; 52 A.L.R. 546; 89 A.L.R. 252.

Duty of principal to fill orders under sales-agency contract, 52 A.L.R. 557.

Restrictive agreements or covenants in respect of purchase or handling of petroleum products by operator of filling station, 26 A.L.R.2d 219.

Construction and effect of contract for sale of commodity to fill buyer's requirements, 26 A.L.R.2d 1099.

Mutuality and enforceability of contract to furnish another with his needs, wants, desires, requirements and the like, of certain commodities, 26 A.L.R.2d 1139.

Requirements contracts under § 2-306(1) of Uniform Commercial Code, 96 A.L.R.3d 1275.

Output contracts under § 2-306(1) of Uniform Commercial Code, 30 A.L.R.4th 396.

Establishment and construction of requirements contracts under § 2-306(1) of Uniform Commercial Code, 94 A.L.R.5th 247.

11-2-307. Delivery in single lot or several lots.

Unless otherwise agreed all goods called for by a contract for sale must be tendered in a single delivery and payment is due only on such tender but where the circumstances give either party the right to make or demand delivery in lots the price if it can be apportioned may be demanded for each lot.

(Code 1933, § 109A-2 - 307, enacted by Ga. L. 1962, p. 156, § 1.)

JUDICIAL DECISIONS

Cited in Deck House, Inc. v. Scarborough, Sheffield & Gaston, Inc., 139 Ga. App. 173, 228 S.E.2d 142 (1976).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, § 535.

C.J.S.

- 77A C.J.S., Sales, §§ 181, 208 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-307.

ALR.

- Divisibility of contract to furnish material for a specific construction, 2 A.L.R. 687.

11-2-308. Absence of specified place for delivery.

Unless otherwise agreed:

  1. The place for delivery of goods is the seller's place of business or if he has none his residence; but
  2. In a contract for sale of identified goods which to the knowledge of the parties at the time of contracting are in some other place, that place is the place for their delivery; and
  3. Documents of title may be delivered through customary banking channels.

(Code 1933, § 109A-2 - 308, enacted by Ga. L. 1962, p. 156, § 1.)

JUDICIAL DECISIONS

Cited in Taunton v. Allenberg Cotton Co., 378 F. Supp. 34 (M.D. Ga. 1973); Cone Mills Corp. v. A.G. Estes, Inc., 377 F. Supp. 222 (N.D. Ga. 1974); Deck House, Inc. v. Scarborough, Sheffield & Gaston, Inc., 139 Ga. App. 173, 228 S.E.2d 142 (1976).

RESEARCH REFERENCES

Am. Jur. 2d.

- 15A Am. Jur. 2d, Commercial Code, § 27 et seq. 67 Am. Jur. 2d, Sales, § 299.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:114.

C.J.S.

- 77A C.J.S., Sales, § 168.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-308.

ALR.

- When instrument deemed payable at a "special place" within the provision of the Uniform Negotiable Instruments Law making ability and willingness to pay at such place equivalent to tender, 24 A.L.R. 1050.

Buyer's duty to give seller instructions to ship where former has not exercised his option under contract to require shipment before time specified, 119 A.L.R. 1495.

11-2-309. Absence of specific time provisions; notice of termination.

  1. The time for shipment or delivery or any other action under a contract if not provided in this article or agreed upon shall be a reasonable time.
  2. Where the contract provides for successive performances but is indefinite in duration it is valid for a reasonable time but unless otherwise agreed may be terminated at any time by either party.
  3. Termination of a contract by one party except on the happening of an agreed event requires that reasonable notification be received by the other party and an agreement dispensing with notification is invalid if its operation would be unconscionable.

(Code 1933, § 109A-2 - 309, enacted by Ga. L. 1962, p. 156, § 1.)

Cross references.

- Effect of absence of specific time provision in contract, § 13-4-20.

JUDICIAL DECISIONS

Plaintiff did not provide aggregate material within a timely manner.

- Trial court did not err in granting summary judgment in favor of the plaintiff on the defendants' counterclaim for breach of contract because, although the defendants alleged that the plaintiff was required to provide aggregate material within a specific schedule, but, on numerous occasions, it had failed to do so, the defendants failed to point to evidence of the contractual terms imposing the specific schedules, or, in other words, the dates by which the plaintiff had to deliver the aggregate material for seven projects; and, without pointing to evidence of the contractually required delivery dates for the materials for the seven projects, the defendants could not show that the plaintiff failed to deliver the materials in a timely manner. Douglas Asphalt Co. v. Martin Marietta Aggregates, 339 Ga. App. 435, 793 S.E.2d 615 (2016).

Cited in Taunton v. Allenberg Cotton Co., 378 F. Supp. 34 (M.D. Ga. 1973); Deck House, Inc. v. Scarborough, Sheffield & Gaston, Inc., 139 Ga. App. 173, 228 S.E.2d 142 (1976); Maderas Tropicales v. Southern Crate & Veneer Co., 588 F.2d 971 (5th Cir. 1979); Jeff Goolsby Homes Corp. v. Smith, 168 Ga. App. 218, 308 S.E.2d 564 (1983); Lundy v. Low, 200 Ga. App. 332, 408 S.E.2d 144 (1991); Drug Line v. Sero-Immuno Diagnostics, Inc., 217 Ga. App. 530, 458 S.E.2d 170 (1995); Club Car, Inc. v. Club Car (Quebec) Import, Inc., 276 F. Supp. 2d 1276 (S.D. Ga. 2003).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 295, 296.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:118.

C.J.S.

- 77A C.J.S., Sales, §§ 139, 140.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-309.

ALR.

- Vendor's acceptance of payment tendered after time specified as waiver of provision making time of essence of contract, 9 A.L.R. 996.

Rights and remedies upon cancelation of sales agency, 32 A.L.R. 209; 52 A.L.R. 546; 89 A.L.R. 252.

Buyer's duty to give seller instructions to ship where former has not exercised his option under contract to require shipment before time specified, 119 A.L.R. 1495.

Termination by principal of distributorship contract containing no express provision for termination, 19 A.L.R.3d 196.

11-2-310. Open time for payment or running of credit; authority to ship under reservation.

Unless otherwise agreed:

  1. Payment is due at the time and place at which the buyer is to receive the goods even though the place of shipment is the place of delivery; and
  2. If the seller is authorized to send the goods he or she may ship them under reservation, and may tender the documents of title, but the buyer may inspect the goods after their arrival before payment is due unless such inspection is inconsistent with the terms of the contract (Code Section 11-2-513); and
  3. If delivery is authorized and made by way of documents of title otherwise than by subsection (b) of this Code section then payment is due regardless of where the goods are to be received (i) at the time and place at which the buyer is to receive delivery of the tangible documents or (ii) at the time the buyer is to receive delivery of the electronic documents and at the seller's place of business or if none, the seller's residence; and
  4. Where the seller is required or authorized to ship the goods on credit the credit period runs from the time of shipment but post-dating the invoice or delaying its dispatch will correspondingly delay the starting of the credit period.

(Code 1933, § 109A-2 - 310, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2010, p. 481, § 2-4/HB 451.)

The 2010 amendment, effective May 27, 2010, inserted "or she" near the beginning of paragraph (b); in paragraph (c), inserted "regardless of where the goods are to be received (i)" and substituted "delivery of the tangible documents or (ii) at the time the buyer is to receive delivery of the electronic documents and at the seller's place of business or if none, the seller's residence" for "the documents regardless of where the goods are to be received" near the end; and substituted "post-dating" for "postdating" in the middle of paragraph (d). See the Editor's notes for applicability.

Editor's notes.

- Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.

Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity between the provisions, decisions under former Code 1933, § 96-106 are included in the annotations of this section.

Where time for second installment payment is left open, it is due immediately.

- Where contract extends definite credit for first payment, leaving time of payment of second installment in abeyance, rule is that unless additional credit for second payment should be agreed on, it would be due immediately. Irvin v. Locke, 200 Ga. 675, 38 S.E.2d 289 (1946) (decided under former Code 1933, § 96-106).

Cited in Deck House, Inc. v. Scarborough, Sheffield & Gaston, Inc., 139 Ga. App. 173, 228 S.E.2d 142 (1976); Babbitt v. State, 314 Ga. App. 115, 723 S.E.2d 10 (2012).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 309-311.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:118. 19A Am. Jur. Pleading and Practice Forms, Payment, § 3.

C.J.S.

- 77A C.J.S., Sales, § 208 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-310.

ALR.

- When payment is due under contract to render services silent as to time of payment, 2 A.L.R. 522.

Buyer's right to inspect at destination where goods are delivered to carrier, 27 A.L.R. 524.

Place, in absence of written provision in sales contract, where cash consideration for goods purchased is payable, 49 A.L.R.2d 1350.

11-2-311. Options and cooperation respecting performance.

  1. An agreement for sale which is otherwise sufficiently definite (subsection (3) of Code Section 11-2-204) to be a contract is not made invalid by the fact that it leaves particulars of performance to be specified by one of the parties. Any such specification must be made in good faith and within limits set by commercial reasonableness.
  2. Unless otherwise agreed specifications relating to assortment of goods are at the buyer's option and except as otherwise provided in subsections (1)(c) and (3) of Code Section 11-2-319 specifications or arrangements relating to shipment are at the seller's option.
  3. Where such specification would materially affect the other party's performance but is not seasonably made or where one party's cooperation is necessary to the agreed performance of the other but is not seasonably forthcoming, the other party in addition to all other remedies:
  1. Is excused for any resulting delay in his own performance; and
  2. May also either proceed to perform in any reasonable manner or after the time for a material part of his own performance treat the failure to specify or to cooperate as a breach by failure to deliver or accept the goods.

(Code 1933, § 109A-2 - 311, enacted by Ga. L. 1962, p. 156, § 1.)

JUDICIAL DECISIONS

Cited in R.C. Graig, Ltd. v. Ships of Sea, Inc., 401 F. Supp. 1051 (S.D. Ga. 1975).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, § 509.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:126.

C.J.S.

- 77A C.J.S., Sales, §§ 74, 75.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-311.

ALR.

- Means of transportation contemplated by provision relating to "freight rates" in contract, 83 A.L.R. 1306.

Validity and enforceability of agreement by seller to repurchase on buyer's demand as affected by failure to fix time for demand, 88 A.L.R. 842.

Contract of sale which calls for a definite quantity but leaves the quality, grade, or assortment optional with one of the parties as subject to objection of indefiniteness, 106 A.L.R. 1284.

When optionee's delay in exercising option excused, 157 A.L.R. 1311.

Provision of partnership agreement giving one partner option to buy out the other, 160 A.L.R. 523.

Necessity for payment or tender of purchase money within option period in order to exercise option, in absence of specific time requirement for payment, 71 A.L.R.3d 1201.

Construction and effect of options to purchase at specified price and at price offered by third person, included in same instrument, 22 A.L.R.4th 1293.

11-2-312. Warranty of title and against infringement; buyer's obligation against infringement.

  1. Subject to subsection (2) of this Code section there is in a contract for sale a warranty by the seller that:
  1. The title conveyed shall be good, and its transfer rightful; and
  2. The goods shall be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge.

A warranty under subsection (1) of this Code section will be excluded or modified only by specific language or by circumstances which give the buyer reason to know that the person selling does not claim title in himself or that he is purporting to sell only such right or title as he or a third person may have.

Unless otherwise agreed a seller who is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of any third person by way of infringement or the like but a buyer who furnishes specifications to the seller must hold the seller harmless against any such claim which arises out of compliance with the specifications.

(Code 1933, § 109A-2 - 312, enacted by Ga. L. 1962, p. 156, § 1.)

Law reviews.

- For article, "Sales Warranties Under Georgia's Uniform Commercial Code," see 1 Ga. St. B.J. 191 (1964). For article discussing interpretation of warranties under the Uniform Commercial Code, see 4 Ga. L. Rev. 469 (1970). For article discussing the implied warranty of fitness for a particular purpose, see 9 Ga. L. Rev. 149 (1974). For article, "Products Liability Law in Georgia: Is Change Coming?" see 10 Ga. St. B.J. 353 (1974). For article, "Buyer's Right of Rejection: A Quarter Century Under the Uniform Commercial Code, and Recent International Developments," see 13 Ga. L. Rev. 805 (1979). For note, "Allowance of Punitive Damages in Products Liability Claims," see 6 Ga. L. Rev. 613 (1972).

JUDICIAL DECISIONS

General Consideration

Editor's notes.

- In light of the similarity in the provisions, cases decided under former Civil Code 1910, § 4139 and former Code 1933, § 96-301 are included in the annotations for this section.

Warranty by seller.

- If there is no express covenant of warranty, purchaser must exercise caution in detecting defects, but seller in all cases, unless expressed or from nature of the transaction excepted, warrants title and right to sell, that article sold is merchantable and reasonably suited to use intended, and that seller knows of no latent defects undisclosed. Jones v. Knightstown Body Co., 52 Ga. 667, 184 S.E. 427 (1936); Wilkinson v. Rich's, Inc., 77 Ga. App. 239, 48 S.E.2d 552 (1948) (decided under former Code 1933, § 96-301).

Where plaintiff purchaser in affidavit denies that plaintiff had actual knowledge that automobile had prior lien lodged against it at time of purchase transaction, and lack of prior actual knowledge has not been controverted in any manner by defendant, warranty that goods shall be delivered free of any lien is included in contract of sale. Christopher v. McGehee, 124 Ga. App. 310, 183 S.E.2d 624, aff'd, 228 Ga. 466, 186 S.E.2d 97 (1971).

Implied warranty in sale of personalty.

- In every sale of personalty there is implied full warranty of title by vendor, unless such a warranty is negatived or restricted by express contract. Cook v. Pollard, 50 Ga. App. 752, 179 S.E. 264 (1935) (decided under former Civil Code 1910, § 4135).

How warranties raised.

- Implied warranty is raised by statute, while express warranty is by contract. Stewart v. Gainesville Glass Co., 131 Ga. App. 747, 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578, 212 S.E.2d 377 (1975).

Buyer is entitled to transfer of good, clean title in rightful manner so that buyer will not be exposed to a law suit in order to protect it. R.C. Craig, Ltd. v. Ships of Sea, Inc., 345 F. Supp. 1066 (S.D. Ga. 1972), later proceeding, 401 F. Supp. 1051 (S.D. Ga. 1975).

Mere fact that another name appears as the owner of a motor vehicle on the certificate of title does not negate a seller's warranty of title, particularly in the face of the seller's alleged representation that the seller owns the vehicle. Spoon v. Herndon, 167 Ga. App. 794, 307 S.E.2d 693 (1983).

The issuance of certificates of title pursuant to O.C.G.A. § 40-3-28 of the motor vehicles law does not, as a matter of law, negate the existence of express or implied warranties of title which the seller gives the purchaser in the course of their dealings. Hudson v. Gaines, 199 Ga. App. 70, 403 S.E.2d 852 (1991).

Cited in Bell v. Menzies, 110 Ga. App. 436, 138 S.E.2d 731 (1964); Cochran v. Horner, 121 Ga. App. 297, 173 S.E.2d 448 (1970); Moister v. National Bank (In re Guaranteed Muffler Supply Co.), 1 Bankr. 324 (Bankr. N.D. Ga. 1979); Fritts v. Mid-Coast Trading Corp., 166 Ga. App. 31, 303 S.E.2d 148 (1983).

Breach of Warranty

Elements of action for breach of implied warranty are invalidity of seller's title and loss to buyer. A petition which by its allegations makes both of these elements appear is not subject to demurrer. Welfare Fin. Corp. v. Waters, 98 Ga. App. 20, 104 S.E.2d 669 (1958) (decided under former Code 1933, § 96-301).

Breach of warranty shown.

- Where petition alleges that through failure of warranty in sale of personalty vendee became liable to pay sum of money and discharged the liability by paying the money, then petition shows breach of warranty and loss to plaintiff appears from its allegations. Welfare Fin. Corp. v. Waters, 98 Ga. App. 20, 104 S.E.2d 669 (1958) (decided under former Code 1933, § 96-301).

Notice of breach.

- A condition precedent to a contract action for breach of warranty of title is that the plaintiff must have notified the defendant of the breach within a reasonable time thereof as provided in O.C.G.A. § 11-2-607(3)(a). Oden & Sims Used Cars, Inc. v. Thurman, 165 Ga. App. 500, 301 S.E.2d 673 (1983).

Impleaded claims.

- Third-party claims of breach of warranty under O.C.G.A. § 11-2-312(3), and indemnity were proper to implead into a patent infringement case under Fed. R. Civ. P. 14(a) because the essence of the claims were to show that others were liable for any infringement. However, because the claims involved separate areas of law and might be prejudicial or confuse the jury, severance was proper under Fed. R. Civ. P. 42(b). Tillotson Corp. v. Shijiazhaung Hongray Plastic Prods., F. Supp. 2d (N.D. Ga. Oct. 23, 2006).

OPINIONS OF THE ATTORNEY GENERAL

Responsibility for ad valorem taxes.

- Where purchaser of automobile purchases it after January 1 of that year, the seller is responsible for ad valorem taxes on it; however, since license plates cannot be purchased for motor vehicle until ad valorem taxes have been paid, and since there is a lien against the vehicle which could be enforced by taxing authority, if seller has not paid taxes, buyer may desire to pay taxes and then proceed against seller. 1967 Op. Att'y Gen. No. 67-309.

RESEARCH REFERENCES

Am. Jur. 2d.

- 38 Am. Jur. 2d, Guaranty, § 10. 63 Am. Jur. 2d, Products Liability, §§ 659et seq., 875 et seq. 67A Am. Jur. 2d, Sales, §§ 794-821.

3 Am. Jur. Pleading and Practice Forms, Automobiles and Highway Traffic, § 66.

C.J.S.

- 77A C.J.S., Sales, § 258 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-312.

ALR.

- Loss of profits as elements of damages for fraud of seller, as to quality of goods purchased for resale, 28 A.L.R. 354.

Warranty of title by seller in conditional sale contract, 132 A.L.R. 338.

Construction and application of provision in conditional sale contract regarding implied warranties, 139 A.L.R. 1276.

Law of sales and liability in respect thereof as applied to transactions in self-service stores, 163 A.L.R. 238.

Assignability of warranty of goods and chattels, 17 A.L.R.2d 1196.

Liability of auctioneer or clerk to buyer as to title, condition, or quality of property sold, 80 A.L.R.2d 1237.

Elements and measure of damages for breach of warranty in sale of horse, 91 A.L.R.3d 419.

Preemption of state law claim by federal copyright act - nature or type of claim asserted, 77 A.L.R.6th 543.

11-2-313. Express warranties by affirmation, promise, description, sample.

  1. Express warranties by the seller are created as follows:
  1. Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.
  2. Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.
  3. Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.

It is not necessary to the creation of an express warranty that the seller use formal words such as "warrant" or "guarantee" or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty.

(Code 1933, § 109A-2 - 313, enacted by Ga. L. 1962, p. 156, § 1.)

Cross references.

- Misbranding of pesticides, § 2-7-53.

Labeling of fertilizer, § 2-12-6.

False or misleading statements or claims made in regard to agricultural liming materials, § 2-12-45.

Misrepresentations made in regard to soil amendments, § 2-12-77.

Misbranding of commercial feed, § 2-13-9.

Standards for, labeling of, etc., food generally, Ch. 2, T. 26.

Civil action for knowing or negligent selling of unwholesome provisions, drugs, alcoholic beverages, etc., to another person by use of which damage results to purchaser or his family, § 51-1-23 et seq.

Law reviews.

- For article, "Sales Warranties Under Georgia's Uniform Commercial Code," see 1 Ga. St. B.J. 191 (1964). For article discussing aspects of third party practice (impleader) under the Georgia Civil Practice Act, see 4 Ga. St. B. J. 355 (1968). For article, "Consumer Protection Against Sellers Misrepresentations," see 20 Mercer L. Rev. 414 (1969). For article discussing interpretation of warranties under the Uniform Commercial Code, see 4 Ga. L. Rev. 469 (1970). For article discussing the implied warranty of fitness for a particular purpose, see 9 Ga. L. Rev. 149 (1974). For article, "Products Liability Law in Georgia: Is Change Coming?" see 10 Ga. St. B.J. 353 (1974). For article explaining the Unfair Trade Practices and Consumer Protection Act, proposed in Georgia in 1973, see 10 Ga. St. B.J. 409 (1974). For article discussing ex parte rescission of sales contract for fraud and suit for fraud and deceit, in light of City Dodge, Inc. v. Gardner, 232 Ga. 766, 208 S.E.2d 794 (1974), see 11 Ga. St. B.J. 172 (1975). For article discussing modification of consumer warranty provisions of the U.C.C. by the Magnuson-Moss Act (15 U.S.C. §§ 2301-2312) with special emphasis on attempted disclaimers, see 27 Mercer L. Rev. 1111 (1976). For article, "Buyer's Right of Rejection: A Quarter Century Under the Uniform Commercial Code, and Recent International Developments," see 13 Ga. L. Rev. 805 (1979). For article discussing the applicability of warranty provisions under the Uniform Commercial Code to domestic solar energy devices, see 30 Mercer L. Rev. 547 (1979). For article, "Contractual Limitations of Remedy and the Failure of Essential Purpose Doctrine," see 26 Ga. St. B.J. 113 (1990). For article, "Products Liability Law in Georgia Including Recent Developments," see 43 Mercer L. Rev. 27 (1991). For annual survey article discussing developments in construction law, see 51 Mercer L. Rev. 181 (1999). For article, “Do’s and Don’ts When Handling a Product Liability Matter in Georgia,” see 25 Ga. St. B.J. 17 (Aug. 2019). For note, "The Law of Evidence in the Uniform Commercial Code," see 1 Ga. L. Rev. 44 (1966). For note, "Does the National Childhood Vaccine Injury Compensation Act Really Prohibit Design Defect Claims?: Examining Federal Preemption in Light of American Home Products Corp. v. Ferrari," see 26 Ga. St. U.L. Rev. 617 (2010). For note, "Amazon's Invincibility: The Effect of Defective Third-Party Vendors' Products on Amazon," see 53 Ga. L. Rev. 1215 (2019). For comment on Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975), see 27 Mercer L. Rev. 347 (1975).

JUDICIAL DECISIONS

General Consideration

How warranties raised.

- Implied warranty is raised by statute, while express warranty is by contract. Stewart v. Gainesville Glass Co., 131 Ga. App. 747, 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578, 212 S.E.2d 377 (1975).

A warranty is a statement of representation made by the seller of goods contemporaneously with and as a part of the contract of sale, though collateral to the express object of it, having reference to the character, quality, or title to the goods and by which the seller promises or undertakes to insure that certain facts are or shall be as the seller then represents them. North Ga. Ready Mix Concrete Co. v. L & L Constr., Inc., 235 Ga. App. 68, 508 S.E.2d 722 (1998).

Representation as to quality, character, or title.

- An express warranty is a representation or statement made by seller at time of sale and as a part thereof, having reference to quality, character, or title to goods, and is part of the transaction between seller and purchaser. Stewart v. Gainesville Glass Co., 131 Ga. App. 747, 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578, 212 S.E.2d 377 (1975).

Test.

- Decisive test in determining whether language used is mere expression of opinion or warranty, is whether it purported to state fact upon which it may fairly be presumed seller expected buyer to rely, and upon which buyer would ordinarily rely. If language used is of that character, fact of reliance on part of buyer and presumption of intent on part of seller which the law would raise in such case would operate to create warranty. Bell v. Menzies, 110 Ga. App. 436, 138 S.E.2d 731 (1964); Moore v. Berry, 217 Ga. App. 697, 458 S.E.2d 879 (1995).

Failure to limit warranty made or to exclude any implied warranties may give rise to liability under either O.C.G.A. §§ 11-2-313 or11-2-314. Jones v. Cranman's Sporting Goods, 142 Ga. App. 838, 237 S.E.2d 402 (1977).

Express and implied warranties.

- A warranty may be express or implied; it is the former when created by the apt and explicit statements of the seller; it is the latter when the law derives it by implication or inference from the nature of the transaction or the relative situation or circumstances of the parties. North Ga. Ready Mix Concrete Co. v. L & L Constr., Inc., 235 Ga. App. 68, 508 S.E.2d 722 (1998).

Trial court erred in denying a corporation's motion for summary judgment on an individual's claim for breach of an express warranty when the individual's three-wheeled motorized scooter tipped over while the individual was operating the scooter in the individual's yard as the individual failed to present any evidence that the scooter was generally unsuitable for use on non-paved and sloped surfaces and, therefore, the individual had not identified any evidence that the scooter did not conform to a salesperson's description. Foothills Pharms., Inc. v. Powers, 313 Ga. App. 630, 722 S.E.2d 331 (2012).

Description of vehicle as new created express warranty. Horne v. Claude Ray Ford Sales, Inc., 162 Ga. App. 329, 290 S.E.2d 497 (1982).

Contract for sale of car describing it as new created express warranty to that effect, which was not negated by disclaimer of express warranties in same contract. Century Dodge, Inc. v. Mobley, 155 Ga. App. 712, 272 S.E.2d 502 (1980); Thompson v. Huckabee Auto Co., 190 Ga. App. 540, 379 S.E.2d 411 (1989).

Where a retail sales contract described a car as new, neither specific disclaimer of express or implied warranties nor "sold as is" language could negate the express warranty that the car was new. Rivers v. BMW of N. Am., Inc., 214 Ga. App. 880, 449 S.E.2d 337 (1994).

Error as to actual mileage of automobile.

- The defendant did not breach any express warranty concerning the actual mileage of an automobile where, at the time it made a statement regarding an odometer reading, it had no knowledge or any reason to believe that the true mileage differed from the mileage shown on the odometer. Charles Evans Nissan, Inc. v. Trussell Ford-Mazda, Inc., 200 Ga. App. 432, 408 S.E.2d 419, cert. denied, 200 Ga. App. 895, 408 S.E.2d 419 (1991).

Disclaimer in same contract.

- It is unreasonable to allow express warranty to be negated by disclaimer in same contract. Century Dodge, Inc. v. Mobley, 155 Ga. App. 712, 272 S.E.2d 502 (1980).

The issuance of certificates of title pursuant to O.C.G.A. § 40-3-28 of the motor vehicles law does not, as a matter of law, negate the existence of express or implied warranties of title which the seller gives the purchaser in the course of their dealings. Hudson v. Gaines, 199 Ga. App. 70, 403 S.E.2d 852 (1991).

No wrongful death action arises from breach of warranties absent negligence or criminal conduct. Miles v. Bell Helicopter Co., 385 F. Supp. 1029 (N.D. Ga. 1974).

Learned intermediary doctrine.

- Plaintiff's breach of warranty claims against a drug manufacturer to the extent the claims were based upon failure to provide accurate or sufficient information regarding the use of the drug to the decedent, were barred by the learned intermediary doctrine, but the claims were not barred to the extent the claims were based upon failure to provide accurate or sufficient information regarding the use of the drug to others. Lee v. Mylan Inc., 806 F. Supp. 2d 1320 (M.D. Ga. Apr. 15, 2011).

Cited in Jacobs Pharmacy Co. v. Gipson, 116 Ga. App. 760, 159 S.E.2d 171 (1967); Whitaker v. Harvell-Kilgore Corp., 418 F.2d 1010 (5th Cir. 1969); Hill Aircraft & Leasing Corp. v. Simon, 122 Ga. App. 524, 177 S.E.2d 803 (1970); Smith v. Bruce, 129 Ga. App. 97, 198 S.E.2d 697 (1973); City Dodge, Inc. v. Gardner, 232 Ga. 766, 208 S.E.2d 794 (1974); Weaver v. Ralston Motor Hotel, Inc., 135 Ga. App. 536, 218 S.E.2d 260 (1975); Key v. Bagen, 136 Ga. App. 373, 221 S.E.2d 234 (1975); Lancaster v. Eberhardt, 141 Ga. App. 534, 233 S.E.2d 880 (1977); Hutchinson Homes, Inc. v. Guerdon Indus., Inc., 143 Ga. App. 664, 239 S.E.2d 553 (1977); Tillman & Deal Farm Supply, Inc. v. Deal, 146 Ga. App. 232, 246 S.E.2d 138 (1978); Transart Indus., Inc. v. Gaines-American Moulding Corp., 148 Ga. App. 363, 251 S.E.2d 384 (1978); Solomon Refrigeration, Inc. v. Osburn, 148 Ga. App. 772, 252 S.E.2d 686 (1979); Ramsey Brick Sales Co. v. Outlaw, 152 Ga. App. 37, 262 S.E.2d 227 (1979); Patron Aviation, Inc. v. Teledyne Indus., Inc., 154 Ga. App. 13, 267 S.E.2d 274 (1980); Preiser v. Jim Letts Oldsmobile, Inc., 160 Ga. App. 658, 288 S.E.2d 219 (1981); Rigdon v. Walker Sales & Serv., Inc., 161 Ga. App. 459, 288 S.E.2d 711 (1982); Sires v. Luke, 544 F. Supp. 1155 (S.D. Ga. 1982); GMC v. Green, 173 Ga. App. 188, 325 S.E.2d 794 (1984).

Applicability

Chattel leases.

- Provisions of O.C.G.A. § 11-2-313 are not applicable to all commercial chattel leases. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975).

Warranty provisions of Uniform Commercial Code are applicable to chattel leases where transaction is analogous to sale. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975).

Defect in instruction manual.

- O.C.G.A. § 11-2-313 does not go beyond physical goods to include freedom from defect in manual of instructions accompanying appliance. Reddick v. White Consol. Indus., Inc., 295 F. Supp. 243 (S.D. Ga. 1968).

Statements deemed not mere sales talk or opinion.

- Statements by defendant's sales clerk that a product was "probably the safest one on the market" and that there was "no way you [could] fall" from it were sufficient to create an express warranty. Moore v. Berry, 217 Ga. App. 697, 458 S.E.2d 879 (1995).

Statements deemed opinion or commendation.

- Sellers' statement that a horse would be a good show horse was a mere opinion, commendation, or puffing. Sheffield v. Darby, 244 Ga. App. 437, 535 S.E.2d 776 (2000).

Seller's opinions as to the working order of electrical components in a motor home and some other issues did not create a warranty. Gill v. Bluebird Wanderlodge & Holland Motor Homes, F. Supp. 2d (M.D. Ga. Feb. 4, 2004).

Privity between manufacturer and ultimate consumer.

- To the extent the plaintiff's express warranty claim against a drug manufacturer was based upon affirmations of fact or promises to the decedent, the plaintiff asserted a claim upon which relief could be granted because a manufacturer could extend an express warranty to the ultimate consumer. Lee v. Mylan Inc., 806 F. Supp. 2d 1320 (M.D. Ga. Apr. 15, 2011).

Medical device.

- In a case arising from surgical implantation of a medical device and the injuries sustained from the device's failure and removal, the plaintiff's claim for breach of express warranty was properly asserted because the manufacturer's limited warranty for the implantable pulse generator met the definition of an express warranty pursuant to O.C.G.A. § 11-2-313(1), and was not preempted under the Medical Device Amendments of 1976, 21 U.S.C. § 360c et seq. Cline v. Advanced Neuromodulation Sys., F. Supp. 2d (N.D. Ga. June 15, 2012).

Evidence

Admission of evidence of samples.

- Because there was no indication that the written contract was a complete and exclusive statement of the agreement between the parties, and because the terms expressed by the sample did not contradict those in the written contract, the parol evidence rule did not prevent the admission of evidence of the peanut samples sent by the seller to describe what the buyer would receive in bulk shipment to provide a foundation for the claim against the seller for breach of express warranty by sample. Alimenta (U.S.A.), Inc. v. Anheuser-Busch Cos., 803 F.2d 1160 (11th Cir. 1986).

Parol evidence.

- A disclaimer of warranty in an equipment purchase contract barred any claim that the dealer made an express warranty that the equipment would be sold in "working" condition based on oral representations where the contract required that any warranty be contained in a separate writing. Stephens v. Crittenden Tractor Co., 187 Ga. App. 545, 370 S.E.2d 757 (1988).

Damages.

- In a consumer's suit against a car dealer for breach of an express warranty, regarding the sale of a used car which the dealer's salesman falsely represented had not been in a wreck, it was not error for the trial court to grant a directed verdict to the dealer because, while the salesman's representation was an express warranty, under O.C.G.A. § 11-2-313(1)(a), the consumer offered no probative evidence of damages. Mitchell v. Backus Cadillac-Pontiac, Inc., 274 Ga. App. 330, 618 S.E.2d 87 (2005).

Substantial repairs over three-year period.

- Trial court erred in entering summary judgment for a manufacturer on the owners' suit for breach of an express warranty where the owners made 22 trips to the dealership for repairs over a three-year period and, despite the replacement of multiple parts and extensive repairs to the vehicle, the problems continued, including: (1) that the check engine light and the fluid light came on; (2) that the radio's sound quality was inconsistent; (3) that there was engine hesitation and jerking; (4) that squeaking occurred on entering and exiting the vehicle; and (5) that the operation of the wiper blades was noisy. Hill v. Mercedes Benz USA, LLC, 274 Ga. App. 826, 619 S.E.2d 353 (2005).

RESEARCH REFERENCES

Am. Jur. 2d.

- 63 Am. Jur. 2d, Products Liability, § 675 et seq. 67A Am. Jur. 2d, Sales, §§ 723-742.

20A Am. Jur. Pleading and Practice Forms, Products Liability, § 46.

C.J.S.

- 77A C.J.S., Sales, § 242 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-313.

ALR.

- Warranties and conditions upon sale of seeds, nursery stock, etc., 16 A.L.R. 859; 32 A.L.R. 1241; 62 A.L.R. 451; 117 A.L.R. 470; 168 A.L.R. 581.

Right of dealer against his vendor in case of breach of warranty as to article purchased for resale and resold, 22 A.L.R. 133; 64 A.L.R. 883.

Resale by buyer where seller has refused to receive the property rejected for breach of warranty, 24 A.L.R. 1445.

Loss of profits as elements of damages for fraud of seller, as to quality of goods purchased for resale, 28 A.L.R. 354.

Validity and effect of provision in contract of sale which, in effect, guarantees the buyer against decline in prices, 29 A.L.R. 112.

Express or implied warranty on sale for accommodation of buyer, 32 A.L.R. 1150; 59 A.L.R. 1541.

Warranty or condition as to kind or quality implied by sale under trade term which by use has become generic, 35 A.L.R. 249.

Express or implied warranty of quality, condition, or fitness of automobile or truck sold by retail dealer, 43 A.L.R. 648.

Implied warranty or condition as to quality of timber or lumber, 52 A.L.R. 1536.

Right of retailer to rely upon express or implied warranty by wholesaler or manufacturer where there is an express warranty to the consumer, 59 A.L.R. 1239.

Construction and effect of express or implied warranty on sale of an article intended for use as an explosive, 62 A.L.R. 1510.

Liability of manufacturer or packer of defective article for injury to person or property of ultimate consumer who purchased from middleman, 105 A.L.R. 1502; 111 A.L.R. 1239; 140 A.L.R. 191; 142 A.L.R. 1490.

Warranty of title by seller in conditional sale contract, 132 A.L.R. 338.

Implied warranty of quality, condition, or fitness on sale of secondhand article, 151 A.L.R. 446.

Seller's advertisements as affecting rights of parties to sale of personal property, 158 A.L.R. 1413.

Law of sales and liability in respect thereof as applied to transactions in self-service stores, 163 A.L.R. 238.

Intervening purchaser's knowledge of defects in or danger of article, or failure to inspect therefor, as affecting liability of manufacturer or dealer for personal injury or property damage to subsequent purchaser or other third person, 164 A.L.R. 371.

Express warranty as excluding implied warranty of fitness, 164 A.L.R. 1321.

Assignability of warranty of goods and chattels, 17 A.L.R.2d 1196.

Recovery by contractor or artisan, suing for breach of warranty, of damages for loss of good will occasioned by use in his business of unfit materials, 28 A.L.R.2d 591.

Measure and elements of recovery of buyer rescinding sale of domestic animal for seller's breach of warranty, 35 A.L.R.2d 1273.

Statute of frauds as applicable to seller's oral warranty as to quality or condition of chattel, 40 A.L.R.2d 760.

Form and substance of notice which buyer of goods must give in order to recover damages for seller's breach of warranty, 53 A.L.R.2d 270.

Statements in advertisements as affecting manufacturer's or seller's liability for injury caused by product sold, 75 A.L.R.2d 112.

Liability of manufacturer or seller for injury caused by food or food product sold, 77 A.L.R.2d 7.

Liability of manufacturer or seller for injury caused by beverage sold, 77 A.L.R.2d 215.

Liability of manufacturer or seller for injury caused by automobile or other vehicle, aircraft, boat, or their parts, supplies, or equipment, 78 A.L.R.2d 460; 81 A.L.R.3d 318; 97 A.L.R.3d 627; 1 A.L.R.4th 411; 3 A.L.R.4th 489; 5 A.L.R.4th 483.

Liability of manufacturer or seller for injury caused by industrial, business, or farm machinery, tools, equipment, or materials, 78 A.L.R.2d 594; 2 A.L.R.4th 262.

Liability of manufacturer or seller for injury caused by paint, cement, lumber, building supplies, ladders, small tools, and like products, 78 A.L.R.2d 696; 84 A.L.R.3d 877.

Liability of manufacturer or seller for injury caused by toys, games, athletic or sports equipment, or like products, 78 A.L.R.2d 738; 95 A.L.R.3d 390.

Liability of manufacturer or seller for injury caused by firearms, explosives, and flammables, 80 A.L.R.2d 488; 94 A.L.R.3d 291; 15 A.L.R.4th 909; 18 A.L.R.4th 206.

Liability of manufacturer or seller for injury caused by household and domestic machinery, appliances, furnishings, and equipment, 80 A.L.R.2d 598; 89 A.L.R.3d 210; 93 A.L.R.3d 99; 1 A.L.R.4th 748.

Liability of manufacturer or seller for injury caused by clothing, shoes, combs, and similar products, 80 A.L.R.2d 702.

Liability of auctioneer or clerk to buyer as to title, condition, or quality of property sold, 80 A.L.R.2d 1237.

Construction and effect of standard new motor vehicle warranty, 99 A.L.R.2d 1419.

Seller's duty to test or inspect as affecting his liability for product-caused injury, 6 A.L.R.3d 12.

Liability for representations and express warranties in connection with sale of used motor vehicle, 36 A.L.R.3d 125.

Sales: liability for warranty or representation that article, other than motor vehicle, is new, 36 A.L.R.3d 237.

Application of warranty provisions of Uniform Commercial Code to bailments, 48 A.L.R.3d 668.

Necessity and propriety of instructing on alternative theories of negligence or breach of warranty, where instruction on strict liability in tort is given in products liability case, 52 A.L.R.3d 101.

Liability of builder or subcontractor for insufficiency of building resulting from latent defects in materials used, 61 A.L.R.3d 792.

Contracts for artificial insemination of cattle, 61 A.L.R.3d 811.

Statements on container that enclosed toy, game, sports equipment, or the like, is safe as affecting manufacturer's liability for injury caused by product sold, 74 A.L.R.3d 1298.

Products liability: liability for injury or death allegedly caused by defective tires, 81 A.L.R.3d 318.

Products liability: liability for injury or death allegedly caused by defect in snowmobile or other recreational-purpose vehicle, 81 A.L.R.3d 394; 66 A.L.R.4th 622.

Products liability: liability for injury or death allegedly caused by defect in mobile home or trailer, 81 A.L.R.3d 421.

Liability of manufacturer, seller, or installer for personal injury caused by door glass, 84 A.L.R.3d 877.

Liability of manufacturer or seller for personal injury or property damage caused by television set, 89 A.L.R.3d 210.

Practices forbidden by state deceptive trade practice and consumer protection acts, 89 A.L.R.3d 449.

Elements and measure of damages for breach of warranty in sale of horse, 91 A.L.R.3d 419.

Products liability: stoves, 93 A.L.R.3d 99.

What constitutes "affirmation of fact" giving rise to express warranty under UCC § 2-313(1)(a), 94 A.L.R.3d 729.

Liability of packer, foodstore, or restaurant for causing trichinosis, 96 A.L.R.3d 451.

Products liability: personal injury or death allegedly caused by defect in aircraft or its parts, supplies, or equipment, 97 A.L.R.3d 627.

Products liability: liability of manufacturer or seller for injury or death caused by defect in boat or its parts, supplies, or equipment, 1 A.L.R.4th 411.

Products liability: defective heating equipment, 1 A.L.R.4th 748.

Products liability: industrial accidents involving conveyor belts or systems, 2 A.L.R.4th 262.

Construction and effect of new motor vehicle warranty limiting manufacturer's liability to repair or replacement of defective parts, 2 A.L.R.4th 576.

Products liability: defective vehicular windows, 3 A.L.R.4th 489.

Products liability: farm machinery, 4 A.L.R.4th 13.

Products liability: glue and other adhesive products, 7 A.L.R.4th 155.

Products liability: elevators, 7 A.L.R.4th 852.

Products liability: industrial presses, 8 A.L.R.4th 70.

Products liability: transformer and other electrical equipment, 10 A.L.R.4th 854.

Products liability: fertilizers, insecticides, pesticides, fungicides, weedkillers, and the like, or articles used in application thereof, 12 A.L.R.4th 462.

Products liability: cranes and other lifting apparatuses, 13 A.L.R.4th 476.

Products liability: cement and concrete, 15 A.L.R.4th 1186.

Products liability: tire rims and wheels, 16 A.L.R.4th 137.

Products liability: firefighting equipment, 19 A.L.R.4th 326.

Products liability: stud guns, staple guns, or parts thereof, 33 A.L.R.4th 1189.

Products liability: household appliances relating to cleaning, washing, personal care, and water supply, quality, and disposal, 34 A.L.R.4th 95.

