UNIVERSITY 
 
 OF CALIFORNIA 
 
 LOS ANGELES 
 
 SCHOOL OF LAW 
 LIBRARY
 
 How to Draft and Enforce 
 a Conditional Sale 
 
 odern American Law Lecture 
 
 Blackstone Institute, Chicago
 
 HOW TO DRAFT AND ENFORCE 
 A CONDITIONAL SALE 
 
 BY 
 
 AKTHUK W. BLAKEMOKE, A.B., LL.B. 
 
 iv > 
 
 OF THE BOSTON BAR 
 
 One of a Series of Lectures Especially Prepared for the 
 Blackstone Institute 
 
 BLACK STONE INSTITUTE 
 CHICAGO 
 
 Copyright, 1915, by Blackstone Institute 
 Copyright, 1919, by Blackstone Institute 
 Copyright, 1921, by Blackstone Institute
 
 ARTHUR W. BLAKEMORE
 
 ARTHUR W. BLAKEMORE 
 
 Mr. Blakemore is a practicing attorney with 
 offices at 40 Central Street, Boston, Mass. His 
 wide experience in active practice since 1900 makes 
 him particularly well qualified to handle the very 
 practical subject of "How to Draft and Enforce a 
 Conditional Sale." 
 
 He is a graduate of Harvard College and Har- 
 vard Law School. Mr. Blakemore also studied 
 for a time at the Universities of Berlin and Heidel- 
 berg, Germany. 
 
 After he was admitted to the bar, he devoted 
 his attention not only to practice but also to the 
 preparation of legal articles on many phases of 
 the law and has become known as an authority. 
 
 Mr. Blakemore is the author of "Real Prop- 
 erty," in MODERN AMERICAN LAW. In addition he 
 has written several articles in the Cyclopedia of 
 Law and Procedure. He is the author of 
 "Make Your Will," "Blakemore and Bancroft 
 on Inheritance Taxes," "Gould and Blakemore 
 on Bankruptcy," and has prepared articles for 
 several other publications. 
 
 Along with his other activities Mr. Blakemore 
 has found time to take an active part in civic enter- 
 prises. For a period of five years he has served as 
 Alderman of the City of Newton, Massachusetts, 
 where he resides.
 
 HOW TO DRAFT AND ENFORCE 
 A CONDITIONAL SALE 
 
 By 
 ARTHUR W. BLAKEMORE, A.B., LL.B. 
 
 An offer may be received for purchase of goods 
 from a customer whose credit is not of the best or 
 cannot be ascertained. The buyer either will not con- 
 sent, or is unable, to pay for the goods on delivery. 
 Rather than lose the sale, dealers in machinery, fur- 
 niture, or other personal property of value, are fre- 
 quently willing to take a business risk by selling to 
 persons of uncertain responsibility. 
 
 The question will then arise, how can one best 
 protect himself in so doing. Usually the best way 
 is to make some arrangement by which you have the 
 right to retake the goods if the buyer becomes in- 
 solvent or does not pay as he agreed. If you fail to 
 preserve such a right the buyer may sell the goods 
 and put the money in his own pocket ; or if he does 
 not sell the goods, they may be taken by the assignee 
 or trustee in bankruptcy for the creditors. They 
 may even be attached by some other creditors who 
 will thus obtain a prior lien upon them. In all these 
 cases your chance of receiving adequate compensa- 
 tion is usually slight, for you become a general cred- 
 itor along with the others, while if a conditional sale 
 is properly drawn and recorded, where recording is
 
 6 MODERN AMERICAN LAW LECTURE 
 
 made necessary, it reserves to the seller rights su- 
 perior even to one to whom the conditional vendee 
 has wrongfully sold, although the buyer from the 
 conditional vendee acted in good faith and paid 
 value and had no actual notice of the conditional 
 sale. 1 
 
 It is the purpose of this lecture to show how a con- 
 tract of sale may be drawn so that title to the goods 
 may be legally reserved until payment is received. 
 Not only will the proper method of drafting such 
 agreements be indicated, but the nature of the con- 
 ditional sale contract and the necessary steps to be 
 taken after it has been drawn will be discussed. 
 
 THE CONTRACT OF CONDITIONAL SALE 
 
 Conditional sales are discussed in MODERN AMER- 
 ICAN LAW, SALES, Chapter VI, under the heading 
 " Title Reserved for Security." Reference should 
 be made thereto in connection with this lecture. A 
 number of the general principals of the Law of Sales 
 will be mentioned here. They will not be discussed 
 at length, however, for they are carefully presented 
 by Professor Horack. 
 
