An unpaid seller does not have a right to reclaim goods unless which condition occurs?

An unpaid seller does not have a right to reclaim goods unless which condition occurs?

• A. Buyer was insolvent when it received the goods and seller makes a demand within 10 days after receipt
• B. Buyer misrepresented its solvency to seller in writing within 3 months before delivery
• C. Both of the above
• D. Either of the above

Answer: (D)

The unpaid seller’s right to reclaim rests on two separate triggers. First, if the buyer is insolvent at the time it receives the goods and the seller makes a demand within ten days after receipt, the seller can reclaim. This keeps the seller protected when credit was extended to someone unable to pay, but requires a prompt demand within a short window. Second, even if insolvency isn’t the basis, the seller may reclaim if the buyer misrepresented its solvency to the seller in writing within the three months before delivery. This protects the seller when credit was extended based on a false representation of the buyer’s financial status. Because either of these scenarios can confirm the seller’s reclaim right, the correct understanding is that the ability to reclaim arises under either condition. If neither condition occurs, the reclaim right generally does not attach.

The unpaid seller’s right to reclaim rests on two separate triggers. First, if the buyer is insolvent at the time it receives the goods and the seller makes a demand within ten days after receipt, the seller can reclaim. This keeps the seller protected when credit was extended to someone unable to pay, but requires a prompt demand within a short window.

Second, even if insolvency isn’t the basis, the seller may reclaim if the buyer misrepresented its solvency to the seller in writing within the three months before delivery. This protects the seller when credit was extended based on a false representation of the buyer’s financial status.

Because either of these scenarios can confirm the seller’s reclaim right, the correct understanding is that the ability to reclaim arises under either condition. If neither condition occurs, the reclaim right generally does not attach.