Products liability: household equipment relating to storage, preparation, cooking, and disposal of food, 35 A.L.R.4th 663.

Products liability: home and office furnishings, 36 A.L.R.4th 170.

Computer sales and leases: breach of warranty, misrepresentation, or failure of consideration as defense or ground for affirmative relief, 37 A.L.R.4th 110.

Affirmations or representations made after the sale is closed as basis of warranty under UCC § 2-313(1)(a), 47 A.L.R.4th 189.

Products liability: personal soap, 54 A.L.R.4th 574.

Liability of successor corporation for punitive damages for injury caused by predecessor's product, 55 A.L.R.4th 166.

Products liability: sufficiency of evidence to support product misuse defense in actions concerning lawnmowers, 55 A.L.R.4th 1062.

Products liability: building and construction lumber, 61 A.L.R.4th 121.

Liability of manufacturer of oral live polio (Sabin) vaccine for injury or death from its administration, 66 A.L.R.4th 83.

Liability for injury incurred in operation of power golf cart, 66 A.L.R.4th 622.

Products liability: industrial refrigerator equipment, 72 A.L.R.4th 90.

Products liability: scaffolds and scaffolding equipment, 74 A.L.R.4th 904.

Products liability: tractors, 75 A.L.R.4th 312.

Products liability: bicycles and accessories, 76 A.L.R.4th 117.

Products liability: exercise and related equipment, 76 A.L.R.4th 145.

Products liability: trampolines and similar devices, 76 A.L.R.4th 171.

Products liability: competitive sports equipment, 76 A.L.R.4th 201.

Products liability: skiing equipment, 76 A.L.R.4th 256.

Products liability: general recreational equipment, 77 A.L.R.4th 1121.

Products liability: mechanical amusement rides and devices, 77 A.L.R.4th 1152.

Products liability: lubricating products and systems, 80 A.L.R.4th 972.

Liability for injury or death allegedly caused by spoilage or contamination of beverage, 87 A.L.R.4th 804.

Liability for injury or death allegedly caused by foreign substance in beverage, 90 A.L.R.4th 12.

Liability for injury or death allegedly caused by foreign object in food or food product, 1 A.L.R.5th 1.

Liability for injury or death allegedly caused by spoilage, contamination, or other deleterious condition of food or food product, 2 A.L.R.5th 1.

Liability for injury or death allegedly caused by food product containing object related to, but not intended to be present in, product, 2 A.L.R.5th 189.

Products liability: roofs and roofing materials, 3 A.L.R.5th 851.

Products liability: prefabricated buildings, 4 A.L.R.5th 667.

Purchaser's disbelief in, or nonreliance upon, express warranties made by seller in contract for sale of business as precluding action for breach of express warranties, 7 A.L.R.5th 841.

Products liability: cigarettes and other tobacco products, 36 A.L.R.5th 541.

Products liability: theatrical equipment and props, 42 A.L.R.5th 699.

Breach of warranty in sale, installation, repair, design, or inspection of septic or sewage disposal systems, 50 A.L.R.5th 417.

Products liability: ladders, 81 A.L.R.5th 245.

Statement in advertisements, product brochures or other promotional materials as constituting "affirmation of fact" giving rise to express warranty under UCC § 2-313(1)(a), 83 A.L.R.6th 1.

Statement in product packaging, user manuals, or other product documentation as constituting "affirmation of fact" giving rise to express warranty under UCC § 2-313(1)(a), 84 A.L.R.6th 1.

Oral Statement as constituting "affirmation of fact" giving rise to express warranty under UCC § 2-313(1)(a), 88 A.L.R.6th 1.

Statement in contract proposals, contract correspondence, or contract itself as constituting "affirmation of fact" giving rise to express warranty under U.C.C. § 2-313(1)(a), 94 A.L.R.6th 1.

Federal preemption of state common-law products liability claims pertaining to medical devices, implants, and other health-related items, 74 A.L.R. Fed. 2d 1.

11-2-314. Implied warranty: merchantability; usage of trade.

  1. Unless excluded or modified (Code Section 11-2-316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under this Code section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale.
  2. Goods to be merchantable must be at least such as:
  1. Pass without objection in the trade under the contract description; and
  2. In the case of fungible goods, are of fair average quality within the description; and
  3. Are fit for the ordinary purposes for which such goods are used; and
  4. Run, within the variations permitted by the agreement, of even kind, quality, and quantity within each unit and among all units involved; and
  5. Are adequately contained, packaged, and labeled as the agreement may require; and
  6. Conform to the promises or affirmations of fact made on the container or label if any.

Unless excluded or modified (Code Section 11-2-316) other implied warranties may arise from course of dealing or usage of trade.

(Code 1933, § 109A-2 - 314, enacted by Ga. L. 1962, p. 156, § 1.)

Cross references.

- Misbranding of pesticides, § 2-7-53.

Labeling of fertilizer, § 2-12-6.

Misbranding of commercial feed, § 2-13-9.

Nonapplicability of implied warranties to blood transfusions, organ transplants, etc., §§ 11-2-316,51-1-28.

Standards for, labeling of, etc., food generally, Ch. 2, T. 26.

Products liability actions, § 51-1-11.

Civil action for knowing or negligent selling of unwholesome provisions, drugs, alcoholic beverages, etc., to another person by use of which damage results to purchaser or his family, § 51-1-23 et seq.

Law reviews.

- For article discussing manufacturer's warranty of merchantability and fitness under former § 96-307, see 10 Mercer L. Rev. 272 (1959). For article, "Sales Warranties Under Georgia's Uniform Commercial Code," see 1 Ga. St. B.J. 191 (1964). For article, "Georgia's New Statutory Liability for Manufacturers: An Inadequate Legislative Response," see 2 Ga. L. Rev. 538 (1968). For article discussing aspects of third party practice (impleader) under the Georgia Civil Practice Act, see 4 Ga. St. B.J. 355 (1968). For article, "Consumer Protection Against Sellers Misrepresentations," see 20 Mercer L. Rev. 414 (1969). For article discussing interpretation of warranties under the Uniform Commercial Code, see 4 Ga. L. Rev. 469 (1970). For article discussing the implied warranty of fitness for a particular purpose, see 9 Ga. L. Rev. 149 (1974). For article, "Products Liability Law in Georgia: Is Change Coming?" see 10 Ga. St. B.J. 353 (1974). For article explaining the Unfair Trade Practices and Consumer Protection Act, proposed in Georgia in 1973, see 10 Ga. St. B.J. 409 (1974). For article discussing modification of consumer warranty provisions of the U.C.C. by the Magnuson-Moss Act (15 U.S.C. §§ 2301-2312) with special emphasis on attempted disclaimers, see 27 Mercer L. Rev. 1111 (1976). For article discussing strict liability for defective products in Georgia, see 13 Ga. St. B.J. 142 (1977). For article, "Buyer's Right of Rejection: A Quarter Century Under the Uniform Commercial Code, and Recent International Developments," see 13 Ga. L. Rev. 805 (1979). For article discussing applicability of implied warranty provisions of the Uniform Commercial Code to construction contracts, see 28 Emory L.J. 335 (1979). For article discussing the applicability of warranty provisions under the Uniform Commercial Code to domestic solar energy devices, see 30 Mercer L. Rev. 547 (1979). For article surveying recent judicial developments in commercial law, see 31 Mercer L. Rev. 13 (1979). For article surveying developments in Georgia commercial law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 33 (1981). For article, "Contractual Limitations of Remedy and the Failure of Essential Purpose Doctrine," see 26 Ga. St. B.J. 113 (1990). For article, "Products Liability Law in Georgia Including Recent Developments," see 43 Mercer L. Rev. 27 (1991). For annual survey article on product liability, see 67 Mercer L. Rev. 177 (2015). For annual survey on product liability, see 69 Mercer L. Rev. 231 (2017). For annual survey on construction law, see 71 Mercer L. Rev. 57 (2019). For article, “Do’s and Don’ts When Handling a Product Liability Matter in Georgia,” see 25 Ga. St. B.J. 17 (Aug. 2019). For note discussing implied warranties in the sale of second-hand goods, see 17 Mercer L. Rev. 455 (1966). For note discussing products liability actions based on breach of implied warranty under the Uniform Commercial Code, see 4 Ga. L. Rev. 164 (1969). For note, "Allowance of Punitive Damages in Products Liability Claims," see 6 Ga. L. Rev. 613 (1972). For note, "Buyer's Right to Revoke Acceptance Against the Automobile Manufacturer for Breach of its Continuing Warranty of Repair or Replacement," see 7 Ga. L. Rev. 711 (1973). For comment on Felder v. Neeves, 36 Ga. App. 41, 135 S.E. 219 (1926), see 1 Ga. L. Rev. No. 1 P. 51 (1927). For comment on Davis v. Williams, 58 Ga. App. 274, 198 S.E. 357 (1938), see 1 Ga. B.J. 41 (1939). For comment on Revlon, Inc. v. Murdock, 103 Ga. App. 842, 120 S.E.2d 912 (1961), see 24 Ga. B.J. 271 (1961). For comment discussing evolution of the implied warranty of habitability in sales of new homes in light of Humber v. Morton, 426 S.W.2d 554 (Tex. 1968), and criticizing absence of this doctrine in Georgia law, see 20 Mercer L. Rev. 464 (1969). For comment on Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975), see 27 Mercer L. Rev. 347 (1975). For comment on Fender v. Colonial Stores, Inc., 138 Ga. App. 31, 225 S.E.2d 691 (1976), see 28 Mercer L. Rev. 751 (1977). For comment discussing the prohibition of wrongful death suits under Georgia's strict liability in Ford Motor Co. v. Carter, 239 Ga. 657, 238 S.E.2d 361 (1977), see 29 Mercer L. Rev. 649 (1978).

JUDICIAL DECISIONS

General Consideration

Editor's notes.

- In light of the similarity between the provisions, decisions under former Code 1910, § 4135 and former Code 1933, §§ 96-301 and 96-307 are included in the annotations to this section. Since this section does not expressly exclude manufacturers from its coverage, cases decided under former Code 1933, § 96-307 have been included here. See Official Comment 2 to Uniform Commercial Code § 2-314.

Purpose of former Code 1933,

§ 96-307 to distribute losses. - Purpose of former Code 1933, § 96-307 was that enterprise which causes losses should lift them from the individual victims and distribute them widely among those who benefit from activities of the enterprise. Wood v. Hub Motor Co., 110 Ga. App. 101, 137 S.E.2d 674 (1964) (decided under former Code 1933, § 96-307).

Implied warranty is raised by statute, while express warranty is by contract. Stewart v. Gainesville Glass Co., 131 Ga. App. 747, 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578, 212 S.E.2d 377 (1975).

Statutory implied warranty is an obligation that the law places upon a party as a result of some transaction entered into; it is not a contractual obligation. Wood v. Hub Motor Co., 110 Ga. App. 101, 137 S.E.2d 674 (1964) (decided under former Code 1933, § 96-307).

Because granite blocks were movable at the time of identification of the contract, they were "goods" under O.C.G.A. § 11-2-314, and an implied warranty of merchantability applied to their sale. Willis Mining, Inc. v. Noggle, 235 Ga. App. 747, 509 S.E.2d 731 (1998).

Under Georgia's Uniform Commercial Code, O.C.G.A. § 11-2-314(1), a warranty that the goods shall be merchantable is implied in a contract for the goods' sale if the seller is a merchant with respect to goods of that kind. That warranty protects consumers from defects or conditions existing at the time of sale. Paulk v. Thomasville Ford Lincoln Mercury, Inc., 317 Ga. App. 780, 732 S.E.2d 297 (2012).

Warranties exist unless excepted.

- Implied warranties exist unless expressly or from nature of transaction excepted. Wilson v. Eargle, 98 Ga. App. 241, 105 S.E.2d 474 (1958) (decided under former Code 1933, § 96-301).

If there is no express covenant of warranty, purchaser must exercise caution in detecting defects, but seller in all cases, unless expressed or from the nature of the transaction excepted, warrants it has title and right to sell, that article sold is merchantable and reasonably suited to use intended, and that seller knows of no latent defects undisclosed. Jones v. Knightstown Body Co., 52 Ga. App. 667, 184 S.E. 427 (1936); Wilkinson v. Rich's, Inc., 77 Ga. App. 239, 48 S.E.2d 552 (1948) (decided under former Code 1933, § 96-301).

Implied warranty remains effective for a reasonable time. Wood v. Hub Motor Co., 110 Ga. 101, 137 S.E.2d 674 (1964) (decided under former Code 1933, § 96-307).

Implied warranties warrant against defects or conditions existing at the time of sale, but do not provide a warranty of continuing serviceability. Jones v. Marcus, 217 Ga. App. 372, 457 S.E.2d 271 (1995).

Implied warranties inapplicable to settlement agreements.

- Seller sued a buyer who rejected the seller's goods; the parties settled. As the parties' agreement was a contract to settle litigation, with any sale of goods merely incidental, the implied warranties of merchantability and fitness, O.C.G.A. §§ 11-2-314 and11-2-315, did not apply to their settlement agreement. Ole Mexican Foods, Inc. v. Hanson Staple Co., 285 Ga. 288, 676 S.E.2d 169 (2009).

Evidence negated buyer's claim that vehicle was unmerchantable at time of sale.

- Summary judgment for the seller of a vehicle was proper in a case in which the buyer claimed breach of implied warranties under O.C.G.A. § 11-2-314; the buyer's complaints were minor and did not render the vehicle unusable, and the vehicle had 57,000 miles on it when the buyer purchased it, and the fact that the buyer drove it 25,000 more miles before abandoning it at the seller's lot negated the claim that the vehicle was unmerchantable when purchased. Soto v. CarMax Auto Superstores, Inc., 271 Ga. App. 813, 611 S.E.2d 108 (2005).

Parties may expressly broaden or narrow warranty.

- Parties may expressly agree on provisions of contract and extent of warranty, which may be more limited or more extensive than implied warranty of law. Jones v. Knightstown Body Co., 52 Ga. App. 667, 184 S.E. 427 (1936) (decided under former Code 1933, § 96-301).

Vendor may act in good faith in transaction, and yet violate O.C.G.A. § 11-2-314. A.D.L. Sales Co. v. Gailey, 48 Ga. App. 798, 173 S.E. 734 (1934) (decided under former Code 1910, § 4135).

Patent, discoverable, or disclosed latent defects.

- Implied warranty is a guaranty against loss only from latent defects. The law of implied warranty will not avail against patent defects, nor against latent defects which are either disclosed or are discoverable by exercise of caution on part of purchaser. Where property is brought under an implied warranty that it is reasonably suited to the use intended, an acceptance by the purchaser waives all defects discovered by the purchaser, or which by exercise of ordinary care and prudence, the purchaser might have discovered before delivery. Jones v. Knightstown Body Co., 52 Ga. App. 667, 184 S.E. 427 (1936); Wilkinson v. Rich's, Inc., 77 Ga. App. 239, 48 S.E.2d 552 (1948); Smith v. Northeast Ga. Fair Ass'n, 85 Ga. App. 32, 67 S.E.2d 836 (1951) (decided under former Code 1933, § 96-301); Moore v. Berry, 217 Ga. App. 697, 458 S.E.2d 879 (1995);.

Implied warranty of fitness of thing sold for ordinary use, does not embrace defects discoverable by ordinary prudence and care. Smith v. Northeast Ga. Fair Ass'n, 85 Ga. App. 32, 67 S.E.2d 836 (1951) (decided under former Code 1933, § 96-301).

In an action by a customer against a drugstore for burns suffered when bleach spilled from a bottle as the customer removed it from a shelf, the customer's claim was not defeated by failure to exercise care for the customer's own safety since the bleach was located at a height above the customer's eye level and there was no patent or obvious defect; reversing A.B.C. Drug Co. v. Monroe, 214 Ga. App. 136, 447 S.E.2d 315 (1994). Keaton v. A.B.C. Drug Co., 266 Ga. 385, 467 S.E.2d 558 (1996).

Defects not ascertainable by examination of property.

- The law imposes upon vendee the duty of exercising caution in detecting defects, and hence it is a well-established rule that where defect is patent, or could have been ascertained by exercise of diligence, there can be no recovery upon ground of an implied warranty and in all such cases the doctrine of caveat emptor applies; but in cases of latent defects, the existence of which cannot be ascertained by an examination of the property, the law protects a purchaser by imposing upon vendor an implied warranty, whenever the defect is of such a nature as to render article sold unsuited to use intended, and in cases of latent defects, therefore, the doctrine of caveat venditor applies. Williams v. Ballenger, 87 Ga. App. 255, 73 S.E.2d 509 (1952) (decided under former Code 1933, § 96-301).

While the seller's argument that no warranty existed because the buyer inspected the blocks the buyer was buying and used own judgment in selecting purchases was relevant to an implied warranty of fitness for a particular purpose, it was not applicable to the warranty of merchantability at issue. Since the implied warranty of merchantability was not clearly disclaimed, it applied to this sale of goods absent one of the exceptions enumerated in O.C.G.A. § 11-2-316(3). Willis Mining, Inc. v. Noggle, 235 Ga. App. 747, 509 S.E.2d 731 (1998).

Sale of common article.

- In sale of common article there is always an implied warranty that it is made of good material and reasonably fit to be employed in use for which it is designed by maker. Jones v. Knightstown Body Co., 52 Ga. App. 667, 184 S.E. 427 (1936) (decided under former Code 1933, § 96-301).

Defective container or packaging.

- In an action by a customer against a drugstore for burns suffered when bleach spilled from a bottle as she removed it from a shelf, the jury was authorized to find a breach of implied warranty because, as a merchant of bleach, the store was required to adequately contain and package the bleach that it sold and bleach which spills from a loose cap is not adequately contained or packaged; reversing A.B.C. Drug Co. v. Monroe, 214 Ga. App. 136, 447 S.E.2d 315 (1994). Keaton v. A.B.C. Drug Co., 266 Ga. 385, 467 S.E.2d 558 (1996).

Adaption of machine to uses for which it is made is always warranted. A.D.L. Sales Co. v. Gailey, 48 Ga. App. 798, 173 S.E. 734 (1934) (decided under former Code 1910, § 4135(2)).

Used or second-hand goods.

- When the article even though used or second-hand is sold by one who "is a merchant with respect to goods of that kind," an implied warranty of merchantability attaches to the sale under O.C.G.A. § 11-2-314 unless excluded or modified by O.C.G.A. § 11-2-316. Georgia Timberlands, Inc. v. Southern Airways Co., 125 Ga. App. 404, 188 S.E.2d 108 (1972).

Implied warranty of merchantability does not base distinctions upon whether or not goods are sold in original packages. Pierce v. Liberty Furn. Co., 141 Ga. App. 175, 233 S.E.2d 33 (1977).

Instruction manual accompanying product.

- Under warranty provisions of Uniform Commercial Code, where a product is sold which is to be installed by the consumer, written instructions that accompany it create an implied warranty that it will be fit for ordinary purpose for which it is used and will be safely operable when installed in accordance with such directions. Reddick v. White Consol. Indus., Inc., 295 F. Supp. 243 (S.D. Ga. 1968).

When contract originates in self-service store.

- Where defendant self-service store offered soft drinks for sale by placing them on its shelf, contract for sale of goods came into being when plaintiff accepted offer by taking physical possession thereof with intent to pay for them; and from that moment forward implied warranties of O.C.G.A. § 11-2-314 were applicable. Fender v. Colonial Stores, Inc., 138 Ga. App. 31, 225 S.E.2d 691 (1976).

Blood furnished by hospital in course of treatment is not a sales transaction covered by implied warranty under O.C.G.A. § 11-2-314. Lovett v. Emory Univ., Inc., 116 Ga. App. 277, 156 S.E.2d 923 (1967).

Medical center's furnishing of facility for use in connection with surgery to install a plate device to stabilize plaintiff's spine was a transaction involving "services and labor with an incidental furnishing of equipment and materials" and, as such, the Uniform Commercial Code had no application. McCombs v. Southern Regional Medical Ctr., Inc., 233 Ga. App. 676, 504 S.E.2d 747 (1998).

Distributor of anti-psychotic drug.

- The distributor of an anti-psychotic drug could not be held liable for the suicide of a patient based on warranty claims because it neither manufactured nor prescribed the drug. Presto v. Sandoz Pharmaceuticals Corp., 226 Ga. App. 547, 487 S.E.2d 70 (1997).

Pharmaceutical products.

- Patient who died after taking medicine which a pharmaceutical manufacturer gave to the doctor and which the doctor gave to the patient was not entitled to an extension of any implied warranty existing between the manufacturer and the doctor, and the appellate court upheld the trial court's judgment dismissing claims the patient's spouse filed against the manufacturer, alleging breach of express and implied warranties, but reversed the trial court's judgment dismissing the husband's claims against the manufacturer alleging strict liability and negligent failure to warn. Bryant v. Hoffmann-La Roche, Inc., 262 Ga. App. 401, 585 S.E.2d 723 (2003).

Federal law on medical devices preempted implied warranty.

- Medical Device Amendments, 21 U.S.C. § 360k, preempted state law claims in a products liability case alleging an implied warranty of merchantability under O.C.G.A. § 11-2-314 with respect to a Precision Spinal Cord Stimulator medical device. Horn v. Boston Sci. Neuromodulation Corp., F. Supp. 2d (S.D. Ga. Aug. 26, 2011).

"Learned intermediary" doctrine.

- The manufacturer of an anti-psychotic drug could not be held liable for the suicide of a patient under any warranty claim because of the "learned intermediary" doctrine, absent some showing that the product itself was defective. Presto v. Sandoz Pharmaceuticals Corp., 226 Ga. App. 547, 487 S.E.2d 70 (1997).

Plaintiff's breach of warranty claims against a drug manufacturer, to the extent the claims were based upon failure to provide accurate or sufficient information regarding the use of the drug to the decedent, were barred by the learned intermediary doctrine but the claims were not barred to the extent the claims were based upon failure to provide accurate or sufficient information regarding the use of the drug to others. Lee v. Mylan Inc., 806 F. Supp. 2d 1320 (M.D. Ga. Apr. 15, 2011).

Handgun used to accidentally kill another.

- Handgun with cocked hammer which was discovered by three-year-old, who pulled the trigger and thereby killed another child, could not be considered "not merchantable and not reasonably suited to the use intended" since the gun performed exactly as intended - when the hammer was cocked and the trigger was pulled, it fired. Rhodes v. R.G. Indus., Inc., 173 Ga. App. 51, 325 S.E.2d 465 (1984).

Skylights.

- Where a subcontractor's initial proposal and the general contractor's purchase order referencing the "plans and specs" required that skylights be water-tight or leak free, but the skylights were not leak free, the goods were not merchantable. American Aluminum Prods. Co. v. Binswanger Glass Co., 194 Ga. App. 703, 391 S.E.2d 688 (1990).

A contract for rebuilding an engine was not a sale by a merchant so as to invoke the warranty of O.C.G.A. § 11-2-314. American Whse. & Moving Serv. of Atlanta, Inc. v. Floyd's Diesel Serv., Inc., 164 Ga. App. 106, 296 S.E.2d 64 (1982).

Breach and consequent damages complete a cause of action on an implied warranty. Wood v. Hub Motor Co., 110 Ga. App. 101, 137 S.E.2d 674 (1964) (decided under former Code 1933, § 96-307).

Negligence is not an element of breach of warranty.

- If goods do not conform to warranty, warrantor's utmost care will not relieve warrantor of liability. Wood v. Hub Motor Co., 110 Ga. App. 101, 137 S.E.2d 674 (1964) (decided under former Code 1933, § 96-307).

Strict liability of manufacturer distinguished.

- Establishment of the implied warranty of merchantability as applied to a seller under O.C.G.A. § 11-2-314 is not the same as the strict liability imposed on a manufacturer under O.C.G.A. § 51-1-11. Buford v. Toys R' Us, Inc., 217 Ga. App. 565, 458 S.E.2d 373 (1995), overruled on other grounds, Wal-Mart Stores, Inc. v. Wheeler, 262 Ga. App. 607, 586 S.E.2d 83 (2003).

Essential elements not proved.

- Proof that the car was defective when sold was an essential element of the buyer's claim, which the buyer did not satisfy; the evidence showed that the buyer drove the used car approximately 26,000 miles before the cooling system began to malfunction. Dildine v. Town & Country Truck Sales, Inc., 259 Ga. App. 732, 577 S.E.2d 882 (2003).

To recover in Georgia under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq., a plaintiff must show that a defendant breached the implied warranty of merchantability arising under Georgia law, and summary judgment for a car seller in a case alleging breach of implied warranties under 15 U.S.C. § 2301 et seq., and O.C.G.A. § 11-2-314(1) was correct because the buyers failed to show that car was defective when sold; numerous repairs to the car during first year of ownership were mostly for different items each time, and all of the needed repairs were made. Crowe v. CarMax Auto Superstores, Inc., 272 Ga. App. 249, 612 S.E.2d 90 (2005).

Trial court did not err in granting a seller's motion for summary judgment in a customer's action seeking to recover damages for injuries the customer sustained when the customer was burned from a ceramic, scented-oil burner and alleging, among other things, that the seller breached an implied warranty of merchantability because the trial court's conclusion that the ceramic burner was not defective for the burner's ordinary purpose at the time of sale was supported by the evidence of record; the customer presented no evidence that some defect existed in the item such that it was inappropriate to use for the item's ordinary purpose as a ceramic oil burner other than the mere existence of the customer's injury, and the sellers' owners and employees deposed that the item and others like it were marketed by the manufacturer as oil burners and were displayed as such at various trade shows the seller's personnel attended. Rivers v. H. S. Beauty Queen, Inc., 306 Ga. App. 866, 703 S.E.2d 416 (2010).

Cited in Bell v. Menzies, 110 Ga. App. 436, 138 S.E.2d 731 (1964); Reddick v. White Consol. Indus., Inc., 295 F. Supp. 243 (S.D. Ga. 1968); Horne v. Armstrong Prods. Corp., 416 F.2d 1329 (5th Cir. 1969); Rupee v. Mobile Home Brokers, Inc., 124 Ga. App. 86, 183 S.E.2d 34 (1971); Hornbuckle v. Escambia Chem. Corp., 127 Ga. App. 522, 194 S.E.2d 344 (1972); Lashley v. Ford Motor Co., 359 F. Supp. 363 (M.D. Ga. 1972); Smith v. Bruce, 129 Ga. App. 97, 198 S.E.2d 697 (1973); Evershine Prods., Inc. v. Schmitt, 130 Ga. App. 34, 202 S.E.2d 228 (1973); Mays v. Citizens & S. Nat'l Bank, 132 Ga. App. 602, 208 S.E.2d 614 (1974); Weaver v. Ralston Motor Hotel, Inc., 135 Ga. App. 536, 218 S.E.2d 260 (1975); Higginbotham v. Ford Motor Co., 540 F.2d 762 (5th Cir. 1976); Caldwell v. Lord & Taylor, Inc., 142 Ga. App. 137, 235 S.E.2d 546 (1977); Ford Motor Co. v. Carter, 239 Ga. 657, 238 S.E.2d 361 (1977); Hutchinson Homes, Inc. v. Guerdon Indus., Inc., 143 Ga. App. 664, 239 S.E.2d 553 (1977); Pepsico Truck Rental, Inc. v. Eastern Foods, Inc., 145 Ga. App. 410, 243 S.E.2d 662 (1978); Vance v. Miller-Taylor Shoe Co., 147 Ga. App. 812, 251 S.E.2d 52 (1978); Ramsey Brick Sales Co. v. Outlaw, 152 Ga. App. 37, 262 S.E.2d 227 (1979); Maddux v. R.O.E.M., Inc., 152 Ga. App. 732, 264 S.E.2d 31 (1979); Patron Aviation, Inc. v. Teledyne Indus., Inc., 154 Ga. App. 13, 267 S.E.2d 274 (1980); Preiser v. Jim Letts Oldsmobile, Inc., 160 Ga. App. 658, 288 S.E.2d 219 (1981); Salome v. First Nat'l Bank, 162 Ga. App. 394, 291 S.E.2d 452 (1982); Alterman Foods, Inc. v. G.C.C. Beverages, Inc., 168 Ga. App. 921, 310 S.E.2d 755 (1983); W. Linton Howard, Inc. v. Gibbs Mach., Inc., 169 Ga. App. 627, 314 S.E.2d 259 (1984); Gee v. Chattahoochee Tractor Sales, Inc., 172 Ga. App. 351, 323 S.E.2d 176 (1984); Citizens Jewelry Co. v. Walker, 178 Ga. App. 897, 345 S.E.2d 106 (1986); Warner Robins Tree Surgeons, Inc. v. Kolb & Co., 181 Ga. App. 20, 351 S.E.2d 486 (1986); Ream Tool Co. v. Newton, 209 Ga. App. 226, 433 S.E.2d 67 (1993); Dixon Dairy Farms, Inc. v. Conagra Feed Co., 245 Ga. App. 836, 538 S.E.2d 897 (2000); Imex Int'l v. Wires Eng'g, 261 Ga. App. 329, 583 S.E.2d 117 (2003).

Leases

Section applicable to sales and not leases.

- It would appear from a literal reading of O.C.G.A. § 11-2-314 that it was intended to apply only to "sales" and not leases. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975).

Commercial chattel leases.

- Provisions of O.C.G.A. § 11-2-314 are not applicable to all commercial chattel leases. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975).

Warranty provisions of Uniform Commercial Code are applicable to those chattel leases where transaction in question is analogous to a sale. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975).

Irrevocable agreement to transfer ownership in future.

- Where owner had contracted irrevocably to transfer ownership to another at some time in the future, the transaction was analogous to a sale even though in the form of a lease and even though the owner retained title, the implied warranties of O.C.G.A. § 11-2-314 applied. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975).

Four-year lease of vehicle.

- Where a lessee leased a vehicle for four years, title remained with the assignee, and the lessee was required to surrender the car at the expiration of the lease term, there being no option to purchase it, neither the implied warranty provisions nor the exclusion rules therefor of the Uniform Commercial Code applied to the lease agreement. Mark Singleton Buick, Inc. v. Taylor, 194 Ga. App. 630, 391 S.E.2d 435 (1990).

Torts

Wrongful death action.

- No wrongful death action arises from any breach of warranties absent negligence or criminal conduct. Miles v. Bell Helicopter Co., 385 F. Supp. 1029 (N.D.Ga. 1974).

A wrongful death action may not be predicated on a breach of warranty arising from the sale of goods, except specified articles intended for human consumption or use. Ryals v. Billy Poppell, Inc., 192 Ga. App. 787, 386 S.E.2d 513 (1989).

Retailer's liability parallels that of manufacturer under O.C.G.A. § 51-1-11. - O.C.G.A. § 11-2-314 establishes a concept for retailers similar to that employed in O.C.G.A. § 51-1-11, by which manufacturers may be held strictly liable for defective products. Pierce v. Liberty Furn. Co., 141 Ga. App. 175, 233 S.E.2d 33 (1977).

O.C.G.A. § 11-2-314, defining implied warranty of merchantability, is involved under O.C.G.A. § 51-1-11, which relate to actions for product liability. Parzini v. Center Chem. Co., 134 Ga. App. 414, 214 S.E.2d 700, rev'd on other grounds, 234 Ga. 868, 218 S.E.2d 580 (1975).

Dealer not liable for manufacturer's warranty.

- Defendant used-car dealer could not be held liable under a complaint alleging that plaintiffs' decedent was killed while driving a used car purchased from defendant which was defective when manufactured and that the car was covered by an express warranty of merchantability, issued by defendant at the time of purchase, where the vehicle in question was not manufactured by defendant. Ryals v. Billy Poppell, Inc., 192 Ga. App. 787, 386 S.E.2d 513 (1989).

Liability for food served.

- Trial court erred by granting summary judgment to a restaurant on a customer's claim that the restaurant served the customer a hamburger that breached the implied warranties of merchantability and fitness for purpose when the hamburger contained a bit of bone that broke the customer's tooth when the customer bit into the hamburger. Because this material question had to be decided by a jury, the trial court erred in its grant of summary judgment to the restaurant. Mitchell v. BBB Servs. Co., 261 Ga. App. 240, 582 S.E.2d 470 (2003).

Existence of defect.

- In an action in which an insurance company filed suit against a company in a subrogation action to recover money paid by the insurance company to a restaurant in Norcross, Georgia, after a fire destroyed the restaurant, the company's motion for summary judgment was granted on the breach of implied warranty claim; the insurance company proffered no evidence in the record from which a jury could conclude that the defect existed when the power supply left the manufacturing facility or even after it was re-manufactured. Colony Ins. Co. v. Coca-Cola Co., 239 F.R.D. 666 (N.D. Ga. 2007).

Exclusion or Waiver

Waiver must be clear and certain.

- Contract intended to waive implied warranties written into the sale by law should be clear and certain on that point. Wilson v. Eargle, 98 Ga. App. 241, 105 S.E.2d 474 (1958) (decided under former Code 1933, § 96-301).

Inconspicuous disclaimer in installment contract could not constitute exclusion of implied warranty of seller that mobile home was fit for ordinary purposes. BCS Fin. Corp. v. Sorbo, 213 Ga. App. 259, 444 S.E.2d 85 (1994).

Because the language "THERE ARE NO ... IMPLIED WARRANTIES WITH RESPECT TO MERCHANTABILITY ... CONCERNING THE VEHICLE, PARTS, OR ACCESSORIES DESCRIBED HEREIN," appeared in bold type and all capital letters in the sales contract, the implied warranty of merchantability was excluded. Gill v. Bluebird Wanderlodge & Holland Motor Homes, F. Supp. 2d (M.D. Ga. Feb. 4, 2004).

Failure to exclude warranty.

- Failure to limit warranty made or to exclude any implied warranties may give rise to liability under either O.C.G.A. §§ 11-2-313 or11-2-314. Jones v. Cranman's Sporting Goods, 142 Ga. App. 838, 237 S.E.2d 402 (1977).

Vendee's inspection of property.

- A vendee of personal property, by making a personal examination and inspection of same before purchase, with view of vendee determining quality and condition of the property, does not thereby waive an implied warranty by vendor that article sold is merchantable, and reasonably suited to use intended; and vendee can maintain a suit for such breach of warranty growing out of a latent defect which could not, in the exercise of due caution, have been detected; this is true notwithstanding the vendor was ignorant of the existence of such defect. Williams v. Ballenger, 87 Ga. App. 255, 73 S.E.2d 509 (1952) (decided under former Code 1933, § 96-301).

Purchaser's acceptance of property bought with full knowledge of its defective condition constitutes a waiver of implied warranty that property is in merchantable condition and suited for purpose intended. Smith v. Northeast Ga. Fair Ass'n, 85 Ga. App. 32, 67 S.E.2d 836 (1951) (decided under former Code 1933, § 96-301).

Acceptance of used goods in exchange for reduced price.

- Acceptance of used equipment in exchange for reduced purchase price does not cause corresponding waiver of implied warranty of fitness for ordinary purposes for which such goods are intended. Solomon Refrigeration, Inc. v. Osburn, 148 Ga. App. 772, 252 S.E.2d 686 (1979).

Warranty limiting liability to repair or replacement of defective goods.

- Seller was not liable for consequential damages resulting from alleged breach of warranty arising from defects in its goods where seller's written warranty specifically limited any liability to repairing or replacing any defective goods and where buyer had notice of the existence of the written warranty but never requested or saw a copy of the written warranty. A-Larms, Inc. v. Alarms Device Mfg. Co., 165 Ga. App. 382, 300 S.E.2d 311 (1983).

Automobile invoice containing language, "I accept the above-described car in its present condition . . ." indicated that the car was sold "as is" and operated to exclude any implied warranties; trial court, therefore, erred in not granting partial summary judgment to seller in regard to the claim for breach of implied warranties. Joseph Charles Parrish, Inc. v. Hill, 173 Ga. App. 97, 325 S.E.2d 595 (1984).

Implied warranty not excluded.

- Paragraph written in same size and color type as all other paragraphs on back of form fails completely to comply with O.C.G.A. § 11-2-316 for excluding the warranties implied by law in O.C.G.A. § 11-2-314. Chrysler Corp. v. Wilson Plumbing Co., 132 Ga. App. 435, 208 S.E.2d 321 (1974).

Evidentiary Issues

Merchantability may concern whether product is dangerous for ordinary use.

- Under merchantability such questions may be considered as whether drain solvent consisting of 95 percent to 99 1/2 percent pure sulphuric acid is unmerchantable and dangerous because it is too potent for ordinary use. Parzini v. Center Chem. Co., 134 Ga. App. 414, 214 S.E.2d 700, rev'd on other grounds, 234 Ga. 868, 218 S.E.2d 580 (1975).

Guarantor of debtor may not raise defense of breach of warranty.

- Whether or not warranty provisions of Uniform Commercial Code apply to lease of machinery, defense of breach of warranty cannot be raised by guarantor of debtor. Hurst v. Stith Equip. Co., 133 Ga. App. 374, 210 S.E.2d 851 (1974).

Negating causal connection between breach and damages.

- Defendant may demonstrate in defense that product was in fact merchantable and fit for purpose intended, or that if there was a deficiency in such regard there was no causal connection between breach and damages sued for, or that some other factor was the sole proximate cause of damage. Firestone Tire & Rubber Co. v. Jackson Transp. Co., 126 Ga. App. 471, 191 S.E.2d 110 (1972).

Mere fact of tire blowout does not demonstrate manufacturer's negligence, nor tend to establish that tire was defective. Firestone Tire & Rubber Co. v. Jackson Transp. Co., 126 Ga. App. 471, 191 S.E.2d 110 (1972).

Evidence of defect at time of sale.

- Where there was a factual question as to whether a defect existed in a re-treaded tire at the time of sale, summary judgment was correctly denied. Jones v. Marcus, 217 Ga. App. 372, 457 S.E.2d 271 (1995).

Trial court erred in granting a manufacturer's summary judgment motion on a buyer's breach of the implied warranty of merchantability claim on a ground not raised in the motion because the manufacturer argued in its motion that the buyer failed to show that the vehicle was defective at the time it was purchased; at the hearing, the manufacturer claimed that the buyer's expert did not establish that the vehicle was unmerchantable under Georgia law. Knight v. Am. Suzuki Motor Corp., 272 Ga. App. 319, 612 S.E.2d 546 (2005).

Because the product defect must exist at the time of sale or lease for an action under warranty to be valid, plaintiff could not recover for breach of the implied warranty of merchantability since plaintiff failed to show that defendant manufacturer was responsible for the truck's brake failure. Jenkins v. GMC, 240 Ga. App. 636, 524 S.E.2d 324 (1999).

Trial court erred in entering summary judgment for a manufacturer on the owners' breach of the implied warranty of merchantability claim as there were triable issues as to the driveability of a car at the time of its delivery where an owner brought the vehicle to the dealership approximately one month after the owner picked it up and had driven only 1,923 miles, and, among other things, there was a recurrant problem with the coolant lamp. Hill v. Mercedes Benz USA, LLC, 274 Ga. App. 826, 619 S.E.2d 353 (2005).

Evidence insufficient to show vehicle not merchantable.

- Because there was no evidence that a vehicle's driveability or usefulness was ever affected by alleged defects, and the purchaser did not allege that the vehicle was ever rendered inoperable or that its capacity to operate as a means of transportation was ever disabled by alleged defects, there was no basis for a decision that the vehicle was not merchantable as guaranteed by the implied warranty pursuant to O.C.G.A. § 11-2-314. Hines v. Mercedes-Benz USA, LLC, 358 F. Supp. 2d 1222 (N.D. Ga. 2005).

Defective product.

- Affidavit of plaintiff's expert stating that a product was defective and unsuitable for its intended purpose did not suggest the alleged defect was patent so as to justify a grant of summary judgment on the issue of an implied warranty. Moore v. Berry, 217 Ga. App. 697, 458 S.E.2d 879 (1995).

Evidence from a veterinarian and farm manager raised an issue of fact regarding whether plaintiff's feed was fit for its intended purpose. Dixon Dairy Farms, Inc. v. Conagra Feed Co., 239 Ga. App. 233, 519 S.E.2d 729 (1999).

Seller of an all-terrain vehicle was entitled to summary judgment on breach of warranty claims because plaintiffs did not present evidence that the vehicle was unfit or unsafe for only one rider and there was no evidence that the seller knew that plaintiffs intended to operate the vehicle with a passenger. Battersby v. Boyer, 241 Ga. App. 115, 526 S.E.2d 159 (1999).

In a consumer's suit against a car dealer for breach of an implied warranty, under 15 U.S.C. § 2310(d)(1) of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq., regarding the sale of a used car which the dealer's salesman falsely represented had not been in a wreck, it was not error for the trial court to grant a directed verdict to the dealer because the consumer did not show the vehicle was not merchantable, under O.C.G.A. § 11-2-314(1). Mitchell v. Backus Cadillac-Pontiac, Inc., 274 Ga. App. 330, 618 S.E.2d 87 (2005).

Defendant's compliance with plaintiff's specifications did not eliminate the defendant's duty to supply merchantable pallets; as there were genuine issues of material fact regarding plaintiff's claim for breach of the implied warranty of merchantability, summary judgment was inappropriate. Plaintiff's expert testimony indicated that many pallet manufacturers were aware of mold issues caused by surface moisture on green heat-treated wood and, as a result, were drying pallets used for export, however, neither the pallet manufacturing standards nor the heat-treatment standards required any specific moisture content; this conflicting evidence raised a question of fact as to whether pallets with high moisture content were defective and unfit for shipping products overseas. Kraft Reinsurance Ir., Ltd. v. Pallets Acquisitions, LLC, F. Supp. 2d (N.D. Ga. Sept. 30, 2011).

Sale of horse.

- No breach of implied warranty could be shown after undisputed evidence demonstrated that the sellers' representation at the time of sale that a horse would be a good show horse was true. Sheffield v. Darby, 244 Ga. App. 437, 535 S.E.2d 776 (2000).