 A contract of conditional sale is an instrument by 
 which an owner of personal property 
 
 (1) Agrees to deliver the personalty to the buyer 
 at once ; 
 
 (2) Reserves title in himself until the purchase 
 price is paid ; 
 
 (3) Agrees that completion of the payments 
 (which are usually made on the instalment plan) 
 will render the buyer the absolute owner of the goods. 
 
 Gamble v. Shingler, 96 S. E. 705 (Ga.).
 
 HOW TO DRAFT A CONDITIONAL SALE 7 
 
 CONDITIONAL SALES LEASES MORTGAGES 
 
 The difference between a lease and a conditional 
 sale, in the strict sense of those terms, is that in 
 a lease the parties intend the article leased to be 
 returned at the end of a set period. The user pays 
 certain sums called rent for use of the property. In 
 the case of a conditional sale the parties contemplate 
 that when the sums stipulated are paid the property 
 shall belong absolutely to the buyer. In the case of 
 the lease, the sums paid are simply in return for the 
 use of the property. In the case of the conditional 
 sale, the sums paid are part payment toward the pur- 
 chase price. 
 
 In many states it is the custom to draft conditional 
 sales in the form of leases on the theory that in this 
 way the buyer most clearly acquires no claim to the 
 title until final payment has been made. Such leases 
 contain a clause giving the so-called lessee the right 
 to a release of the lessor's rights in the property on 
 final payment. The courts, however, have been very 
 quick to protect the buyer in the case of leases of 
 this character by declaring them to be what they are 
 in fact conditional sales. 1 The final payment of the 
 so-called rent results in the transfer of the title, but 
 this cannot be the effect in case of a real lease. The 
 courts have reached this result without the aid of 
 any statute. In some states, however, statutes have 
 been passed which include such leases within their 
 operation. 
 
 One of the essentials of a conditional sale is that 
 the buyer must be bound to take title to the property 
 and therefore a lease providing that the lessee can at 
 any time return the property is not a conditional 
 
 'See, for example, Hartford-Connecticut Trust Co. vs. Puritan Laun- 
 dry Co., Ill A. 149 (Conn.).
 
 8 MODERN AMERICAN LAW LECTURE 
 
 sale. Whether an agreement shall be construed as a 
 lease, a conditional sale, or a mortgage, the courts 
 usually consider, depends upon its effect and not 
 upon what the parties may have called it. 1 
 
 But it should be borne in mind that a real lease 
 may be used and the clause reserving to the lessee the 
 privilege of a release from the lessor on payment of 
 the last installment may be omitted. 2 One of the 
 large shoe manufacturing companies puts out many 
 of its machines on real leases. This transaction has 
 the advantage of affording maximum protection to 
 the manufacturer as the tenant thus acquires no 
 interest whatever in the goods themselves. He has 
 not even an inchoate title, and has no right to sell 
 the leased property, nor any interest which his cred- 
 itors can reach. On the other hand, where the com- 
 petition is keen it is usually more difficult to get cus- 
 tomers to take a lease than to sign a conditional bill 
 of sale the lease gives the lessee no prospect of ever 
 acquiring title to the goods. For that reason you 
 will probably prefer to have a conditional bill of sale. 
 
 A sale with mortgage back differs from a condi- 
 tional sale in that in case of a mortgage the original 
 property owner becomes the debtor, and hence stat- 
 utes requiring recording of mortgages will not 
 usually apply to conditional sales. 3 
 
 A sale where the delivery is accompanied by a 
 trade acceptance to be signed by the buyer is not a 
 
 'Corbett v. Eiddle, 209 Fed. 811. 
 
 'Outcault Advertising Co. v. Citizens' State Bank, 180 N. W. 705 
 (Minn.). 
 
 'See Dobson Printers' Supply Co. v. Corbett, 82 So. 804 (Fla.). As 
 to rule in Illinois, however, see post p. 21.
 
 HOW TO DRAFT A CONDITIONAL SALE 9 
 
 conditional sale which is a sale subject to a condition 
 subsequent, but this is a conditional contract of sale 
 in which the buyer does not even obtain a special title 
 until he performs the condition precedent of signing 
 the acceptance or paying cash. 1 This is a nice dis- 
 tinction but important and clear. 
 
