Uniform Commercial Code Sales Provisions and Consignment
What this domain tests
This domain tests UCC Article 2 as adopted in Louisiana, especially auction sales of goods and consignment arrangements, including creditor risk and warranty disclaimers.
Core rules
- Louisiana's UCC sales chapter, La. R.S. 10:2-101 et seq., governs transactions in goods. Auction sales of goods are expressly addressed by La. R.S. 10:2-328.
- A consignment is a delivery of goods to an auctioneer for sale. Under the UCC consignment rule, goods held for sale may be treated as the auctioneer's inventory and reachable by the auctioneer's creditors unless the consignor complies with the statutory protections.
- Those protections generally require that the auctioneer be known by creditors to be in the business of selling others' goods, that a conspicuous sign disclose the consignment, or that the consignor file a UCC financing statement. Louisiana filing rules control perfection.
- The auction agreement should identify consigned goods, ownership, minimum or reserve, commission, insurance, and risk of loss. Keep consigned goods segregated and marked.
- 'As is' and warranty disclaimers can limit implied warranties of merchantability and fitness, but they do not eliminate title warranties, fraud, or misrepresentation.
Worked example
A consignor leaves a tractor with an auctioneer. The auctioneer files bankruptcy before the sale. The consignor has no sign, no UCC-1, and creditors did not know the auctioneer sold others' goods. The trustee treats the tractor as inventory, and the consignor is an unsecured creditor. If the consignor had perfected or the sign or known-business exception applied, the tractor would likely be excluded from the estate.
Traps
Assuming a consignment always keeps ownership safe; relying on a handshake; believing 'as is' waives every claim; and failing to document the consignor's title and authority to sell.