Privity

Law as to liability under a warranty requires privity. Stewart v. Gainesville Glass Co., 131 Ga. App. 747, 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578, 212 S.E.2d 377 (1975).

Plaintiff must be purchaser.

- For plaintiff to maintain action against manufacturer based on implied warranties, plaintiff must be purchaser either directly from manufacturer or from some other person such as a wholesaler or retailer. Whitaker v. Harvell-Kilgore Corp., 418 F.2d 1010 (5th Cir. 1969); Lamb v. Georgia-Pacific Corp., 194 Ga. App. 848, 392 S.E.2d 307 (1990); Cobb County Sch. Dist. v. MAT Factory, Inc., 215 Ga. App. 697, 452 S.E.2d 140 (1994).

Implied warranty that goods are merchantable clearly arises out of contract of sale of goods, so it can only run to buyer who is in privity of contract with seller. Chaffin v. Atlanta Coca-Cola Bottling Co., 127 Ga. App. 619, 194 S.E.2d 513 (1972).

Although a warranty of merchantability was implied in any sale of goods under O.C.G.A. § 11-2-314, the warranty only ran to a buyer in privity of contract with the seller and did not pass to a second or subsequent purchaser; thus, the buyers who were not placed on the title and title transferees had no cause of action against the seller under Georgia law under O.C.G.A. § 11-2-106(1) for breach of implied warranties because of their lack of privity as original purchasers. Gill v. Blue Bird Body Co., F.3d (11th Cir. June 17, 2005).

Legal transaction conducted in name of corporate entity.

- Motor home seller's renewed motion for judgment as a matter of law was denied because the buyers presented sufficient evidence to support jury verdict in their favor as to state law breach of implied warranty claim; the buyers presented evidence showing that they were the real buyers of the motor home even though the legal transaction was done in the name of a corporate entity; thus, the seller could not challenge the buyers' standing to assert breach of warranty claims because it assured the buyers that they were covered under the motor home's warranty and that the warranty was being honored. Gill v. Bluebird Body Co., F. Supp. 2d (M.D. Ga. Jan. 21, 2005).

Under Uniform Commercial Code, no implied warranty runs from manufacturer to one not purchasing directly from it. Lashley v. Ford Motor Co., 359 F. Supp. 363 (M.D. Ga. 1972), aff'd, 480 F.2d 158 (5th Cir.), cert. denied, 414 U.S. 1072, 94 S. Ct. 585, 38 L. Ed. 2d 478 (1973).

In a products liability diversity action brought on the theory of breach of implied warranty of merchantability, Georgia procedural law, which looked to the lex loci delicti, controlled the claim. Since the injury took place in Georgia, Georgia substantive law, which required privity, was applied. The plaintiff, who was an employee of the purchaser of the product, failed to satisfy this privity requirement. Morgan v. Mar-Bel, Inc., 614 F. Supp. 438 (N.D. Ga. 1985).

Lack of privity between manufacturer and ultimate consumer.

- Ordinarily under O.C.G.A. § 11-2-314 there is no implied warranty existing between a manufacturer and an ultimate consumer due to the fact that no privity of contract exists between the two. Chrysler Corp. v. Wilson Plumbing Co., 132 Ga. App. 435, 208 S.E.2d 321 (1974).

Purchaser did not have a claim for breach of implied warranty against the manufacturers of component parts of the purchaser's recreational vehicle because there was no privity between the manufacturers and the purchaser. Monticello v. Winnebago Indus., 369 F. Supp. 2d 1350 (N.D. Ga. 2005).

Privity between manufacturer and ultimate consumer.

- Because the plaintiff established privity with respect to an express warranty claim against a drug manufacturer based upon affirmations of fact or promises to the decedent, the plaintiff also could bring claims for the implied warranties of merchantability and fitness for a particular purpose. Lee v. Mylan Inc., 806 F. Supp. 2d 1320 (M.D. Ga. Apr. 15, 2011).

Warranty issued through dealer as part of sale.

- Although in Georgia privity is required in order to impose liability under the theory of express or implied warranty, where an automobile manufacturer, through its authorized dealer issues to a purchaser of one of its automobiles from such dealer, admittedly as a part of the sale, a warranty by the manufacturer running to the purchaser, privity exists and O.C.G.A. § 11-2-314 becomes operative. Jones v. Cranman's Sporting Goods, 142 Ga. App. 838, 237 S.E.2d 402 (1977); Chrysler Corp. v. Wilson Plumbing Co., 132 Ga. App. 435, 208 S.E.2d 321 (1974).

Ordinarily, there is no implied warranty existing between manufacturer and purchaser of automobile when there is no privity between the two, yet where an automobile manufacturer, through its authorized dealer, issues to a purchaser a warranty by the manufacturer to said purchaser, the implied warranty statute becomes operative. Ford Motor Co. v. Lee, 137 Ga. App. 486, 224 S.E.2d 168, aff'd in part and rev'd in part on other grounds, 237 Ga. 554, 229 S.E.2d 379 (1976).

Dealer's warranty not binding on manufacturer.

- Absent a showing of a de facto principal/agent relationship between an automobile manufacturer and its authorized dealer, a warranty made by the dealer for repair work done on a used vehicle would not extend any responsibility to the manufacturer. Lauria v. Ford Motor Co., 169 Ga. App. 203, 312 S.E.2d 190 (1983).

No privity meant no duty to warn.

- Claim, based on warranty law, that a hospital had a duty to warn regarding the effects of discontinuing prescription drug use was meritless since the hospital neither manufactured nor prescribed the drug. Presto v. Charter Peachford Behavioral Health Sys., 229 Ga. App. 576, 494 S.E.2d 377 (1997).

Damages

Loss of expected profits.

- Where there is evidence of defect in goods which renders them unfit for ordinary purposes for which such goods are used, vendor may be held liable under O.C.G.A. § 11-2-314. However, loss of expected profits cannot be recovered except where evidence of such loss can be shown with reasonable certainty. Farmers Mut. Exch. of Baxley, Inc. v. Dixon, 146 Ga. App. 663, 247 S.E.2d 124 (1978).

Emotional distress.

- Summary judgment, pursuant to O.C.G.A. § 9-11-56(c), to a restaurant was properly granted by a trial court in an action by a restaurant patron, alleging emotional distress when the patron discovered two blood spots on the french fry container, fearing that the patron would contract HIV or hepatitis, because the patron failed to provide evidence of more than the patron's "fear" of exposure to the diseases; accordingly, the patron's claims for negligence, negligence per se, and breach of the implied warranty of merchantability, under O.C.G.A. § 51-1-23 and O.C.G.A. § 11-2-314, failed due to the patron's failure to meet the damages requirement. Wilson v. J & L Melton, Inc., 270 Ga. App. 1, 606 S.E.2d 47 (2004).

RESEARCH REFERENCES

Am. Jur. 2d.

- 15A Am. Jur. 2d, Commercial Code, § 14. 63 Am. Jur. 2d, Products Liability, § 705 et seq. 67A Am. Jur. 2d, Sales, §§ 747-760.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, §§ 2:234, 2:260. 20A Am. Jur. Pleading and Practice Forms, Products Liability, § 57.

Implied Warranty of Merchantability, 26 POF2d 1.

C.J.S.

- 77A C.J.S., Sales, § 254 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-314.

ALR.

- Liability of seller of article not inherently dangerous for personal injuries to the buyer, due to the defective or dangerous condition of the article, 13 A.L.R. 1176; 74 A.L.R. 343; 168 A.L.R. 1054.

Warranties and conditions upon sale of seeds, nursery stock, etc., 16 A.L.R. 859; 32 A.L.R. 1241; 62 A.L.R. 451; 117 A.L.R. 470; 168 A.L.R. 581.

Right of dealer against his vendor in case of breach of warranty as to article purchased for resale and resold, 22 A.L.R. 133; 64 A.L.R. 883.

Implied warranty upon retail sale of garment for personal wear, 27 A.L.R. 1507.

Loss of profits as elements of damages for fraud of seller, as to quality of goods purchased for resale, 28 A.L.R. 354.

Seller's duty to ascertain at his peril that articles of food conform to food regulations, 28 A.L.R. 1385.

Express or implied warranty on sale for accommodation of buyer, 32 A.L.R. 1150; 59 A.L.R. 1541.

Express or implied warranty of quality, condition, or fitness of automobile or truck sold by retail dealer, 34 A.L.R. 535; 43 A.L.R. 648.

Warranty or condition as to kind or quality implied by sale under trade term which by use has become generic, 35 A.L.R. 249.

Express or implied warranty of quality, condition, or fitness of automobile or truck sold by retail dealer, 43 A.L.R. 648.

Implied warranty or condition as to quality of timber or lumber, 52 A.L.R. 1536.

Implied warranty of fitness on sale of article by trademark, tradename, or other particular description, 59 A.L.R. 1180; 90 A.L.R. 410.

Implied warranty of strength or fitness of chain, cable, or wire, 59 A.L.R. 1235.

Express or implied warranty on sale for accommodation, 59 A.L.R. 1541.

Construction and effect of express or implied warranty on sale of an article intended for use as an explosive, 62 A.L.R. 1510.

Right of dealer against his vendor in case of breach of warranty as to article purchased for resale or resold, 64 A.L.R. 883.

Implied warranty by other than packer, of fitness of goods sold in sealed cans, 90 A.L.R. 1269; 142 A.L.R. 1434.

Implied warranty of quality, condition, or fitness on sale of "job lot," "leftovers," and the like, 103 A.L.R. 1347.

Presumption of negligence from foreign substance in food, 105 A.L.R. 1039.

Liability of manufacturer or packer of defective article for injury to person or property of ultimate consumer who purchased from middleman, 105 A.L.R. 1502; 111 A.L.R. 1239; 140 A.L.R. 191; 142 A.L.R. 1490.

Liability for injury or death from refrigerating machinery or apparatus, 117 A.L.R. 1425.

Joinder of manufacturer or packer and retailer or other middleman as defendants in action for injury to person or damage to property of purchaser or consumer of defective article, 119 A.L.R. 1356.

Infected or tainted condition of milk or other food, or contamination in water, and its causation of the sickness of the consumer, as inferable from such sickness, 130 A.L.R. 616.

Implied warranty by retailer of cosmetics, 131 A.L.R. 123.

Warranty of title by seller in conditional sale contract, 132 A.L.R. 338.

Construction and application of provision in conditional sale contract regarding implied warranties, 139 A.L.R. 1276.

Implied warranty, by other than packer, of fitness of goods sold in sealed cans, 142 A.L.R. 1434.

Implied warranty of reasonable fitness of food for human consumption as breached by substance natural to the original product and not removed in processing, 143 A.L.R. 1421.

Implied warranty of quality, condition, or fitness on sale of secondhand article, 151 A.L.R. 446.

Manufacturer's liability for injury or damage as affected by his test, or by his failure to test, for defects, 156 A.L.R. 479.

Law of sales and liability in respect thereof as applied to transactions in self-service stores, 163 A.L.R. 238.

Intervening purchaser's knowledge of defects in or danger of article, or failure to inspect therefor, as affecting liability of manufacturer or dealer for personal injury or property damage to subsequent purchaser or other third person, 164 A.L.R. 371.

Implied warranty of quality, fitness, or condition as affected by buyer's inspection of, or opportunity to inspect, goods, 168 A.L.R. 389.

Liability of seller of article not inherently dangerous for personal injuries due to the defective or dangerous condition of the article, 168 A.L.R. 1054.

Implied warranty of fitness by one serving food, 7 A.L.R.2d 1027, 87 A.L.R.4th 804, 90 A.L.R.4th 12.

Recovery by contractor or artisan, suing for breach of warranty, of damages for loss of good will occasioned by use in his business of unfit materials, 28 A.L.R.2d 591.

Measure and elements of recovery of buyer rescinding sale of domestic animal for seller's breach of warranty, 35 A.L.R.2d 1273.

Form and substance of notice which buyer of goods must give in order to recover damages for seller's breach of warranty, 53 A.L.R.2d 270.

Implied warranty of fitness on sale of livestock, 53 A.L.R.2d 892.

Size and kind of trees contemplated by contracts or deeds in relation to standing timber, 72 A.L.R.2d 727.

What law governs liability of manufacturer or seller for injury caused by product sold, 76 A.L.R.2d 130.

Liability of manufacturer or seller for injury caused by food or food product sold, 77 A.L.R.2d 7.

Liability of manufacturer or seller for injury caused by beverage sold, 77 A.L.R.2d 215.

Liability of manufacturer or seller for injury caused by automobile or other vehicle, aircraft, boat, or their parts, supplies, or equipment, 78 A.L.R.2d 460; 81 A.L.R.3d 318; 97 A.L.R.3d 627; 1 A.L.R.4th 411; 3 A.L.R.4th 489; 5 A.L.R.4th 483.

Liability of manufacturer or seller for injury caused by industrial, business, or farm machinery, tools, equipment, or materials, 78 A.L.R.2d 594; 2 A.L.R.4th 262.

Liability of manufacturer or seller for injury caused by paint, cement, lumber, building supplies, ladders, small tools, and like products, 78 A.L.R.2d 696; 84 A.L.R.3d 877.

Liability of manufacturer or seller for injury caused by toys, games, athletic or sports equipment, or like products, 78 A.L.R.2d 738; 95 A.L.R.3d 390.

Liability of manufacturer or seller for injury caused by firearms, explosives, and flammables, 80 A.L.R.2d 488; 94 A.L.R.3d 291; 15 A.L.R.4th 909; 18 A.L.R.4th 206.

Liability of auctioneer or clerk to buyer as to title, condition, or quality of property sold, 80 A.L.R.2d 1237.

Liability of manufacturer or seller for injury caused by household and domestic machinery, appliances, furnishings, and equipment, 80 A.L.R.2d 598; 89 A.L.R.3d 210; 93 A.L.R.3d 99; 1 A.L.R.4th 748.

Liability of manufacturer or seller for injury caused by clothing, shoes, combs, and similar products, 80 A.L.R.2d 702.

Liability of auctioneer or clerk to buyer as to title, condition, or quality of property sold, 80 A.L.R.2d 1237.

Liability of manufacturer or seller of product sold in container or package for injury caused by container or packaging, 81 A.L.R.2d 229; 36 A.L.R.4th 419.

Liability of manufacturer or seller of container (bottle, barrel, drum, tank, etc.) or other packaging material for injury caused thereby, 81 A.L.R.2d 350; 36 A.L.R.4th 419.

Products liability: manufacturer's responsibility for defective component supplied by another and incorporated in product, 3 A.L.R.3d 1016.

Contributory negligence or assumption of risk as defense to action for personal injury, death, or property damage resulting from alleged breach of implied warranty, 4 A.L.R.3d 501.

Statute of limitations: when cause of action arises on action against manufacturer or seller of product causing injury or death, 4 A.L.R.3d 821.

Seller's duty to test or inspect as affecting his liability for product-caused injury, 6 A.L.R.3d 12.

Manufacturer's duty to test or inspect as affecting his liability for product-caused injury, 6 A.L.R.3d 91.

Liability for warranties and representations in connection with the sale of air-conditioning equipment, 15 A.L.R.3d 1207.

Products liability: right of manufacturer or seller to contribution or indemnity from user of product causing injury or damage to third person, and vice versa, 28 A.L.R.3d 943.

Products liability: extension of strict liability in tort to permit recovery by a third person who was neither a purchaser nor user of product, 33 A.L.R.3d 415.

Liability of manufacturer, seller, or distributor of motor vehicle for defect which merely enhances injury from accident otherwise caused, 42 A.L.R.3d 560; 96 A.L.R.3d 900.

Application of warranty provisions of Uniform Commercial Code to bailments, 48 A.L.R.3d 668.

Liability for injury or death of pallbearer, 48 A.L.R.3d 1280.

Necessity and propriety of instructing on alternative theories of negligence or breach of warranty, where instruction on strict liability in tort is given in products liability case, 52 A.L.R.3d 101.

Failure to warn as basis of liability under doctrine of strict liability in tort, 53 A.L.R.3d 239.

Products liability: strict liability in tort where injury results from allergenic (side-effect) reaction to product, 53 A.L.R.3d 298.

Strict liability in tort: liability of seller of used product, 53 A.L.R.3d 337.

Liability of hospital or medical practitioner under doctrine of strict liability in tort, or breach of warranty, for harm caused by drug, medical instrument, or similar device used in treating patient, 54 A.L.R.3d 258.

Products liability: product as unreasonably dangerous or unsafe under doctrine of strict liability in tort, 54 A.L.R.3d 352.

Liability of water supplier for damages resulting from furnishing impure water, 54 A.L.R.3d 936.

Products liability: proof, under strict tort liability doctrine, that defect was present when product left hands of defendant, 54 A.L.R.3d 1079.

Liability of builder or subcontractor for insufficiency of building resulting from latent defects in materials used, 61 A.L.R.3d 792.

Contracts for artificial insemination of cattle, 61 A.L.R.3d 811.

Liability of installer or maintenance company for injury caused by door of automatic passenger elevator, 64 A.L.R.3d 1005.

Promises or attempts by seller to repair goods as tolling statute of limitations for breach of warranty, 68 A.L.R.3d 1277.

Admissibility of evidence of subsequent repairs or other remedial measures in products liability cases, 74 A.L.R.3d 1001, 38 A.L.R.4th 583, 64 A.L.R.5th 119.

Statements on container that enclosed toy, game, sports equipment, or the like, is safe as affecting manufacturer's liability for injury caused by product sold, 74 A.L.R.3d 1298.

What constitutes a contract for sale under Uniform Commercial Code § 2-314, 78 A.L.R.3d 696.

Products liability: liability for injury or death allegedly caused by defective tire, 81 A.L.R.3d 318.

Products liability: liability for injury or death allegedly caused by defect in snowmobile or other recreational-purpose vehicle, 81 A.L.R.3d 394; 66 A.L.R.4th 622.

Products liability: liability for injury or death allegedly caused by defect in mobile home or trailer, 81 A.L.R.3d 421.

What are "merchantable" goods within meaning of UCC § 2-314 dealing with implied warranty of merchantability, 83 A.L.R.3d 694.

Liability of manufacturer, seller, or installer for personal injury caused by door glass, 84 A.L.R.3d 877.

Products liability: drain cleaners, 85 A.L.R.3d 727.

Liability of manufacturer or seller for personal injury or property damage caused by television set, 89 A.L.R.3d 210.

Practices forbidden by state deceptive trade practice and consumer protection acts, 89 A.L.R.3d 449.

Products liability: what statute of limitations governs actions based on strict liability in tort, 91 A.L.R.3d 455.

Who is "merchant" under UCC § 2-314(1) dealing with implied warranties of merchantability, 91 A.L.R.3d 876.

Products liability: stoves, 93 A.L.R.3d 99.

Products liability: toys and games, 95 A.L.R.3d 390.

Farmers as "merchants" within provisions of UCC Article 2, dealing with sales, 95 A.L.R.3d 484.

Products liability: forklift trucks, 95 A.L.R.3d 541.

Products liability: duty of manufacturer to equip product with safety device to protect against patent or obvious danger, 95 A.L.R.3d 1066.

Products liability: modern cases determining whether product is defectively designed, 96 A.L.R.3d 22.

Products liability: defective vehicular gasoline tanks, 96 A.L.R.3d 265.

Liability of packer, foodstore, or restaurant for causing trichinosis, 96 A.L.R.3d 451.

Products liability: personal injury or death allegedly caused by defect in aircraft or its parts, supplies, or equipment, 97 A.L.R.3d 627.

Products liability: personal injury or death allegedly caused by defect in motorcycle or its parts, supplies, or equipment, 98 A.L.R.3d 317.

Products liability: liability of manufacturer or seller for injury or death caused by defect in boat or its parts, supplies, or equipment, 1 A.L.R.4th 411.

Products liability: defective heating equipment, 1 A.L.R.4th 748.

Products liability: industrial accidents involving conveyor belts or systems, 2 A.L.R.4th 262.

Construction and effect of new motor vehicle warranty limiting manufacturer's liability to repair or replacement of defective parts, 2 A.L.R.4th 576.

Products liability: Diethylstilbestrol (DES), 2 A.L.R.4th 1091.

Liability of manufacturer or seller of snowthrower for injuries to user, 2 A.L.R.4th 1284.

Products liability: defective vehicular windows, 3 A.L.R.4th 489.

Products liability: farm machinery, 4 A.L.R.4th 13.

Products liability: glue and other adhesive products, 7 A.L.R.4th 155.

Products liability: elevators, 7 A.L.R.4th 852.

Products liability: stud guns, staple guns, or parts thereof, 8 A.L.R.4th 70.

Products liability: transformer and other electrical equipment, 10 A.L.R.4th 854.

Products liability: fertilizers, insecticides, pesticides, fungicides, weedkillers, and the like, or articles used in application thereof, 12 A.L.R.4th 462.

Products liability: cranes and other lifting apparatuses, 13 A.L.R.4th 476.

Extent of liability of seller of livestock infected with communicable disease, 14 A.L.R.4th 1096.

Products liability: cement and concrete, 15 A.L.R.4th 1186.

Products liability: tire rims and wheels, 16 A.L.R.4th 137.

Products liability: firefighting equipment, 19 A.L.R.4th 326.

Liability of hospital, physician, or other individual medical practitioner for injury or death resulting from blood transfusion, 20 A.L.R.4th 136.

Liability of blood supplier or donor for injury or death resulting from blood transfusion, 24 A.L.R.4th 508.

Products liability: animal feed or medicines, 29 A.L.R.4th 1045.

Products liability: stud guns, staple guns, or parts thereof, 33 A.L.R.4th 1189.

Products liability: household appliances relating to cleaning, washing, personal care, and water supply, quality, and disposal, 34 A.L.R.4th 95.

Products liability: household equipment relating to storage, preparation, cooking, and disposal of food, 35 A.L.R.4th 663.

Products liability: home and office furnishings, 36 A.L.R.4th 170.

Computer sales and leases: breach of warranty, misrepresentation, or failure of consideration as defense or ground for affirmative relief, 37 A.L.R.4th 110.

Products liability: personal soap, 54 A.L.R.4th 574.

Liability of successor corporation for punitive damages for injury caused by predecessor's product, 55 A.L.R.4th 166.

Products liability: sufficiency of evidence to support product misuse defense in actions concerning lawnmowers, 55 A.L.R.4th 1062.

Products liability: toxic shock syndrome, 59 A.L.R.4th 50.

Products liability: sufficiency of evidence to support product misuse defense in actions concerning agricultural implements and equipment, 60 A.L.R.4th 678.

Products liability: electricity, 60 A.L.R.4th 732.

Products liability: building and construction lumber, 61 A.L.R.4th 121.

Liability of manufacturer of oral live polio (Sabin) vaccine for injury or death from its administration, 66 A.L.R.4th 83.

Liability for injury incurred in operation of power golf cart, 66 A.L.R.4th 622.

Products liability: industrial refrigerator equipment, 72 A.L.R.4th 90.

Products liability: scaffolds and scaffolding equipment, 74 A.L.R.4th 904.

Products liability: tractors, 75 A.L.R.4th 312.

Products liability: bicycles and accessories, 76 A.L.R.4th 117.

Products liability: exercise and related equipment, 76 A.L.R.4th 145.

Products liability: trampolines and similar devices, 76 A.L.R.4th 171.

Products liability: competitive sports equipment, 76 A.L.R.4th 201.

Products liability: skiing equipment, 76 A.L.R.4th 256.

Products liability: general recreational equipment, 77 A.L.R.4th 1121.

Products liability: mechanical amusement rides and devices, 77 A.L.R.4th 1152.

Products liability: lubricating products and systems, 80 A.L.R.4th 972.

Liability for injury or death allegedly caused by spoilage or contamination of beverage, 87 A.L.R.4th 804.

Liability for injury or death allegedly caused by foreign substance in beverage, 90 A.L.R.4th 12.

Liability for injury or death allegedly caused by foreign object in food or food product, 1 A.L.R.5th 1.

Liability for injury or death allegedly caused by spoilage, contamination, or other deleterious condition of food or food product, 2 A.L.R.5th 1.

Liability for injury or death allegedly caused by food product containing object related to, but not intended to be present in, product, 2 A.L.R.5th 189.

Products liability: roofs and roofing materials, 3 A.L.R.5th 851.

Products liability: prefabricated buildings, 4 A.L.R.5th 667.

Purchaser's disbelief in, or nonreliance upon, express warranties made by seller in contract for sale of business as precluding action for breach of express warranties, 7 A.L.R.5th 841.

Products liability: application of strict liability doctrine to seller of used product, 9 A.L.R.5th 1.

Products liability: cigarettes and other tobacco products, 36 A.L.R.5th 541.

Validity, construction, and application of computer software licensing agreements, 38 A.L.R.5th 1.

Products liability: theatrical equipment and props, 42 A.L.R.5th 699.

Causes of action governed by limitations period in UCC § 2-725, 49 A.L.R.5th 1.

Breach of warranty in sale, installation, repair, design, or inspection of septic or sewage disposal systems, 50 A.L.R.5th 417.

Liability of manufacturer or seller for injury or death allegedly caused by use of contraceptive, 54 A.L.R.5th 1.

Construction and application of learned-intermediary doctrine, 57 A.L.R.5th 1.

Products liability: computer hardware and software, 59 A.L.R.5th 461.

Products liability: liability for injury or death allegedly caused by defect in mobile home or trailer, 61 A.L.R.5th 473.

Products liability: swimming pools and accessories, 65 A.L.R.5th 105.

Products liability: paints, stains, and similar products, 69 A.L.R.5th 137.

Products liability: helicopters, 72 A.L.R.5th 299.

Products liability: consumer expectations test, 73 A.L.R.5th 75.

Products liability: ladders, 81 A.L.R.5th 245.

Products liability: personal injury or death allegedly caused by defect in motorcycle or its parts or equipment, 14 A.L.R.7th 7.

11-2-315. Implied warranty: fitness for particular purpose.

Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, there is unless excluded or modified under Code Section 11-2-316 an implied warranty that the goods shall be fit for such purpose.

(Code 1933, § 109A-2 - 315, enacted by Ga. L. 1962, p. 156, § 1.)

Cross references.

- Nonapplicability of implied warranties to blood transfusions, organ transplants, etc., §§ 11-2-316,51-1-28.

Law reviews.

- For article discussing manufacturer's warranty of merchantability and fitness under former § 96-307, see 10 Mercer L. Rev. 272 (1959). For article, "Sales Warranties Under Georgia's Uniform Commercial Code," see 1 Ga. St. B.J. 191 (1964). For article, "Georgia's New Statutory Liability for Manufacturers: An Inadequate Legislative Response," see 2 Ga. L. Rev 538 (1968). For article discussing aspects of third party practice (impleader) under the Georgia Civil Practice Act, see 4 Ga. St. B.J. 355 (1968). For article, "Consumer Protection Against Sellers Misrepresentations," see 20 Mercer L. Rev. 414 (1969). For article discussing interpretation of warranties under the Uniform Commercial Code, see 4 Ga. L. Rev. 469 (1970). For article discussing the implied warranty of fitness for a particular purpose, see 9 Ga. L. Rev. 149 (1974). For article, "Products Liability Law in Georgia: Is Change Coming?" see 10 Ga. St. B.J. 353 (1974). For article explaining the Unfair Trade Practices and Consumer Protection Act, proposed in Georgia in 1973, see 10 Ga. St. B.J. 409 (1974). For article discussing modification of consumer warranty provisions of the U.C.C. by the Magnuson-Moss Act (15 U.S.C. §§ 2301-2312) with special emphasis on attempted disclaimers, see 27 Mercer L. Rev. 1111 (1976). For article, "Buyer's Right of Rejection: A Quarter Century Under the Uniform Commercial Code, and Recent International Developments," see 13 Ga. L. Rev. 805 (1979). For article discussing applicability of implied warranty provisions of the Uniform Commercial Code to construction contracts, see 28 Emory L.J. 335 (1979). For article discussing the applicability of warranty provisions under the Uniform Commercial Code to domestic solar energy devices, see 30 Mercer L. Rev. 547 (1979). For article surveying recent judicial developments in commercial law, see 31 Mercer L. Rev. 13 (1979). For annual survey of law of contracts, see 38 Mercer L. Rev. 107 (1986). For article, "Contractual Limitations of Remedy and the Failure of Essential Purpose Doctrine," see 26 Ga. St. B.J. 113 (1990). For article, "Products Liability Law in Georgia Including Recent Developments," see 43 Mercer L. Rev. 27 (1991). For note discussing implied warranties in the sale of second-hand goods, see 17 Mercer L. Rev. 455 (1966). For note discussing products liability actions based on breach of implied warranty under the Uniform Commercial Code, see 4 Ga. L. Rev. 164 (1969). For note, "Allowance of Punitive Damages in Products Liability Claims," see 6 Ga. L. Rev. 613 (1972). For note, "Buyer's Right to Revoke Acceptance Against the Automobile Manufacturer for Breach of its Continuing Warranty of Repair or Replacement," see 7 Ga. L. Rev. 711 (1973). For note, "Does the National Childhood Vaccine Injury Compensation Act Really Prohibit Design Defect Claims?: Examining Federal Preemption in Light of American Home Products Corp. v. Ferrari," see 26 Ga. St. U.L. Rev. 617 (2010). For comment on Felder v. Neeves, 36 Ga. App. 41, 135 S.E. 219 (1926), see 1 Ga. L. Rev. No. 1 p. 51 (1927). For comment on Revlon, Inc. v. Murdock, 103 Ga. App. 842, 120 S.E.2d 912 (1961), see 24 Ga. B.J. 271 (1961). For comment on Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975), see 27 Mercer L. Rev. 347 (1975).

JUDICIAL DECISIONS

General Consideration

Editor's notes.

- In light of the similarity between the provisions, decisions under former Code 1933, § 96-301 are included in the annotations for this section.

Implied warranty is raised by statute, while express warranty is by contract. Stewart v. Gainesville Glass Co., 131 Ga. App. 747, 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578, 212 S.E.2d 377 (1975).

What is warranted.

- Warranty of fitness warrants that goods sold are suitable for special purpose of buyer. Multivision N.W., Inc. v. Jerrold Elecs. Corp., 356 F. Supp. 207 (N.D. Ga. 1972).

Buying goods for general resale is not a "particular purpose" within meaning of O.C.G.A. § 11-2-315. Bruce v. Calhoun First Nat'l Bank, 134 Ga. App. 790, 216 S.E.2d 622 (1975).

Requirements for creation of warranty of fitness.

- In order to create implied warranty of fitness for particular purpose, O.C.G.A. § 11-2-315 requires that seller have reason to know of particular purpose for which goods are required and that buyer rely on seller's skill or judgment in selecting or furnishing suitable goods. Bruce v. Calhoun First Nat'l Bank, 134 Ga. App. 790, 216 S.E.2d 622 (1975).

Applicability to latent defects.

- Implied warranty is a guaranty against loss only from latent defects. Jones v. Knightstown Body Co., 52 Ga. App. 667, 184 S.E. 427 (1936); Smith v. Northeast Ga. Fair Ass'n, 85 Ga. App. 32, 67 S.E.2d 836 (1951).

Law of implied warranty will not avail against patent defects, nor against latent defects which are either disclosed or are discoverable by exercise of caution on part of purchaser. Jones v. Knightstown Body Co., 52 Ga. App. 667, 184 S.E. 427 (1936); Wilkinson v. Rich's, Inc., 77 Ga. App. 239, 48 S.E.2d 552 (1948); Smith v. Northeast Ga. Fair Ass'n, 85 Ga. App. 32, 67 S.E.2d 836 (1951).

While plaintiff's argument that no warranty existed because a buyer inspected the blocks buying and used the buyer's own judgment in selecting purchases was relevant to an implied warranty of fitness for a particular purpose, it was not applicable to the warranty of merchantability at issue. Willis Mining, Inc. v. Noggle, 235 Ga. App. 747, 509 S.E.2d 731 (1998).

Parties may expand or limit warranty.

- Parties may expressly agree on provisions of contract and extent of warranty, which may be more limited or more extensive than implied warranty of law. Jones v. Knightstown Body Co., 52 Ga. App. 667, 184 S.E. 427 (1936).

Waiver of warranty.

- Purchaser's acceptance of property bought with full knowledge of its defective condition constitutes waiver of implied warranty that property is in merchantable condition and suited for the purpose intended. Smith v. Northeast Ga. Fair Ass'n, 85 Ga. App. 32, 67 S.E.2d 836 (1951).

Where property is brought under implied warranty that it is reasonably suited to use intended, an acceptance by purchaser waives all defects discovered by the purchaser, or which, by the exercise of ordinary care and prudence, the purchaser might have discovered before delivery. Jones v. Knightstown Body Co., 52 Ga. App. 667, 184 S.E. 427 (1936); Wilkinson v. Rich's, Inc., 77 Ga. App. 239, 48 S.E.2d 552 (1948).

Implied warranties inapplicable to settlement agreement.

- Seller sued a buyer who rejected the seller's goods; the parties settled. As the parties' agreement was a contract to settle litigation, with any sale of goods merely incidental, the implied warranties of merchantability and fitness, O.C.G.A. §§ 11-2-314 and11-2-315, did not apply to their settlement agreement. Ole Mexican Foods, Inc. v. Hanson Staple Co., 285 Ga. 288, 676 S.E.2d 169 (2009).

Medical center's furnishing of facility for use in connection with surgery to install a plate device to stabilize plaintiff's spine was a transaction involving "services and labor with an incidental furnishing of equipment and materials" and, as such, the Uniform Commercial Code had no application. McCombs v. Southern Regional Medical Ctr., Inc., 233 Ga. App. 676, 504 S.E.2d 747 (1998).

Pharmaceutical products.

- Patient who died after taking medicine which a pharmaceutical manufacturer gave to the doctor and which the doctor gave to the patient was not entitled to an extension of any implied warranty existing between the manufacturer and the doctor, and the appellate court upheld the trial court's judgment dismissing claims the patient's spouse filed against the manufacturer, alleging breach of express and implied warranties, but reversed the trial court's judgment dismissing the husband's claims against the manufacturer alleging strict liability and negligent failure to warn. Bryant v. Hoffmann-La Roche, Inc., 262 Ga. App. 401, 585 S.E.2d 723 (2003).

Federal law preempted implied warranty provisions.

- Medical Device Amendments, 21 U.S.C. § 360k, preempted state law claims in a products liability case alleging an implied warranty of fitness for a particular purpose under O.C.G.A. § 11-2-315 with respect to a precision spinal cord stimulator medical device. Horn v. Boston Sci. Neuromodulation Corp., F. Supp. 2d (S.D. Ga. Aug. 26, 2011).

Sale of horse.

- No breach of implied warranty could be shown after undisputed evidence demonstrated that the sellers' representation at the time of sale that a horse would be a good show horse was true. Sheffield v. Darby, 244 Ga. App. 437, 535 S.E.2d 776 (2000).

Scented oil burner.

- Trial court did not err in granting a seller's motion for summary judgment in a customer's action seeking to recover damages for injuries the customer sustained when the customer was burned from a ceramic, scented-oil burner and alleging, among other things, that the seller breached the seller's duty of implied warranty of fitness for a particular purpose because there was no evidence that the seller's employees knew that the customer intended to use the product in any way other than its ordinary purpose, burning scented oil; the customer utilized the ceramic burner for the ordinary purpose for which the item was intended, i.e., using the receptacle on the item to hold scented oil over a burning candle, causing the scent to diffuse throughout the customer's home. Rivers v. H. S. Beauty Queen, Inc., 306 Ga. App. 866, 703 S.E.2d 416 (2010).

Pallets.

- It was undisputed that the defendant knew the plaintiff would be using the heat-treated pallets to ship products overseas and it was similarly undisputed that plaintiff specifically requested certain heat-treated pallets and that the pallets supplied by the defendant met these specifications; however, it was also undisputed that the plaintiff did not specify any particular moisture content for the pallets the plaintiff ordered. There was conflicting evidence in the record as to whether the plaintiff requested green or raw wood or whether the defendant decided unilaterally to use green wood; accordingly, as there was a question of fact as to whether the plaintiff relied on the defendant's skill and judgment to supply it with pallets with appropriate moisture content for shipping products overseas in freight containers and whether the defendant failed to do so, summary judgment was inappropriate on the implied warranties claim. Kraft Reinsurance Ir., Ltd. v. Pallets Acquisitions, LLC, F. Supp. 2d (N.D. Ga. Sept. 30, 2011).

Cited in Bell v. Menzies, 110 Ga. App. 436, 138 S.E.2d 731 (1964); Hill Aircraft & Leasing Corp. v. Simon, 122 Ga. App. 524, 177 S.E.2d 803 (1970); Security Dev. & Inv. Co. v. Ben O'Callaghan Co., 125 Ga. App. 526, 188 S.E.2d 238 (1972); Avery v. Aladdin Prods. Div., Nat'l Serv. Indus., Inc., 128 Ga. App. 266, 196 S.E.2d 357 (1973); Smith v. Bruce, 129 Ga. App. 97, 198 S.E.2d 697 (1973); Evershine Prods., Inc. v. Schmitt, 130 Ga. App. 34, 202 S.E.2d 228 (1973); Mays v. Citizens & S. Nat'l Bank, 132 Ga. App. 602, 208 S.E.2d 614 (1974); Parzini v. Center Chem. Co., 134 Ga. App. 414, 214 S.E.2d 700 (1975); Weaver v. Ralston Motor Hotel, Inc., 135 Ga. App. 536, 218 S.E.2d 260 (1975); Key v. Bagen, 136 Ga. App. 373, 221 S.E.2d 234 (1975); Lancaster v. Eberhardt, 141 Ga. App. 534, 233 S.E.2d 880 (1977); Caldwell v. Lord & Taylor, Inc., 142 Ga. App. 137, 235 S.E.2d 546 (1977); Hutchinson Homes, Inc. v. Guerdon Indus., Inc., 143 Ga. App. 664, 239 S.E.2d 553 (1977); Farmers Mut. Exch. of Baxley, Inc. v. Dixon, 146 Ga. App. 663, 247 S.E.2d 124 (1978); Transart Indus., Inc. v. Gaines-American Moulding Corp., 148 Ga. App. 363, 251 S.E.2d 384 (1978); Ramsey Brick Sales Co. v. Outlaw, 152 Ga. App. 37, 262 S.E.2d 227 (1979); Patron Aviation, Inc. v. Teledyne Indus., Inc., 154 Ga. App. 13, 267 S.E.2d 274 (1980); Corbett v. North Fla. Clarklift, Inc., 155 Ga. App. 701, 272 S.E.2d 563 (1980); Rigdon v. Walker Sales & Serv., Inc., 161 Ga. App. 459, 288 S.E.2d 711 (1982); Salome v. First Nat'l Bank, 162 Ga. App. 394, 291 S.E.2d 452 (1982); W.B. Anderson Feed & Poultry Co. v. Georgia Gas Distribs., Inc., 164 Ga. App. 96, 296 S.E.2d 395 (1982); Atlanta Cutlery Corp. v. Queen Cutlery Co., 168 Ga. App. 584, 309 S.E.2d 691 (1983); Alterman Foods, Inc. v. G.C.C. Beverages, Inc., 168 Ga. App. 921, 310 S.E.2d 755 (1983); Citizens Jewelry Co. v. Walker, 178 Ga. App. 897, 345 S.E.2d 106 (1986); Hill v. Jay Pontiac, Inc., 191 Ga. App. 258, 381 S.E.2d 417 (1989); Cobb County Sch. Dist. v. MAT Factory, Inc., 215 Ga. App. 697, 452 S.E.2d 140 (1994); Imex Int'l v. Wires Eng'g, 261 Ga. App. 329, 583 S.E.2d 117 (2003).

Manufacturer's Instructions

Instruction manual accompanying product.

- Under warranty provisions of Uniform Commercial Code where a product is sold which is to be installed by consumer, written instructions that accompany it create implied warranty that it will be fit for ordinary purpose for which it is used and will be safely operable when installed in accordance with such directions. Reddick v. White Consol. Indus., Inc., 295 F. Supp. 243 (S.D. Ga. 1968).

If a manufacturer furnishes instructions as to manner in which product is to be used, consumer is entitled to think that so used it will not injure the consumer and there is implied warranty that goods are fit for that particular use. Reddick v. White Consol. Indus., Inc., 295 F. Supp. 243 (S.D. Ga. 1968).

A manufacturer furnishing instructions for use of product is warranting same for that particular purpose and use, and no other. This is especially true where appliance sold becomes dangerous if used improperly. Reddick v. White Consol. Indus., Inc., 295 F. Supp. 243 (S.D. Ga. 1968).

Exclusion or Modification

Warranty limiting liability to repair or replacement of defective goods.

- Seller was not liable for consequential damages resulting from alleged breach of warranty arising from defects in its goods where seller's written warranty specifically limited any liability to repairing or replacing any defective goods and where buyer had notice of the existence of the written warranty but never requested or saw a copy of the written warranty. A-Larms, Inc. v. Alarms Device Mfg. Co., 165 Ga. App. 382, 300 S.E.2d 311 (1983).

Leases

Applicable to sales and not leases.

- It would appear from a literal reading of O.C.G.A. § 11-2-315 that it was intended to apply only to "sales" and not leases. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975).

Applicable to leases which are analogous to sales.

- Warranty provisions of Uniform Commercial Code are applicable to those chattel leases where transaction in question is analogous to a sale. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975).

Commercial chattel leases.

- Provisions of O.C.G.A. § 11-2-315 are not applicable to all commercial chattel leases. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975).

O.C.G.A. § 11-2-315 is not applicable to commercial chattel leases, and lessor may exculpate liability with a disclaimer clause, as long as the disclaimer is expressed in clear and unambiguous language. Petroziello v. United States Leasing Corp., 176 Ga. App. 858, 338 S.E.2d 63 (1985).