 CONDITIONAL SALES TO MERCHANTS FOB RESALE 
 
 It is very difficult to protect the seller when he 
 sells to a retail dealer for sale in the ordinary course 
 of business, as it is the general rule, 2 crystallized into 
 law in the Uniform Act, 3 that in such case one who 
 purchases in good faith from the retailer for value 
 without notice has a clear title, even though the goods 
 were sold to the retailer under a valid conditional 
 sale. In Michigan there is a special recording statute 
 for such cases. 4 
 
 RIGHTS UNDER CONTRACT ARE ASSIGNABLE 
 
 A conditional sale although it does not pass title 
 still gives the buyer a special property in the thing 
 sold which he may sell or mortgage while the seller 
 under a conditional sale has an interest which he also 
 can sell or mortgage. 5 
 
 WHAT LAW GOVERNS THE CONDITIONAL SALE 
 
 It is the general rule that the law of the place 
 where the conditional sale was made determines all 
 
 'Firestone Tire & Rubber Co. v. Anderson, 180 N. W. 273 (Iowa). 
 *Spooner v. Cummings, 151 Mass. 313. 
 *Section 9. 
 
 8ee Becker v. La Core, 179 N. W. 344 (Mich.) 
 
 Worcester Morris Plan Co. v. Mader, 128 N. E. 777 (Mass.). See 
 also King v. Cline, 194 P. 290 (Cal. App.).
 
 10 MODERN AMERICAN LAW LECTURE 
 
 questions of the validity, nature and construction of 
 the sale. Questions of the validity of a sale can 
 usually arise only where the rights of third parties 
 are concerned as the conditional sale is universally 
 upheld as between the parties. If a sale is good as 
 against creditors in the state where it was made it 
 will also be good against creditors when the goods 
 are moved to another state, even though the law as to 
 validity may be different in that state. 1 So if a con- 
 ditional bill of sale is made where recording is not 
 required it would still be good in another state to 
 which the goods may be removed although in that 
 state recording is essential. On the other hand if the 
 law of the place where the sale is made requires re- 
 cording a failure to record will invalidate the sale 
 in another state in which recording is not required. 
 Where a conditional sale, made in one state, con- 
 templates or provides that the property is to be 
 delivered or used in another state the construction 
 and validity of the contract is to be determined by 
 the law of the latter state. Where, however, a third 
 person purchases goods from the conditional buyer 
 his rights must be determined by the law of the place 
 where he contracts and not by the law of another 
 state. The contract in question here is not the orig- 
 inal contract, but the sale by the original buyer. 2 
 
 'Where an article sold on conditional sale is taken by the buyer to 
 another state and sold to a purchaser for value without notice, it is the 
 general rule that if the conditional sale was properly recorded or was 
 valid without record the conditional vendor can still enforce his rights, 
 but the rule is otherwise in Texas. Willys-Overland Co. v. Chapman, 206 
 S. W. 978 (Tex. Civ. App.). 
 
 *For authorities on the above rules, reference may be had to the case 
 of Corbett v. Kiddle, 209 Fed. 811, and In re Wall, 207 Ted. 994.
 
 HOW TO DRAFT A CONDITIONAL SALE 11 
 
 WHEN TITLE PASSES 
 
 In all cases the question may be vital as to just 
 when the title to the goods passed under the terms 
 of the sale. In determining this, the usual rules of 
 the Law of Sales should be applied. 
 
 The chief question is when the particular goods 
 became so set apart to the buyer that the seller can- 
 not withdraw them from the operation of a condi- 
 tional sale. This, as with any other sale, depends 
 upon the intention of the parties as evidenced bv the 
 circumstances of the particular transaction. Where 
 goods are delivered to a carrier for shipment to the 
 buyer, ordinarily they become, from that instant, the 
 property of the buyer, subject to the rights of the 
 seller to stop them in transit before delivery to the 
 buyer. 
 
 There is another rule which may affect this ques- 
 tion to the effect that where anything remains for 
 the seller to do in respect to the goods, the title 
 does not finally pass until it is done. The writer 
 has in mind, for example, a case where machinery 
 was sold to a worthless contractor. The sale was not 
 in proper form to protect the rights of the seller, 
 but it happened that the contract did provide that the 
 seller would set up the machinery on arrival at the 
 buyer's property. The seller never had set it up and 
 for this reason he was able to retake the machinery 
 as against creditors of the buyer who had attached 
 it. This was true notwithstanding the seller had 
 already sent the buyer bills for the purchase price, 
 and thus given the buyer credit usually a certain 
 indication of the intention to pass title. 
 
 In a true conditional sale there must be a delivery
 
 12 MODERN AMERICAN LAW LECTURE 
 
 of possession with the intention of passing immediate 
 ownership, often called a special title, with the in- 
 tention of reserving to the seller only the general 
 title as security. 1 
 
 FORM OF THE CONTRACT 
 
 The form of the contract will depend upon the 
 nature of the individual business. One form of con- 
 tract might be very useful for a concern dealing in 
 furniture while at the same time very awkward for 
 a business house selling machinery. It will, of 
 course, make a difference whether the business is 
 done through agents on the road who cannot be 
 clothed with authority to bind a bargain, or whether 
 the business is all done in a store, where the whole 
 transaction can be settled and decided on at once. 
 If the business is done through agents it is usually 
 best to have a form drawn up by which the buyer 
 really makes an order for the goods to be sent to 
 him under certain conditions while the order does 
 not become binding on the seller until accepted by the 
 home office. 
 
