California Commercial Code 6107 – (a) Except as provided in subdivision (c), and subject to the …
(a) Except as provided in subdivision (c), and subject to the limitation in subdivision (d), a buyer who fails to comply with the requirements of Section 6104 with respect to a claimant is liable to the claimant for damages in the amount of the claim, reduced by any amount that the claimant would not have realized if the buyer had complied.
(b) In an action under subdivision (a), the claimant has the burden of establishing the validity and amount of the claim, and the buyer has the burden of establishing the amount that the claimant would not have realized if the buyer had complied.
Terms Used In California Commercial Code 6107
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Assets: means the inventory and equipment that is the subject of a bulk sale and any tangible and intangible personal property used or held for use primarily in, or arising from, the seller's business and sold in connection with that inventory and equipment, but the term does not include any of the following:
California Commercial Code 6102
- Bulk sale: means either of the following:
California Commercial Code 6102
- Claim: means a right to payment from the seller, whether or not the right is reduced to judgment, liquidated, fixed, matured, disputed, secured, legal, or equitable. See California Commercial Code 6102
- Claimant: means a person holding a claim incurred in the seller's business other than any of the following:
California Commercial Code 6102
- 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 Section 1303. See California Commercial Code 1201
- Contract: A legal written agreement that becomes binding when signed.
- Creditor: means a claimant or other person holding a claim. See California Commercial Code 6102
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Date of the bulk sale: means either of the following:
California Commercial Code 6102
- Debt: means liability on a claim. See California Commercial Code 6102
- Lien: A claim against real or personal property in satisfaction of a debt.
- Net contract price: means the new consideration the buyer is obligated to pay for the assets less each of the following:
California Commercial Code 6102
- Person: means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. See California Commercial Code 1201
- Right: includes remedy. See California Commercial Code 1201
- Security interest: 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 Division 9 (commencing with Section 9101). See California Commercial Code 1201
- Value: means fair market value. See California Commercial Code 6102
(c) A buyer who made a good faith and commercially reasonable effort to comply with the requirements of Section 6104 or to exclude the sale from the application of this division under subdivision (c) of Section 6103 is not liable to creditors for failure to comply with the requirements of Section 6104. The buyer has the burden of establishing the good faith and commercial reasonableness of the effort.
(d) In a single bulk sale the cumulative liability of the buyer for failure to comply with the requirements of Section 6104 may not exceed an amount equal to any of the following:
(1) If the assets consist only of inventory and equipment, twice the net contract price, less the amount of any part of the net contract price paid to or applied for the benefit of the seller or a creditor except to the extent that the payment or application is applied to a debt which is secured by the assets and which has been taken into consideration in determining the net contract price.
(2) If the assets include property other than inventory and equipment, twice the net value of the inventory and equipment less the amount of the portion of any part of the net contract price paid to or applied for the benefit of the seller or a creditor which is allocable to the inventory and equipment except to the extent that the payment or application is applied to a debt which is secured by the assets and which has been taken into consideration in determining the net contract price.
(e) For the purposes of paragraph (2) of subdivision (d), the “net value” of an asset is the value of the asset less each of the following:
(1) The amount of any proceeds of the sale of an asset, to the extent the proceeds are applied in partial or total satisfaction of a debt secured by the asset.
(2) The amount of any debt to the extent it is secured by a security interest or lien that is enforceable against the asset before and after it has been sold to a buyer. If a debt is secured by an asset and other property of the seller, the amount of the debt secured by a security interest or lien that is enforceable against the asset is determined by multiplying the debt by a fraction, the numerator of which is the value of the asset on the date of the bulk sale and the denominator of which is the value of all property securing the debt on the date of the bulk sale. The portion of a part of the net contract price paid to or applied for the benefit of the seller or a creditor that is “allocable to the inventory and equipment” is the portion that bears the same ratio to that part of the net contract price as the net value of the inventory and equipment bears to the net value of all of the assets.
(f) A payment made by the buyer to a person to whom the buyer is, or believes it is, liable under subdivision (a) reduces pro tanto the buyer’s cumulative liability under subdivision (d).
(g) No action may be brought under subdivision (a) by or on behalf of a claimant whose claim is unliquidated or contingent.
(h) A buyer’s failure to comply with the requirements of Section 6104 does not do any of the following:
(1) Impair the buyer’s rights in or title to the assets.
(2) Render the sale ineffective, void, or voidable.
(3) Entitle a creditor to more than a single satisfaction of its claim.
(4) Create liability other than as provided in this division.
(i) Payment of the buyer’s liability under subdivision (a) discharges pro tanto the seller’s debt to the creditor.
(j) Unless otherwise agreed, a buyer has an immediate right of reimbursement from the seller for any amount paid to a creditor in partial or total satisfaction of the buyer’s liability under subdivision (a).
(Repealed and added by Stats. 1990, Ch. 1191, Sec. 3.)