Irrevocable commitment to transfer ownership in future.

- Where owner contracted irrevocably to transfer ownership to another at some time in the future, the transaction was analogous to sale even though in the form of a lease and even though the owner retained title, the implied warranties of O.C.G.A. § 11-2-315 applied. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975).

Four-year lease of vehicle.

- Where a lessee leased a vehicle for four years, title remained with the assignee, and the lessee was required to surrender the car at the expiration of the lease term, there being no option to purchase it, neither the implied warranty provisions nor the exclusion rules therefor of the Uniform Commercial Code applied to the lease agreement. Mark Singleton Buick, Inc. v. Taylor, 194 Ga. App. 630, 391 S.E.2d 435 (1990).

Actions

To bring action against manufacturer, plaintiff must be purchaser.

- For plaintiff to maintain action against manufacturer based on implied warranties, plaintiff must be purchaser either directly from manufacturer or from some other person such as a wholesaler or retailer. Whitaker v. Harvell-Kilgore Corp., 418 F.2d 1010 (5th Cir. 1969).

Privity between manufacturer and ultimate consumer.

- Because the plaintiff established privity with respect to an express warranty claim against a drug manufacturer based upon affirmations of fact or promises to the decedent, the plaintiff also could bring claims for the implied warranties of merchantability and fitness for a particular purpose. Lee v. Mylan Inc., 806 F. Supp. 2d 1320 (M.D. Ga. Apr. 15, 2011).

Lack of privity between the manufacturer and user of exercise machine at a health club precluded the user's implied warranty claim against the manufacturer. Bodymaster Sports Indus., Inc. v. Wimberley, 232 Ga. App. 170, 501 S.E.2d 556 (1998).

Defense of breach of warranty may not be raised by guarantor of debtor.

- Whether or not warranty provisions of Uniform Commercial Code apply to lease of machinery, defense of breach of warranty cannot be raised by guarantor of debtor. Hurst v. Stith Equip. Co., 133 Ga. App. 374, 210 S.E.2d 851 (1974).

Seller's defense.

- Defendant may demonstrate in defense that product was in fact merchantable and fit for purpose intended, or that if there was a deficiency in such regard there was no causal connection between the breach and the damages sued for, or that some other factor was the sole proximate cause of the damage. Firestone Tire & Rubber Co. v. Jackson Transp. Co., 126 Ga. App. 471, 191 S.E.2d 110 (1972).

Mere fact of tire blowout does not demonstrate manufacturer's negligence, nor tend to establish that tire was defective. Firestone Tire & Rubber Co. v. Jackson Transp. Co., 126 Ga. App. 471, 191 S.E.2d 110 (1972).

Distributor of anti-psychotic drug.

- The distributor of an anti-psychotic drug could not be held liable for the suicide of a patient based on warranty claims because it neither manufactured nor prescribed the drug. Presto v. Sandoz Pharmaceuticals Corp., 226 Ga. App. 547, 487 S.E.2d 70 (1997).

"Learned intermediary" doctrine.

- The manufacturer of an anti-psychotic drug could not be held liable for the suicide of a patient under any warranty claim because of the "learned intermediary" doctrine, absent some showing that the product itself was defective. Presto v. Sandoz Pharmaceuticals Corp., 226 Ga. App. 547, 487 S.E.2d 70 (1997).

Plaintiff's breach of warranty claims against a drug manufacturer, to the extent they were based upon failure to provide accurate or sufficient information regarding the use of the drug to the decedent, were barred by the learned intermediary doctrine, but the claims were not barred to the extent they were based upon failure to provide accurate or sufficient information regarding the use of the drug to others. Lee v. Mylan Inc., 806 F. Supp. 2d 1320 (M.D. Ga. Apr. 15, 2011).

Seller's knowledge of use.

- Where there was no evidence that the seller of re-treaded tires for a pick-up truck knew that it would be used in the owner's construction business, the seller was not liable to the owner based on breach of an implied warranty for a particular purpose. Jones v. Marcus, 217 Ga. App. 372, 457 S.E.2d 271 (1995).

Manufacturer's knowledge of use.

- Where it was not shown that plaintiff relied on defendant manufacturer's skill and judgment in selecting the truck, or that, if plaintiff did, defendant knew of the reliance, plaintiff could not establish an implied warranty of fitness for a particular purpose under this section. Jenkins v. GMC, 240 Ga. App. 636, 524 S.E.2d 324 (1999).

RESEARCH REFERENCES

Am. Jur. 2d.

- 38 Am. Jur. 2d, Guaranty, § 10. 63 Am. Jur. 2d, Products Liability, § 723 et seq. 67A Am. Jur. 2d, Sales, §§ 761-790.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:264. 20A Am. Jur. Pleading and Practice Forms, Commercial Code, § 57.

Implied Warranty of Fitness for Particular Purpose, 27 POF2d 243.

Misrepresentations in Sale of Animal, 35 POF2d 607.

Builder-Vendor's Liability to Purchaser of New Dwelling for Breach of Implied Warranty of Fitness or Habitability, 50 POF3d 543.

C.J.S.

- 77A C.J.S., Sales, §§ 252, 253, 258 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-315.

ALR.

- Implied warranty on sale of vessel, 3 A.L.R. 622.

Liability of seller of article not inherently dangerous for personal injuries to the buyer, due to the defective or dangerous condition of the article, 13 A.L.R. 1176; 74 A.L.R. 343; 168 A.L.R. 1054.

Warranties and conditions upon sale of seeds, nursery stock, etc., 16 A.L.R. 859; 32 A.L.R. 1241; 62 A.L.R. 451; 117 A.L.R. 470; 168 A.L.R. 581.

Loss of profits as elements of damages for fraud of seller, as to quality of goods purchased for resale, 28 A.L.R. 354.

Express or implied warranty on sale for accommodation of buyer, 32 A.L.R. 1150; 59 A.L.R. 1541.

Express or implied warranty of quality, condition, or fitness of automobile or truck sold by retailer dealer, 34 A.L.R. 535; 43 A.L.R. 648.

Implied warranty or condition as to quality of timber or lumber, 52 A.L.R. 1536.

Implied warranty of fitness on sale of article by trademark, tradename, or other particular description, 59 A.L.R. 1180; 90 A.L.R. 410.

Implied warranty of strength or fitness of chain, cable, or wire, 59 A.L.R. 1235.

Express or implied warranty on sale for accommodation, 59 A.L.R. 1541.

Construction and effect of express or implied warranty on sale of an article intended for use as an explosive, 62 A.L.R. 1510.

Liability of manufacturer or packer of defective article for injury to person or property of ultimate consumer who purchased from middleman, 105 A.L.R. 1502; 111 A.L.R. 1239; 140 A.L.R. 191; 142 A.L.R. 1490.

Implied warranty by retailer of cosmetics, 131 A.L.R. 123.

Warranty of title by seller in conditional sale contract, 132 A.L.R. 338.

Construction and application of provision in conditional sale contract regarding implied warranties, 139 A.L.R. 1276.

Implied warranty, by other than packer, of fitness of goods sold in sealed cans, 142 A.L.R. 1434.

Implied warranty of reasonable fitness of food for human consumption as breached by substance natural to the original product and not removed in processing, 143 A.L.R. 1421.

Implied warranty of quality, condition, or fitness on sale of secondhand article, 151 A.L.R. 446.

Seller's advertisements as affecting rights of parties to sale of personal property, 158 A.L.R. 1413.

Law of sales and liability in respect thereof as applied to transactions in self-service stores, 163 A.L.R. 238.

Intervening purchaser's knowledge of defects in or danger of article, or failure to inspect therefor, as affecting liability of manufacturer or dealer for personal injury or property damage to subsequent purchaser or other third person, 164 A.L.R. 371.

Assignability of warranty of goods and chattels, 17 A.L.R.2d 1196.

Seller's or manufacturer's liability for injuries as affected by buyer's or user's allergy or unusual susceptibility to injury from article, 26 A.L.R.2d 963.

Recovery by contractor or artisan, suing for breach of warranty, of damages for loss of good will occasioned by use in his business of unfit materials, 28 A.L.R.2d 591.

Measure and elements of recovery of buyer rescinding sale of domestic animal for seller's breach of warranty, 35 A.L.R.2d 1273.

Form and substance of notice which buyer of goods must give in order to recover damages for seller's breach of warranty, 53 A.L.R.2d 270.

Implied warranty of fitness on sale of livestock, 53 A.L.R.2d 892.

What law governs liability of manufacturer or seller for injury caused by product sold, 76 A.L.R.2d 130.

Liability of manufacturer or seller for injury caused by food or food product sold, 77 A.L.R.2d 7.

Liability of manufacturer or seller for injury caused by beverage sold, 77 A.L.R.2d 215.

Liability of manufacturer or seller for injury caused by automobile or other vehicle, aircraft, boat, or their parts, supplies, or equipment, 78 A.L.R.2d 460; 81 A.L.R.3d 318; 97 A.L.R.3d 627; 1 A.L.R.4th 411; 3 A.L.R.4th 489; 5 A.L.R.4th 483.

Liability of manufacturer or seller for injury caused by industrial, business, or farm machinery, tools, equipment, or materials, 78 A.L.R.2d 594; 2 A.L.R.4th 262.

Liability of manufacturer or seller for injury caused by paint, cement, lumber, building supplies, ladders, small tools, and like products, 78 A.L.R.2d 696; 84 A.L.R.3d 877.

Liability of manufacturer or seller for injury caused by toys, games, athletic or sports equipment, or like products, 78 A.L.R.2d 738; 95 A.L.R.3d 390.

Liability of manufacturer or seller for injury caused by firearms, explosives, and flammables, 80 A.L.R.2d 488; 94 A.L.R.3d 291; 15 A.L.R.4th 909; 18 A.L.R.4th 206.

Liability of manufacturer or seller for injury caused by household and domestic machinery, appliances, furnishings, and equipment, 80 A.L.R.2d 598; 89 A.L.R.3d 210; 93 A.L.R.3d 99; 1 A.L.R.4th 748.

Liability of manufacturer or seller for injury caused by clothing, shoes, combs, and similar products, 80 A.L.R.2d 702.

Liability of auctioneer or clerk to buyer as to title, condition, or quality of property sold, 80 A.L.R.2d 1237.

Products liability: manufacturer's responsibility for defective component supplied by another and incorporated in product, 3 A.L.R.3d 1016.

Contributory negligence or assumption of risk as defense to action for personal injury, death, or property damage resulting from alleged breach of implied warranty, 4 A.L.R.3d 501.

Statute of limitations: when cause of action arises on action against manufacturer or seller of product causing injury or death, 4 A.L.R.3d 821.

Seller's duty to test or inspect as affecting his liability for product-caused injury, 6 A.L.R.3d 12.

Products liability: extension of strict liability in tort to permit recovery by a third person who was neither a purchaser nor user of product, 33 A.L.R.3d 415.

Application of warranty provisions of Uniform Commercial Code to bailments, 48 A.L.R.3d 668.

Liability for injury or death of pallbearer, 48 A.L.R.3d 1280.

Liability of hospital or medical practitioner under doctrine of strict liability in tort, or breach of warranty, for harm caused by drug, medical instrument, or similar device used in treating patient, 54 A.L.R.3d 258.

Products liability: product as unreasonably dangerous or unsafe under doctrine of strict liability in tort, 54 A.L.R.3d 352.

Liability of water supplier for damages resulting from furnishing impure water, 54 A.L.R.3d 936.

Products liability: proof, under strict tort liability doctrine, that defect was present when product left hands of defendant, 54 A.L.R.3d 1079.

Liability of builder or subcontractor for insufficiency of building resulting from latent defects in materials used, 61 A.L.R.3d 792.

Contracts for artificial insemination of cattle, 61 A.L.R.3d 811.

Liability of installer or maintenance company for injury caused by door of automatic passenger elevator, 64 A.L.R.3d 1005.

Statements on container that enclosed toy, game, sports equipment, or the like, is safe as affecting manufacturer's liability for injury caused by product sold, 74 A.L.R.3d 1298.

Products liability: liability for injury or death allegedly caused by defective tire, 81 A.L.R.3d 318.

Products liability: liability for injury or death allegedly caused by defect in snowmobile or other recreational-purpose vehicle, 81 A.L.R.3d 394; 66 A.L.R.4th 622.

Products liability: liability for injury or death allegedly caused by defect in mobile home or trailer, 81 A.L.R.3d 421.

Uniform Commercial Code: implied warranty of fitness for particular purpose as including fitness for ordinary use, 83 A.L.R.3d 656.

What constitutes "particular purpose" within meaning of UCC § 2-315 dealing with implied warranty of fitness, 83 A.L.R.3d 669.

Liability of manufacturer, seller, or installer for personal injury caused by door glass, 84 A.L.R.3d 877.

Liability of manufacturer or seller for personal injury or property damage caused by television set, 89 A.L.R.3d 210.

Practices forbidden by state deceptive trade practice and consumer protection acts, 89 A.L.R.3d 449.

Elements and measure of damages for breach of warranty in sale of horse, 91 A.L.R.3d 419.

Products liability: stoves, 93 A.L.R.3d 99.

Products liability: modern cases determining whether product is defectively designed, 96 A.L.R.3d 22.

Products liability: defective vehicular gasoline tanks, 96 A.L.R.3d 265.

Liability of packer, foodstore, or restaurant for causing trichinosis, 96 A.L.R.3d 451.

Products liability: personal injury or death allegedly caused by defect in aircraft or its parts, supplies, or equipment, 97 A.L.R.3d 627.

Products liability: defective heating equipment, 1 A.L.R.4th 748.

Products liability: industrial accidents involving conveyor belts or systems, 2 A.L.R.4th 262.

Construction and effect of new motor vehicle warranty limiting manufacturer's liability to repair or replacement of defective parts, 2 A.L.R.4th 576.

Liability of manufacturer or seller of snowthrower for injuries to user, 2 A.L.R.4th 1284.

Products liability: defective vehicular windows, 3 A.L.R.4th 489.

Products liability: farm machinery, 4 A.L.R.4th 13.

Products liability: glue and other adhesive products, 7 A.L.R.4th 155.

Products liability: elevators, 7 A.L.R.4th 852.

Products liability: stud guns, staple guns, or parts thereof, 8 A.L.R.4th 70; 33 A.L.R.4th 1189.

Products liability: transformer and other electrical equipment, 10 A.L.R.4th 854.

Products liability: fertilizers, insecticides, pesticides, fungicides, weedkillers, and the like, or articles used in application thereof, 12 A.L.R.4th 462.

Products liability: cranes and other lifting apparatuses, 13 A.L.R.4th 476.

Extent of liability of seller of livestock infected with communicable disease, 14 A.L.R.4th 1096.

Products liability: cement and concrete, 15 A.L.R.4th 1186.

Products liability: firefighting equipment, 19 A.L.R.4th 326.

Liability of hospital, physician, or other individual medical practitioner for injury or death resulting from blood transfusion, 20 A.L.R.4th 136.

Liability of blood supplier or donor for injury or death resulting from blood transfusion, 24 A.L.R.4th 508.

Products liability: household appliances relating to cleaning, washing, personal care, and water supply, quality, and disposal, 34 A.L.R.4th 95.

Products liability: household equipment relating to storage, preparation, cooking, and disposal of food, 35 A.L.R.4th 663.

Products liability: home and office furnishings, 36 A.L.R.4th 170.

Computer sales and leases: breach of warranty, misrepresentation, or failure of consideration as defense or ground for affirmative relief, 37 A.L.R.4th 110.

Applicability of warranty of fitness under UCC § 2-325 to supplies or equipment used in performance of service contract, 47 A.L.R.4th 238.

Products liability: personal soap, 54 A.L.R.4th 574.

Liability of successor corporation for punitive damages for injury caused by predecessor's product, 55 A.L.R.4th 166.

Products liability: sufficiency of evidence to support product misuse defense in actions concerning lawnmowers, 55 A.L.R.4th 1062.

Products liability: toxic shock syndrome, 59 A.L.R.4th 50.

Products liability: building and construction lumber, 61 A.L.R.4th 121.

Liability of manufacturer of oral live polio (Sabin) vaccine for injury or death from its administration, 66 A.L.R.4th 83.

Liability for injury incurred in operation of power golf cart, 66 A.L.R.4th 622.

Products liability: industrial refrigerator equipment, 72 A.L.R.4th 90.

Products liability: scaffolds and scaffolding equipment, 74 A.L.R.4th 904.

Products liability: tractors, 75 A.L.R.4th 312.

Products liability: bicycles and accessories, 76 A.L.R.4th 117.

Products liability: exercise and related equipment, 76 A.L.R.4th 145.

Products liability: trampolines and similar devices, 76 A.L.R.4th 171.

Products liability: competitive sports equipment, 76 A.L.R.4th 201.

Products liability: skiing equipment, 76 A.L.R.4th 256.

Products liability: general recreational equipment, 77 A.L.R.4th 1121.

Products liability: mechanical amusement rides and devices, 77 A.L.R.4th 1152.

Products liability: lubricating products and systems, 80 A.L.R.4th 972.

Liability for injury or death allegedly caused by spoilage or contamination of beverage, 87 A.L.R.4th 804.

Liability for injury or death allegedly caused by foreign substance in beverage, 90 A.L.R.4th 12.

Liability for injury or death allegedly caused by foreign object in food or food product, 1 A.L.R.5th 1.

Liability for injury or death allegedly caused by spoilage, contamination, or other deleterious condition of food or food product, 2 A.L.R.5th 1.

Liability for injury or death allegedly caused by food product containing object related to, but not intended to be present in, product, 2 A.L.R.5th 189.

Products liability: roofs and roofing materials, 3 A.L.R.5th 851.

Products liability: cigarettes and other tobacco products, 36 A.L.R.5th 541.

Validity, construction, and application of computer software licensing agreements, 38 A.L.R.5th 1.

Products liability: theatrical equipment and props, 42 A.L.R.5th 699.

Liability on implied warranties in sale of used motor vehicle, 47 A.L.R.5th 677.

Causes of action governed by limitations period in UCC § 2-725, 49 A.L.R.5th 1.

Construction and application of learned-intermediary doctrine, 57 A.L.R.5th 1.

Products liability: computer hardware and software, 59 A.L.R.5th 461.

Products liability: liability for injury or death allegedly caused by defect in mobile home or trailer, 61 A.L.R.5th 473.

Products liability: swimming pools and accessories, 65 A.L.R.5th 105.

Products liability: paints, stains, and similar products, 69 A.L.R.5th 137.

Products liability: helicopters, 72 A.L.R.5th 299.

Products liability: consumer expectations test, 73 A.L.R.5th 75.

Products liability: ladders, 81 A.L.R.5th 245.

11-2-316. Exclusion or modification of warranties.

  1. Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but subject to the provisions of this article on parol or extrinsic evidence (Code Section 11-2-202) negation or limitation is inoperative to the extent that such construction is unreasonable.
  2. Subject to subsection (3) of this Code section, to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous. Language to exclude all implied warranties of fitness is sufficient if it states, for example, that "There are no warranties which extend beyond the description on the face hereof."
  3. Notwithstanding subsection (2) of this Code section:
  1. Unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like "as is," "with all faults," or other language which in common understanding calls the buyer's attention to the exclusion of warranties and makes plain that there is no implied warranty; and
  2. When the buyer before entering into the contract has examined the goods or the sample or model as fully as he desired or has refused to examine the goods there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him; and
  3. An implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade; and
  4. With respect to the sale of cattle, hogs, and sheep by a licensed auction company or by an agent, there shall be no implied warranty by said auction company or agent that the cattle, hogs, and sheep are free from disease; provided, however, that the provisions of this paragraph shall not be applicable to brucellosis reactor cattle detected at an official state laboratory within 30 days following the date of sale.

Remedies for breach of warranty can be limited in accordance with the provisions of this article on liquidation or limitation of damages and on contractual modification of remedy (Code Sections 11-2-718 and 11-2-719).

The implied warranty of merchantability under Code Section 11-2-314 and the implied warranty of fitness for a particular purpose under Code Section 11-2-315 shall not be applicable to the procurement, processing, storage, distribution, or use of whole human blood, blood plasma, blood products, blood derivatives, or other human tissue or organs for the purpose of injecting, transfusing, incorporating, or transplanting any of them into the human body. The injection, transfusion, or other transfer of blood, blood plasma, blood products, or blood derivatives and the transplanting or other transfer of any tissue, bones, or organs into or unto the human body shall not be considered, for the purpose of this article, commodities subject to sale or barter, but shall be considered as medical services.

(Code 1933, § 109A-2 - 316, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 1971, p. 457, § 2; Ga. L. 1979, p. 756, § 1.)

Cross references.

- Prohibition against sale, auction, etc., of livestock infected with disease or placed under quarantine by Commissioner of Agriculture, § 4-6-2.

Regulation of labeling of blood, blood plasma, etc., Ch. 24, T. 31.

For further provisions as to nonapplicability of implied warranties to blood transfusions, organ transplants, etc., § 51-1-28.

Law reviews.

- For article, "Sales Warranties Under Georgia's Uniform Commercial Code," see 1 Ga. St. B.J. 191 (1964). For article, "Georgia's New Statutory Liability for Manufacturers: An Inadequate Legislative Response," see 2 Ga. L. Rev. 538 (1968). For article, "Consumer Protection Against Sellers Misrepresentations," see 20 Mercer L. Rev. 414 (1969). For article discussing interpretation of warranties under the Uniform Commercial Code, see 4 Ga. L. Rev. 469 (1970). For article discussing the implied warranty of fitness for a particular purpose, see 9 Ga. L. Rev. 149 (1974). For article, "Products Liability Law in Georgia: Is Change Coming?" see 10 Ga. St. B.J. 353 (1974). For article explaining the Unfair Trade Practices and Consumer Protection Act, proposed in Georgia in 1973, see 10 Ga. St. B.J. 409 (1974). For article surveying Georgia cases dealing with commercial law from June 1977 through May 1978, see 30 Mercer L. Rev. 15 (1978). For article discussing the applicability of warranty provisions under the Uniform Commercial Code to domestic solar energy devices, see 30 Mercer L. Rev. 547 (1979). For article surveying developments in Georgia commercial law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 33 (1981). For article, "Products Liability Law in Georgia Including Recent Developments," see 43 Mercer L. Rev. 27 (1991). For article, "Giving Unconscionability More Muscle: Attorney's Fees as a Remedy for Contractual Overreaching," see 44 Ga. L. Rev. 317 (2010). For note discussing implied warranties in the sale of second-hand goods, see 17 Mercer L. Rev. 455 (1966). For note, "Allowance of Punitive Damages in Products Liability Claims," see 6 Ga. L. Rev. 613 (1972). For note, "Buyer's Right to Revoke Acceptance Against the Automobile Manufacturer for Breach of its Continuing Warranty of Repair or Replacement," see 7 Ga. L. Rev. 711 (1973). For note, "Enforcing Manufacturers' Warranty Exclusions Against Non-Privity Commercial Purchasers: The Need for Uniform Guidelines," see 20 Ga. L. Rev. 461 (1986). For comment on Felder v. Neeves, 36 Ga. App. 41, 135 S.E. 219 (1926), see 1 Ga. L. Rev. No. 1 p. 51 (1927). For comment on Manheim v. Ford Motor Co., 210 So. 2d 440 (Fla. 1967), discussing effect of automobile manufacturer's disclaimer of the Uniform Commercial Code's implied warranties of merchantability and fitness, see 2 Ga. L. Rev. 314 (1968). For comment, "Damage Awards and Computer Systems - Trends," see 35 Emory L.J. 255 (1986). For comment, "U.C.C. Article Two Warranty Disclaimers and the 'Conspicuousness' Requirement of Section 2-316," see 43 Mercer L. Rev. 943 (1992).

JUDICIAL DECISIONS

General Consideration

Editor's notes.

- In light of the similarity of the issues dealt with, decisions under former Code 1910, § 4136 and former Code 1933, § 96-301 are included in the annotations for this section.

Unconscionability of exclusion or modification.

- Although a seller may exclude or modify warranties, a court may refuse to enforce an exclusion or modification on the basis of unconscionability. Mullis v. Speight Seed Farms, Inc., 234 Ga. App. 27, 505 S.E.2d 818 (1998).

Implied warranties exist unless expressly or from nature of transaction excepted. Wilson v. Eargle, 98 Ga. App. 241, 105 S.E.2d 474 (1958) (decided under former Code 1933, § 96-301).

Purpose of O.C.G.A. § 11-2-316 includes preventing indirect elimination of warranty liability through indemnification. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975).

How warranties are raised.

- Implied warranty is raised by statute, while express warranty is by contract. Stewart v. Gainesville Glass Co., 131 Ga. App. 747, 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578, 212 S.E.2d 377 (1975).

O.C.G.A. § 11-2-316 does not apply to a warranty under O.C.G.A. § 44-12-63. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975).

An agreement for the installation and maintenance of a protective alarm system was not a sale and, as a result, the implied warranty and other U.C.C. considerations were not applicable. D.L. Lee & Sons v. ADT Sec. Sys., 916 F. Supp. 1571 (S.D. Ga. 1995).

Section does not govern limitation of remedies.

- The provisions of O.C.G.A. § 11-2-316 have no bearing on the seller's ability to achieve the less comprehensive legal effect of limiting the remedies which are available to the buyer for breach of implied warranties. It is the separate provisions of O.C.G.A. §§ 11-2-718 or11-2-719 which govern the limitation of remedies. Apex Supply Co. v. Benbow Indus., Inc., 189 Ga. App. 598, 376 S.E.2d 694 (1988).

No public policy against all disclaimers.

- Disclaimer provisions of O.C.G.A. § 11-2-316 do not establish public policy against use of disclaimers in all commercial transactions. Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975).

It is unreasonable to allow express warranty to be negated by disclaimer in same contract. Century Dodge, Inc. v. Mobley, 155 Ga. App. 712, 272 S.E.2d 502 (1980).

Contract for sale of car describing it as new created express warranty to that effect which was not negated by disclaimer of express warranties in same contract. Century Dodge, Inc. v. Mobley, 155 Ga. App. 712, 272 S.E.2d 502 (1980).

Disclaimer limiting liability to purchase price unconscionable.

- A disclaimer of liability for breach of warranty by a tobacco seed manufacturer, which stated that liability would be limited to the purchase price, was unconscionable and would not be enforced; an absence of liability on the part of the manufacturer would leave farmers with no recourse for a loss caused by a crop failure, and the allocation of risk for ineffective seeds is better shouldered by the manufacturer than the consumer. Mullis v. Speight Seed Farms, Inc., 234 Ga. App. 27, 505 S.E.2d 818 (1998).

Consequential damages excluded by warranty.

- Seller was not liable for consequential damages resulting from alleged breach of warranty arising from defects in its goods where seller's written warranty specifically limited any liability to repairing or replacing any defective goods and where buyer had notice of the existence of the written warranty but never requested or saw a copy of the written warranty. A-Larms, Inc. v. Alarms Device Mfg. Co., 165 Ga. App. 382, 300 S.E.2d 311 (1983).

Description of vehicle as "new" not inconsistent with recognition of possible factory-damage.

- There is nothing unreasonable or inconsistent in an affirmation, promise or description by a manufacturer that its vehicle is "new" and its recognition that, even so, the vehicle might contain factory-damage and/or factory-repairs. GMC v. Green, 173 Ga. App. 188, 325 S.E.2d 794 (1984).

Prior contrary oral representations merged into written contract.

- Where there was a written contract covering the sale of an engine from plaintiff to defendant, which contained certain stipulations and warranties by plaintiff, any oral agreement by plaintiff at time of or before written agreement was entered into to the contrary would be merged into and done away with by the written agreement. Worthington Pump & Mach. Corp. v. Briarcliff, 67 Ga. App. 71, 19 S.E.2d 574 (1942) (decided under former Code 1933, § 96-301).

Revocation of acceptance under O.C.G.A. § 11-2-608 is an available remedy even where the seller has attempted to limit its warranties. Esquire Mobile Homes, Inc. v. Arrendale, 182 Ga. App. 528, 356 S.E.2d 250 (1987).

Revocation is an available remedy even where the seller has attempted to limit its warranties by use of "as is" language under O.C.G.A. § 11-2-316. Prudential Metal Supply Corp. v. Atlantic Freight Sales Co., 204 Ga. App. 439, 419 S.E.2d 520 (1992).

Where there is no express covenant of warranty, purchaser must exercise caution in detecting defects. Smith v. Northeast Ga. Fair Ass'n, 85 Ga. App. 32, 67 S.E.2d 836 (1951) (decided under former Code 1933, § 96-301).

Waiver of implied warranty.

- A contract drawn so as to waive implied warranties written into sale by law should be clear and certain on that point. Wilson v. Eargle, 98 Ga. App. 241, 105 S.E.2d 474 (1958) (decided under former Code 1933, § 96-301).

Acceptance of article with obvious defect waives claim for damages growing out of implied warranty.

- If defects or discrepancies in article purchased are patent, such as might have been discovered by exercise of ordinary care and prudence, then acceptance by purchaser, in the absence of fraud, will operate as an absolute waiver on the purchaser's part even of a claim for damages growing out of an implied warranty, but such mere acceptance will not prevent the purchaser from making a claim for damages arising out of an express warranty. Evans v. Mitchell, 44 Ga. App. 695, 162 S.E. 660 (1932) (decided under former Code 1910, § 4136).

Purchaser's acceptance of property bought with full knowledge of its defective condition constitutes waiver of implied warranty that property is in merchantable condition and suited for purpose intended. Smith v. Northeast Ga. Fair Ass'n, 85 Ga. App. 32, 67 S.E.2d 836 (1951) (decided under former Code 1933, § 96-301).

Cited in Whitaker v. Harvell-Kilgore Corp., 418 F.2d 1010 (5th Cir. 1969); GMC v. Halco Instruments, Inc., 124 Ga. App. 630, 185 S.E.2d 619 (1971); Jacobs v. Metro Chrysler-Plymouth, Inc., 125 Ga. App. 462, 188 S.E.2d 250 (1972); Smith, Kline & French Labs. v. Just, 126 Ga. App. 643, 191 S.E.2d 632 (1972); Avery v. Aladdin Prods. Div., Nat'l Serv. Indus., Inc., 128 Ga. App. 266, 196 S.E.2d 357 (1973); Smith v. Bruce, 129 Ga. App. 97, 198 S.E.2d 697 (1973); Harison-Gulley Chevrolet, Inc. v. Carr, 134 Ga. App. 449, 214 S.E.2d 712 (1975); Lancaster v. Eberhardt, 141 Ga. App. 534, 233 S.E.2d 880 (1977); Transart Indus., Inc. v. Gaines-American Moulding Corp., 148 Ga. App. 363, 251 S.E.2d 384 (1978); Patron Aviation, Inc. v. Teledyne Indus., Inc., 154 Ga. App. 13, 267 S.E.2d 274 (1980); Hardee v. Coastal Tractor Co., 153 Ga. App. 487, 265 S.E.2d 838 (1980); Burroughs Corp. v. Macon Rubber Co., 154 Ga. App. 322, 268 S.E.2d 374 (1980); Corbett v. North Fla. Clarklift, Inc., 155 Ga. App. 701, 272 S.E.2d 563 (1980); Bicknell v. B & S Enters., 160 Ga. App. 307, 287 S.E.2d 310 (1981); Frick Forest Prods., Inc. v. International Hardwoods, Inc., 161 Ga. App. 359, 288 S.E.2d 625 (1982); Rigdon v. Walker Sales & Serv., Inc., 161 Ga. App. 459, 288 S.E.2d 711 (1982); Teledyne Indus., Inc. v. Patron Aviation, Inc., 161 Ga. App. 596, 288 S.E.2d 911 (1982); Sires v. Luke, 544 F. Supp. 1155 (S.D. Ga. 1982); W. Linton Howard, Inc. v. Gibbs Mach., Inc., 169 Ga. App. 627, 314 S.E.2d 259 (1984); Holman Motor Co. v. Evans, 169 Ga. App. 610, 314 S.E.2d 453 (1984); Entertainment Developers, Inc. v. Relco, Inc., 172 Ga. App. 176, 322 S.E.2d 304 (1984); W.M. Hobbs, Ltd. v. Accusystems of Ga., Inc., 177 Ga. App. 432, 339 S.E.2d 646 (1986); Citizens Jewelry Co. v. Walker, 178 Ga. App. 897, 345 S.E.2d 106 (1986); McCrimmon v. Tandy Corp., 202 Ga. App. 233, 414 S.E.2d 15 (1991).

Writing Requirement

Conspicuous writing.

- Requirement that disclaimer terms be conspicuous follows main current of interpretation of O.C.G.A. § 11-2-316. White v. First Fed. Sav. & Loan Ass'n, 158 Ga. App. 373, 280 S.E.2d 398 (1981).

O.C.G.A. § 11-2-316(2) requires that, to exclude or modify an implied warranty of fitness, the actual warranty disclaimer language itself be conspicuous. That requirement is not satisfied if the disclaimer provision contains only general introductory language which is conspicuous. Leland Indus., Inc. v. Suntek Indus., Inc., 184 Ga. App. 635, 362 S.E.2d 441 (1987).

Warranty disclaimer language was "conspicuous" where it appeared in capital letters, in a separate paragraph on the front of an invoice, and in a type style which was otherwise employed on the form only with regard to language relating to the limitation of remedies. Apex Supply Co. v. Benbow Indus., Inc., 189 Ga. App. 598, 376 S.E.2d 694 (1988).

Although, by its terms, O.C.G.A. § 11-2-316(3)(a) does not explicitly require that the "other language" be conspicuous, it implicitly imposes such a requirement. Leland Indus., Inc. v. Suntek Indus., Inc., 184 Ga. App. 635, 362 S.E.2d 441 (1987).

A writing would, regardless of its "conspicuousness," be ineffective to disclaim the implied warranty of merchantability if that writing nowhere specifically mentions "merchantability." Leland Indus., Inc. v. Suntek Indus., Inc., 184 Ga. App. 635, 362 S.E.2d 441 (1987).

Effect of font.

- Language printed in type which was bolder and larger than that generally used in the document, and emphasized by capitalization and by being within a dark bordered rectangle, was sufficiently conspicuous to satisfy the requirements of O.C.G.A. § 11-2-316(2). Webster v. Sensormatic Elec. Corp., 193 Ga. App. 654, 389 S.E.2d 15 (1989).

Modification need not be in writing.

- Modification or restitution of the remedy available for breach of warranty need not be in writing. Parole evidence to show the usage of the trade to explain or supplement the available remedies for breach of warranty was improperly excluded. Topeka Mach. Exch., Inc. v. Stoler Indus., Inc., 220 Ga. App. 799, 470 S.E.2d 250 (1996).

Leases

Inapplicability to auto lease not providing for purchase at termination.

- Restrictions of O.C.G.A. § 11-2-316 on exclusion of warranties are not applicable to lease contract for automobile containing no provision for purchase at termination. Mays v. Citizens & S. Nat'l Bank, 132 Ga. App. 602, 208 S.E.2d 614 (1974), overruled on other grounds, Mock v. Canterbury Realty Co., 152 Ga. App. 872, 264 S.E.2d 489 (1980).

Where a lessee leased a vehicle for four years, title remained with the assignee, and the lessee was required to surrender the car at the expiration of the lease term, there being no option to purchase it, neither the implied warranty provisions nor the exclusion rules therefor of the Uniform Commercial Code applied to the lease agreement. Mark Singleton Buick, Inc. v. Taylor, 194 Ga. App. 630, 391 S.E.2d 435 (1990).

Debtor may waive any defense of nonexpressed warranties in plain language in a lease, and such waiver is enforceable under O.C.G.A. § 11-2-316 by party to the lease. Hurst v. Stith Equip. Co., 133 Ga. App. 374, 210 S.E.2d 851 (1974).

Implied Warranty of Merchantability

Implied warranty of merchantability runs only to buyer.

- Implied warranty that goods are merchantable clearly arises out of contract of sale of goods, so it can only run to buyer who is in privity of contract with seller. Chaffin v. Atlanta Coca-Cola Bottling Co., 127 Ga. App. 619, 194 S.E.2d 513 (1972).

Second-hand sales.

- When article sold, even though used or second-hand, was sold by seller who "is a merchant with respect to goods of that kind," an implied warranty of merchantability attaches to the sale under O.C.G.A. § 11-2-314 unless excluded or modified by O.C.G.A. § 11-2-316. Georgia Timberlands, Inc. v. Southern Airways Co., 125 Ga. App. 404, 188 S.E.2d 108 (1972).

Statement of mileage.

- It is an illogical extension to include within the concept of warranty of merchantability or fitness for purposes intended a statement of mileage required by an unrelated statute absent any showing that the statement of mileage is incorrect and/or connected to the injuries suffered. Troutt v. Nash AMC/Jeep, Inc., 157 Ga. App. 399, 278 S.E.2d 54 (1981).

Georgia's "blood shield" statutes applied to a commercial laboratory, so as to bar a hemophiliac's strict liability and breach of warranty claims against the laboratory for a defective blood-clotting agent which allegedly exposed the hemophiliac to the virus associated with acquired immune deficiency syndrome (AIDS). Jones v. Miles Labs., Inc., 705 F. Supp. 561 (N.D. Ga. 1987), aff'd, 887 F.2d 1576 (11th Cir. 1989), aff'd, 887 F.2d 1576 (11th Cir. 1989).

Exclusions must be conspicuous.

- Exclusions of implied warranties of fitness or merchantability must be in writing and conspicuous. White v. First Fed. Sav. & Loan Ass'n, 158 Ga. App. 373, 280 S.E.2d 398 (1981).

Exclusion by course of conduct.

- Implied warranty provisions of the Uniform Commercial Code (UCC) did not apply to a settlement between a supplier and a customer because the primary purpose of the settlement was not a sale of goods, but was to resolve a dispute about whether the customer was obligated to purchase any goods and whether the goods were merchantable. Alternatively, under O.C.G.A. § 11-2-316(3)(c), the parties had excluded the UCC's implied warranties based upon the parties course of conduct. Hanson Staple Co. v. Ole Mexican Foods, Inc., 293 Ga. App. 4, 666 S.E.2d 398 (2008), aff'd, 285 Ga. 288, 676 S.E.2d 169 (2009).

Jury decides factual question of modification or exclusion of warranty.

- Where the trial court specifically instructed the jury that "an implied warranty can be excluded or modified by course of dealings or course of performance or usage of trade," the evidence of such, sufficient to create an exception to the rule requiring conspicuous written exclusion of warranties, were questions of fact for the jury to determine. Willis Mining, Inc. v. Noggle, 235 Ga. App. 747, 509 S.E.2d 731 (1998).

Exclusionary paragraph of same size and color type as rest of form.

- Paragraph written in same size and color type as all other paragraphs on back of form fails completely to comply with O.C.G.A. § 11-2-316 for excluding the warranties implied by law in O.C.G.A. § 11-2-314. Chrysler Corp. v. Wilson Plumbing Co., 132 Ga. App. 435, 208 S.E.2d 321 (1974).

Disclaimer of implied warranty was adequate.

- Where the disclaimer was in letters larger than any other type on the form, where significant portions of the disclaimer were capitalized, thus distinguishing them from other language on the form, and where the language was conspicuously set forth, the limitation of the implied warranty of merchantability met the requirements of O.C.G.A. § 11-2-316(2). Harris v. Sulcus Computer Corp., 175 Ga. App. 140, 332 S.E.2d 660 (1985).

Roofing material vendor's disclaimer of warranty, which stated in capitalized letters that the vendor made no warranties, express or implied, including merchantability or fitness for a particular purpose, except as expressly stated therein, was sufficient to preclude an action against the vendor for breach of the implied warranties of merchantability and fitness. Steele v. Gold Kist, Inc., 186 Ga. App. 569, 368 S.E.2d 196, cert. denied, 186 Ga. App. 919, 368 S.E.2d 196 (1988).

Printed language effectively precluded a claim for breach of implied warranty, where, although the text of the disclaimer was not in bold print, the heading "DISCLAIMER OF WARRANTIES" was in large capital letters and the entire paragraph was blocked off by an outline. Bennett v. Matt Gay Chevrolet Oldsmobile, Inc., 200 Ga. App. 348, 408 S.E.2d 111, cert. denied, 200 Ga. App. 895, 408 S.E.2d 111 (1991).

Goods "Sold As Is"

Term "sold as is" excludes implied warranties.

- The term, "sold as is," when contained in contract for sale of personalty, means that buyer takes article in its then present state or condition without any implied warranty as to soundness of condition, or suitability for use, or purposes intended. Hutchinson Homes, Inc. v. Guerdon Indus., Inc., 143 Ga. App. 664, 239 S.E.2d 553 (1977).

Express warranty not negated.

- Statement in purchase agreement that goods are sold "as is" does not negate express warranty. City Dodge, Inc. v. Gardner, 232 Ga. 766, 208 S.E.2d 794 (1974).

Automobile invoice containing language, "I accept the above-described car in its present condition . . ." indicated that the car was sold "as is" and operated to exclude any implied warranties; trial court, therefore, erred in not granting partial summary judgment to seller in regard to the claim for breach of implied warranties. Joseph Charles Parrish, Inc. v. Hill, 173 Ga. App. 97, 325 S.E.2d 595 (1984).

Buyer's Examination of Goods

Demand that buyer fully examine goods.

- To bring transaction within scope of "refused to examine" of O.C.G.A. § 11-2-316(3)(b), it is not sufficient that goods are available for inspection. There must in addition be demand by seller that buyer examine goods fully, which demand puts buyer on notice that the buyer is assuming risk of defects which examination ought to reveal. The language "refused to examine" in that subsection is intended to make clear the necessity for such demand. Austin Lee Corp. v. Cascades Motel, Inc., 123 Ga. App. 642, 182 S.E.2d 173 (1971).