 This gives the seller an opportunity to look into 
 the credit of the buyer and decide whether or not 
 he desires to accept the offer. The only difficulty 
 with it is that it leaves the buyer the right to revoke 
 his offer or order at any time until it is finally ac- 
 cepted by the home office. But it is usually wise for 
 the salesman to take this risk in a large sale where 
 the seller has a credit department better able to 
 decide on the financial responsibility of the buyer 
 than the salesman. 
 
 'Firestone Tire & Rubber Co. v. Anderson, 180 N. W. 273 (Iowa). 
 Conner v. Borland-Grannis Co., 128 N. E. 317 (HI.).
 
 HOW TO DRAFT A CONDITIONAL SALE 13 
 
 Where a salesman simply takes an order he does 
 not sign a contract as the agent of the seller and he 
 therefore can act as a subscribing witness if the sig- 
 nature of the buyer was affixed in his presence. This 
 may be very important where a witness is necessary, 
 and the salesman may affix his name either at the 
 time or later when the question for any reason may 
 arise. 
 
 The acceptance of such an order may be made 
 either by indorsement in writing on the order, which 
 should be signed in duplicate and one copy sent 
 back accepted to the seller. In the absence of this, 
 sending the goods after receiving the order will be 
 deemed acceptance of the order. 
 
 It seems wise to have some formality in the con- 
 tract as it has been recently held that the buyer's 
 signature to a mere delivery slip containing the 
 words " Conditional sale. Title retained by W until 
 paid in full" is insufficient to show that the parties 
 had agreed to a conditional sale in the absence of 
 evidence that the buyer read the delivery slip or 
 assented to its terms, especially where the contract of 
 sale was otherwise made. 1 
 
 ORDER FORMS 
 
 A form of order used by a large manufacturing 
 concern is as follows : 
 
 ORDER AND AGREEMENT 
 SALE MACHINES 
 
 UNION MACHINERY COMPANY (GENERAL DEPARTMENT), 
 
 BOSTON, MASS. : 
 Please ship the following machines to the undersigned at his 
 
 'Utah Ass'n v. Buller, 194 P. 127 (Utah).
 
 14 MODERN AMERICAN LAW LECTURE 
 
 factory at in accordance with the terms and 
 
 conditions hereinafter stated: 
 
 MACHINES. 
 
 
 
 
 
 
 
 
 
 
 Total, 
 
 Price. 
 
 The undersigned agrees to purchase from you the machines 
 hereby ordered and to pay you for the same upon demand the 
 sums set opposite the names of the respective machines in the 
 list above, amounting to a total of Dollars. 
 
 The title to all machines hereby ordered shall remain in you at all 
 times, although possession shall have been given to the undersigned, 
 until the amount of the purchase price of all shall have been paid in 
 full; and on default in any payment you may retake possession of said 
 machines free from all claims whatsoever, and may retain as consider- 
 ation for the use of the said machines theretofore any sums which may 
 have been theretofore paid in respect to said machines. The said 
 machines shall at all times be held at the sole risk of the undersigned 
 from loss, damage, or destruction, and they shall not nor shall any 
 thereof be removed from the said factory of the undersigned without 
 your written consent at any time before said payment in full shall have 
 been made. The undersigned shall pay all taxes which may be assessed 
 in respect to said machines from delivery thereof to the undersigned, 
 upon whomsoever assessed. 
 
 The "machine numbers" of the machines hereby ordered may 
 be entered in the above list by you upon or after acceptance of 
 this order. 
 
 Delivery is to be f. o. b. your factory or office at 
 
 and freight and transportation charges on said machines from 
 your factory or office shall be paid by the undersigned.
 
 HOW TO DRAFT A CONDITIONAL SALE 15 
 
 (The detail of equipment and shipping directions may be 
 added here or on back of form.) 
 
 Dated 19 
 
 Signature of Applicant 
 
 By 
 
 Order accepted, Boston, 19 .... 
 