Actions

Action for deceit.

- Where purchaser did not receive car described and identified in bill of sale, but instead received one-half of described vehicle welded to one-half of another unidentified and unidentifiable vehicle, disclaimer of warranties in bill of sale was not sufficient defense against action for deceit. Bill Spreen Toyota, Inc. v. Jenquin, 163 Ga. App. 855, 294 S.E.2d 533 (1982).

Revival of waived defense.

- If debtor waives defense of nonexpressed warranties in plain language, the debtor's guarantor cannot revive it. Hurst v. Stith Equip. Co., 133 Ga. App. 374, 210 S.E.2d 851 (1974).

Defense of breach of warranty cannot be raised by guarantor of debtor.

- Whether or not warranty provisions of Uniform Commercial Code apply to lease of machinery, defense of breach of warranty cannot be raised by a guarantor of debtor. Hurst v. Stith Equip. Co., 133 Ga. App. 374, 210 S.E.2d 851 (1974).

The grant of summary judgment to a defendant with respect to an allegation that equipment is not fit for the purpose intended will be affirmed where the lease/purchase agreement effectively excludes any implied warranties of merchantability or suitability for a particular purpose, pursuant to O.C.G.A. § 11-2-316. Holcomb v. Commercial Credit Servs. Corp., 180 Ga. App. 451, 349 S.E.2d 523 (1986).

RESEARCH REFERENCES

Am. Jur. 2d.

- 63 Am. Jur. 2d, Products Liability, §§ 794 et seq., 826 et seq. 67A Am. Jur. 2d, Sales, §§ 822-852.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:285.

C.J.S.

- 77A C.J.S., Sales, § 263 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-316.

ALR.

- Warranties and conditions upon sale of seeds, nursery stock, etc., 16 A.L.R. 859; 32 A.L.R. 1241; 62 A.L.R. 451; 117 A.L.R. 470; 168 A.L.R. 581.

Validity and effect of provision in contract of sale which, in effect, guarantees the buyer against decline in prices, 29 A.L.R. 112.

Express or implied warranty on sale for accommodation of buyer, 32 A.L.R. 1150; 59 A.L.R. 1541.

Express or implied warranty of quality, condition, or fitness of automobile or truck sold by retail dealer, 34 A.L.R. 535; 43 A.L.R. 648.

Implied warranty or condition as to quality of timber or lumber, 52 A.L.R. 1536.

Validity of provision of contract of sale of personal property negativing implied warranties, 117 A.L.R. 1350.

Necessity of buyer's actual knowledge of disclaimer of warranty of personal property, 160 A.L.R. 357.

Law of sales and liability in respect thereof as applied to transactions in self-service stores, 163 A.L.R. 238.

Express warranty as excluding implied warranty of fitness, 164 A.L.R. 1321.

What amounts to a "sale by sample" as regards warranties, 12 A.L.R.2d 524.

Assignability of warranty of goods and chattels, 17 A.L.R.2d 1196.

Seller's waiver of sales contract provision limiting time within which buyer may object to or return goods or article for defects or failure to comply with warranty or representations, 24 A.L.R.2d 717.

Recovery by contractor or artisan, suing for breach of warranty, of damages for loss of good will occasioned by use in his business of unfit materials, 28 A.L.R.2d 591.

Measure and elements of recovery of buyer rescinding sale of domestic animal for seller's breach of warranty, 35 A.L.R.2d 1273.

Implied warranty of fitness on sale of livestock, 53 A.L.R.2d 892.

Manufacturer's or seller's duty to give warning regarding product as affecting his liability for product-caused injury, 76 A.L.R.2d 9, 53 A.L.R.3d 239.

Liability of manufacturer or seller for injury caused by automobile or other vehicle, aircraft, boat, or their parts, supplies, or equipment, 78 A.L.R.2d 460; 81 A.L.R.3d 318; 97 A.L.R.3d 627; 1 A.L.R.4th 411; 3 A.L.R.4th 489; 5 A.L.R.4th 483.

Liability of manufacturer or seller for injury caused by industrial, business, or farm machinery, tools, equipment, or materials, 78 A.L.R.2d 594; 2 A.L.R.4th 262.

Liability of manufacturer or seller for injury caused by paint, cement, lumber, building supplies, ladders, small tools, and like products, 78 A.L.R.2d 696; 84 A.L.R.3d 877.

Liability of manufacturer or seller for injury caused by toys, games, athletic or sports equipment, or like products, 78 A.L.R.2d 738; 95 A.L.R.3d 390.

Construction and effect of affirmative provision in contract of sale by which purchaser agrees to take article "as is," in the condition in which it is, or equivalent term, 24 A.L.R.3d 465.

Application of warranty provisions of Uniform Commercial Code to bailments, 48 A.L.R.3d 668.

Validity of disclaimer of warranty clauses in sale of new automobile, 54 A.L.R.3d 1217.

Construction and effect of UCC § 2-316(2) providing that implied warranty disclaimer must be "conspicuous,", 73 A.L.R.3d 248.

Products liability: liability for injury or death allegedly caused by defective tires, 81 A.L.R.3d 318.

Products liability: liability for injury or death allegedly caused by defect in snowmobile or other recreational-purpose vehicle, 81 A.L.R.3d 394; 66 A.L.R.4th 622.

Products liability: liability for injury or death allegedly caused by defect in mobile home or trailer, 81 A.L.R.3d 421.

Liability of manufacturer, seller, or installer for personal injury caused by door glass, 84 A.L.R.3d 877.

Measure of damages in action for breach of warranty of title to personal property under UCC § 2-714, 94 A.L.R.3d 583.

What constitutes "affirmation of fact" giving rise to express warranty under UCC § 2-313(1)(a), 94 A.L.R.3d 729.

Products liability: personal injury or death allegedly caused by defect in aircraft or its parts, supplies, or equipment, 97 A.L.R.3d 627.

Products liability: liability of manufacturer or seller for injury or death caused by defect in boat or its parts, supplies, or equipment, 1 A.L.R.4th 411.

Products liability: industrial accidents involving conveyor belts or systems, 2 A.L.R.4th 262.

Construction and effect of new motor vehicle warranty limiting manufacturer's liability to repair or replacement of defective parts, 2 A.L.R.4th 576.

Products liability: defective vehicular windows, 3 A.L.R.4th 489.

Products liability: farm machinery, 4 A.L.R.4th 13.

Products liability: elevators, 7 A.L.R.4th 852.

Products liability: stud guns, staple guns, or parts thereof, 8 A.L.R.4th 70; 33 A.L.R.4th 1189.

Products liability: transformer and other electrical equipment, 10 A.L.R.4th 854.

Products liability: cranes and other lifting apparatuses, 13 A.L.R.4th 476.

Products liability: cement and concrete, 15 A.L.R.4th 1186.

Products liability: tire rims and wheels, 16 A.L.R.4th 137.

Products liability: firefighting equipment, 19 A.L.R.4th 326.

Liability of hospital, physician, or other individual medical practitioner for injury or death resulting from blood transfusion, 20 A.L.R.4th 136.

Liability of blood supplier or donor for injury or death resulting from blood transfusion, 24 A.L.R.4th 508.

Products liability: building and construction lumber, 61 A.L.R.4th 121.

Liability for injury incurred in operation of power golf cart, 66 A.L.R.4th 622.

Products liability: industrial refrigerator equipment, 72 A.L.R.4th 90.

Products liability: scaffolds and scaffolding equipment, 74 A.L.R.4th 904.

Products liability: tractors, 75 A.L.R.4th 312.

Products liability: bicycles and accessories, 76 A.L.R.4th 117.

Products liability: exercise and related equipment, 76 A.L.R.4th 145.

Products liability: trampolines and similar devices, 76 A.L.R.4th 171.

Products liability: competitive sports equipment, 76 A.L.R.4th 201.

Products liability: skiing equipment, 76 A.L.R.4th 256.

Products liability: general recreational equipment, 77 A.L.R.4th 1121.

Products liability: mechanical amusement rides and devices, 77 A.L.R.4th 1152.

Products liability: lubricating products and systems, 80 A.L.R.4th 972.

Products liability: mechanical amusement rides and devices, 3 A.L.R.5th 851.

Products liability: theatrical equipment and props, 42 A.L.R.5th 699.

Liability on implied warranties in sale of used motor vehicle, 47 A.L.R.5th 677.

Validity, construction, and application of blood shield statutes, 75 A.L.R.5th 229.

Products liability: ladders, 81 A.L.R.5th 245.

11-2-317. Cumulation and conflict of warranties express or implied.

Warranties whether express or implied shall be construed as consistent with each other and as cumulative, but if such construction is unreasonable the intention of the parties shall determine which warranty is dominant. In ascertaining that intention the following rules apply:

  1. Exact or technical specifications displace an inconsistent sample or model or general language of description.
  2. A sample from an existing bulk displaces inconsistent general language of description.
  3. Express warranties displace inconsistent implied warranties other than an implied warranty of fitness for a particular purpose.

(Code 1933, § 109A-2 - 317, enacted by Ga. L. 1962, p. 156, § 1.)

Law reviews.

- For article, "Sales Warranties Under Georgia's Uniform Commercial Code," see 1 Ga. St. B.J. 191 (1964). For article discussing interpretation of warranties under the Uniform Commercial Code, see 4 Ga. L. Rev. 469 (1970). For article, "Products Liability Law in Georgia: Is Change Coming?" see 10 Ga. St. B.J. 353 (1974). For article explaining the Unfair Trade Practices and Consumer Protection Act, proposed in Georgia in 1973, see 10 Ga. St. B.J. 409 (1974). For article, "Products Liability Law in Georgia Including Recent Developments," see 43 Mercer L. Rev. 27 (1991).

JUDICIAL DECISIONS

How warranties are raised.

- Implied warranty is raised by statute, while express warranty is by contract. Stewart v. Gainesville Glass Co., 131 Ga. App. 747, 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578, 212 S.E.2d 377 (1975).

Cited in Whitaker v. Harvell-Kilgore Corp., 418 F.2d 1010 (5th Cir. 1969); Citizens Jewelry Co. v. Walker, 178 Ga. App. 897, 345 S.E.2d 106 (1986).

RESEARCH REFERENCES

Am. Jur. 2d.

- 63 Am. Jur. 2d, Products Liability, § 831 et seq. 67A Am. Jur. 2d, Sales, §§ 703, 704.

C.J.S.

- 77A C.J.S., Sales, §§ 250, 258 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-317.

ALR.

- Express or implied warranty of quality, condition, or fitness of automobile or truck sold by retail dealer, 43 A.L.R. 648.

Law of sales and liability in respect thereof as applied to transactions in self-service stores, 163 A.L.R. 238.

Express warranty as excluding implied warranty of fitness, 164 A.L.R. 1321.

What amounts to a "sale by sample" as regards warranties, 12 A.L.R.2d 524.

Recovery by contractor or artisan, suing for breach of warranty, of damages for loss of good will occasioned by use in his business of unfit materials, 28 A.L.R.2d 591.

Measure and elements of recovery of buyer rescinding sale of domestic animal for seller's breach of warranty, 35 A.L.R.2d 1273.

Application of warranty provisions of Uniform Commercial Code to bailments, 48 A.L.R.3d 668.

Validity of disclaimer of warranty clauses in sale of new automobile, 54 A.L.R.3d 1217.

Seller's promises or attempts to repair article sold as affecting buyer's duty to minimize damages for breach of sale contract or of warranty, 66 A.L.R.3d 1162.

Uniform Commercial Code: implied warranty of fitness for particular purpose as including fitness for ordinary use, 83 A.L.R.3d 656.

What constitutes "affirmation of fact" giving rise to express warranty under UCC § 2-313(1)(a), 94 A.L.R.3d 729.

Products liability: industrial accidents involving conveyor belts or systems, 2 A.L.R.4th 262.

Construction and effect of new motor vehicle warranty limiting manufacturer's liability to repair or replacement of defective parts, 2 A.L.R.4th 576.

Products liability: defective vehicular windows, 3 A.L.R.4th 489.

Products liability: manufacturer's postsale obligation to modify, repair, or recall product, 47 A.L.R.5th 395.

Liability on implied warranties in sale of used motor vehicle, 47 A.L.R.5th 677.

11-2-318. Third party beneficiaries of warranties express or implied.

A seller's warranty whether express or implied extends to any natural person who is in the family or household of his buyer or who is a guest in his home if it is reasonable to expect that such person may use, consume, or be affected by the goods and who is injured in person by breach of the warranty. A seller may not exclude or limit the operation of this Code section.

(Code 1933, § 109A-2 - 318, enacted by Ga. L. 1962, p. 156, § 1.)

Cross references.

- Necessity of privity to support tort action generally, and as to liability of manufacturer of personal property sold as new property directly or through a dealer or other person, § 51-1-11.

Civil action for knowing or negligent selling of unwholesome provisions, drugs, alcoholic beverages, etc., to another person by use of which damage results to purchaser or his family, § 51-1-23 et seq.

Law reviews.

- For article, "Georgia's New Statutory Liability for Manufacturers: An Inadequate Legislative Responses," see 2 Ga. L. Rev. 538 (1968). For article discussing interpretation of warranties under the Uniform Commercial Code, see 4 Ga. L. Rev. 469 (1970). For article, "Products Liability Law in Georgia: Is Change Coming?" see 10 Ga. St. B.J. 353 (1974). For article explaining the Unfair Trade Practices and Consumer Protection Act, proposed in Georgia in 1973, see 10 Ga. St. B.J. 409 (1974). For article discussing modification of consumer warranty provisions of the U.C.C. by the Magnuson-Moss Act (15 U.S.C. §§ 2301-2312) with special emphasis on attempted disclaimers, see 27 Mercer L. Rev. 1111 (1976). For article discussing strict liability for defective products in Georgia, see 13 Ga. St. B.J. 142 (1977). For article surveying developments in the Georgia torts law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 247 (1981). For article, "Products Liability Law in Georgia Including Recent Developments," see 43 Mercer L. Rev. 27 (1991). For annual survey on construction law, see 71 Mercer L. Rev. 57 (2019). For note, "Allowance of Punitive Damages in Products Liability Claims," see 6 Ga. L. Rev. 613 (1972). For note, "Buyer's Right to Revoke Acceptance Against the Automobile Manufacturer for Breach of its Continuing Warranty of Repair or Replacement," see 7 Ga. L. Rev. 711 (1973). For note, "Enforcing Manufacturers' Warranty Exclusions Against Non-Privity Commercial Purchasers: The Need for Uniform Guidelines," see 20 Ga. L. Rev. 461 (1986). For comment on U.C.C.'s restrictive effect on consumers' right of action against manufacturers absent privity, see 1 Ga. St. B.J. 129 (1964). For comment on Putnam v. Erie City Mfg. Co., 338 F.2d 911 (5th Cir. 1964), as to privity requirement in implied warranty actions, see 17 Mercer L. Rev. 318 (1965).

JUDICIAL DECISIONS

General Consideration

Expression of public policy on product liability.

- O.C.G.A. §§ 11-2-318 and51-1-11 are recent expressions of legislature establishing and limiting public policy of state in area of product liability. Ellis v. Rich's, Inc., 233 Ga. 573, 212 S.E.2d 373 (1975).

Exception to privity requirement.

- Under O.C.G.A. § 51-1-11, no privity is necessary to institute an action for tort, but if tort results from violation of duty, itself the consequence of contract, right of action is generally confined to parties and privies of that contract except in cases where party would have right of action for injury done independently of contract and except as provided in O.C.G.A. § 11-2-318. Shell v. Watts, 125 Ga. App. 542, 188 S.E.2d 269, rev'd on other grounds, 229 Ga. 474, 192 S.E.2d 265 (1972).

O.C.G.A. § 51-1-11 purportedly limits the right of tort action based on the violation of a duty, itself the consequence of a contract, to a party or privy, except in "cases where the party would have had a right of action for the injury done, independently of the contract" or in cases covered by O.C.G.A. § 11-2-318 of the Uniform Commercial Code extending the benefit of express or implied warranties to certain natural persons without regard to privity. Koppers Co. v. Parks, 120 Ga. App. 551, 171 S.E.2d 639 (1969).

Generally, this state has recognized the necessity of privity between parties where plaintiff-purchaser of an article has been injured because of its alleged defectiveness and brings action based on warranty, but an exception to this rule requiring privity is expressed in O.C.G.A. § 11-2-318. Evershine Prods., Inc. v. Schmitt, 130 Ga. App. 34, 202 S.E.2d 228 (1973).

The rule of privity in contract actions is made a statutory requirement by O.C.G.A. § 51-1-11. In actions based upon the breach of express or implied warranties this requirement is subject only to the exception contained in O.C.G.A. § 11-2-318. Ellis v. Rich's, Inc., 233 Ga. 573, 212 S.E.2d 373 (1975).

Privity is required in actions for breach of express warranties except as provided in O.C.G.A. § 11-2-318 and except where warranty clearly extends to some identifiable third person. Stewart v. Gainesville Glass Co., 233 Ga. 578, 212 S.E.2d 377 (1975).

Necessity of privity between buyer and seller.

- Nothing contained in O.C.G.A. § 11-2-318, which extends the seller's warranties to family members and guests in the buyer's home who may reasonably be expected to use the product and who are injured thereby, eliminates the requirement that the buyer and the defendant be in privity. Thomaston v. Fort Wayne Pools, Inc., 181 Ga. App. 541, 352 S.E.2d 794 (1987); Gowen v. Cady, 189 Ga. App. 473, 376 S.E.2d 390, cert. denied, 189 Ga. App. 912, 376 S.E.2d 390 (1988).

Plaintiff, parent of a child who sustained burns from spilled coffee, was not in privity with defendant restaurant that sold the coffee to a family friend of plaintiff, who was in turn purchasing the coffee for another family friend. Barnett v. Leiserv, Inc., 968 F. Supp. 690 (N.D. Ga. 1997), aff'd, 137 F.3d 1356 (11th Cir. 1998).

O.C.G.A. § 11-2-318 extends warranty to natural persons in family or household of buyer reasonably using or affected by goods, who are injured or damaged by breach thereof. Reddick v. White Consol. Indus., Inc., 295 F. Supp. 243 (S.D. Ga. 1968).

Section does not limit members of family covered to those living within buyer's household.

- In O.C.G.A. § 11-2-318, the words "family or household" do not, because stated in the alternative, limit members of family who may rely on implied warranty to those who live within household of buyer. Chastain v. Fuqua Indus., Inc., 156 Ga. App. 719, 275 S.E.2d 679 (1980).

Nephew living next door.

- Word "family" as used in O.C.G.A. § 11-2-318 includes nephew of purchaser who lived next door and not in owner's house. Chastain v. Fuqua Indus., Inc., 156 Ga. App. 719, 275 S.E.2d 679 (1980).

"Family" and "household" have different meanings in O.C.G.A. § 11-2-318. Chastain v. Fuqua Indus., Inc., 156 Ga. App. 719, 275 S.E.2d 679 (1980).

"Guest in his home" has significance different from and independent of clause "person in household." Chastain v. Fuqua Indus., Inc., 156 Ga. App. 719, 275 S.E.2d 679 (1980).

Person meeting briefly at buyer's home before embarking on trip.

- Plaintiff was not a "guest in [the] home" of buyer where plaintiff and buyer met briefly at buyer's home before embarking on a fishing trip on buyer's boat, aboard which buyer's handgun accidentally discharged and injured plaintiff. Curlee v. Mock Enters., Inc., 173 Ga. App. 594, 327 S.E.2d 736 (1985).

Warranty of personalty does not run with chattel to second or subsequent purchasers. Stewart v. Gainesville Glass Co., 131 Ga. App. 747, 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578, 212 S.E.2d 377 (1975).

Where the father of an injured child purchased a used motorcycle which caused the child's injuries several years after it was manufactured, plaintiffs were not the beneficiaries of any warranty, express or implied, arising from the manufacture of the motorcycle. Weatherby v. Honda Motor Co., 195 Ga. App. 169, 393 S.E.2d 64 (1990).

Mere fact that one would benefit by performance of warranty does not make that person a third-party beneficiary. Stewart v. Gainesville Glass Co., 131 Ga. App. 747, 206 S.E.2d 857 (1974), aff'd, 233 Ga. 578, 212 S.E.2d 377 (1975).

Cited in Wood v. Hub Motor Co., 110 Ga. App. 101, 137 S.E.2d 674 (1964); Stovall & Co. v. Tate, 124 Ga. App. 605, 184 S.E.2d 834 (1971); Chaffin v. Atlanta Coca-Cola Bottling Co., 127 Ga. App. 619, 194 S.E.2d 513 (1972); Standard v. Meadors, 347 F. Supp. 908 (N.D. Ga. 1972); Dodge Trucks, Inc. v. Wilson, 140 Ga. App. 743, 231 S.E.2d 818 (1976); Pierce v. Liberty Furn. Co., 141 Ga. App. 175, 233 S.E.2d 33 (1977); GMC v. Davis, 141 Ga. App. 495, 233 S.E.2d 825 (1977); Ford Motor Co. v. Carter, 239 Ga. 657, 238 S.E.2d 361 (1977); Rhodes v. R.G. Indus., Inc., 173 Ga. App. 51, 325 S.E.2d 465 (1984).

Employees of Buyer

Privity is not extended to employee of purchaser by O.C.G.A. § 11-2-318. Beam v. Omark Indus., Inc., 143 Ga. App. 142, 237 S.E.2d 607 (1977).

To extent that breach of implied warranty is a contract notion, plaintiff who is employee of purchaser rather than person in family or household of buyer or a guest in the purchaser's home may not rely on express or implied warranties of manufacturer, as there is no privity. Parzini v. Center Chem. Co., 134 Ga. App. 414, 214 S.E.2d 700, rev'd on other grounds, 234 Ga. 868, 218 S.E.2d 580 (1975).

Employees of purchaser do not have privity with manufacturer. Watkins v. Barber-Colman Co., 625 F.2d 714 (5th Cir. 1980).

Employees of a purchaser simply do not have privity with the manufacturer and will not be allowed to institute action for breach of an implied warranty. Starling v. Seaboard Coast Line R.R., 533 F. Supp. 183 (S.D. Ga. 1982).

Class excepted by O.C.G.A. § 11-2-318 from horizontal privity requirement does not include employees of buyer. Weaver v. Ralston Motor Hotel, Inc., 135 Ga. App. 536, 218 S.E.2d 260 (1975).

Employment as maid of buyer.

- Plaintiff, employed as maid at time injury was sustained, does not fall into category of persons benefiting from implied warranty under O.C.G.A. § 11-2-318. Verddier v. Neal Blun Co., 128 Ga. App. 321, 196 S.E.2d 469 (1973).

Armed forces members injured by products purchased by federal government.

- Member of armed forces injured by product purchased by federal government does not fall within ambit of O.C.G.A. § 11-2-318. Miles v. Bell Helicopter Co., 385 F. Supp. 1029 (N.D. Ga. 1974).

Manufacturer's Liability

O.C.G.A. §§ 11-2-318 and51-1-11 preclude extension of strict liability to parties other than the manufacturer. Ellis v. Rich's, Inc., 233 Ga. 573, 212 S.E.2d 373 (1975).

Plaintiff must be purchaser.

- For plaintiff to maintain action against manufacturer based on implied warranties, plaintiff must be a purchaser either directly from manufacturer or from some other person such as a wholesaler or retailer. Whitaker v. Harvell-Kilgore Corp., 418 F.2d 1010 (5th Cir. 1969).

In a product liability action against the manufacturers of a boat and motor after a boating accident, where plaintiffs bought the boat from another consumer who in turn had purchased it from the original buyer who was in privity with the manufacturers, plaintiffs did not meet the required exceptions of O.C.G.A. § 11-2-318. Davis v. Brunswick Corp., 854 F. Supp. 1574 (N.D. Ga. 1993).

Lack of privity between the manufacturer and user of exercise machine at a health club precluded an implied warranty claim against the manufacturer. Bodymaster Sports Indus., Inc. v. Wimberley, 232 Ga. App. 170, 501 S.E.2d 556 (1998).

Extension of warranty through dealer.

- Ordinarily, there is no implied warranty existing between manufacturer and purchaser of automobile when there is no privity between the two, yet where automobile manufacturer, through its authorized dealer, issues to purchaser a warranty by manufacturer to said purchaser, implied warranty statute becomes operative. Ford Motor Co. v. Lee, 137 Ga. App. 486, 224 S.E.2d 168, aff'd in part and rev'd in part on other grounds, 237 Ga. 554, 229 S.E.2d 379 (1976).

Repeal of former Code 1933,

§ 96-307 does not negate effect of express warranties by manufacturer. - Repeal of former Code 1933, § 96-307 which provided implied warranty to ultimate consumer for whom product was intended does not mean that there can be no warranties if manufacturer or producer makes an express warranty to ultimate consumer, which is commonly done in the sale of a number of items, such as automobiles and household appliances. Evershine Prods., Inc. v. Schmitt, 130 Ga. App. 34, 202 S.E.2d 228 (1973).

Second-hand goods.

- When goods are sold by original purchaser to third party as used or second-hand goods, there is no implied warranty with respect to manufacturer or original seller. Even with respect to the original purchaser or second seller, absent special circumstances, "the rule is that there is no implied warranty as to the condition, fitness or quality of the article." GMC v. Halco Instruments, Inc., 124 Ga. App. 630, 185 S.E.2d 619 (1971).

Pharmaceutical products.

- Patient who died after taking medicine which a pharmaceutical manufacturer gave to the doctor and which the doctor gave to the patient was not entitled to an extension of any implied warranty existing between the manufacturer and the doctor, and the appellate court upheld the trial court's judgment dismissing claims the patient's spouse filed against the manufacturer, alleging breach of express and implied warranties, but reversed the trial court's judgment dismissing the husband's claims against the manufacturer alleging strict liability and negligent failure to warn. Bryant v. Hoffmann-La Roche, Inc., 262 Ga. App. 401, 585 S.E.2d 723 (2003).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67A Am. Jur. 2d, Sales, §§ 708-715.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:307.

C.J.S.

- 77A C.J.S., Sales, §§ 240, 241.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-318.

ALR.

- Joinder of manufacturer or packer and retailer or other middleman as defendants in action for injury to person or damage to property of purchaser or consumer of defective article, 119 A.L.R. 1356.

Express warranty as excluding implied warranty of fitness, 164 A.L.R. 1321.

Assignability of warranty of goods and chattels, 17 A.L.R.2d 1196.

Privity of contract as essential to recovery in action based on theory other than negligence, against manufacturer or seller of product alleged to have caused injury, 75 A.L.R.2d 39.

Right of member of armed forces to recover from manufacturer or seller for injury caused by defective military material, equipment, supplies, or components thereof, 38 A.L.R.3d 1247.

Liability of manufacturer or seller of power lawnmower for injuries to user, 41 A.L.R.3d 986.

Liability of manufacturer, seller, or distributor of motor vehicle for defect which merely enhances injury from accident otherwise caused, 42 A.L.R.3d 560; 96 A.L.R.3d 265.

Application of warranty provisions of Uniform Commercial Code to bailments, 48 A.L.R.3d 668.

Liability of manufacturer, seller, or installer for personal injury caused by door glass, 84 A.L.R.3d 877.

Products liability: toys and games, 95 A.L.R.3d 390.

Products liability: forklift trucks, 95 A.L.R.3d 541.

Products liability: defective vehicular gasoline tanks, 96 A.L.R.3d 265.

Products liability: industrial accidents involving conveyor belts or systems, 2 A.L.R.4th 262.

Construction and effect of new motor vehicle warranty limiting manufacturer's liability to repair or replacement of defective parts, 2 A.L.R.4th 576.

Products liability: defective vehicular windows, 3 A.L.R.4th 489.

Liability of manufacturer of oral live polio (Sabin) vaccine for injury or death from its administration, 66 A.L.R.4th 83.

Products liability: general recreational equipment, 77 A.L.R.4th 1121.

Purchaser's disbelief in, or nonreliance upon, express warranties made by seller in contract for sale of business as precluding action for breach of express warranties, 7 A.L.R.5th 841.

Liability on implied warranties in sale of used motor vehicle, 47 A.L.R.5th 677.

Third-party beneficiaries of warranties under UCC § 2-318, 50 A.L.R.5th 327.

11-2-319. F.O.B. and F.A.S. terms.

  1. Unless otherwise agreed the term F.O.B. (which means "free on board") at a named place, even though used only in connection with the stated price, is a delivery term under which:
  1. When the term is F.O.B. the place of shipment, the seller must at that place ship the goods in the manner provided in this article (Code Section 11-2-504) and bear the expense and risk of putting them into the possession of the carrier; or
  2. When the term is F.O.B. the place of destination, the seller must at his own expense and risk transport the goods to that place and there tender delivery of them in the manner provided in this article (Code Section 11-2-503);
  3. When under either paragraph (a) or (b) of this subsection the term is also F.O.B. vessel, car, or other vehicle, the seller must in addition at his own expense and risk load the goods on board. If the term is F.O.B. vessel the buyer must name the vessel and in an appropriate case the seller must comply with the provisions of this article on the form of bill of lading (Code Section 11-2-323).

Unless otherwise agreed the term F.A.S. vessel (which means "free alongside") at a named port, even though used only in connection with the stated price, is a delivery term under which the seller must:

At his own expense and risk deliver the goods alongside the vessel in the manner usual in that port or on a dock designated and provided by the buyer; and

Obtain and tender a receipt for the goods in exchange for which the carrier is under a duty to issue a bill of lading.

Unless otherwise agreed in any case falling within subsection (1)(a) or (c) or subsection (2) of this Code section the buyer must seasonably give any needed instructions for making delivery, including when the term is F.A.S. or F.O.B. the loading berth of the vessel and in an appropriate case its name and sailing date. The seller may treat the failure of needed instructions as a failure of cooperation under this article (Code Section 11-2-311). He may also at his option move the goods in any reasonable manner preparatory to delivery or shipment.

Under the term F.O.B. vessel or F.A.S. unless otherwise agreed the buyer must make payment against tender of the required documents and the seller may not tender nor the buyer demand delivery of the goods in substitution for the documents.

(Code 1933, § 109A-2 - 319, enacted by Ga. L. 1962, p. 156, § 1.)

JUDICIAL DECISIONS

Title did not pass to the shipper's customer upon delivery of goods to the carrier where it was agreed between all parties that the seller bore the expense, not of putting the goods in possession of the carrier, but rather of transporting the goods to the place of destination. Clark v. Messer Indus., Inc., 222 Ga. App. 606, 475 S.E.2d 653 (1996).

Cited in Undercofler v. United States Steel Corp., 109 Ga. App. 8, 135 S.E.2d 69 (1964); Giant Peanut Co. v. Carolina Chems., Inc., 129 Ga. App. 718, 200 S.E.2d 918 (1973); Fratelli Gardino v. Caribbean Lumber Co., 587 F.2d 204 (5th Cir. 1979); Diamond Crystal Brands, Inc. v. Food Movers Int'l, 593 F.3d 1249 (11th Cir. 2010).

OPINIONS OF THE ATTORNEY GENERAL

Increased freight rates after contract made.

- Absent contrary agreement, seller bears risk and expense of increased freight rates after contract is made. 1969 Op. Att'y Gen. No. 69-1.

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 566-575.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:135.

C.J.S.

- 77A C.J.S., Sales, §§ 94 et seq., 168.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-319.

ALR.

- What amounts to delivery f.o.b., 16 A.L.R. 597.

F.O.B. provision in sale contract as affecting time or place of passing of title, 101 A.L.R. 292.

11-2-320. C.I.F. and C. & F. terms.

  1. The term C.I.F. means that the price includes in a lump sum the cost of the goods and the insurance and freight to the named destination. The term C. & F. or C.F. means that the price so includes cost and freight to the named destination.
  2. Unless otherwise agreed and even though used only in connection with the stated price and destination, the term C.I.F. destination or its equivalent requires the seller at his own expense and risk to:
  1. Put the goods into the possession of a carrier at the port for shipment and obtain a negotiable bill or bills of lading covering the entire transportation to the named destination; and
  2. Load the goods and obtain a receipt from the carrier (which may be contained in the bill of lading) showing that the freight has been paid or provided for; and
  3. Obtain a policy or certificate of insurance, including any war risk insurance, of a kind and on terms then current at the port of shipment in the usual amount, in the currency of the contract, shown to cover the same goods covered by the bill of lading and providing for payment of loss to the order of the buyer or for the account of whom it may concern; but the seller may add to the price the amount of the premium for any such war risk insurance; and
  4. Prepare an invoice of the goods and procure any other documents required to effect shipment or to comply with the contract; and
  5. Forward and tender with commercial promptness all the documents in due form and with any indorsement necessary to perfect the buyer's rights.

Unless otherwise agreed the term C. & F. or its equivalent has the same effect and imposes upon the seller the same obligations and risks as a C.I.F. term except the obligation as to insurance.

Under the term C.I.F. or C. & F. unless otherwise agreed the buyer must make payment against tender of the required documents and the seller may not tender nor the buyer demand delivery of the goods in substitution for the documents.

(Code 1933, § 109A-2 - 320, enacted by Ga. L. 1962, p. 156, § 1.)

JUDICIAL DECISIONS

Cited in Undercofler v. United States Steel Corp., 109 Ga. App. 8, 135 S.E.2d 69 (1964); Georgia Ports Auth. v. Mitsubishi Int'l Corp., 156 Ga. App. 304, 274 S.E.2d 699 (1980).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 553-558.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:135.

C.J.S.

- 77A C.J.S., Sales, §§ 94 et seq., 167.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-320.

ALR.

- What constitutes delivery of goods sold under "C.I.F." contract, 10 A.L.R. 701; 20 A.L.R. 1236.

11-2-321. C.I.F. or C. & F.: "net landed weights"; "payment on arrival"; warranty of condition on arrival.

Under a contract containing a term C.I.F. or C. & F.:

  1. Where the price is based on or is to be adjusted according to "net landed weights," "delivered weights," "out turn" quantity or quality, or the like, unless otherwise agreed the seller must reasonably estimate the price. The payment due on tender of the documents called for by the contract is the amount so estimated, but after final adjustment of the price a settlement must be made with commercial promptness.
  2. An agreement described in subsection (1) of this Code section or any warranty of quality or condition of the goods on arrival places upon the seller the risk of ordinary deterioration, shrinkage, and the like in transportation but has no effect on the place or time of identification to the contract for sale or delivery or on the passing of the risk of loss.
  3. Unless otherwise agreed where the contract provides for payment on or after arrival of the goods the seller must before payment allow such preliminary inspection as is feasible; but if the goods are lost delivery of the documents and payment are due when the goods should have arrived.

(Code 1933, § 109A-2 - 321, enacted by Ga. L. 1962, p. 156, § 1.)

JUDICIAL DECISIONS

Cited in Undercofler v. United States Steel Corp., 109 Ga. App. 8, 135 S.E.2d 69 (1964).

RESEARCH REFERENCES

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:135.

C.J.S.

- 77A C.J.S., Sales, §§ 185 et seq., 208 et seq., 215.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-321.

ALR.

- What constitutes delivery of goods sold under "c.i.f." contract, 10 A.L.R. 701; 20 A.L.R. 1236.

Resale by buyer where seller has refused to receive the property rejected for breach of warranty, 24 A.L.R. 1445.

Buyer's right to inspect at destination where goods are delivered to carrier, 27 A.L.R. 524.

Warranties and conditions upon sale of seeds, nursery stock, etc., 62 A.L.R. 451; 117 A.L.R. 470; 168 A.L.R. 581.

Provision in bill of lading prohibiting or limiting consignee's right to inspect goods shipped, 25 A.L.R.2d 770.

11-2-322. Delivery "ex-ship."

  1. Unless otherwise agreed a term for delivery of goods "ex-ship" (which means from the carrying vessel) or in equivalent language is not restricted to a particular ship and requires delivery from a ship which has reached a place at the named port of destination where goods of the kind are usually discharged.
  2. Under such a term unless otherwise agreed:
  1. The seller must discharge all liens arising out of the carriage and furnish the buyer with a direction which puts the carrier under a duty to deliver the goods; and
  2. The risk of loss does not pass to the buyer until the goods leave the ship's tackle or are otherwise properly unloaded.

(Code 1933, § 109A-2 - 322, enacted by Ga. L. 1962, p. 156, § 1.)

RESEARCH REFERENCES

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:135.

C.J.S.

- 77A C.J.S., Sales, §§ 94 et seq., 167, 215.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-322.

11-2-323. Form of bill of lading required in overseas shipment; "overseas."

  1. Where the contract contemplates overseas shipment and contains a term C.I.F. or C. & F. or F.O.B. vessel, the seller unless otherwise agreed shall obtain a negotiable bill of lading stating that the goods have been loaded in board or, in the case of a term C.I.F. or C. & F., received for shipment.
  2. Where in a case within subsection (1) of this Code section a tangible bill of lading has been issued in a set of parts, unless otherwise agreed if the documents are not to be sent from abroad the buyer may demand tender of the full set; otherwise only one part of the bill of lading need be tendered. Even if the agreement expressly requires a full set:
  1. Due tender of a single part is acceptable within the provisions of this article on cure of improper delivery (subsection (1) of Code Section 11-2-508); and
  2. Even though the full set is demanded, if the documents are sent from abroad the person tendering an incomplete set may nevertheless require payment upon furnishing an indemnity which the buyer in good faith deems adequate.

A shipment by water or by air or a contract contemplating such shipment is "overseas" insofar as by usage of trade or agreement it is subject to the commercial, financing, or shipping practices characteristic of international deep water commerce.

(Code 1933, § 109A-2 - 323, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2010, p. 481, § 2-5/HB 451.)

The 2010 amendment, effective May 27, 2010, in subsection (1), substituted "shall" for "must" and substituted "in board" for "on board"; and inserted "tangible" near the beginning of subsection (2). See the Editor's notes for applicability.

Editor's notes.

- Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.

Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.

RESEARCH REFERENCES

Am. Jur. 2d.

- 13 Am. Jur. 2d, Carriers, § 324. 70 Am. Jur. 2d, Shipping, § 458.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:135.

C.J.S.

- 80 C.J.S., Shipping, § 256 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-323.

ALR.

- What constitutes delivery of goods sold under "C.I.F." contract, 20 A.L.R. 1236.

11-2-324. "No arrival, no sale" term.

Under a term "no arrival, no sale" or terms of like meaning, unless otherwise agreed:

  1. The seller must properly ship conforming goods and if they arrive by any means he must tender them on arrival but he assumes no obligation that the goods will arrive unless he has caused the nonarrival; and
  2. Where without fault of the seller the goods are in part lost or have so deteriorated as no longer to conform to the contract or arrive after the contract time, the buyer may proceed as if there had been casualty to identified goods (Code Section 11-2-613).

(Code 1933, § 109A-2 - 324, enacted by Ga. L. 1962, p. 156, § 1.)

Law reviews.

- For article, "Impracticability As Risk Allocation: The Effect of Changed Circumstances upon Contract Obligations for the Sale of Goods," see 22 Ga. L. Rev. 503 (1988).

RESEARCH REFERENCES

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:135.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-324.

11-2-325. "Letter of credit" term; "confirmed credit."

  1. Failure of the buyer seasonably to furnish an agreed letter of credit is a breach of the contract for sale.
  2. The delivery to seller of a proper letter of credit suspends the buyer's obligation to pay. If the letter of credit is dishonored, the seller may on seasonable notification to the buyer require payment directly from him.
  3. Unless otherwise agreed the term "letter of credit" or "banker's credit" in a contract for sale means an irrevocable credit issued by a financing agency of good repute and, where the shipment is overseas, of good international repute. The term "confirmed credit" means that the credit must also carry the direct obligation of such an agency which does business in the seller's financial market.

(Code 1933, § 109A-2 - 325, enacted by Ga. L. 1962, p. 156, § 1.)

RESEARCH REFERENCES

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:135.

C.J.S.

- 77A C.J.S., Sales, § 208.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-325.

ALR.

- Construction or provision for letter of credit in contract of sale, 38 A.L.R. 608.

11-2-326. Sale on approval and sale or return; rights of creditors.

  1. Unless otherwise agreed, if delivered goods may be returned by the buyer even though they conform to the contract, the transaction is:
  1. A "sale on approval" if the goods are delivered primarily for use; and
  2. A "sale or return" if the goods are delivered primarily for resale.

Goods held on approval are not subject to the claims of the buyer's creditors until acceptance; goods held on sale or return are subject to such claims while in the buyer's possession.

Any "or return" term of a contract for sale is to be treated as a separate contract for sale within the statute of frauds section of this article (Code Section 11-2-201) and as contradicting the sale aspect of the contract within the provisions of this article on parol or extrinsic evidence (Code Section 11-2-202).

(Code 1933, § 109A-2 - 326, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 1963, p. 188, § 2; Ga. L. 2001, p. 362, § 6.)

The 2001 amendment, effective July 1, 2001, deleted "consignment sales and" in the catchline, substituted "Goods" for "Except as provided in subsection (3) of this Code section, goods" at the beginning of subsection (2), deleted subsection (3), which read: "Where goods are delivered to a person for sale and such person maintains a place of business at which he deals in goods of the kind involved, under a name other than the name of the person making delivery, then with respect to claims of creditors of the person conducting the business the goods are deemed to be on sale or return. The provisions of this subsection are applicable even though an agreement purports to reserve title to the person making delivery until payment or resale or uses such words as 'on consignment' or 'on memorandum.' However, this subsection is not applicable if the person making delivery: (a) Complies with an applicable law providing for a consignor's interest or the like to be evidenced by a sign; or (b) Establishes that the person conducting the business is generally known by his creditors to be substantially engaged in selling the goods of others; or (c) Complies with the filing provisions of the article on secured transactions (Article 9 of this title).", and redesignated former subsection (4) as present subsection (3).

Law reviews.

- For survey article on commercial law, see 34 Mercer L. Rev. 31 (1982).

JUDICIAL DECISIONS

Purpose of O.C.G.A. § 11-2-326 is to protect creditors of person in possession of goods (the dealer) who would have a right to assume goods were property of dealer. Guardian Disct. Co. v. Settles, 114 Ga. App. 418, 151 S.E.2d 530 (1966).

One purpose behind O.C.G.A. § 11-2-326 is subordination of secret consignment seller claims to claims of consignment buyer's creditors. Financeamerica Corp. v. Morris (In re KLP, Inc.), 7 Bankr. 256 (Bankr. N.D. Ga. 1980).

O.C.G.A. § 11-2-326 importance lies primarily in role it plays, along with notice provisions of Article 9 of this title, in giving disclosed claims to property priority over secret claims. Financeamerica Corp. v. Morris (In re KLP, Inc.), 7 Bankr. 256 (Bankr. N.D. Ga. 1980).

O.C.G.A. § 11-2-326 applies to transactions which are not true sales at all, since section governs agreements which somehow provide that "delivered goods may be returned by the buyer even though they conform to the contract." Financeamerica Corp. v. Morris (In re KLP, Inc.), 7 Bankr. 256 (Bankr. N.D. Ga. 1980).

The burden of proof is on the defendant to prove that the consignee is generally known by creditors to be substantially engaged in selling the goods of others. Loeb v. G.A. Gertmenian & Sons (In re A.J. Nichols, Ltd.), 21 Bankr. 612 (Bankr. N.D. Ga. 1982).

Consignment sales insufficient.

- Debtor aviation company's index of consignment sales at 10 percent over the course of a ten year period was insufficient to render it substantially engaged in the sale of goods to others within the meaning of O.C.G.A. § 11-2-326. ATG Aerospace, Inc. v. High-Line Aviation Ltd., 149 Bankr. 730 (Bankr. N.D. Ga. 1992).

Car delivered by owner to dealer to secure offers for owner's approval.

- Where individual owner of automobile delivers it to automobile dealer for the purpose of having said dealer secure offers for purchase thereof, and to sell same upon approval of offer by individual owner, the automobile dealer to receive a commission of set sum regardless of sale price, such transaction is not a "sale or return" transaction between a buyer and a seller within meaning of O.C.G.A. § 11-2-326. Allgeier v. Campisi, 117 Ga. App. 105, 159 S.E.2d 458 (1968).

Transaction between a mobile home manufacturer and a retail dealer, involving a mobile home claimed by a floor-plan financer was a "sale or return," and the mobile home was subject to the financer's claim arising from a security interest in the dealer's after-acquired inventory without regard to whether the manufacturer was compensated for the mobile home. GECC v. Catalina Homes, Inc., 178 Ga. App. 319, 342 S.E.2d 734 (1986).

Voidable preference under Bankruptcy Code.

- Debtor's return of goods held on sale or return within the preference period constituted a voidable preference under the Bankruptcy Code, 11 U.S.C.S. § 547(b). Loeb v. G.A. Gertmenian & Sons (In re A.J. Nichols, Ltd.), 21 Bankr. 612 (Bankr. N.D. Ga. 1982).

Cited in McDonald v. Peoples Auto. Loan & Fin. Corp., 115 Ga. App. 483, 154 S.E.2d 886 (1967); Evans Implement Co. v. Thomas Indus., Inc., 117 Ga. App. 279, 160 S.E.2d 462 (1968); Knox Jewelry Co. v. Cincinnati Ins. Co., 130 Ga. App. 519, 203 S.E.2d 739 (1974); King's Appliance & Elecs., Inc. v. Citizens & S. Bank, 157 Ga. App. 857, 278 S.E.2d 733 (1981); Logan Paving Co. v. Massey-Ferguson Credit Corp., 172 Ga. App. 368, 323 S.E.2d 259 (1984); Amatulli Imports, Inc. v. House of Persia, Inc., 191 Ga. App. 827, 383 S.E.2d 192 (1989).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 465-502.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:315.

C.J.S.

- 35 C.J.S., Factors, §§ 1, 56, 60, 63.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-326.

ALR.

- Duty of purchaser of goods "on trial" or "on approval" regarding notice of rejection, 78 A.L.R. 533.

Reasonableness or personal judgment of buyer as test where goods are sold subject to being satisfactory to the buyer, 86 A.L.R.2d 200.

Time for return of goods sold on "sale or return" absent specific time provision in contract, 93 A.L.R.2d 342.

Consignment transactions under the Uniform Commercial Code, 40 A.L.R.3d 1078.

"Sale on approval" and "sale or return" contracts under Uniform Commercial Code § 2-326, 44 A.L.R.6th 441.

11-2-327. Special incidents of sale on approval and sale or return.

  1. Under a sale on approval unless otherwise agreed:
  1. Although the goods are identified to the contract the risk of loss and the title do not pass to the buyer until acceptance; and
  2. Use of the goods consistent with the purpose of trial is not acceptance but failure seasonably to notify the seller of election to return the goods is acceptance, and if the goods conform to the contract acceptance of any part is acceptance of the whole; and
  3. After due notification of election to return, the return is at the seller's risk and expense but a merchant buyer must follow any reasonable instructions.

Under a sale or return unless otherwise agreed:

The option to return extends to the whole or any commercial unit of the goods while in substantially their original condition, but must be exercised seasonably; and

The return is at the buyer's risk and expense.

(Code 1933, § 109A-2 - 327, enacted by Ga. L. 1962, p. 156, § 1.)

JUDICIAL DECISIONS

Cited in Knox Jewelry Co. v. Cincinnati Ins. Co., 130 Ga. App. 519, 203 S.E.2d 739 (1974); Walter E. Heller & Co. v. Aetna Bus. Credit, Inc., 158 Ga. App. 249, 280 S.E.2d 144 (1981); Amatulli Imports, Inc. v. House of Persia, Inc., 191 Ga. App. 827, 383 S.E.2d 192 (1989); Eagle Jets, LLC v. Atlanta Jet, Inc., 321 Ga. App. 386, 740 S.E.2d 439 (2013).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 465, 467.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:315.

C.J.S.

- 77A C.J.S., Sales, § 214.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-327.

ALR.

- Duty of purchaser of goods "on trial" or "on approval" regarding notice of rejection, 78 A.L.R. 533.

Loss on goods shipped as proratable between carrier's insurer and shipper's insurer, 169 A.L.R. 666.

Duty of consignee as to valuation of goods on reshipment to consignor, 16 A.L.R.2d 866.

Reasonableness or personal judgment of buyer as test where goods are sold subject to being satisfactory to the buyer, 86 A.L.R.2d 200.

Time for return of goods sold on "sale or return" absent specific time provision in contract, 93 A.L.R.2d 342.

Risk of loss of goods in "sale or return" transaction under UCC § 2-327, 66 A.L.R.3d 190.

11-2-328. Sale by auction.

  1. In a sale by auction if goods are put up in lots each lot is the subject of a separate sale.
  2. A sale by auction is complete when the auctioneer so announces by the fall of the hammer or in other customary manner. Where a bid is made while the hammer is falling in acceptance of a prior bid the auctioneer may in his discretion reopen the bidding or declare the goods sold under the bid on which the hammer was falling. In sales by auction the auctioneer shall be considered agent of both parties so far as to dispense with any further memorandum in writing than his own entries.
  3. Such a sale is with reserve unless the goods are in explicit terms put up without reserve. In an auction with reserve the auctioneer may withdraw the goods at any time until he announces completion of the sale. In an auction without reserve, after the auctioneer calls for bids on an article or lot, that article or lot cannot be withdrawn unless no bid is made within a reasonable time. In either case a bidder may retract his bid until the auctioneer's announcement of completion of the sale, but a bidder's retraction does not revive any previous bid.
  4. If the auctioneer knowingly receives a bid on the seller's behalf or the seller makes or procures such a bid, and notice has not been given that liberty for such bidding is reserved, the buyer may at his option avoid the sale or take the goods at the price of the last good faith bid prior to the completion of the sale. This subsection shall not apply to any bid at a forced sale.

(Code 1933, § 109A-2 - 328, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 1968, p. 1101, § 1.)

Cross references.

- Regulation of livestock auctions generally, § 4-6-40 et seq.

JUDICIAL DECISIONS

Not applicable to real property sales.

- O.C.G.A. § 11-2-328 applies only to sales of goods as opposed to sales of real property. Cuba v. Resolution Trust Corp., 849 F. Supp. 793 (N.D. Ga. 1994).

Cited in Dublin Livestock & Comm'n Co. v. Day, 178 Ga. App. 50, 341 S.E.2d 913 (1986).

RESEARCH REFERENCES

Am. Jur. 2d.

- 7 Am. Jur. 2d, Auctions and Auctioneers, §§ 18, 26, 30, 34, 38, 40. 30 Am. Jur. 2d, Executions and Enforcement of Judgments, § 495.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:315.

C.J.S.

- 7 C.J.S., Auctions and Auctioneers, §§ 7, 8.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-328.

ALR.

- Modes of making and accepting bids at auctions, 11 A.L.R. 543.

Regulations affecting auctions or auctioneers, 39 A.L.R. 773; 111 A.L.R. 473.

Liability of auctioneer or clerk to buyer as to title, condition, or quality of property sold, 80 A.L.R.2d 1237.

Personal liability of auctioneer to owner or mortgage for conversion, 96 A.L.R.2d 208.

Auction sales under UCC § 2-328, 44 A.L.R.4th 110.

PART 4 TITLE, CREDITORS, AND GOOD FAITH PURCHASERS

11-2-401. Passing of title; reservation for security; limited application of this Code section.

Each provision of this article with regard to the rights, obligations, and remedies of the seller, the buyer, purchasers, or other third parties applies irrespective of title to the goods except where the provision refers to such title. Insofar as situations are not covered by the other provisions of this article and matters concerning title become material the following rules apply:

  1. Title to goods cannot pass under a contract for sale prior to their identification to the contract (Code Section 11-2-501), and unless otherwise explicitly agreed the buyer acquires by their identification a special property as limited by this title. Any retention or reservation by the seller of the title (property) in goods shipped or delivered to the buyer is limited in effect to a reservation of a security interest. Subject to these provisions and to the provisions of the article on secured transactions (Article 9 of this title), title to goods passes from the seller to the buyer in any manner and on any conditions explicitly agreed on by the parties.
  2. Unless otherwise explicitly agreed title passes to the buyer at the time and place at which the seller completes his or her performance with reference to the physical delivery of the goods, despite any reservation of a security interest and even though a document of title is to be delivered at a different time or place; and in particular and despite any reservation of a security interest by the bill of lading:
  1. If the contract requires or authorizes the seller to send the goods to the buyer but does not require him or her to deliver them at destination, title passes to the buyer at the time and place of shipment; but
  2. If the contract requires delivery at destination, title passes on tender there.

Unless otherwise explicitly agreed where delivery is to be made without moving the goods:

If the seller is to deliver a tangible document of title, title passes at the time when and the place where he or she delivers such documents and if the seller is to deliver an electronic document of title, title passes when the seller delivers the document; or

If the goods are at the time of contracting already identified and no documents of title are to be delivered, title passes at the time and place of contracting.

A rejection or other refusal by the buyer to receive or retain the goods, whether or not justified, or a justified revocation of acceptance revests title to the goods in the seller. Such revesting occurs by operation of law and is not a "sale."

(Code 1933, § 109A-2 - 401, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2010, p. 481, § 2-6/HB 451.)

The 2010 amendment, effective May 27, 2010, inserted "or her" in subsection (2) and in paragraph (2)(a); inserted "the" in the introductory paragraph of subsection (3); in paragraph (3)(a), inserted "tangible", inserted "or she", and added "and if the seller is to deliver an electronic document of title, title passes when the seller delivers the document" at the end; and inserted "of title" in paragraph (3)(b). See the Editor's notes for applicability.

Editor's notes.

- Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.

Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.

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 insurance law in 1984-1985, see 37 Mercer L. Rev. 275 (1985). For comment on Cook Motor Co. v. Richardson, 103 Ga. App. 129, 118 S.E.2d 502 (1961), see 24 Ga. B.J. 266 (1961). For comment on Fender v. Colonial Stores, Inc., 138 Ga. App. 31, 225 S.E.2d 691 (1976), see 28 Mercer L. Rev. 751 (1977).

JUDICIAL DECISIONS

General Consideration

When title passes.

- If contract requires or authorizes seller to send goods to buyer but does not require seller to deliver them at destination, title passes to buyer at the time and place of shipment, but if contract requires delivery at destination, title passes on tender there. Promech Corp. v. Brodhead-Garrett Co., 131 Ga. App. 314, 205 S.E.2d 511 (1974).

Construction with other law.

- After obtaining consent from the probate court to sell construction equipment an executrix's decedent secured with a promissory note, the executrix was entitled to summary judgment as to the tort claims alleged against the decedent's corporation, after the corporation wrongfully retained possession of said equipment, converted two certificates of deposit, and the decedent's liability on the notes was extinguished under a provision of a stock sales agreement; furthermore, evidence was presented that the corporation's failure to release the equipment prevented its sale to third parties and thereby constituted a breach of a duty to mitigate damages. Midway R.R. Constr. Co. v. Beck, 281 Ga. App. 412, 636 S.E.2d 110 (2006).

Title did not pass to the shipper's customer upon delivery of goods to the carrier where it was agreed between all parties that the seller bore the expense, not of putting the goods in possession of the carrier, but rather of transporting the goods to the place of destination. Clark v. Messer Indus., Inc., 222 Ga. App. 606, 475 S.E.2d 653 (1996).

Delivery, in exchange for promise to pay in future, without retained security interest.

- Where defendant offered to pay in future for goods to be delivered presently, and seller agreed, delivered merchandise to defendant, and did not retain any security interest therein, there was a completed "sale" of the goods in question, and defendant had not only rightful possession of items, but title to them as well. Elliott v. State, 149 Ga. App. 579, 254 S.E.2d 900 (1979).

Attempted reservation of title amounted to a security interest.

- When the peanut growers completed the performance of the growers' duties under the growers' contracts with a peanut broker by delivering the growers' peanuts to a peanut company, title passed to the broker. The growers' attempted reservation of title amounted to a security interest. Farm Credit of Northwest Fla., ACA v. Easom Peanut Co., 312 Ga. App. 374, 718 S.E.2d 590 (2011), cert. denied, No. S12C0444, 2012 Ga. LEXIS 315 (Ga. 2012).

Customer's selection of goods and placing in shopping cart.

- Where defendant owner of barbecue restaurant continued to purchase large quantities of cut meat from plaintiff market's meat case (thereby leaving the market's meat case empty for other customers) instead of special ordering required meat as requested by plaintiff, plaintiff prevented defendant from paying for meat when defendant again disregarded plaintiff's instructions, and defendant refused to leave the market premises without paying for the meat selected, title to the meat did not pass to the defendant at the time defendant selected it and placed it in defendant's cart so as to serve as a basis for allowing defendant to ignore plaintiff's demand that defendant leave, thereby violating a criminal statute (criminal trespass). Watson v. State, 190 Ga. App. 671, 379 S.E.2d 811 (1989).

Delivery of automobile.

- Where seller delivered possession of automobile to buyer and transaction was complete as between them even though compliance had not yet been made with recording and insurance statutes, buyer was "owner" of the automobile and buyer alone was liable to third party for injuries sustained in accident while buyer was driving automobile. American Mut. Fire Ins. Co. v. Cotton States Mut. Ins. Co., 149 Ga. App. 280, 253 S.E.2d 825 (1979).

The evidence authorized the finding by the fact finder that, pursuant to the parties' understanding, the title to a motor vehicle passed to the buyer at the time the buyer received physical possession, with the seller holding the certificate as security only for the final payment of $50.00, which document was to be delivered at such time and place as the indebtedness was paid, and that, consequently, the sale was complete and the seller's uninsured motorist coverage on the vehicle was no longer in effect. Stone v. Nolan, 171 Ga. App. 644, 320 S.E.2d 781 (1984).

Since there was no explicit agreement to the contrary, a used car dealer acquired title to a car and the right to sell the car to a third party when the car was delivered to the dealer for this purpose; the fact that the dealer did not obtain the certificate of title did not deprive the dealer of title in the car or prevent it from transferring title. Right Touch of Class, Inc. v. Superior Bank, FSB, 244 Ga. App. 473, 536 S.E.2d 181 (2000); Mitchell Motors, Inc. v. Barnett, 249 Ga. App. 639, 549 S.E.2d 445 (2001).

Evidence showed that a car dealership sold its interest in a car to the buyer before a collision since the father signed the purchase and financing documents relating to the car sale, a credit company financed the purchase in the buyer's name and paid the dealership the car's purchase price, and the buyer's daughter took possession of the vehicle, regardless of whether an application for a certificate of title was filed before or after the collision. West v. Village Ford-Mercury, Inc., 256 Ga. App. 18, 567 S.E.2d 355 (2002).

O.C.G.A. § 11-2-401 creates, in favor of unpaid cash seller, unperfected interest which, though generally subject to a valid and perfected Article Nine security interest, may on some rare occasions provide relief to the aggrieved cash seller who can substantiate allegations either that a secured party acted in other than good faith or that one of the conditions described in O.C.G.A.11-9-113 has been met. Dixie Bonded Whse. & Grain Co. v. Allstate Fin. Corp., 693 F. Supp. 1162 (M.D. Ga. 1988).

Perfected security interest had priority over attempted reservation of title.

- Peanut growers' attempted reservation of title when the growers' delivered peanuts to a peanut company at a peanut broker's direction amounted to a security interest; however, the growers never perfected the growers' security interests. A cooperative bank's security interest in the peanuts was perfected, as the bank had filed financing statements and the security interest had attached so that the bank's perfected security interest had priority over the growers' unperfected security interests. Farm Credit of Northwest Fla., ACA v. Easom Peanut Co., 312 Ga. App. 374, 718 S.E.2d 590 (2011), cert. denied, No. S12C0444, 2012 Ga. LEXIS 315 (Ga. 2012).

Seller's failure to reserve title or obtain security interest.

- Unpaid seller of cotton was an unsecured creditor with no standing to challenge a secured creditor's ownership rights in accounts receivable, where the seller failed to reserve title and did not obtain a security interest in the cotton or the accounts receivable before releasing possession and control of its goods. Graniteville Co. v. Bleckley Lumber Co., 944 F.2d 819 (11th Cir. 1991).

Seller's security interest not discharged by sale where buyer does not complete terms of sale.

- The security interest of the mortgagee of a mobile home retail installment sales contract was not discharged by a sale to the mobile home dealer by the mortgagee following default by the purchasers where the mortgagee and the dealer agreed that the title to the mobile home was to be transferred to the dealer only after it had paid mortgagee for the mobile home, the dealer did not complete payment for the mobile home, and there was no transfer of the certificate of title or ownership interest to the dealer, nor was there need prior to the resale of the mobile home for the mortgagee to secure a new certificate of title. Sunnyland Employees' Fed. Credit Union v. Fort Wayne Mtg. Co., 182 Ga. App. 5, 354 S.E.2d 645 (1987).

When owner estopped from asserting title to property sold by another.

- Where one party sells property belonging to another, if latter received proceeds of sale with knowledge of fact that it is proceeds of sale of own property, the seller is estopped from asserting title to property against purchaser; if party to whom property belongs receives proceeds from sale of property in ignorance of fact that it is proceeds from sale of own property, seller is not estopped to assert title against purchaser, but may be required to account for money received. Stubbs v. Smith, 248 Ga. 768, 285 S.E.2d 720 (1982).

Definition of "sale" used in drug prosecution.

- There was no error, in a prosecution for trafficking in cocaine, in using the language contained in O.C.G.A. § 11-2-401(2) when giving the jury a definition of the word "sale." Quinn v. State, 171 Ga. App. 590, 320 S.E.2d 827 (1984).

Sale of marijuana was completed when defendant caused marijuana to be delivered to undercover agent. Freeman v. State, 163 Ga. App. 71, 292 S.E.2d 563 (1982).

Sale of marijuana not completed.

- Offense of selling marijuana was not complete upon defendants' leading of undercover agents to the site of the marijuana since an agreed-upon weighing, loading, and delivering had not yet occurred; thus, the substantive trafficking offense did not merge with or extinguish the conspiracy-to-traffic offense. Meyers v. State, 174 Ga. App. 161, 329 S.E.2d 293 (1985).

Factor's purchase of accounts receivable.

- Factor's interest as a good faith purchaser of a cotton buyer's accounts receivable was superior to the interests asserted by unsecured aggrieved sellers, where the factor's actions with respect to the sellers could be characterized as nothing other than honesty in fact and good faith under Article Two of the UCC. 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).

Legal title passed when goods tendered to third-party customer and bill of lading issued listing nonresident corporation as consignee.

- Under O.C.G.A. § 11-2-401(2), the nonresident corporation took legal title to goods when the manufacturer tendered those goods to a third-party customer at the manufacturer's Georgia facility and issued a bill of lading listing the nonresident corporation as the consignee. Taking physical possession of the goods was not necessary; the nonresident corporation took legal title to goods located in Georgia, and that was sufficient for purposes of "transacting business" under O.C.G.A. § 9-10-91(1). Diamond Crystal Brands, Inc. v. Food Movers Int'l, 593 F.3d 1249 (11th Cir.), cert. denied, 131 S. Ct. 158, 178 L. Ed. 2d 39 (2010).

Cited in Wooden v. Michigan Nat'l Bank, 117 Ga. App. 852, 162 S.E.2d 222 (1968); First Nat'l Bank & Trust Co. v. Smithloff, 119 Ga. App. 284, 167 S.E.2d 190 (1969); First Nat'l Bank & Trust Co. v. McElmurray, 120 Ga. App. 134, 169 S.E.2d 720 (1969); Marshall v. Universal C.I.T. Credit Corp., 121 Ga. App. 751, 175 S.E.2d 84 (1970); Rockwin Corp. v. Kincaid, 124 Ga. App. 570, 184 S.E.2d 509 (1971); Tri-County Livestock Auction Co. v. Bank of Madison, 228 Ga. 325, 185 S.E.2d 393 (1971); Giant Peanut & Grain Co. v. Long Mfg. Co., 129 Ga. App. 685, 201 S.E.2d 26 (1973); International Harvester Credit Corp. v. Associates Fin. Servs. Co., 133 Ga. App. 488, 211 S.E.2d 430 (1974); Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975); McDuffie v. State, 135 Ga. App. 616, 218 S.E.2d 320 (1975); Cone Mills Corp. v. A.G. Estes, Inc., 399 F. Supp. 938 (N.D. Ga. 1975); Spurlock v. Commercial Banking Co., 138 Ga. App. 892, 227 S.E.2d 790 (1976); Canal Ins. Co. v. P & J Truck Lines, 145 Ga. App. 545, 244 S.E.2d 81 (1978); Johnson v. State, 154 Ga. App. 353, 268 S.E.2d 406 (1980); Madewell v. Marietta Dodge, Inc., 506 F. Supp. 286 (N.D. Ga. 1980); Leader Nat'l Ins. Co. v. Smith, 162 Ga. App. 612, 292 S.E.2d 456 (1982); Palmer v. State, 250 Ga. 219, 297 S.E.2d 22 (1982); Robinson v. State, 164 Ga. App. 652, 297 S.E.2d 751 (1982); Ansley Park Plumbing & Heating Co. v. Mikart, Inc., 9 Bankr. 144 (Bankr. N.D. Ga. 1981); Graniteville Co. v. Bleckley Lumber Co., 687 F. Supp. 589 (M.D. Ga. 1988); Cotton States Mut. Ins. Co. v. Gomez, 192 Ga. App. 76, 383 S.E.2d 567 (1989); Mail Concepts, Inc. v. Foote & Davies, Inc., 200 Ga. App. 778, 409 S.E.2d 567 (1991); Saffron, Inc. v. Macon Kraft, Inc., 134 Bankr. 62 (Bankr. M.D. Ga. 1991); Superior Bank, FSB v. Human Servs. Emples. Credit Union, 252 Ga. App. 489, 556 S.E.2d 155 (2001); Edel v. Southtowne Motors of Newnan II, Inc., 338 Ga. App. 376, 789 S.E.2d 224 (2016).

Rejection or Revocation of Acceptance

Election at time of delivery.

- O.C.G.A. § 11-2-401(4), which provides that a "rejection or other refusal by the buyer to receive or retain the goods, whether or not justified, or a justified revocation of acceptance revests title to the goods in the seller," pertains to an election a buyer may make at the time the goods are presented to the buyer for delivery. Tennessee-Virginia Constr. Co. v. Willingham, 117 Ga. App. 290, 160 S.E.2d 444 (1968).

Return of automobile to dealer.

- The plaintiffs obtained all the rights to an automobile originally held by the defendant when they purchased the automobile from the dealer to whom it had been entrusted. However, after returning the car to the dealer in hopes this would enable plaintiffs to obtain a proper certificate of title, the plaintiffs eventually agreed to give up their claim to the automobile in exchange for the dealer's promise to order them a new and different automobile. This subsequent agreement with the dealer revoked any right or title the plaintiffs had to the automobile in question and revested title back to the original owner, the defendant. Walker v. Castello, 187 Ga. App. 196, 369 S.E.2d 527 (1988).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 390-398. 68A Am. Jur. 2d, Secured Transactions, § 13.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:346.

C.J.S.

- 77A C.J.S., Sales, § 214 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-401.

ALR.

- Forfeiture by innocent vendor of article sold conditionally and used by vendee in violation of law, 2 A.L.R. 1596.

Taking note for price as waiver of reservation of title under conditional sale, 13 A.L.R. 1044; 55 A.L.R. 1160.

Bankruptcy: rights of trustee in bankruptcy and contract purchaser of chattel remaining in the possession of the bankrupt, 22 A.L.R. 1328.

Validity and effect of provision in contract of sale with reservation of title, for collection of unpaid purchase money after retaking the property, 25 A.L.R. 1490; 43 A.L.R. 1243.

Provision in land contract against removal of buildings as affecting rights of third person under chattel mortgage or conditional sale, 30 A.L.R. 542.

Rule that title passes on delivery to carrier as applicable to shipment in "pool" car for several purchasers, 36 A.L.R. 410.

Who bears loss incident to destruction of goods sold conditionally, 38 A.L.R. 1319.

Passing of title to goods by acceptance of draft for purchase price, with warehouse receipt attached, or by transfer of draft with receipt, 55 A.L.R. 1116.

Time and place of passage of title to goods shipped under bill of lading, with draft attached, consigning them to shipper's order, 60 A.L.R. 677.

Rights and remedies as between parties to a conditional sale after the seller has repossessed himself of the property, 83 A.L.R. 959; 99 A.L.R. 1288; 49 A.L.R.2d 15.

Validity as against third person of sale or pledge of goods, or receipts issued for goods, retained in warehouse on premises of seller or pledgor (field warehousing), 133 A.L.R. 209.

Rights and duties of parties to conditional sales contract as to resale of repossessed property, 49 A.L.R.2d 15.

Punitive damages for wrongful seizure of chattel by one claiming security interest, 35 A.L.R.3d 1016.

11-2-402. Rights of seller's creditors against sold goods.

  1. Except as provided in subsections (2) and (3) of this Code section, rights of unsecured creditors of the seller with respect to goods which have been identified to a contract for sale are subject to the buyer's rights to recover the goods under this article (Code Sections 11-2-502 and 11-2-716).
  2. A creditor of the seller may treat a sale or an identification of goods to a contract for sale as void if as against him a retention of possession by the seller is fraudulent under any rule of law of the state where the goods are situated, except that retention of possession in good faith and current course of trade by a merchant-seller for a commercially reasonable time after a sale or identification is not fraudulent.
  3. Nothing in this article shall be deemed to impair the rights of creditors of the seller:
  1. Under the provisions of the article on secured transactions (Article 9 of this title); or
  2. Where identification to the contract or delivery is made not in current course of trade but in satisfaction of or as security for a preexisting claim for money, security, or the like and is made under circumstances which under any rule of law of the state where the goods are situated would apart from this article constitute the transaction a fraudulent transfer or voidable preference.

(Code 1933, § 109A-2 - 402, enacted by Ga. L. 1962, p. 156, § 1.)

RESEARCH REFERENCES

Am. Jur. 2d.

- 6 Am. Jur. 2d, Attachment and Garnishment, § 90. 15A Am. Jur. 2d, Commercial Code, § 11. 67 Am. Jur. 2d, Sales, §§ 462-464. 68A Am. Jur. 2d, Secured Transactions, § 13.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:356.

C.J.S.

- 37 C.J.S., Fraudulent Conveyances, § 212.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-402.

ALR.

- Validity as against third person of sale or pledge of goods, or receipts issued for goods, retained in warehouse on premises of seller or pledgor (field warehousing), 133 A.L.R. 209.

11-2-403. Power to transfer; good faith purchase of goods; "entrusting."

  1. A purchaser of goods acquires all title which his transferor had or had power to transfer except that a purchaser of a limited interest acquires rights only to the extent of the interest purchased. A person with voidable title has power to transfer a good title to a good faith purchaser for value. When goods have been delivered under a transaction of purchase the purchaser has such power even though:
  1. The transferor was deceived as to the identity of the purchaser; or
  2. The delivery was in exchange for a check which is later dishonored; or
  3. It was agreed that the transaction was to be a "cash sale"; or
  4. The delivery was procured through fraud punishable as larcenous under the criminal law.

Any entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer in ordinary course of business.

"Entrusting" includes any delivery and any acquiescence in retention of possession regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor's disposition of the goods have been such as to be larcenous under the criminal law.

The rights of other purchasers of goods and of lien creditors are governed by the articles on secured transactions (Article 9 of this title), bulk transfers (Article 6 of this title), and documents of title (Article 7 of this title).

(Code 1933, § 109A-2 - 403, enacted by Ga. L. 1962, p. 156, § 1.)

Cross references.

- Effect of sale to person without notice of equity, § 23-1-19.

Law reviews.

- For article discussing, "Voidability of Minors' Contracts: A Feudal Doctrine in a Modern Economy," see 1 Ga. L. Rev. 205 (1967). 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, "The Good Faith Purchase Idea and the Uniform Commercial Code," see 15 Ga. L. Rev. 605 (1981). For article surveying developments in Georgia commercial law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 33 (1981). For comment on Hewitt v. Malone, 105 Ga. App. 281, 124 S.E.2d 501 (1962), see 25 Ga. B.J. 218 (1962).

JUDICIAL DECISIONS

General Consideration

Editor's notes.

- In light of the similarity of the provisions, decisions under former Code 1933, § 96-207 are included in the annotations for this section.

Subsection (2) and (3) applied only to the owner of the goods as the entruster. Superior Bank, FSB v. Human Servs. Emples. Credit Union, 252 Ga. App. 489, 556 S.E.2d 155 (2001).

Exception to rule that seller can convey no greater title than possesses.

- O.C.G.A. § 11-2-403 and former § 11-9-306 (see now O.C.G.A. §§ 11-9-102 and11-9-315) provide precisely limited exception to common-law rule that seller can convey no greater title than seller has as to rights of an entrustor, because as between the seller and an innocent purchaser, it is entrustor whose act or omission enables wrongdoer to commit fraud. Commercial Credit Equip. Corp. v. Bates, 159 Ga. App. 910, 285 S.E.2d 560 (1981).

Divestment of true owner's title.

- Where owner of personal property gives another apparent right to sell such property by reason of having conferred upon the other indicia of title, a sale to an innocent purchaser divests true owner's title. Teague Ford Sales, Inc. v. Commercial Auto Loan Corp., 96 Ga. App. 129, 99 S.E.2d 524 (1957) (decided under former § 96-207).

Special application of O.C.G.A. § 23-1-14. - Rule that where owner has given to another such evidence of right to sell goods as, according to custom of trade or common understanding of the world, usually accompanies authority of disposal, or has given external indicia of the right of disposing of property, sale to an innocent purchaser divests true owner's title, is merely a special application of rule embodied in O.C.G.A. § 23-1-14, that, when one of two innocent persons must suffer by act of third person, owner who put it in power of third person to inflict injury shall bear loss. Cook Motor Co. v. Richardson, 103 Ga. App. 129, 118 S.E.2d 502 (1961) (decided under Code 1933, § 96-207).

Innocent purchaser protected.

- The estoppel is based on justice of protecting an innocent purchaser against damage that would otherwise come to purchaser through original act of owner in making it possible for one, whether immediate or in succession, to appear as rightfully entitled to sell that for which innocent party parts with money or property. Morris v. Courts, 59 Ga. App. 666, 1 S.E.2d 687 (1939) (decided under former § 96-207).

O.C.G.A. § 11-2-403(2) and (3) are applicable only to owners of goods. United Carolina Bank v. Sistrunk, 158 Ga. App. 107, 279 S.E.2d 272 (1981).

Where plaintiff was not the owner of a mobile home, it could not be its entruster, and hence defendant's contention that the remedy provided by O.C.G.A. § 11-2-403(2) and (3) applied was without merit. Sunnyland Employees' Fed. Credit Union v. Fort Wayne Mtg. Co., 182 Ga. App. 5, 354 S.E.2d 645 (1987).

Merchant.

- O.C.G.A. § 11-2-403 requires, from an objective viewpoint, that the entruster know, or in the exercise of reasonable diligence should know, that the entrustor placed the goods with one who might appear to third persons to be a dealer in the type of goods in question, and where entrustor met entrustee at an auction bidding for the litigated tractor, agreed for entrustee to install equipment on tractor and visited entrustee's repair shop, entrustee could reasonably appear to be a merchant. Perez-Medina v. First Team Auction, Inc., 206 Ga. App. 719, 426 S.E.2d 397 (1992).

Stolen property not included within section.

- Georgia Court of Appeals held that stolen property was not within the ambit of O.C.G.A. § 11-2-403. Cars v. W. Funding II, 349 Ga. App. 517, 826 S.E.2d 370 (2019).

Cited in Charles S. Martin Distrib. Co. v. Banks, 111 Ga. App. 538, 142 S.E.2d 309 (1965); First Nat'l Bank & Trust Co. v. Smithloff, 119 Ga. App. 284, 167 S.E.2d 190 (1969); First Nat'l Bank & Trust Co. v. McElmurray, 120 Ga. App. 134, 169 S.E.2d 720 (1969); Marshall v. Universal C.I.T. Credit Corp., 121 Ga. App. 751, 175 S.E.2d 84 (1970); Greater S. Distrib. Co. v. Usry, 124 Ga. App. 525, 184 S.E.2d 486 (1971); Rockwin Corp. v. Kincaid, 124 Ga. App. 570, 184 S.E.2d 509 (1971); Tri-County Livestock Auction Co. v. Bank of Madison, 228 Ga. 325, 185 S.E.2d 393 (1971); International Harvester Credit Corp. v. Commercial Credit Equip. Corp., 125 Ga. App. 477, 188 S.E.2d 110 (1972); Cone Mills Corp. v. A.G. Estes, Inc., 399 F. Supp. 938 (N.D. Ga. 1975); Chastain-Roberts Co. v. Better Brands, Inc., 141 Ga. App. 186, 233 S.E.2d 5 (1977); Sylvester Motor & Tractor Co. v. Farmers Bank, 153 Ga. App. 614, 266 S.E.2d 293 (1980); Commercial Credit Equip. Corp. v. Bates, 154 Ga. App. 71, 267 S.E.2d 469 (1980); McConnell v. Barrett, 154 Ga. App. 767, 270 S.E.2d 13 (1980); Hanington v. Palmer, 103 Bankr. 348 (Bankr. M.D. Ga. 1989); First Nat'l Bank v. Proceeding Ayres Aviation Holdings, Inc. (In re Ayres Aviation Holdings, Inc.), 342 Bankr. 104 (Bankr. M.D. Ga. 2006).

Good Faith Purchaser for Value

Proof of ownership not required.

- There is no requirement that a good faith purchaser for value receive a bill of sale or other proof of ownership before the purchaser can hold good title to a tractor. Brown v. Allen, 203 Ga. App. 894, 418 S.E.2d 153 (1992).

One holding perfected security interest in after-acquired property.

- Where seller did not perfect purchase money security interest, lien of security instrument previously perfected by filing held by plaintiff bank covering after-acquired property attached to property sold when it came into possession of buyer, even though at that time buyer had only voidable title, having paid with bad check, thus giving bank priority over the seller as a purchaser for value, provided bank had acted in good faith. Central Bank v. American Charms, Inc., 149 Ga. App. 218, 253 S.E.2d 857 (1979).

Bank was a good faith purchaser for value of certain cars under the following circumstances: The proprietor of a used-car business maintained a special checking account with the bank; the proprietor purchased cars from a car auction company with checks drawn upon this account; the proprietor then executed a promissory note to the bank, which loaned the proprietor the purchase price and took a security interest in the car; the account became overdrawn and the bank refused to honor the checks made out to the auction company. Georgia Cas. & Sur. Co. v. Tennille Banking Co. (In re Smith), 51 Bankr. 904 (Bankr. M.D. Ga. 1985).

Dealer acquiring vehicle from forger.

- Automobile dealer, who acquired a vehicle from a person who gave a forged check to its owner and then purported to "sell" the vehicle to the dealer, was a good faith purchaser for value. Charles Evans BMW, Inc. v. Williams, 196 Ga. App. 230, 395 S.E.2d 650 (1990).

Because plaintiff cellular telephone trademark holder's packages contained terms and conditions inside and language on the outside of the packages that referenced those terms and conditions, there was a valid "shrink-wrap" contract between the holder and purchasers of the cell phones, and allegations that defendant competitor removed the phones from their original packaging and shipped the phones outside the United States sufficiently raised a reasonable expectation that discovery would reveal evidence that the competitor was aware of the terms and conditions, was afforded an opportunity to reject the terms and conditions, and failed to reject the terms and conditions, such that a breach of contract claim was plausible, and, because the allegations indicated a lack of good faith by the competitor, the bona fide purchaser for value and buyer in the ordinary course defenses under O.C.G.A. §§ 11-1-201 and11-2-403(1)(a) were not available. Tracfone Wireless, Inc. v. Zip Wireless Prods., 716 F. Supp. 2d 1275 (N.D. Ga. 2010).

Thief cannot grant voidable title nor entrust.

- Trial court erred in finding that the finance company was entitled to summary judgment under O.C.G.A. § 11-2-403 because a thief who took the car could neither grant a voidable title to the car nor entrust the car to any other entity to sell on a dealer's behalf since no agency was established. Cars v. W. Funding II, 349 Ga. App. 517, 826 S.E.2d 370 (2019).

Buyer in Ordinary Course of Business

Plaintiffs in attachment proceedings.

- Where plaintiffs in attachment proceedings are seeking refund of down payment after recission of contract, fact that debt is to be satisfied by execution sale of attached mobile home does not make them buyers in ordinary course of business. Troy Lumber Co. v. Williams, 124 Ga. App. 636, 185 S.E.2d 580 (1971).

Security Interest

Security interest continues in collateral notwithstanding sale, exchange, or other disposition, unless authorized by secured party. Commercial Credit Equip. Corp. v. Bates, 159 Ga. App. 910, 285 S.E.2d 560 (1981).

Priority of entruster's security interest.

- Where financing statement giving notice of interest of entruster in office machines entrusted to a bankrupt was signed by debtor, incorporated a security agreement and adequately described collateral, and was filed prior to filing of a bank's financing statement covering inventory, equipment, furniture, and fixtures, the prior security interest must prevail. First Nat'l Bank & Trust Co. v. Olivetti Corp. of Am., 130 Ga. App. 896, 204 S.E.2d 781 (1974).

Application

Placing automobile in hands of dealer.

- Delivery of automobiles by plaintiff, under contract of sale, to one known by plaintiff to be a dealer in used automobiles in Georgia, without taking any security therefor, and with whom plaintiff had done business in a similar manner many times before, constituted such evidence of right to sell plaintiff's automobiles as according to custom of trade or common understanding of the world usually accompanies authority to dispose of them; plaintiff gave to dealer possession of the automobiles under external indicia of ownership, and dealer's subsequent sale to defendant divested plaintiff of title. Cook Motor Co. v. Richardson, 103 Ga. App. 129, 118 S.E.2d 502 (1961).

Defendant, by placing automobile in hands of merchant dealing in automobiles, gives latter power to transfer all defendant's rights to plaintiff buyer in ordinary course of business, and any limitation defendant placed upon authority of merchant is of no moment and not material to the issues. Christopher v. McGehee, 124 Ga. App. 310, 183 S.E.2d 624, aff'd, 228 Ga. 466, 186 S.E.2d 97 (1971).

Where the evidence showed that an automobile dealer entrusted a car to an automobile sales and leasing firm which was a merchant dealing in such goods, under O.C.G.A. § 11-2-403 the sales and leasing firm was empowered to transfer ownership interest in the car to a buyer in the ordinary course of business. Perimeter Ford, Inc. v. Edwards, 197 Ga. App. 747, 399 S.E.2d 520 (1990).

Even though a car dealer did not intend to sell the car to another dealer and authorize it to sell the car to a third party until the latter dealer's check cleared, the facts supported the conclusion that the first dealer entrusted the car to the other dealer with the understanding that the latter would arrange for financing and sell the car to the third party, who, as a buyer in the ordinary course of business, obtained all of the first dealer's interest to the car. Right Touch of Class, Inc. v. Superior Bank, FSB, 244 Ga. App. 473, 536 S.E.2d 181 (2000); Mitchell Motors, Inc. v. Barnett, 249 Ga. App. 639, 549 S.E.2d 445 (2001).

In an action upon a consignment of a motor home between the consignors and a dealer, once a dealer transferred a motor home to the buyer other than by the creation of a security interest, whether the buyer obtained title to the motor home was governed by O.C.G.A. § 11-2-403(2); the fact that the dealer did not obtain a title certificate at the time of the consignment did not prevent it from transferring good title to the buyer. Smith v. Hardeman, 281 Ga. App. 402, 636 S.E.2d 106 (2006).