 UNION MACHINERY COMPANY. 
 Order taken by By 
 
 A Form Used in New England. The following 
 form of bilateral contract is in use in the New Eng- 
 land States. The directions to salesmen should be 
 altered to fit the territory covered : 
 
 CONDITIONAL BILL OF SALE 
 
 THE GOOD ROADS MACHINERY COMPANY (herein- 
 after called the vendor), a corporation duly organized by law, 
 whose corporate existence is hereby admitted for all purposes, 
 in consideration of the agreements hereinafter set forth, hereby 
 
 sells and delivers to (hereinafter 
 
 called the vendee), the articles mentioned in the following 
 memorandum, but on the following conditions, viz. : 
 
 That title to said property shall remain in said vendor until 
 all the agreements of the vendee are fulfilled; and the vendee 
 for himself, his heirs and assigns, hereby covenants with the 
 vendor, its successors and assigns, that .... will pay the pur- 
 chase price and notes as set forth in said memorandum, which 
 notes are given only as collateral and may be sold or discounted, 
 without waiver of any rights under this contract, and will also 
 pay all taxes and liens which may accrue on said property; 
 will keep it in good order, allow proper inspection, order and 
 pay for all necessary repairs, keep it insured against fire in a 
 sum satisfactory to the vendor (any proceeds of said insurance 
 policy to inure to the benefit of the vendor in whatever name
 
 16 MODERN AMERICAN LAW LECTURE 
 
 the vendee may take it out) ; and will not alienate it or remove 
 
 it from the state of or suffer it to 
 
 be attached or to be in the real or constructive possession of 
 others. 
 
 Upon breach of any of the above covenants, or bankruptcy 
 or insolvency or general sale or assignment by the vendee of 
 business or stock in trade, or whenever in the opinion of the 
 vendor the property is threatened with loss, damage or destruc- 
 tion of any kind, except reasonable wear and tear, or with the 
 imposition of a lien or adverse claim of any kind, said vendee 
 will allow and assist in the removal of said property and for 
 that purpose said vendor or its agents or attorneys may enter, 
 re-take and remove said property wherever the same may be 
 without liability of any kind and at the expense of the vendee 
 up to the cost of removal to the vendor's Boston office. No 
 delay in removing shall be construed a waiver of the vendor's 
 right to remove. 
 
 UPON THE PAYMENT OF ALL OF THE SAID NOTES 
 AT MATURITY, TITLE TO SAID PROPERTY SHALL 
 THEREUPON PASS TO SAID VENDEE; and it is further 
 expressly agreed that all sums paid before said final payment 
 are rent and shall be kept by said vendor in any event as rent 
 for the use of said property and to cover its decrease in market 
 value. 
 
 It is further agreed that the vendee has read this contract 
 and fully understands its terms and has received a copy thereof ; 
 that this contract shall be recorded by the vendee and at his 
 expense whenever recording is necessary by law. 
 
 Witness our hands this day of 
 
 192.... 
 
 THE GOOD ROADS MACHINERY COMPANY, 
 
 By 
 
 Agent. 
 
 (Acknowledgment by buyer required in Connecticut.) 
 
 STATE OF CONNECTICUT, 1 
 
 COUNTY OF J S 
 
 ..19
 
 HOW TO DRAFT A CONDITIONAL SALE 17 
 
 Then personally appeared the above-named 
 
 and acknowledged the foregoing instrument to be 
 
 free act. 
 
 Before me, 
 
 Notice to Salesmen 
 
 This contract need not be recorded or acknowledged if the 
 goods are delivered to Rhode Island. It must be recorded 
 with the City or Town Clerk within ten days where the buyer 
 resides in Massachusetts, Maine and Vermont; and must be 
 recorded and acknowledged by the buyer before a Justice or 
 Notary or Town Clerk in Connecticut, and must be recorded 
 in New Hampshire within twenty days after its date with an 
 affidavit, the form for which may be; obtained from the Boston 
 office. Where recording is necessary, see that recording precedes 
 delivery. On payment in full, see that contract is discharged 
 of record to protect the Good Roads Machinery Company against 
 suit by other creditors of the buyer. 
 
 A Lease Held a Conditional Sale. A common form 
 of lease which has been held in Massachusetts to be a 
 conditional sale notwithstanding its language, is as 
 follows : 
 
 Boston, Feb. 28, 1892. No. 1430. 
 
 This is to certify, that I, Ella Bassett, of Boston, have this 
 day hired and received from Smith Brothers the property 
 described and valued in the following 
 
 SCHEDULE 
 
 Which articles are to be used by me at No. 1070 Washington 
 Street. For the rent and use of which, and for all and any use 
 of other goods previously leased by the said Smith Brothers, 
 to me, I have this day paid to the said Smith Brothers, as rent
 