Leaving purchased truck with dealer for modifications.

- Where truck dealer sells same truck to two customers successively, first purchaser is estopped from asserting otherwise good claim to ownership against subsequent purchaser and possessor where the first purchaser allowed truck to stay under control of dealer after transaction so as to effect modifications of truck amounting to an "entrusting" or acquiescence under O.C.G.A. § 11-2-403, giving the dealer power to transfer all rights in the truck. Simson v. Moon, 137 Ga. App. 82, 222 S.E.2d 873 (1975), cert. dismissed, 236 Ga. 786, 225 S.E.2d 314 (1976).

Automobile dealer "entrusted" cars to a leasing firm even though the vehicles were delivered directly to the firm's customers, where the delivery of the cars was simultaneous with the execution of lease agreements. Classic Cadillac v. World Omni Leasing, Inc., 199 Ga. App. 115, 404 S.E.2d 452 (1991).

Authority of automobile broker.

- O.C.G.A. § 11-2-403(2) was inapplicable to the sale of an automobile by an automobile broker where the automobile owner's son indicated acceptance of a lower selling price in a telephone conversation with a salesperson for the automobile broker; the broker was acting within its authority in selling the automobile. McDowell v. Owens, 170 Ga. App. 421, 317 S.E.2d 275 (1984).

Title revoked upon return of automobile to dealer.

- The plaintiffs obtained all the rights to an automobile originally held by the defendant when they purchased the automobile from the dealer to whom it had been entrusted. However, after returning the car to the dealer in hopes this would enable the dealer to obtain a proper certificate of title, the plaintiffs eventually agreed to give up their claim to the automobile in exchange for the dealer's promise to order them a new and different automobile. This subsequent agreement with the dealer revoked any right or title the plaintiffs had to the automobile in question and revested title back to the original owner, the defendant. Walker v. Castello, 187 Ga. App. 196, 369 S.E.2d 527 (1988).

Dealer with title, but finance company in possession.

- Trial court erred by denying a used car dealer's motion for summary judgment on the dealer's counterclaims for trover and conversion because the undisputed evidence showed that the dealer held the title to car but that the finance company was in possession and refused to return the car upon demand. Cars v. W. Funding II, 349 Ga. App. 517, 826 S.E.2d 370 (2019).

Where car is purchased by check later found to be worthless, and where such car is put into possession of purchaser and is later sold by original purchaser to innocent purchaser for valuable consideration, trover will not lie for original seller to recover property. Gouldman-Taber Pontiac, Inc. v. Thomas, 96 Ga. App. 279, 99 S.E.2d 711 (1957) (decided under former § 96-207).

Where, under contract of sale of automobiles, by terms of which payment was to be made in cash, vendor delivered possession of automobiles to vendee, accepted in payment a check or draft which later was found to be worthless, and where such vendee, being in possession of automobiles, later sold the same to an innocent purchaser for value, trover would not lie to aid the original seller in recovering the property from the possession of the second vendee. Cook Motor Co. v. Richardson, 103 Ga. App. 129, 118 S.E.2d 502 (1961).

An insurer of a vehicle was not entitled to summary judgment on the insurer's claims of trover and conversion against a buyer as the buyer was a good faith purchaser for value who acquired good title to the car pursuant to the voidable title doctrine under O.C.G.A. § 11-2-403, despite the fact that the check paid by the buyer's seller was later dishonored. Moreover, because the insurer stood in the shoes of the insured, it could have no greater right of recovery than that insured. Stein v. GEICO Indem. Ins. Co., 289 Ga. App. 739, 658 S.E.2d 153 (2008).

Entrustment of stolen corn.

- Plaintiff could not recover in trover and conversion from defendant grain elevator company for corn sold to defendant by plaintiff's manager, who had pocketed the proceeds, where the purchases were made in the ordinary course of business, and, since the allegedly stolen goods had been entrusted to the manager by plaintiff, the manager had the power to transfer all rights of the entruster to defendant. Locke v. Arabi Grain & Elevator Co., 197 Ga. App. 854, 399 S.E.2d 705 (1990).

Purchase of stolen goods.

- When items stolen from an electric company were sold to a supply company, the supply company was not entitled to summary judgment dismissing the electric company's conversion claim against it as a good faith purchaser for value, under O.C.G.A. § 11-2-403, because the exception in that statute was designed to protect a purchaser acting in good faith, and whether the supply company or its principal were good faith purchasers was a jury question. Fed. Ins. Co. v. Westside Supply Co., 264 Ga. App. 240, 590 S.E.2d 224 (2003).

Entrustment of auctioned tractor.

- Auctioned tractor was entrusted despite the fact that it was placed in merchant's possession only for the purpose of installing equipment for plaintiff rather than for sale. Perez-Medina v. First Team Auction, Inc., 206 Ga. App. 719, 426 S.E.2d 397 (1992).

Horses not included with farm.

- Purchasers of a horse farm did not acquire title to horses as good faith purchasers for value, even though the horses were listed both on a security agreement as collateral for a loan the purchasers had made to the vendor and in the sales agreement for the farm, where the horses in question were awarded to the vendor's former partner as part of a judgment and the partner obtained the horses through levy on the judgment, so that the vendor had no title in the horses and had no legal right to sell what was not owned. Russell v. Lawrence, 234 Ga. App. 612, 507 S.E.2d 161 (1998).

Delivered stock certificate bearing blank assignment and power of attorney.

- Blank assignment and power of attorney endorsed on delivered stock certificate estops transferor from claiming any further interest or title in stock as against a bona fide transferee. This concept is based upon the principle that where an owner has given to another external indicia of right to dispose of property, a sale to an innocent purchaser divests true owner's title, and upon principle that when one of two innocent persons must suffer by act of a third person, the one who puts it in the power of the third person to inflict the injury shall bear the loss. Morris v. Courts, 59 Ga. App. 666, 1 S.E.2d 687 (1939) (decided under former § 96-207).

Preexisting security interest in collateral.

- Since O.C.G.A. § 11-2-403(2) would not give a buyer title free of a preexisting security interest, it did not alter the result reached by the trial court granting appellee lender's motion and request for a writ of possession of a machine against appellant corporation, a bona fide purchaser. Intermet Corp. v. Fin. Fed. Credit, Inc., 263 Ga. App. 622, 588 S.E.2d 810 (2003).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 432-464. 68A Am. Jur. 2d, Secured Transactions, § 13.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:363.

C.J.S.

- 31 C.J.S., Estoppel and Waiver, §§ 118, 119.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-403.

ALR.

- Factor's failure to account for proceeds of sale as affecting rights of seller and purchaser inter se, 50 A.L.R. 1301.

Purchaser's right to protection under factor's act where transaction involves exchange of goods, 132 A.L.R. 525.

Selling agent's power to exchange or barter principal's personal property, 44 A.L.R.2d 1058.

Rights and duties of parties to conditional sales contract as to resale of repossessed property, 49 A.L.R.2d 15.

Relative rights as between assignee of conditional seller and a subsequent buyer from the conditional seller after repossession or the like, 72 A.L.R.2d 342.

Sales: what is "entrusting" goods to merchant dealer under UCC § 2-403, 59 A.L.R.4th 567.

PART 5 PERFORMANCE

Cross references.

- Performance of contracts generally, § 13-4-20 et seq.

11-2-501. Insurable interest in goods; manner of identification of goods.

  1. The buyer obtains a special property and an insurable interest in goods by identification of existing goods as goods to which the contract refers even though the goods so identified are nonconforming and he has an option to return or reject them. Such identification can be made at any time and in any manner explicitly agreed to by the parties. In the absence of explicit agreement identification occurs:
  1. When the contract is made if it is for the sale of goods already existing and identified;
  2. If the contract is for the sale of future goods other than those described in paragraph (c) of this subsection, when goods are shipped, marked, or otherwise designated by the seller as goods to which the contract refers;
  3. When the crops are planted or otherwise become growing crops or the young are conceived if the contract is for the sale of unborn young to be born within 12 months after contracting or for the sale of crops to be harvested within 12 months or the next normal harvest season after contracting whichever is longer.

The seller retains an insurable interest in goods so long as title to or any security interest in the goods remains in him and where the identification is by the seller alone he may until default or insolvency or notification to the buyer that the identification is final substitute other goods for those identified.

Nothing in this Code section impairs any insurable interest recognized under any other statute or rule of law.

(Code 1933, § 109A-2 - 501, 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, "Impracticability As Risk Allocation: The Effect of Changed Circumstances upon Contract Obligations for the Sale of Goods," see 22 Ga. L. Rev. 503 (1988).

JUDICIAL DECISIONS

Cited in First Nat'l Bank & Trust Co. v. Smithloff, 119 Ga. App. 284, 167 S.E.2d 190 (1969); Promech Corp. v. Brodhead-Garrett Co., 131 Ga. App. 314, 205 S.E.2d 511 (1974); International Harvester Credit Corp. v. Associates Fin. Servs. Co., 133 Ga. App. 488, 211 S.E.2d 430 (1974); Trust Co. v. Thompson, 133 Ga. App. 866, 212 S.E.2d 498 (1975); Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975); Western Publishing Co. v. International Horizons, Inc., 21 Bankr. 414 (N.D. Ga. 1982).

RESEARCH REFERENCES

Am. Jur. 2d.

- 43 Am. Jur. 2d, Insurance, § 962.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:378.

C.J.S.

- 44 C.J.S., Insurance, §§ 218-221.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-501.

11-2-502. Buyer's right to goods on seller's insolvency.

  1. Subject to subsections (2) and (3) of this Code section and even though the goods have not been shipped a buyer who has paid a part or all of the price of goods in which the buyer has a special property under the provisions of Code Section 11-2-501 may on making and keeping good a tender of any unpaid portion of their price recover them from the seller if:
  1. In the case of goods bought for personal, family, or household purposes, the seller repudiates or fails to deliver as required by the contract; or
  2. In all cases, the seller becomes insolvent within ten days after receipt of the first installment on their price.

The buyer's right to recover the goods under paragraph (a) of subsection (1) of this Code section vests upon acquisition of a special property, even if the seller had not then repudiated or failed to deliver.

If the identification creating the buyer's special property has been made by the buyer he or she acquires the right to recover the goods only if they conform to the contract for sale.

(Code 1933, § 109A-2 - 502, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2001, p. 362, § 7.)

The 2001 amendment, effective July 1, 2001, in the introductory language of subsection (1), substituted "subsections (2) and (3)" for "subsection (2)" near the beginning, substituted "the buyer" for "he" in the middle, and substituted "if:" for "if the seller becomes insolvent within ten days after receipt of the first installment on their price." at the end, and added paragraphs (1)(a) and (1)(b); added subsection (2); redesignated former subsection (2) as present subsection (3), and, in subsection (3), substituted "the buyer's" for "his" and substituted "or she" for "he".

Code Commission notes.

- Pursuant to Code Section 28-9-5, in 2001, "buyer he or she" was substituted for "buyer or she" in subsection (3).

RESEARCH REFERENCES

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:392.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-502.

11-2-503. Manner of seller's tender of delivery.

  1. Tender of delivery requires that the seller put and hold conforming goods at the buyer's disposition and give the buyer any notification reasonably necessary to enable him to take delivery. The manner, time, and place for tender are determined by the agreement and this article, and in particular:
  1. Tender must be at a reasonable hour, and if it is of goods they must be kept available for the period reasonably necessary to enable the buyer to take possession; but
  2. Unless otherwise agreed the buyer must furnish facilities reasonably suited to the receipt of the goods.

Where the case is within Code Section 11-2-504 respecting shipment tender requires that the seller comply with its provisions.

Where the seller is required to deliver at a particular destination tender requires that he comply with subsection (1) of this Code section and also in any appropriate case tender documents as described in subsections (4) and (5) of this Code section.

Where goods are in the possession of a bailee and are to be delivered without being moved:

Tender requires that the seller either tender a negotiable document of title covering such goods or procure acknowledgment by the bailee of the buyer's right to possession of the goods; but

Tender to the buyer of a nonnegotiable document of title or of a record directing the bailee to deliver is sufficient tender unless the buyer seasonably objects, and except as otherwise provided in Article 9 of this title receipt by the bailee of notification of the buyer's rights fixes those rights as against the bailee and all third persons; but risk of loss of the goods and of any failure by the bailee to honor the nonnegotiable document of title or to obey the direction remains on the seller until the buyer has had a reasonable time to present the document or direction, and a refusal by the bailee to honor the document or to obey the direction defeats the tender.

Where the contract requires the seller to deliver documents:

He or she shall tender all such documents in correct form, except as provided in this article with respect to bills of lading in a set (subsection (2) of Code Section 11-2-323); and

Tender through customary banking channels is sufficient and dishonor of a draft accompanying or associated with the documents constitutes nonacceptance or rejection.

(Code 1933, § 109A-2 - 503, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2010, p. 481, § 2-7/HB 451.)

The 2010 amendment, effective May 27, 2010, in paragraph (4)(b), substituted "record directing" for "written direction to" and inserted "except as otherwise provided in Article 9 of this title" near the beginning; substituted "or she shall" for "must" near the beginning of paragraph (5)(a); and inserted "or associated with" in the middle of paragraph (5)(b). See the Editor's notes for applicability.

Cross references.

- Bailments generally, § 44-12-40 et seq.

Editor's notes.

- Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.

Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity in the provisions, decisions under former Code 1933, § 20-1106 are included in the annotations for this section.

Tender defined.

- Tender is an offer to deliver something, made in pursuance of some contract or obligation, under such circumstances as to require no further act from party making it to complete transfer; it may be either of money or of specific articles. Carnation v. Pridgen, 84 Ga. App. 768, 67 S.E.2d 485 (1951) (decided under Code 1933, § 20-1106).

Tender not required where party states it will be refused.

- It is unnecessary to make a tender where party to whom offer is made states that tender will be refused if made. Carnation v. Pridgen, 84 Ga. App. 768, 67 S.E.2d 485 (1951) (decided under Code 1933, § 20-1106).

Vendee breaching by refusing to accept goods may not assert lack of delivery as defense.

- Defendant, maker of note, having breached contract by refusing to accept goods purchased thereunder, the contract by its terms not subject to cancellation, and vendor having elected to store goods for vendee, and having notified vendee of disposition of the goods, defendant cannot set up as a defense to suit on the note that contract merchandise was not delivered to vendee according to contract terms. Carnation v. Pridgen, 84 Ga. App. 768, 67 S.E.2d 485 (1951) (decided under Code 1933, § 20-1106).

Cited in Undercofler v. Eastern Air Lines, 221 Ga. 824, 147 S.E.2d 436 (1966); Hill Aircraft & Leasing Corp. v. Planes, Inc., 169 Ga. App. 161, 312 S.E.2d 119 (1983); Kemira, Inc. v. Miller (In re Lemco Gypsum, Inc.), 95 Bankr. 860 (Bankr. S.D. Ga. 1989).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 520, 521, 527, 545.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:434.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-503.

ALR.

- Act done on same day as, but before another act or event, as satisfying a statutory requirement that the former must precede the latter, 21 A.L.R. 1216.

Right to deposit goods in street as incident of loading or unloading, 23 A.L.R. 816.

When instrument deemed payable at a "special place" within the provision of the Uniform Negotiable Instruments Law making ability and willingness to pay at such place equivalent to tender, 24 A.L.R. 1050.

Construction and effect of provision in contract of sale as to declaration by seller of carrier vessel, 27 A.L.R. 165.

Failure to ship by carrier designated by buyer as affecting passing of title, 31 A.L.R. 955.

Upon whom loss from theft or the like falls, where seller turns over goods at buyer's premises, 50 A.L.R.2d 330.

Applicability of UCC Article 2 to mixed contracts for sale of consumer goods and services, 1 A.L.R.7th 3.

Applicability of UCC Article 2 to mixed contracts for sale of goods and services: distributorship, franchise, and similar business contracts, 8 A.L.R.7th 4.

Applicability of UCC Article 2 to mixed contracts for sale of business goods and services: manufacturing, construction, and similar contracts, 15 A.L.R.7th 7.

11-2-504. Shipment by seller.

Where the seller is required or authorized to send the goods to the buyer and the contract does not require him to deliver them at a particular destination, then unless otherwise agreed he must:

  1. Put the goods in the possession of such a carrier and make such a contract for their transportation as may be reasonable having regard to the nature of the goods and other circumstances of the case; and
  2. Obtain and promptly deliver or tender in due form any document necessary to enable the buyer to obtain possession of the goods or otherwise required by the agreement or by usage of trade; and
  3. Promptly notify the buyer of the shipment.

    Failure to notify the buyer under paragraph (c) of this Code section or to make a proper contract under paragraph (a) of this Code section is a ground for rejection only if material delay or loss ensues.

(Code 1933, § 109A-2 - 504, enacted by Ga. L. 1962, p. 156, § 1.)

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 528, 529.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, §§ 2:434, 2:456.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-504.

ALR.

- Failure to ship by carrier designated by buyer as affecting passing of title, 31 A.L.R. 955.

Means of transportation contemplated by provision relating to "freight rates" in contract, 83 A.L.R. 1306.

Buyer's duty to give seller instructions to ship where former has not exercised his option under contract to require shipment before time specified, 119 A.L.R. 1495.

11-2-505. Seller's shipment under reservation.

  1. Where the seller has identified goods to the contract by or before shipment:
  1. His or her procurement of a negotiable bill of lading to his or her own order or otherwise reserves in him or her a security interest in the goods. His or her procurement of the bill to the order of a financing agency or of the buyer indicates in addition only the seller's expectation of transferring that interest to the person named.
  2. A nonnegotiable bill of lading to himself or herself or his or her nominee reserves possession of the goods as security but except in a case of conditional delivery (subsection (2) of Code Section 11-2-507) a nonnegotiable bill of lading naming the buyer as consignee reserves no security interest even though the seller retains possession or control of the bill of lading.

When shipment by the seller with reservation of a security interest is in violation of the contract for sale it constitutes an improper contract for transportation within Code Section 11-2-504 but impairs neither the rights given to the buyer by shipment and identification of the goods to the contract nor the seller's powers as a holder of a negotiable document of title.

(Code 1933, § 109A-2 - 505, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2010, p. 481, § 2-8/HB 451.)

The 2010 amendment, effective May 27, 2010, in subsection (1), inserted "or her" throughout; in paragraph (1)(b), inserted "or herself" near the beginning and inserted "or control" near the end; and added "of title" at the end of subsection (2). See the Editor's notes for applicability.

Editor's notes.

- Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.

Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.

JUDICIAL DECISIONS

Cited in Georgia Ports Auth. v. Mitsubishi Int'l Corp., 156 Ga. App. 304, 274 S.E.2d 699 (1980).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, § 415. 68A Am. Jur. 2d, Secured Transactions, § 13.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, §§ 2:434, 2:456.

C.J.S.

- 13 C.J.S., Carriers, §§ 398-401. 80 C.J.S., Shipping, § 260.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-505.

11-2-506. Rights of financing agency.

  1. A financing agency by paying or purchasing for value a draft which relates to a shipment of goods acquires to the extent of the payment or purchase and in addition to its own rights under the draft and any document of title securing it any rights of the shipper in the goods including the right to stop delivery and the shipper's right to have the draft honored by the buyer.
  2. The right to reimbursement of a financing agency which has in good faith honored or purchased the draft under commitment to or authority from the buyer is not impaired by subsequent discovery of defects with reference to any relevant document which was apparently regular.

(Code 1933, § 109A-2 - 506, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2010, p. 481, § 2-9/HB 451.)

The 2010 amendment, effective May 27, 2010, deleted "on its face" following "regular" at the end of subsection (2). See the Editor's notes for applicability.

Editor's notes.

- Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.

Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.

RESEARCH REFERENCES

Am. Jur. 2d.

- 68A Am. Jur. 2d, Secured Transactions, § 13.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, §§ 2:370, 2:434.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-506.

ALR.

- Repossession by secured seller as affecting his right to recover on note or other obligation given as a down payment, 49 A.L.R.3d 364.

11-2-507. Effect of seller's tender; delivery on condition.

  1. 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.
  2. 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.

(Code 1933, § 109A-2 - 507, enacted by Ga. L. 1962, p. 156, § 1.)

JUDICIAL DECISIONS

Cited in B & P Lumber Co. v. First Nat'l Bank, 147 Ga. App. 762, 250 S.E.2d 505 (1978); Henry v. Blankenship, 284 Ga. App. 578, 644 S.E.2d 419 (2007); Mauk v. Pioneer Ford Mercury, 308 Ga. App. 864, 709 S.E.2d 353 (2011).

RESEARCH REFERENCES

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:434.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-507.

ALR.

- Effect of premature tender of goods which is refused by the buyer, 47 A.L.R. 193.

Necessity of proving specific reason for injury or damage to shipment of fruit or vegetables in order to overcome prima facie case against carrier where shipment was received in good condition and delivered in bad condition, 115 A.L.R. 1274.

11-2-508. Cure by seller of improper tender or delivery; replacement.

  1. Where any tender or delivery by the seller is rejected because nonconforming and the time for performance has not yet expired, the seller may seasonably notify the buyer of his intention to cure and may then within the contract time make a conforming delivery.
  2. Where the buyer rejects a nonconforming tender which the seller had reasonable grounds to believe would be acceptable with or without money allowance the seller may if he seasonably notifies the buyer have a further reasonable time to substitute a conforming tender.

(Code 1933, § 109A-2 - 508, enacted by Ga. L. 1962, p. 156, § 1.)

Law reviews.

- For article, "Buyer's Right of Rejection: A Quarter Century Under the Uniform Commercial Code, and Recent International Developments," see 13 Ga. L. Rev. 805 (1979). For note, "David Tunick, Inc. v. Kornfield: Applying U.C.C. Section 2-716 and Uniqueness to a Section 2-508 Analysis," see 45 Mercer L. Rev. 1407 (1994).

JUDICIAL DECISIONS

Breach of express warranty not found.

- Manufacturer did not breach its express warranty as the manufacturer addressed each defect in a vehicle as it arose, most repairs were made within days, and the only extended delay was the result of the buyer's decision to postpone bringing the vehicle into the repair facility. Knight v. Am. Suzuki Motor Corp., 272 Ga. App. 319, 612 S.E.2d 546 (2005).

Manufacturer's express warranty on a vehicle was not governed by the Magnuson-Moss Warranty Act, specifically 15 U.S.C. § 2304, but was governed by the Uniform Commercial Code, O.C.G.A. §§ 11-2-508,11-2-605, and11-2-607(3)(a) as the warranty was a limited warranty. Knight v. Am. Suzuki Motor Corp., 272 Ga. App. 319, 612 S.E.2d 546 (2005).

Cited in Hill Aircraft & Leasing Corp. v. Planes, Inc., 169 Ga. App. 161, 312 S.E.2d 119 (1983); Wolfes v. Terrell, 173 Ga. App. 835, 328 S.E.2d 569 (1985); Mauk v. Pioneer Ford Mercury, 308 Ga. App. 864, 709 S.E.2d 353 (2011).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 578-584.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:434.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-508.

ALR.

- Effect of premature tender of goods which is refused by the buyer, 47 A.L.R. 193.

Seller's cure of improper tender or delivery under UCC § 2-508, 36 A.L.R.4th 544.

11-2-509. Risk of loss in the absence of breach.

  1. Where the contract requires or authorizes the seller to ship the goods by carrier:
  1. If it does not require him to deliver them at a particular destination, the risk of loss passes to the buyer when the goods are duly delivered to the carrier even though the shipment is under reservation (Code Section 11-2-505); but
  2. If it does require him to deliver them at a particular destination and the goods are there duly tendered while in the possession of the carrier, the risk of loss passes to the buyer when the goods are there duly so tendered as to enable the buyer to take delivery.
  3. After his or her receipt of possession or control of a nonnegotiable document of title or other direction to deliver in a record, as provided in subsection (4)(b) of Code Section 11-2-503.

Where the goods are held by a bailee to be delivered without being moved, the risk of loss passes to the buyer:

On his or her receipt of possession or control of a negotiable document of title covering the goods; or

On acknowledgment by the bailee of the buyer's right to possession of the goods; or

In any case not within subsection (1) or (2) of this Code section, the risk of loss passes to the buyer on his receipt of the goods if the seller is a merchant; otherwise the risk passes to the buyer on tender of delivery.

The provisions of this Code section are subject to contrary agreement of the parties and to the provisions of this article on sale on approval (Code Section 11-2-327) and on effect of breach on risk of loss (Code Section 11-2-510).

(Code 1933, § 109A-2 - 509, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 1963, p. 188, § 3; Ga. L. 2010, p. 481, § 2-10/HB 451.)

The 2010 amendment, effective May 27, 2010, inserted "or her" twice in subsection (2); inserted "possession or control of" in the middle of paragraph (2)(a); and, in the middle of paragraph (2)(c), inserted "possession or control of" in the beginning and substituted "direction to deliver in a record" for "written direction to deliver" in the middle. See the Editor's notes for applicability.

Cross references.

- Insurance of agricultural products stored or deposited in public warehouses, § 10-4-25.

Bailments generally, § 44-12-40 et seq.

Editor's notes.

- Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.

Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.

Law reviews.

- For article, "Impracticability As Risk Allocation: The Effect of Changed Circumstances upon Contract Obligations for the Sale of Goods," see 22 Ga. L. Rev. 503 (1988).

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity in the provisions, decisions under former Code 1933, § 96-108 are included in the annotations for this section.

Provision regarding delays or damage beyond vendor's control.

- Where the contract of sale provided that "vendor shall not be held liable for any loss or damage arising from delays or damages caused by fire or strikes, delays in transportation, or other causes beyond vendor's control," this stipulation is not such an agreement as would come within proviso of former Code 1933, § 96-108, "unless it is otherwise agreed in the contract of sale." Wood v. Phoenix Ins. Co., 199 Ga. 461, 34 S.E.2d 688 (1945) (decided under Code 1933, § 96-108).

Risk of loss did not transfer.

- Jury properly determined that the defendant did not bear the loss of a helicopter crash because there was some evidence upon which the jury could rely in concluding that the defendant did not breach the agreement between the parties and the jury made a special finding that under the aircraft purchase agreement, the risk of loss remained with the plaintiff despite the defendant agreeing to make additional repairs when the helicopter arrived at the helicopter's final destination. Eagle Jets, LLC v. Atlanta Jet, Inc., 321 Ga. App. 386, 740 S.E.2d 439 (2013).

Cited in Georgia Ports Auth. v. Mitsubishi Int'l Corp., 156 Ga. App. 304, 274 S.E.2d 699 (1980).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 412, 419-427.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:475.

C.J.S.

- 77A C.J.S., Sales, § 214.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-509.

ALR.

- Provisions of sales contract relating to party to bear the loss from insolvency of or breach of contract by bank through which paper representing price is routed for collection, 99 A.L.R. 1472.

Loss on goods shipped as proratable between carrier's insurer and shipper's insurer, 169 A.L.R. 666.

Upon whom loss from theft or the like falls, where seller turns over goods at buyer's premises, 50 A.L.R.2d 330.

Who bears risk of loss of goods under UCC § 2-509 and § 2-510, 66 A.L.R.3d 145.

11-2-510. Effect of breach on risk of loss.

  1. Where a tender or delivery of goods so fails to conform to the contract as to give a right of rejection the risk of their loss remains on the seller until cure or acceptance.
  2. Where the buyer rightfully revokes acceptance he may to the extent of any deficiency in his effective insurance coverage treat the risk of loss as having rested on the seller from the beginning.
  3. Where the buyer as to conforming goods already identified to the contract for sale repudiates or is otherwise in breach before risk of their loss has passed to him, the seller may to the extent of any deficiency in his effective insurance coverage treat the risk of loss as resting on the buyer for a commercially reasonable time.

(Code 1933, § 109A-2 - 510, enacted by Ga. L. 1962, p. 156, § 1.)

Law reviews.

- For article, "Impracticability As Risk Allocation: The Effect of Changed Circumstances upon Contract Obligations for the Sale of Goods," see 22 Ga. L. Rev. 503 (1988).

JUDICIAL DECISIONS

No breach of contract established.

- Jury properly determined that the defendant did not bear the loss of a helicopter crash because there was some evidence upon which the jury could rely in concluding that the defendant did not breach the agreement between the parties and the jury made a special finding that under the aircraft purchase agreement, the risk of loss remained with the plaintiff despite the defendant's agreement to make additional repairs. Eagle Jets, LLC v. Atlanta Jet, Inc., 321 Ga. App. 386, 740 S.E.2d 439 (2013).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 413, 428-430.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:487.

C.J.S.

- 77A C.J.S., Sales, § 214.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-510.

ALR.

- Applicability of provision in contract of sale for return of article, where article delivered does not answer to description, 30 A.L.R. 321.

Provisions of sales contract relating to party to bear the loss from insolvency of or breach of contract by bank through which paper representing price is routed for collection, 99 A.L.R. 1472.

Upon whom loss from theft or the like falls, where seller turns over goods at buyer's premises, 50 A.L.R.2d 330.

Who bears risk of loss of goods under UCC § 2-509 and § 2-510, 66 A.L.R.3d 145.

11-2-511. Tender of payment by buyer; payment by check.

  1. Unless otherwise agreed tender of payment is a condition to the seller's duty to tender and complete any delivery.
  2. Tender of payment is sufficient when made by any means or in any manner current in the ordinary course of business unless the seller demands payment in legal tender and gives any extension of time reasonably necessary to procure it.
  3. Subject to the provisions of this title on the effect of an instrument on an obligation, payment by check is conditional and is defeated as between the parties by dishonor of the check on due presentment.

(Code 1933, § 109A-2 - 511, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 1997, p. 143, § 11.)

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).

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity in the provisions, decisions under former Code 1933, § 96-106 are included in the annotations for this section.

Unless credit is specifically agreed on or is custom of trade, purchase money is due immediately, and seller may demand payment before delivering goods. Douglas Motor Sales, Inc. v. Cy Owens, Inc., 99 Ga. App. 890, 109 S.E.2d 874 (1959) (decided under Code 1933, § 96-106).

Title with seller until payment.

- Where goods are sold for cash to be paid on delivery, payment of purchase price is condition precedent to sale; and where purchase price is not paid, title remains in seller, notwithstanding possession of goods by buyer. Fact that payment is to be made by check does not alter above rule. Douglas Motor Sales, Inc. v. Cy Owens, Inc., 99 Ga. App. 890, 109 S.E.2d 874 (1959) (decided under Code 1933, § 96-106).

Acceleration of debt.

- In action alleging wrongful repossession of automobile, where creditor declared entire principal due upon default of debtor, the latter may tender payment by any means current in the ordinary course of business and if seller demands payment in legal tender, seller must give reasonable extension of time. Chrysler Credit Corp. v. Barnes, 126 Ga. App. 444, 191 S.E.2d 121 (1972).

Sale of timber.

- In action on contract for sale of stand of timber, payment to be made as timber was cut, averment that plaintiff admitted defendant in possession of premises and defendant commenced cutting and sawing operations must be taken as referring to an entry under a mere license to cut and remove timber in accordance with the contract, defendant to acquire title only to the product as the same was sawed, stacked, and paid for. Pope v. Barnett, 49 Ga. App. 59, 163 S.E. 517 (1932) (decided under Code 1933, § 96-106).

Stopping payment on check after buyer takes possession.

- When payment is stopped on check after defendant purchasers are in possession of automobiles, conversion of automobiles is established by plaintiff seller and prima facie case made out. Douglas Motor Sales, Inc. v. Cy Owens, Inc., 99 Ga. App. 890, 109 S.E.2d 874 (1959) (decided under Code 1933, § 96-106).

Cited in Ford Motor Credit Co. v. Spicer, 144 Ga. App. 383, 241 S.E.2d 273 (1977); Harris v. Harbin Lumber Co. (In re Ellison), 31 Bankr. 545 (Bankr. M.D. Ga. 1983).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, § 668.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:404.

C.J.S.

- 77A C.J.S., Sales, § 207 et seq. 86 C.J.S., Tender, § 21 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-511.

ALR.

- Tender by check, 23 A.L.R. 1284; 51 A.L.R. 393.

Acceptance of cashier's check from debtor as absolute or conditional payment, 45 A.L.R. 1487.

Right of judgment creditor to demand that debtor's tender of payment be in cash or by certified check rather than by uncertified check, 82 A.L.R.3d 1199.

11-2-512. Payment by buyer before inspection.

  1. Where the contract requires payment before inspection nonconformity of the goods does not excuse the buyer from so making payment unless:
  1. The nonconformity appears without inspection; or
  2. Despite tender of the required documents the circumstances would justify injunction against honor under the provisions of this title (Code Section 11-5-109).

Payment pursuant to subsection (1) of this Code section does not constitute an acceptance of goods or impair the buyer's right to inspect or any of his remedies.

(Code 1933, § 109A-2 - 512, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2002, p. 995, § 2.)

The 2002 amendment, effective July 1, 2002, substituted "(Code Section 11-5-109)" for "(Code Section 11-5-114)" at the end of paragraph (1)(b). See Editor's note for applicability.

Editor's notes.

- Ga. L. 2002, p. 995, § 8, not codified by the General Assembly, provides that: "This Act shall become effective July 1, 2002, and shall apply to a letter of credit that is issued on or after July 1, 2002. This Act does not apply to a transaction, event, obligation, or duty arising out of or associated with a letter of credit that was issued before July 1, 2002."

Law reviews.

- For article, "Buyer's Right of Rejection: A Quarter Century Under the Uniform Commercial Code, and Recent International Developments," see 13 Ga. L. Rev. 805 (1979).

JUDICIAL DECISIONS

Cited in Givens v. State, 216 Ga. App. 176, 454 S.E.2d 141 (1995).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, § 618.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:417.

C.J.S.

- 77A C.J.S., Sales, § 209.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-512.

11-2-513. Buyer's right to inspection of goods.

  1. Unless otherwise agreed and subject to subsection (3) of this Code section, where goods are tendered or delivered or identified to the contract for sale, the buyer has a right before payment or acceptance to inspect them at any reasonable place and time and in any reasonable manner. When the seller is required or authorized to send the goods to the buyer, the inspection may be after their arrival.
  2. Expenses of inspection must be borne by the buyer but may be recovered from the seller if the goods do not conform and are rejected.
  3. Unless otherwise agreed and subject to the provisions of this article on C.I.F. contracts (subsection (3) of Code Section 11-2-321), the buyer is not entitled to inspect the goods before payment of the price when the contract provides:
  1. For delivery "C.O.D." or on other like terms; or
  2. For payment against documents of title, except where such payment is due only after the goods are to become available for inspection.

A place or method of inspection fixed by the parties is presumed to be exclusive but unless otherwise expressly agreed it does not postpone identification or shift the place for delivery or for passing the risk of loss. If compliance becomes impossible, inspection shall be as provided in this Code section unless the place or method fixed was clearly intended as an indispensable condition failure of which avoids the contract.

(Code 1933, § 109A-2 - 513, enacted by Ga. L. 1962, p. 156, § 1.)

Law reviews.

- For article, "Buyer's Right of Rejection: A Quarter Century Under the Uniform Commercial Code, and Recent International Developments," see 13 Ga. L. Rev. 805 (1979). For survey article on construction law for the period from June 1, 2002 through May 31, 2003, see 55 Mercer L. Rev. 85 (2003). For note, "Buyer's Right to Revoke Acceptance Against the Automobile Manufacturer for Breach of its Continuing Warranty of Repair or Replacement," see 7 Ga. L. Rev. 711 (1973).

JUDICIAL DECISIONS

Cited in Tennessee-Virginia Constr. Co. v. Willingham, 117 Ga. App. 290, 160 S.E.2d 444 (1968); Atlantic Aluminum & Metal Distribs. v. Adams, 123 Ga. App. 387, 181 S.E.2d 101 (1971); Givens v. State, 216 Ga. App. 176, 454 S.E.2d 141 (1995); Imex Int'l v. Wires Eng'g, 261 Ga. App. 329, 583 S.E.2d 117 (2003).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 610-616, 699.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:423.

C.J.S.

- 77A C.J.S., Sales, § 185 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-513.

ALR.

- Right of bank which receives for collection draft with bill of lading attached, to deliver bill of lading conditionally to consignee to enable him to inspect the goods, 18 A.L.R. 732.

Buyer's right to inspect at destination where goods are delivered to carrier, 27 A.L.R. 524.

Implied warranty or condition as to quality of timber or lumber, 52 A.L.R. 1536.

Implied warranty of quality, fitness, or condition as affected by buyer's inspection of, or opportunity to inspect, goods, 168 A.L.R. 389.

Provision in bill of lading prohibiting or limiting consignee's right to inspect goods shipped, 25 A.L.R.2d 770.

Time, place and manner of buyer's inspection of goods under UCC § 2-513, 36 A.L.R.4th 726.

11-2-514. When documents deliverable on acceptance; when on payment.

Unless otherwise agreed documents against which a draft is drawn are to be delivered to the drawee on acceptance of the draft if it is payable more than three days after presentment; otherwise, only on payment.

(Code 1933, § 109A-2 - 514, enacted by Ga. L. 1962, p. 156, § 1.)

RESEARCH REFERENCES

Am. Jur. 2d.

- 13 Am. Jur. 2d, Carriers, § 367.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:370.

C.J.S.

- 77A C.J.S., Sales, §§ 153, 208.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-514.

11-2-515. Preserving evidence of goods in dispute.

In furtherance of the adjustment of any claim or dispute:

  1. Either party on reasonable notification to the other and for the purpose of ascertaining the facts and preserving evidence has the right to inspect, test, and sample the goods including such of them as may be in the possession or control of the other; and
  2. The parties may agree to a third party inspection or survey to determine the conformity or condition of the goods and may agree that the findings shall be binding upon them in any subsequent litigation or adjustment.

(Code 1933, § 109A-2 - 515, enacted by Ga. L. 1962, p. 156, § 1.)

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 620-622.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:370.

C.J.S.

- 17B C.J.S., Contracts, § 565 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-515.

ALR.

- Conclusiveness of determination of third party whose approval is provided for by contract for sale of goods, 7 A.L.R.3d 555.

PART 6 BREACH, REPUDIATION, AND EXCUSE

Cross references.

- Rights of buyer and seller upon buyer's cancellation of consumer credit sale made after home solicitation, § 10-1-6.

RESEARCH REFERENCES

ALR.

- Causes of action governed by limitations period in UCC § 2-725, 49 A.L.R.5th 1.

Repudiation and remedies for repudiation under § 212(e) of Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) (12 USCS § 1821(e)), 132 A.L.R. Fed. 1

11-2-601. Buyer's rights on improper delivery.

Subject to the provisions of this article on breach in installment contracts (Code Section 11-2-612) and unless otherwise agreed under the Code sections on contractual limitations of remedy (Code Sections 11-2-718 and 11-2-719), if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may:

  1. Reject the whole; or
  2. Accept the whole; or
  3. Accept any commercial unit or units and reject the rest.

(Code 1933, § 109A-2 - 601, enacted by Ga. L. 1962, p. 156, § 1.)

Law reviews.

- For article, "Buyer's Right of Rejection: A Quarter Century Under the Uniform Commercial Code, and Recent International Developments," see 13 Ga. L. Rev. 805 (1979). For note, "Buyer's Right to Revoke Acceptance Against the Automobile Manufacturer for Breach of its Continuing Warranty of Repair or Replacement," see 7 Ga. L. Rev. 711 (1973).

JUDICIAL DECISIONS

Cited in Tennessee-Virginia Constr. Co. v. Willingham, 117 Ga. App. 290, 160 S.E.2d 444 (1968); Financial Bldg. Consultants, Inc. v. St. Charles Mfg. Co., 145 Ga. App. 768, 244 S.E.2d 877 (1978); Henco Adv., Inc. v. Geographics, Inc., 155 Ga. App. 571, 271 S.E.2d 704 (1980); Hawkins v. UPM, Inc., 159 Ga. App. 231, 283 S.E.2d 87 (1981); Lundy v. Low, 200 Ga. App. 332, 408 S.E.2d 144 (1991); Unipay, Inc. v. Lynk Sys., 251 Ga. App. 674, 555 S.E.2d 78 (2001).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 642-646.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:496.

C.J.S.

- 77A C.J.S., Sales, §§ 189, 197.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-601.

ALR.

- Contract for sale of goods as entire or divisible, 2 A.L.R. 643.

Applicability of provision in contract of sale for return of article, where article delivered does not answer to description, 30 A.L.R. 321.

Misrouting as affecting duty of the buyer to accept goods, 46 A.L.R. 1120.

Sufficiency of buyer's attempt to rescind as affected by his apparent recognition of or insistence upon continuance of seller's obligation under the contract, 118 A.L.R. 530.

Shipper's ratification of carrier's unauthorized delivery or misdelivery, 15 A.L.R.2d 807.

Right of purchaser to decline performance of contract for sale of business or goods because of seller's failure to comply with bulk sales law, 24 A.L.R.2d 1030.

Acceptance of some "commercial units" of goods purchased under UCC § 2-601(C), 41 A.L.R.4th 396.

11-2-602. Manner and effect of rightful rejection.

  1. Rejection of goods must be within a reasonable time after their delivery or tender. It is ineffective unless the buyer seasonably notifies the seller.
  2. Subject to the provisions of Code Sections 11-2-603 and 11-2-604 on rejected goods:
  1. After rejection any exercise of ownership by the buyer with respect to any commercial unit is wrongful as against the seller; and
  2. If the buyer has before rejection taken physical possession of goods in which he does not have a security interest under the provisions of this article (subsection (3) of Code Section 11-2-711), he is under a duty after rejection to hold them with reasonable care at the seller's disposition for a time sufficient to permit the seller to remove them; but
  3. The buyer has no further obligations with regard to goods rightfully rejected.