 18 MODERN AMERICAN LAW LECTURE 
 
 in advance, the sum of One Hundred Dollars, and I promise to 
 pay them, or order, the sum of at least Twenty-five Dollars 
 per month, and continue such payments until the sum to be 
 paid for the use or rent shall equal the sum stated in the above 
 schedule, with the addition of six per cent on the price of the 
 goods named in such schedule; and further six per cent to be 
 added to balance unpaid at the end of the first and every suc- 
 ceeding year, and to keep said articles insured in the sum of 
 not less than (depending upon amount of schedule) for the 
 benefit of said Smith Brothers. I agree not to remove said 
 articles or any of them from the above named place without 
 the consent of said Smith Brothers thereto in writing; and if 
 I fail to pay said rents as above stipulated, or if I remove said 
 articles from said place, or sell them, or underlet them, or 
 suffer them to be attached, mortgaged, damaged or injured or 
 fail to keep them insured as aforesaid, I thereby forfeit all 
 right to said goods, and to further use of the same and to all 
 moneys paid. I further agree and consent that said Smith 
 Brothers and their agents and servants may at any and all 
 times enter into and upon any house, room, and premises occu- 
 pied by me, or any room, premises or home occupied by a tenant 
 or lodger of mine, and view and examine all said articles of 
 furniture and to remove the same without notice or demand 
 and without being deemed guilty of any trespass or wrong, 
 and in case of such removal said Smith Brothers may sell or 
 appropriate each and all said goods and articles at once, as 
 they may see fit, and in case they sell or appropriate them, or 
 any of them, they may apply the proceeds after payment of 
 cost and expense of finding, moving, keeping and selling them, 
 to the payment of any rent or moneys due said Smith Brothers. 
 I remain liable to them for, and agree to pay, any balance or 
 sum still remaining due to them as back rent or otherwise. It 
 is expressly understood and agreed that the title to each and 
 all the above goods and articles and to each and all other 
 goods and articles at any time leased to me by said Smith 
 Brothers, remains in Smith Brothers, and they remain abso- 
 lute owners of all the same, until the full price for all the 
 goods in such leases is fully paid. But that upon full payment 
 to said Smith Brothers of price named in all the leases and all
 
 HOW TO DRAFT A CONDITIONAL SALE 19 
 
 expenses, including expense of collection, of teaming, finding 
 or getting possession of them, then they will release their claim 
 and right in the goods above leased to me. 
 
 WITNESS my hand and seal on the day and in the year first 
 above mentioned. 
 
 ELLA BASSETT. 
 
 IN PRESENCE OP 
 
 JOHN BAXTER. 
 
 I have this day received from Smith Brothers an exact copy 
 of the above lease, the provisions of said lease having been fully, 
 understood by me before signing. 
 
 ELLA BASSETT. 
 
 CERTAIN REQUIREMENTS 
 
 The essential rules as to the requirements of a 
 valid conditional sale as they are known to exist at 
 the time of publication of this Lecture will now be 
 set out as conveniently as possible in alphabetical 
 form. In some states statutes provide that the con- 
 tract may be either acknowledged by the buyer or 
 proven by the subscribing witness, and in such states 
 it is important to have the contract witnessed, as it 
 can be then filed or recorded without any acknowl- 
 edgment by the seller. 
 
 Statutes of many states contain particular require- 
 ments as to conditional sales of railroad equipment 
 and household furniture. All of these cannot be 
 given here. Reference should be had to the statutes 
 and decisions of the particular state in which the 
 contract is made, or into which the goods are to be 
 sent. 
 
 In Virginia the original contract should be re- 
 corded and should show the date of the contract, 
 amount due, when payable, and description of the 
 goods and the name of the buyer and seller. In
 
 20 MODERN AMERICAN LAW LECTURE 
 
 a very few states an oral contract of conditional sale 
 may be enforced. But such a contract should not 
 be made if it can be, avoided on account of the diffi- 
 culty of proving its exact terms. 
 
 SIGNATURE 
 
 In most states it is sufficient that the instrument 
 is signed by the buyer, whether in the form of an 
 order or of a conditional sale. In a few states, how- 
 ever, signature by the seller is necessary. For in- 
 stance, in Florida, Iowa and Pennsylvania, signature 
 and acknowledgment by the seller is required. Con- 
 tracts must be signed by all parties in Arizona, Iowa, 
 New Hampshire, Washington, and Wisconsin. In 
 all other states it would seem that signature by the 
 buyer is sufficient, especially where the contract is 
 in the form of an order by the buyer accepted by 
 shipment of the goods. But where the contract is in 
 bilateral form, it should be signed by both parties 
 before recording to obviate any question that it was 
 never completely executed. 
 
 Several states have special requirements as to wit- 
 nesses which should be carefully examined. The 
 provisions are so different in the various states that 
 it is impossible to classify them. The safer way is to 
 have the signatures of all parties witnessed by at 
 least one disinterested party. In order to determine 
 the validity of an agreement where this has not been 
 done, resort must be had to the statutes of the indi- 
 vidual states. 
 
 AFFIDAVIT OF INTEREST OF PARTIES 
 
 In some States an affidavit in some form of the
 
 HOW TO DRAFT A CONDITIONAL SALE 21 
 
 actual indebtedness secured must be filed with the 
 purpose of preventing so far as possible fradulent 
 devices for hindering attaching creditors, and the 
 statutes in each State must be carefully studied and 
 followed, as each State has its own special forms 
 required. These States are as follows : 
 
 Colorado ohio 
 
 Maryland (some counties) Pennsylvania 
 
 Nebraska Wyoming 
 
 New Hampshire 
 
 SPECIAL RULES 
 
 In Colorado, the contract in order to be treated 
 as a conditional sale must leave it optional with the 
 buyer whether he will pay. If the buyer is bound to 
 pay it is a sale and a mortgage back. In Illinois and 
 Pennsylvania conditional sales are not valid as 
 against third parties even when acknowledged and 
 recorded. As a result in Illinois, the only method of 
 retaining a lien as against third parties is by a chattel 
 mortgage properly acknowledged and recorded. 
 
 In Pennsylvania a conditional sale contract is 
 enf orcible between the parties although not recorded 
 or filed. But for protection against third parties you 
 should have a lease or bailment contract with an 
 option to purchase. Such a contract will be enforced 
 as against a trustee in bankruptcy or against bona 
 fide purchasers or attaching creditors, and all other 
 third persons except a landlord who may have a lien. 
 If the contract leaves title in the seller with no spe- 
 cific term of lease and no agreement for return of 
 the property it is a conditional sale which is treated 
 as an absolute sale. But if the contract provides a 
 definite term of leasing with certain rent and for
 
 22 MODERN AMERICAN LAW LECTURE 
 
 return of the property at the end of the term, it is 
 a lease even though on receipt of the full rent the 
 lessee may elect to become the owner without further 
 payment. 
 
 RECORDING 
 
 A conditional sale is valid everywhere as between 
 the original parties. It is, however, the policy of 
 some states as expressed in their statutes to give no- 
 tice of the existence of a conditional sale in some way 
 in order to apprise third parties of the actual condi- 
 tion of the title. 
 
 The difficulty is that otherwise a man might be 
 doing business and be apparently very prosperous 
 with a large stock of machinery and merchandise 
 which in reality he did not own, while as a result of 
 his apparent prosperity he might easily induce mer- 
 chants to send him goods on credit as they would not 
 do if they knew the real situation. It is common in 
 states where this view is taken to require that a con- 
 ditional sale in order to be valid as against third 
 persons shall be recorded with the city or town clerk 
 or other recording official. This means that the con- 
 tract shall be delivered by the parties to the record- 
 ing officer together with the fee for recording. He 
 will then enter it in an index and copy it in his books 
 of record and return the original to the parties. 
 
 In some states however it is only necessary that 
 the conditional sale be filed, which means that the 
 original will be placed on file and indexed but not 
 copied. In either case the prudent seller will not 
 deliver the goods until the instrument is properly 
 filed or recorded. The buyer of course should pay
 
 HOW TO DRAFT A CONDITIONAL SALE 23 
 
 for the recording or filing fee. The law often re- 
 quires in addition to filing and recording that the 
 instrument be acknowledged by one or both of the 
 parties, or witnessed, and these requirements must 
 be carefully complied with. 
 
 Conditional sales do not need to be recorded, filed, 
 acknowledged or witnessed in the following states: 
 
 Arkansas Louisiana 
 (even if to be sold in the usual Mississippi 
 
 course of trade) (may be oral) 
 
 California Nevada 
 
 District of Columbia New Mexico 
 
 Florida Pennsylvania 
 
 Idaho Rhode Island 
 
 Illinois Tennessee 
 
 Indiana Utah 
 
 In the above states which have no statutes govern- 
 ing conditional sales they are nevertheless commonly 
 sustained by the courts in accordance with their 
 terms. 1 
 
 In the following states conditional sales must be 
 recorded or filed to keep title as against third parties, 
 and need not be acknowledged or witnessed: 
 
 Alabama (over $200) North Carolina 
 
 Arizona Ohio 
 
 Delaware Oklahoma 
 
 Kansas South Carolina [See Perkins v. Bank, 
 
 Maine 20 S. E. 75 (S. C.)] 
 
 Maryland South Dakota 
 
 Minnesota (at residence of seller) Texas 
 
 Montana Washington 
 
 Nebraska West Virginia 
 
 New Hampshire Wisconsin 
 
 New Jersey Wyoming 
 
 New York 
 
 In four states the recording of conditional sales is 
 
 See, for example, Silverstein v. Kohler, 183 P. 451 (Cal.) ; 136 P. 372 
 (Idaho). As to effect in Illinois and Pennsylvania, see, ho were, p. 21.
 