The seller's rights with respect to goods wrongfully rejected are governed by the provisions of this article on seller's remedies in general (Code Section 11-2-703).

(Code 1933, § 109A-2 - 602, enacted by Ga. L. 1962, p. 156, § 1.)

Law reviews.

- For article, "Buyer's Right of Rejection: A Quarter Century Under the Uniform Commercial Code, and Recent International Developments," see 13 Ga. L. Rev. 805 (1979).

JUDICIAL DECISIONS

Rejection based on title.

- O.C.G.A. § 11-2-602 is intended to apply where quantity or quality of goods, or time of delivery, etc., do not conform to terms of sale, but even if this section also has relation to status of title and a rejection is made on that account, the question becomes one of whether rejection is rightful or wrongful, which determination will, of course, ultimately depend on whether or not seller had type of title seller warranted. Cochran v. Horner, 121 Ga. App. 297, 173 S.E.2d 448 (1970).

O.C.G.A. § 11-2-602 recognizes that wrongful rejections may occur and refers to O.C.G.A. § 11-2-703 for seller's remedies in such event, one of which is an action for price. Cochran v. Horner, 121 Ga. App. 297, 173 S.E.2d 448 (1970); Lipsey Motors v. Karp Motors, Inc., 194 Ga. App. 15, 389 S.E.2d 537 (1989).

Reacceptance of goods.

- A buyer who has attempted to reject rather than to accept goods may nonetheless accept them by virtue of buyer's post-rejection conduct with respect to them. Likewise, a buyer who purports to revoke acceptance of goods may be found to have reaccepted them if, after such revocation, buyer performs acts which are inconsistent with the seller's ownership of the goods. Griffith v. Stovall Tire & Marine, Inc., 174 Ga. App. 137, 329 S.E.2d 234 (1985).

A buyer reaccepted a motor vehicle after purported revocation of acceptance, even though the buyer gave sufficient notice that buyer revoked acceptance of the vehicle, when the buyer refused the seller access to it, persisted in efforts to have the vehicle repaired by entities other than the seller, and continued to possess and use the vehicle, which had been driven over 120,000 miles. Griffith v. Stovall Tire & Marine, Inc., 174 Ga. App. 137, 329 S.E.2d 234 (1985).

Rejection of nonconforming goods.

- Within a reasonable time after delivery or tender, the buyer is entitled to reject nonconforming goods under the provisions of O.C.G.A. § 11-2-602 if the buyer reasonably notifies the seller of the rejection. Prudential Metal Supply Corp. v. Atlantic Freight Sales Co., 204 Ga. App. 439, 419 S.E.2d 520 (1992).

Buyer's continued use of a defective copying machine in furtherance of the efficient running of its business was a reacceptance of the machine, and the buyer was not entitled to recover the full contract price of the machine in an action against the seller. W.M. Hobbs, Ltd. v. Accusystems of Ga., Inc., 177 Ga. App. 432, 339 S.E.2d 646 (1986).

Proper rejection of delivered peanuts.

- Seller breached the implied warranty of merchantability by delivering peanuts that were not fit for the ordinary purposes and did not run of even kind, quality, and quantity within each unit and among all units involved; buyer's rejection was proper because it came within a reasonable time, and seller was seasonably notified of the proper rejection. Alimenta (U.S.A.), Inc. v. Anheuser-Busch Cos., 803 F.2d 1160 (11th Cir. 1986).

Issues of fact for trial court.

- Issues such as whether an effective revocation of acceptance was made, whether reasonable notification of revocation was given to the seller, and whether the value of the goods was substantially impaired are ordinarily matters for determination by the trier of fact, even where the buyer has continued to use nonconforming goods after an alleged revocation of acceptance. Griffith v. Stovall Tire & Marine, Inc., 174 Ga. App. 137, 329 S.E.2d 234 (1985).

Granting defendants a directed verdict on a truck buyer's revocation of acceptance claim under O.C.G.A. § 11-2-608 was error when the buyer testified that the truck had been in for repairs more than 30 times, that the buyer had tried to get a replacement or a refund, and that the buyer had continued to use the truck and to pay the note, taxes, and insurance on the truck because the buyer could not afford to buy another truck while attempting to resolve the problems with this one and because the buyer had no other means of transportation; although certain provisions in O.C.G.A. §§ 11-2-602 and11-2-606 might support the unqualified proposition that continued use was inconsistent with a revocation of acceptance, issues such as whether there was effective revocation of acceptance were ordinarily jury matters, and expecting a buyer to discontinue use could be contrary to the UCC's rule of reasonableness. Franklin v. Augusta Dodge, Inc., 287 Ga. App. 818, 652 S.E.2d 862 (2007).

Instructions.

- Where the court fully instructed the jury as to the determinative contract and warranty principles involved in the case, and the charge was adjusted to the evidence, it is not reversible error to fail to charge the precise language of provisions outlining rules and recourses for buyers and sellers. Teledyne Indus., Inc. v. Patron Aviation, Inc., 161 Ga. App. 596, 288 S.E.2d 911 (1982).

Cited in Tennessee-Virginia Constr. Co. v. Willingham, 117 Ga. App. 290, 160 S.E.2d 444 (1968); Trailmobile Div. of Pullman, Inc. v. Jones, 118 Ga. App. 472, 164 S.E.2d 346 (1968); Atlantic Aluminum & Metal Distribs. v. Adams, 123 Ga. App. 387, 181 S.E.2d 101 (1971); Clow Corp. v. Metro Pipeline Co., 442 F. Supp. 583 (N.D. Ga. 1977); Jem Patents, Inc. v. Frost, 147 Ga. App. 839, 250 S.E.2d 547 (1978); Henco Adv., Inc. v. Geographics, Inc., 155 Ga. App. 571, 271 S.E.2d 704 (1980); Bicknell v. B & S Enters., 160 Ga. App. 307, 287 S.E.2d 310 (1981); Imex Int'l v. Wires Eng'g, 261 Ga. App. 329, 583 S.E.2d 117 (2003).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 647-650.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, §§ 2:506, 2:519.

C.J.S.

- 77A C.J.S., Sales, §§ 189, 197.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-602.

ALR.

- Contracts of sale or return as distinguished from contracts for sale on approval, 52 A.L.R. 589.

Time within which buyer must make inspection, trial, or test to determine whether goods are of requisite quality, 52 A.L.R.2d 900.

11-2-603. Merchant buyer's duties as to rightfully rejected goods.

  1. Subject to any security interest in the buyer (subsection (3) of Code Section 11-2-711), when the seller has no agent or place of business at the market of rejection a merchant buyer is under a duty after rejection of goods in his possession or control to follow any reasonable instructions received from the seller with respect to the goods and in the absence of such instructions to make reasonable efforts to sell them for the seller's account if they are perishable or threaten to decline in value speedily. Instructions are not reasonable if on demand indemnity for expenses is not forthcoming.
  2. When the buyer sells goods under subsection (1) of this Code section, he is entitled to reimbursement from the seller or out of the proceeds for reasonable expenses of caring for and selling them, and if the expenses include no selling commission then to such commission as is usual in the trade or if there is none to a reasonable sum not exceeding 10 percent on the gross proceeds.
  3. In complying with this Code section the buyer is held only to good faith and good faith conduct hereunder is neither acceptance nor conversion nor the basis of an action for damages.

(Code 1933, § 109A-2 - 603, enacted by Ga. L. 1962, p. 156, § 1.)

JUDICIAL DECISIONS

Cited in Clow Corp. v. Metro Pipeline Co., 442 F. Supp. 583 (N.D. Ga. 1977).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 656-658.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:506.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-603.

ALR.

- Liability of purchaser under conditional-sale contract, or one claiming under him, as for conversion, 73 A.L.R. 799.

11-2-604. Buyer's options as to salvage of rightfully rejected goods.

Subject to the provisions of Code Section 11-2-603 on perishables if the seller gives no instructions within a reasonable time after notification of rejection the buyer may store the rejected goods for the seller's account or reship them to him or resell them for the seller's account with reimbursement as provided in Code Section 11-2-603. Such action is not acceptance or conversion.

(Code 1933, § 109A-2 - 604, enacted by Ga. L. 1962, p. 156, § 1.)

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 659, 660.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, §§ 2:506, 2:528.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-604.

ALR.

- Liability of purchaser under conditional-sale contract, or one claiming under him, as for conversion, 73 A.L.R. 799.

11-2-605. Waiver of buyer's objections by failure to particularize.

  1. The buyer's failure to state in connection with rejection a particular defect which is ascertainable by reasonable inspection precludes him from relying on the unstated defect to justify rejection or to establish breach:
  1. Where the seller could have cured it if stated seasonably; or
  2. Between merchants when the seller has after rejection made a request in writing for a full and final written statement of all defects on which the buyer proposes to rely.

Payment against documents made without reservation of rights precludes recovery of the payment for defects apparent in the documents.

(Code 1933, § 109A-2 - 605, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2010, p. 481, § 2-11/HB 451.)

The 2010 amendment, effective May 27, 2010, substituted "in the documents" for "on the face of the documents" at the end of subsection (2). See the Editor's notes for applicability.

Editor's notes.

- Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.

Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.

Law reviews.

- For article, "Buyer's Right of Rejection: A Quarter Century Under the Uniform Commercial Code, and Recent International Developments," see 13 Ga. L. Rev. 805 (1979). For note, "The Scope and Meaning of Waiver of Section 2-209 of the Uniform Commercial Code," see 5 Ga. L. Rev. 783 (1971).

JUDICIAL DECISIONS

Breach of express warranty not found.

- Manufacturer did not breach its express warranty as the manufacturer addressed each defect in a vehicle as it arose, most repairs were made within days, and the only extended delay was the result of the buyer's decision to postpone bringing the vehicle into the repair facility. Knight v. Am. Suzuki Motor Corp., 272 Ga. App. 319, 612 S.E.2d 546 (2005).

Manufacturer's express warranty on a vehicle was not governed by the Magnuson-Moss Warranty Act, specifically 15 U.S.C. § 2304, but was governed by the Uniform Commercial Code, O.C.G.A. §§ 11-2-508,11-2-605, and11-2-607(3)(a) as the warranty was a limited warranty. Knight v. Am. Suzuki Motor Corp., 272 Ga. App. 319, 612 S.E.2d 546 (2005).

Cited in Imex Int'l v. Wires Eng'g, 261 Ga. App. 329, 583 S.E.2d 117 (2003).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 651-654.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:533.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-605.

ALR.

- Right of party who has once refused to perform to have specific performance of contract, 2 A.L.R. 416.

Applicability of provision in contract of sale for return of article, where article delivered does not answer to description, 30 A.L.R. 321.

Contracts of sale or return as distinguished from contracts for sale on approval, 52 A.L.R. 589.

11-2-606. What constitutes acceptance of goods.

  1. Acceptance of goods occurs when the buyer:
  1. After a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that he will take or retain them in spite of their nonconformity; or
  2. Fails to make an effective rejection (subsection (1) of Code Section 11-2-602), but such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them; or
  3. Does any act inconsistent with the seller's ownership; but if such act is wrongful as against the seller it is an acceptance only if ratified by him.

Acceptance of a part of any commercial unit is acceptance of that entire unit.

(Code 1933, § 109A-2 - 606, enacted by Ga. L. 1962, p. 156, § 1.)

Law reviews.

- For article, "Buyer's Right of Rejection: A Quarter Century Under the Uniform Commercial Code, and Recent International Developments," see 13 Ga. L. Rev. 805 (1979). For survey article on construction law for the period from June 1, 2002 through May 31, 2003, see 55 Mercer L. Rev. 85 (2003). For note, "Buyer's Right to Revoke Acceptance Against the Automobile Manufacturer for Breach of its Continuing Warranty of Repair or Replacement," see 7 Ga. L. Rev. 711 (1973).

JUDICIAL DECISIONS

When acceptance occurs.

- O.C.G.A. § 11-2-606 requires that acceptance of goods occurs when buyer has had reasonable opportunity to inspect them and signifies to seller that they are conforming or that buyer will take or retain them in spite of their nonconformity. Economy Forms Corp. v. Kandy, Inc., 391 F. Supp. 944 (N.D. Ga. 1974), aff'd, 511 F.2d 1400 (5th Cir. 1975).

Notice of rejection not reasonable.

- See Economy Forms Corp. v. Kandy, Inc., 391 F. Supp. 944 (N.D. Ga. 1974), aff'd, 511 F.2d 1400 (5th Cir. 1975).

No subsequent right to reject after inspection and acceptance.

- Where the plaintiff had ample opportunity to inspect the car to ascertain whether it had an operating air-conditioner and radio before plaintiff took possession of it and signed the bill of sale and the financing documents, plaintiff had no subsequent right to reject the vehicle for nonconformance. Bicknell v. B & S Enters., 160 Ga. App. 307, 287 S.E.2d 310 (1981).

Revocation of acceptance.

- Revocation of a contractor's acceptance of equipment could be found where there was evidence that the supplier was well aware of the problems with the equipment and made an adjustment to the contractor's account that the contractor did not find to be adequate. Williams v. Crispaire Corp., 225 Ga. App. 172, 483 S.E.2d 653 (1997).

Granting defendants a directed verdict on a truck buyer's revocation of acceptance claim under O.C.G.A. § 11-2-608 was error when the buyer testified that the truck had been in for repairs more than 30 times, that the buyer had tried to get a replacement or a refund, and that the buyer had continued to use the truck and to pay the note, taxes, and insurance on the truck because the buyer could not afford to buy another truck while attempting to resolve the problems with this one and because the buyer had no other means of transportation; although certain provisions in O.C.G.A. §§ 11-2-602 and11-2-606 might support the unqualified proposition that continued use was inconsistent with a revocation of acceptance, issues such as whether there was effective revocation of acceptance were ordinarily jury matters, and expecting a buyer to discontinue use could be contrary to the UCC's rule of reasonableness. Franklin v. Augusta Dodge, Inc., 287 Ga. App. 818, 652 S.E.2d 862 (2007).

Reacceptance of goods.

- A buyer who has attempted to reject rather than to accept goods may nonetheless accept them by virtue of buyer's post-rejection conduct with respect to them. Likewise, a buyer who purports to revoke acceptance of goods may be found to have reaccepted them if, after such revocation, the buyer performs acts which are inconsistent with the seller's ownership of the goods. Griffith v. Stovall Tire & Marine, Inc., 174 Ga. App. 137, 329 S.E.2d 234 (1985).

A buyer reaccepted a motor vehicle after purported revocation of acceptance, even though the buyer gave sufficient notice that the buyer revoked acceptance of the vehicle, when the buyer refused the seller access to it, persisted in efforts to have the vehicle repaired by entities other than the seller, and continued to possess and use the vehicle, which had been driven over 120,000 miles. Griffith v. Stovall Tire & Marine, Inc., 174 Ga. App. 137, 329 S.E.2d 234 (1985).

Actions inconsistent with seller's ownership constituting acceptance by buyer.

- See Economy Forms Corp. v. Kandy, Inc., 391 F. Supp. 944 (N.D. Ga. 1974), aff'd, 511 F.2d 1400 (5th Cir. 1975).

Because the purchaser of an automobile continued to drive the vehicle, pay taxes on it, and insure it after the purchaser had complained of defects, these post-revocation acts constituted exercises in ownership that were inconsistent with the seller's ownership; the buyer's attempted revocation was ineffective under O.C.G.A. § 11-2-606(1)(c) and O.C.G.A. § 11-2-608(1)(b). Hines v. Mercedes-Benz USA, LLC, 358 F. Supp. 2d 1222 (N.D. Ga. 2005).

Installation by the buyer of heavy equipment supplied by the seller is an act inconsistent with the seller's ownership. United States ex rel. Fram Corp. v. Crawford, 443 F.2d 611 (5th Cir. 1971); Clow Corp. v. Metro Pipeline Co., 442 F. Supp. 583 (N.D. Ga. 1977).

Hospital lost the right to revoke the hospital's acceptance of pumps the hospital bought from a medical supplier as nonconforming goods pursuant to O.C.G.A. § 11-2-606 by the hospital's course of conduct, i.e., by keeping the pumps for many months after the pumps were delivered without paying for the pumps, up to and including the time of suit. Ardus Med., Inc. v. Emanuel County Hosp. Auth., 558 F. Supp. 2d 1301 (S.D. Ga. 2008).

Seller of trailers was entitled to judgment as a matter of law on a buyer's breach of contract claim; the buyer accepted delivery of the trailers pursuant to O.C.G.A. § 11-2-606(c) as the buyer acted inconsistently with the seller's ownership by undertaking to resell the trailers, and the buyer failed to timely notify the seller of any alleged breach as required by O.C.G.A. § 11-2-607(3)(a). Woodridge USA Props., L.P. v. Southeast Trailer Mart, Inc., F.3d (11th Cir. Feb. 1, 2011)(Unpublished).

Risk of loss did not transfer.

- Jury properly determined that the defendant did not bear the loss of a helicopter crash because there was some evidence upon which the jury could rely in concluding that the defendant did not breach the agreement between the parties and the jury made a special finding that under the aircraft purchase agreement, the risk of loss remained with the plaintiff despite the defendant agreeing to make additional repairs when the helicopter arrived at the helicopter's final destination. Eagle Jets, LLC v. Atlanta Jet, Inc., 321 Ga. App. 386, 740 S.E.2d 439 (2013).

Issues of fact for trial court.

- Issues such as whether an effective revocation of acceptance was made, whether reasonable notification of revocation was given to the seller, and whether the value of the goods was substantially impaired are ordinarily matters for determination by the trier of fact, even where the buyer has continued to use nonconforming goods after an alleged revocation of acceptance. Griffith v. Stovall Tire & Marine, Inc., 174 Ga. App. 137, 329 S.E.2d 234 (1985).

Cited in Trailmobile Div. of Pullman, Inc. v. Jones, 118 Ga. App. 472, 164 S.E.2d 346 (1968); Atlantic Aluminum & Metal Distribs. v. Adams, 123 Ga. App. 387, 181 S.E.2d 101 (1971); Jem Patents, Inc. v. Frost, 147 Ga. App. 839, 250 S.E.2d 547 (1978); Management Assistance, Inc. v. Computer Dimensions, Inc., 546 F. Supp. 666 (N.D. Ga. 1982); W.M. Hobbs, Ltd. v. Accusystems of Ga., Inc., 177 Ga. App. 432, 339 S.E.2d 646 (1986); Lundy v. Low, 200 Ga. App. 332, 408 S.E.2d 144 (1991); Imex Int'l v. Wires Eng'g, 261 Ga. App. 329, 583 S.E.2d 117 (2003).

RESEARCH REFERENCES

Am. Jur. 2d.

- 67 Am. Jur. 2d, Sales, §§ 623-641. 72 Am. Jur. 2d, Statute of Frauds, §§ 109, 121 et seq.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:542.

Acceptance of Goods, 37 POF2d 593.

C.J.S.

- 77A C.J.S., Sales, § 190 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-606.

ALR.

- Effect of delay of principal in disapproving or rejecting orders for goods taken by agent subject to approval, 7 A.L.R. 1686.

Taking possession of property conditionally sold as affecting action previously commenced for purchase price, 23 A.L.R. 1462.

Acceptance which will satisfy statute of frauds where purchaser of goods is in possession at time of sale, 36 A.L.R. 649; 111 A.L.R. 1312.

Validity and effect of provision in a contract of sale making acceptance of goods conditional on approval by, or satisfaction of, third person, 46 A.L.R. 864.

Contracts of sale or return as distinguished from contracts for sale on approval, 52 A.L.R. 589.

Use of article by buyer as waiver of right to rescind for fraud, breach of warranty, or failure of goods to comply with contract, 77 A.L.R. 1165; 41 A.L.R.2d 1173.

Estoppel of or waiver by buyer, in respect of shortage in commodity delivered and accepted as in full, as affecting his liability to pay for shortage or his right to recover back amount paid therefor, 113 A.L.R. 684.

Shipper's ratification of carrier's unauthorized delivery or misdelivery, 15 A.L.R.2d 807.

Buyer's acceptance of delayed or defective instalment of goods as waiver of similar default as to later instalments, 32 A.L.R.2d 1117.

11-2-607. Effect of acceptance; notice of breach; burden of establishing breach after acceptance; notice of claim or litigation to person answerable over.

  1. The buyer must pay at the contract rate for any goods accepted.
  2. Acceptance of goods by the buyer precludes rejection of the goods accepted and if made with knowledge of a nonconformity cannot be revoked because of it unless the acceptance was on the reasonable assumption that the nonconformity would be seasonably cured but acceptance does not of itself impair any other remedy provided by this article for nonconformity.
  3. Where a tender has been accepted:
  1. The buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy; and
  2. If the claim is one for infringement or the like (subsection (3) of Code Section 11-2-312) and the buyer is sued as a result of such a breach he must so notify the seller within a reasonable time after he receives notice of the litigation or be barred from any remedy over for liability established by the litigation.

The burden is on the buyer to establish any breach with respect to the goods accepted.

Where the buyer is sued for breach of a warranty or other obligation for which his seller is answerable over:

He may give his seller written notice of the litigation. If the notice states that the seller may come in and defend and that if the seller does not do so he will be bound in any action against him by his buyer by any determination of fact common to the two litigations, then unless the seller after seasonable receipt of the notice does come in and defend he is so bound.

If the claim is one for infringement or the like (subsection (3) of Code Section 11-2-312) the original seller may demand in writing that his buyer turn over to him control of the litigation including settlement or else be barred from any remedy over and if he also agrees to bear all expense and to satisfy any adverse judgment, then unless the buyer after seasonable receipt of the demand does turn over control the buyer is so barred.

The provisions of subsections (3), (4), and (5) of this Code section apply to any obligation of a buyer to hold the seller harmless against infringement or the like (subsection (3) of Code Section 11-2-312).

(Code 1933, § 109A-2 - 607, enacted by Ga. L. 1962, p. 156, § 1.)

Law reviews.

- For article, "Sales Warranties Under Georgia's Uniform Commercial Code," see 1 Ga. St. B.J. 191 (1964). For article, "Georgia's New Statutory Liability for Manufacturers: An Inadequate Legislative Response," see 2 Ga. L. Rev. 538 (1968). For article discussing applicability of "notice of breach" provision of Uniform Commercial Code to construction contracts, see 28 Emory L.J. 335 (1979). For article, "Buyer's Right of Rejection: A Quarter Century Under the Uniform Commercial Code, and Recent International Developments," see 13 Ga. L. Rev. 805 (1979). For article, "Impracticability As Risk Allocation: The Effect of Changed Circumstances upon Contract Obligations for the Sale of Goods," see 22 Ga. L. Rev. 503 (1988).

JUDICIAL DECISIONS

General Consideration

Editor's notes.

- In light of the similarity of the issues dealt with, decisions under former Code 1933, § 96-305 are included in the annotations for this section.

Manufacturer's express warranty on a vehicle was not governed by the Magnuson-Moss Warranty Act, specifically 15 U.S.C. § 2304, but was governed by the Uniform Commercial Code, O.C.G.A. §§ 11-2-508,11-2-605, and11-2-607(3)(a) as the warranty was a limited warranty. Knight v. Am. Suzuki Motor Corp., 272 Ga. App. 319, 612 S.E.2d 546 (2005).

O.C.G.A. §§ 11-2-607 and11-2-717 apply only to sales of goods. Fruin-Colnon Corp. v. Air Door, Inc., 157 Ga. App. 804, 278 S.E.2d 708 (1981).

Evaluation of buyer's conduct as a whole.

- A buyer's conduct must be evaluated as a whole under O.C.G.A. § 11-2-607, which is designed to defeat commercial bad faith. Clow Corp. v. Metro Pipeline Co., 442 F. Supp. 583 (N.D. Ga. 1977).

Installation by buyer of heavy equipment supplied by seller is an act inconsistent with seller's ownership. United States ex rel. Fram Corp. v. Crawford, 443 F.2d 611 (5th Cir. 1971).

Effect of acceptance of goods.

- Where property is brought under implied warranty that it is reasonably suited to use intended, acceptance by purchaser waives all defects discovered by the purchaser, or which, by exercise of ordinary care and prudence, might have discovered before delivery. Jones v. Knightstown Body Co., 52 Ga. App. 667, 184 S.E. 427 (1936) (decided under former Code 1933, § 96-305).

Where purchaser accepted and installed goods which were delivered late, subsequent attempts to revoke the purchase agreement were not effective. Management Assistance, Inc. v. Computer Dimensions, Inc., 546 F. Supp. 666 (N.D. Ga. 1982), aff'd sub nom. Computer Dimensions v. Basic Four, 747 F.2d 708 (11th Cir. 1984).

Trial court did not err in awarding a seller pre-judgment interest under O.C.G.A. § 7-4-16 in the seller's breach of contract action against a buyer to recover damages for unpaid principal on shipped material and unpurchased material because the seller's invoices were a due and payable liquidated debt on a commercial account subject to interest under § 7-4-16; because certain materials were delivered by the seller and accepted by the buyer, the buyer was responsible for payment according to the agreed-upon price. Scovill Fasteners, Inc. v. Northern Metals, Inc., 303 Ga. App. 246, 692 S.E.2d 840 (2010).

Acceptance does not foreclose suit for breach.

- Absent an explicit contract term so providing, even explicit acceptance does not foreclose buyer's suit for breach of warranty. International Multifoods Corp. v. Nat'l Egg Prods., 202 Ga. App. 263, 414 S.E.2d 253 (1991), cert. denied, 202 Ga. App. 906, 414 S.E.2d 253 (1992).

Reacceptance of goods.

- A buyer who has attempted to reject rather than to accept goods may nonetheless accept them by virtue of buyer's post-rejection conduct with respect to them. Likewise, a buyer who purports to revoke acceptance of goods may be found to have reaccepted them if, after such revocation, buyer performs acts which are inconsistent with the seller's ownership of the goods. Griffith v. Stovall Tire & Marine, Inc., 174 Ga. App. 137, 329 S.E.2d 234 (1985).

A buyer reaccepted a motor vehicle after purported revocation of acceptance, even though the buyer gave sufficient notice that buyer revoked acceptance of the vehicle, when the buyer refused the seller access to it, persisted in efforts to have the vehicle repaired by entities other than the seller, and continued to possess and use the vehicle, which had been driven over 120,000 miles. Griffith v. Stovall Tire & Marine, Inc., 174 Ga. App. 137, 329 S.E.2d 234 (1985).

Burden of showing breach of express warranty.

- After acceptance of personal property sold under express warranty, it is presumed that it is of the quality ordered, and burden is upon buyer in all cases to show that it was not. Frick Co. v. Lawson, 50 Ga. App. 511, 179 S.E. 274 (1935) (decided under former Code 1933, § 96-305).

Manufacturer did not breach its express warranty as the manufacturer addressed each defect in a vehicle as it arose, most repairs were made within days, and the only extended delay was the result of the buyer's decision to postpone bringing the vehicle into the repair facility. Knight v. Am. Suzuki Motor Corp., 272 Ga. App. 319, 612 S.E.2d 546 (2005).

Questions of fact.

- Reasonableness of notice by buyer of defect and responsibility for defect are questions of fact. Fruin-Colnon Corp. v. Air Door, Inc., 157 Ga. App. 804, 278 S.E.2d 708 (1981).

Issues such as whether an effective revocation of acceptance was made, whether reasonable notification of revocation was given to the seller, and whether the value of the goods was substantially impaired are ordinarily matters for determination by the trier of fact, even where the buyer has continued to use nonconforming goods after an alleged revocation of acceptance. Griffith v. Stovall Tire & Marine, Inc., 174 Ga. App. 137, 329 S.E.2d 234 (1985).

Cited in Systems Consultants v. Eng Enters., Inc., 123 Ga. App. 641, 182 S.E.2d 188 (1971); Beavers v. Mastan Co., 124 Ga. App. 498, 184 S.E.2d 476 (1971); Southern Concrete Prods. Co. v. Martin, 126 Ga. App. 534, 191 S.E.2d 314 (1972); Coast Scopitone, Inc. v. Self, 127 Ga. App. 124, 192 S.E.2d 513 (1972); Carr v. Jacuzzi Bros., 133 Ga. App. 70, 210 S.E.2d 16 (1974); Romedy v. Willett Lincoln-Mercury, Inc., 136 Ga. App. 67, 220 S.E.2d 74 (1975); Dixie Lime & Stone Co. v. Wiggins Scale Co., 144 Ga. App. 145, 240 S.E.2d 323 (1977); Pepsico Truck Rental, Inc. v. Eastern Foods, Inc., 145 Ga. App. 410, 243 S.E.2d 662 (1978); Hawkins v. UPM, Inc., 159 Ga. App. 231, 283 S.E.2d 87 (1981); Sires v. Luke, 544 F. Supp. 1155 (S.D. Ga. 1982); W.M. Hobbs, Ltd. v. Accusystems of Ga., Inc., 177 Ga. App. 432, 339 S.E.2d 646 (1986); Warner Robins Tree Surgeons, Inc. v. Kolb & Co., 181 Ga. App. 20, 351 S.E.2d 486 (1986); Amatulli Imports, Inc. v. House of Persia, Inc., 191 Ga. App. 827, 383 S.E.2d 192 (1989); Regency Nissan, Inc. v. Taylor, 194 Ga. App. 645, 391 S.E.2d 467 (1990); Massey v. Thomaston Ford Mercury, 196 Ga. App. 278, 395 S.E.2d 663 (1990); Buford v. Toys R' Us, Inc., 217 Ga. App. 565, 458 S.E.2d 373 (1995); Fried Group, Inc. v. Sundance Tractor & Mower, 218 Bankr. 247 (Bankr. M.D. Ga. 1998); SunTrust Bank v. Hightower, 291 Ga. App. 62, 660 S.E.2d 745 (2008).

Notice

1. In General

Oral notification.

- Evidence that the buyer had complained about the quality of merchandise received and that the buyer told personnel of the seller that goods were defective, often immediately after inspecting the goods, presented an issue of material fact as to whether there was oral notification of defective accepted merchandise. Atwood v. Southeast Bedding Co., 226 Ga. App. 50, 485 S.E.2d 217 (1997).

Applicability to third-party beneficiary.

- Notice provisions of O.C.G.A. § 11-2-607 of a breach cannot apply to third-party beneficiary under O.C.G.A. § 11-2-318 where there has been no tender of goods by seller and no acceptance from seller by such third party. Chaffin v. Atlanta Coca-Cola Bottling Co., 127 Ga. App. 619, 194 S.E.2d 513 (1972).

The notice requirement of O.C.G.A. § 11-2-607 applies only to the buyer and not to a third-party beneficiary. Morgan v. Sears, Roebuck & Co., 693 F. Supp. 1154 (N.D. Ga. 1988); Morgan v. Sears, Roebuck & Co., 700 F. Supp. 1574 (N.D. Ga. 1988).

Applicable to breach of warranty of title.

- The notice of breach required in O.C.G.A. § 11-2-607(3)(a)applies in cases of breach of warranty of title. Oden & Sims Used Cars, Inc. v. Thurman, 165 Ga. App. 500, 301 S.E.2d 673 (1983).

Adequate notice may be dissipated by subsequent actions of buyer.

- A buyer's dealings must be evaluated under standard of commercial good faith, and while adequate notice might be given at one point in time, subsequent actions by the buyer might dissipate its effect. Clow Corp. v. Metro Pipeline Co., 442 F. Supp. 583 (N.D. Ga. 1977).

Fact that defendant has actual notice of breach does not waive or alleviate the requirement that plaintiff give notice of any breach within a reasonable time or otherwise be barred from any remedy for the breach. Oden & Sims Used Cars, Inc. v. Thurman, 165 Ga. App. 500, 301 S.E.2d 673 (1983).

Failure to give notice.

- When plaintiff buyers of distributorship opportunities sued defendants, the seller and the seller's principal and relatives and other corporate entities, alleging all of the products shipped to the buyers were defective, the warranty claims failed because there was no proof that notice of the defects were given. Brenner v. Future Graphics, LLC, 258 F.R.D. 561 (N.D. Ga. 2007).

2. Time

Receipt and acceptance of goods required.

- Notice of breach under O.C.G.A. § 11-2-607 cannot be given until receipt and acceptance of goods. Warren's Kiddie Shoppe, Inc. v. Casual Slacks, Inc., 120 Ga. App. 578, 171 S.E.2d 643 (1969).

Adequacy of notice.

- No formality is required as to notice, and it is adequate if it merely informs seller within a reasonable time after goods are received and accepted by buyer. Holiday Homes, Inc. v. Bragg, 132 Ga. App. 594, 208 S.E.2d 608 (1974).

Failure to notify seller within reasonable time is a bar against recovery for all damages including any breaches of warranties which were caused by a difference in any characteristics or by any other apparent or obvious qualities of the goods. Economy Forms Corp. v. Kandy, Inc., 391 F. Supp. 944 (N.D. Ga. 1974), aff'd, 511 F.2d 1400 (5th Cir. 1975).

In an action alleging breach of implied warranties of merchantability and fitness for a particular purpose, the customer's failure to serve the seller with notice of the defect in the product until two years and three days after the customer suffered an injury did not bar relief; the delay alone, without prejudice to the seller caused by such delay, was insufficient to bar relief. Wal-Mart Stores, Inc. v. Wheeler, 262 Ga. App. 607, 586 S.E.2d 83 (2003).

Seller of trailers was entitled to judgment as a matter of law on a buyer's breach of contract claim; the buyer accepted delivery of the trailers pursuant to O.C.G.A. § 11-2-606(c) as the buyer acted inconsistently with the seller's ownership by undertaking to resell the trailers, and the buyer failed to timely notify the seller of any alleged breach as required by O.C.G.A. § 11-2-607(3)(a). Woodridge USA Props., L.P. v. Southeast Trailer Mart, Inc., F.3d (11th Cir. Feb. 1, 2011)(Unpublished).

Reasonable time for notification for retail consumer.

- Time of notification required by O.C.G.A. § 11-2-607(3)(a) is to be determined by applying commercial standards to merchant buyer. Consequently, "a reasonable time" for notification from retail consumer is to be judged by different standards so that in this case it will be extended, since rule of requiring notification is designed to defeat commercial bad faith, not to deprive a good faith consumer of remedy. Jones v. Cranman's Sporting Goods, 142 Ga. App. 838, 237 S.E.2d 402 (1977).

Notice after relationship terminated and goods retrieved by seller.

- Written notice that goods were unacceptable sent only after the relationship had been terminated and all goods had been either sold or retrieved by the seller was not sufficient. Atwood v. Southeast Bedding Co., 226 Ga. App. 50, 485 S.E.2d 217 (1997).

Where vehicles in possession of buyer were confiscated as stolen property, service of the original suit, made eight months after confiscation removed the vehicles from control of either party, was reasonable notice under the circumstances. Hudson v. Gaines, 199 Ga. App. 70, 403 S.E.2d 852 (1991).

Summary judgment.

- The question of reasonableness of notice is ordinarily a factual one, although summary adjudication is appropriate if the uncontroverted facts establish that a plaintiff is not entitled to recover. International Multifoods Corp. v. Nat'l Egg Prods., 202 Ga. App. 263, 414 S.E.2d 253 (1991), cert. denied, 202 Ga. App. 906, 414 S.E.2d 253 (1992).

Where there was a material fact question as to whether a purchaser gave the manufacturer reasonable notice of defective goods, summary adjudication was precluded. Great W. Press, Inc. v. Atlanta Film Converting Co., 223 Ga. App. 861, 479 S.E.2d 143 (1996).

Whether purchaser acted unreasonably in not notifying seller, a defunct company, that it was dissatisfied that seller would not be providing the support services allegedly agreed upon was properly a question for the jury, and summary judgment on the basis of lack of notice was improperly granted to the seller. BDI Distribs. v. Beaver Computer Corp., 232 Ga. App. 316, 501 S.E.2d 839 (1998).

3. Content

Notice need only let seller know transaction is troublesome.

- Content of notification required under O.C.G.A. § 11-2-607 need only be sufficient to let seller know transaction is still troublesome and must be watched. Jones v. Cranman's Sporting Goods, 142 Ga. App. 838, 237 S.E.2d 402 (1977); Clow Corp. v. Metro Pipeline Co., 442 F. Supp. 583 (N.D. Ga. 1977).

Notice need only inform seller of claimed breach.

- Notification which saves buyer's rights under O.C.G.A. § 11-2-607 need only be such as informs seller that transaction is claimed to involve a breach, thus opening way for normal settlement through negotiation. Clow Corp. v. Metro Pipeline Co., 442 F. Supp. 583 (N.D. Ga. 1977).

What notice need not contain.

- There is no reason to require that notification which saves buyer's rights under O.C.G.A. § 11-2-607 must include a clear statement of all objections that will be relied on by buyer, as is required under that section covering statements of defects upon rejection. Nor is there reason for requiring the notification to be a claim for damages or of any threatened litigation or other resort to remedy. Clow Corp. v. Metro Pipeline Co., 442 F. Supp. 583 (N.D. Ga. 1977).

RESEARCH REFERENCES

Am. Jur. 2d.

- 17A Am. Jur. 2d, Contracts, § 639. 63 Am. Jur. 2d, Products Liability, §§ 659 et seq., 840 et seq., 868. 67 Am. Jur. 2d, Sales, §§ 661-665.

6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:549.

20A Am. Jur. Pleading and Practice Forms, Products Liability, § 38.

C.J.S.

- 42 C.J.S., Indemnity, §§ 15, 26. 77A C.J.S., Sales, § 192.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 2-607.

ALR.

- Resale by buyer where seller has refused to receive the property rejected for breach of warranty, 24 A.L.R. 1445.

Loss of profits as elements of damages for fraud of seller, as to quality of goods purchased for resale, 28 A.L.R. 354.

Acceptance of instalment of goods as affecting buyer's right to rescind because of defects in that instalment, 29 A.L.R. 1517.

Effect of premature tender of goods which is refused by the buyer, 47 A.L.R. 193.

Contracts of sale or return as distinguished from contracts for sale on approval, 52 A.L.R. 589.

Use of article by buyer as waiver of right to rescind for fraud, breach of warranty, or failure of goods to comply with contract, 77 A.L.R. 1165; 41 A.L.R.2d 1173.

Estoppel of or waiver by buyer, in respect of shortage in commodity delivered and accepted as in full, as affecting his liability to pay for shortage or his right to recover back amount paid therefor, 113 A.L.R. 684.

Breach of warranty as to title as within statutory provision requiring notice of breach of warranty on sale of goods, 114 A.L.R. 707.

"Vouching in" of one who is not liable over to defendant but is liable over to one whom the defendant has vouched in, 123 A.L.R. 1153.

Deposit in mail of notice of claim required as condition of action against, or liability of, governmental body, as a giving of notice within required period, 175 A.L.R. 299.

Shipper's ratification of carrier's unauthorized delivery or misdelivery, 15 A.L.R.2d 807.

Buyer's acceptance of delayed or defective instalment of goods as waiver of similar default as to later instalments, 32 A.L.R.2d 1117.

Time within which buyer of goods must give notice in order to recover damages for seller's breach of express warranty, 41 A.L.R.2d 812.

Form and substance of notice which buyer of goods must give in order to recover damages for seller's breach of warranty, 53 A.L.R.2d 270.

Requirement of notice, by buyer of goods, of breach of warranty as applicable to actions for personal injury, 6 A.L.R.3d 1371.

Seller's promises or attempts to repair article sold as affecting buyer's duty to minimize damages for breach of sale contract or of warranty, 66 A.L.R.3d 1162.

Necessity that buyer of goods give notice of breach of warranty to manufacturer under UCC § 2-607, requiring notice to seller of breach, 24 A.L.R.4th 277.

Products liability: seller's right to indemnity from manufacturer, 79 A.L.R.4th 278.

Products liability: manufacturer's postsale obligation to modify, repair, or recall product, 47 A.L.R.5th 395.

Sufficiency and timeliness of buyer's notice under UCC § 607(3)(a) of seller's breach of warranty, 89 A.L.R.5th 319.

11-2-608. Revocation of acceptance in whole or in part.

  1. The buyer may revoke his acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to him if he has accepted it:
  1. On the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or
  2. Without discovery of such nonconformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller's assurances.

Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. It is not effective until the buyer notifies the seller of it.

A buyer who so revokes has the same rights and duties with regard to the goods involved as if he had rejected them.

(Code 1933, § 109A-2 - 608, enacted by Ga. L. 1962, p. 156, § 1.)

Law reviews.

- For article, "Buyer's Right of Rejection: A Quarter Century Under the Uniform Commercial Code, and Recent International Developments," see 13 Ga. L. Rev. 805 (1979). For annual survey of commercial law, see 38 Mercer L. Rev. 85 (1986). For note, "Buyer's Right to Revoke Acceptance Against the Automobile Manufacturer for Breach of its Continuing Warranty of Repair or Replacement," see 7 Ga. L. Rev. 711 (1973).

JUDICIAL DECISIONS

Authority to revoke acceptance in certain circumstances.

- Buyer who has accepted goods may under certain conditions enumerated in O.C.G.A. § 11-2-608 revoke acceptance. Clow Corp. v. Metro Pipeline Co., 442 F. Supp. 583 (N.D. Ga. 1977).

O.C.G.A. § 11-2-608 gives buyer right to revoke acceptance within reasonable time for nonconformity not within purchaser's knowledge at time of acceptance if such nonconformity substantially impairs its value to the buyer. Jacobs v. Metro Chrysler-Plymouth, Inc., 125 Ga. App. 462, 188 S.E.2d 250 (1972).

Even after acceptance, the buyer has a right to revoke acceptance under the provisions of O.C.G.A. § 11-2-608 for nonconformance that substantially impairs the value of the goods. Prudential Metal Supply Corp. v. Atlantic Freight Sales Co., 204 Ga. App. 439, 419 S.E.2d 520 (1992).

O.C.G.A. § 11-2-608(1)(b) refers to situations where nonconformity was discovered after acceptance.