 24 . MODERN AMERICAN LAW LECTURE 
 
 1 
 required only under certain circumstances, namely: 
 
 Massachusetts (bill of sale intended for security) 
 
 Michigan (See Young v. Phillips, 202 Mich. 480) 
 
 Oregon (when property becomes attached to real estate) 
 
 Pennsylvania (when property attached or to be attached to real estate) 
 
 In the following states conditional sales must be 
 recorded or filed and must be acknowledged by the 
 vendee in person in order to be recorded : 
 
 Colorado graph supplies and jewelry 
 
 (as to validity see page 21) pawned in certain cases) 
 
 Connecticut Georgia 
 
 (except phonographs or phono- Vermont 
 
 In the following states conditional sales must be 
 recorded or filed and must be either acknowledged or 
 witnessed : 
 
 Georgia Missouri 
 
 (signature by purchaser is suf- North Carolina 
 
 fieient) North Dakota 
 
 Iowa Oklahoma 
 Kentucky (filed and not recorded) 
 
 (recording at domicil of buyer, Virginia 
 155 Ky. 686) 
 
 Time of Recording. In some states a contract 
 must be filed or recorded at once or within a definite 
 period, and sometimes even before delivery of the 
 goods. These states are as follows : 
 
 Alabama, within thirty days of date. 
 
 Connecticut, within a reasonable time after its date. 
 
 Plorida, need not be recorded or filed for two years, but if not paid at 
 the end of that time it should be recorded and must be either ac- 
 knowledged by the buyer or proven by a subscribing witness. 
 
 Georgia, within thirty days from date. 
 
 Massachusetts, within fifteen days of their date, unless the property 
 sold becomes a fixture when within ten days of its date. 
 
 Mississippi, within three years from date. 
 
 New Hampshire, within twenty days of delivery of property. 
 
 New York, to be filed as soon as possible. 
 
 Ohio, should be filed or recorded forthwith.
 
 HOW TO DRAFT A CONDITIONAL SALE 25 
 
 Oregon, within ten days after property becomes attached to real estate. 
 South Carolina, within ten days of delivery or execution. 
 Vermont, within thirty days after delivery of the property. 
 Washington, within ten days of delivery of property. 
 
 In most states, however, it is enough that the con- 
 tract is filed or recorded at the time of shipment. 
 The prudent seller should in all cases insist on re- 
 cording before he actually sends the goods. 
 
 PLACE OF RECORD 
 
 The usual American rule is that a conditional sale 
 shall be recorded in the place where the buyer resides 
 and this view prevails in the following states : 
 
 Connecticut New Hampshire 
 
 Iowa New York 
 
 Maine North Carolina 
 
 Minnesota Ohio 
 
 Missouri South Carolina 
 
 Nebraska Washington 
 
 In some states record is required in the place where 
 the goods were at the time of sale, as in 
 
 Arizona Virginia 
 
 Montana West Virginia 
 
 North Dakota Wyoming 
 
 Under the Uniform Conditional Sale Act record- 
 ing must be made in the place where the goods are 
 kept after the sale and this is also the rule in Kansas 
 and Oklahoma. 
 
 In three states (Alabama, Georgia, Michigan) two 
 records are required, one where the buyer resides 
 and one where the goods were delivered. Record may 
 be in either place in Texas. 
 
 DURATION OF VALIDITY 
 
 The length of time during which the contract is
 
 26 MODERN AMERICAN LAW LECTURE 
 
 valid is limited in some states as follows : 
 
 Arizona, valid for three years. Minnesota, valid for six years. 
 
 California, valid for two years if Mississippi, valid for six years. 
 
 executed without the state, Missouri, valid for five years. 
 
 and for four years if executed Nebraska, valid for five years. 
 
 within the state. Nevada, valid for six years. 
 
 Colorado, valid for two years if not New Jersey, valid for three years. 
 
 to exceed $2,500; five years, New Mexico, valid for six years. 
 
 $2,500 to $20,000; ten years, if North Carolina, valid for three 
 
 exceeds $20,000. years. 
 
 Delaware, valid for three years. Oregon, valid for six years. 
 
 District of Columbia, valid for Rhode Island, valid for six years. 
 
 three years. South Dakota, valid for three years. 
 
 Georgia, valid for six years. Vermont, valid for six years. 
 
 Idaho, valid for five years. Washington, valid for six years. 
 
 Kansas, valid for two years. Wisconsin, valid for three years. 
 
 Kentucky, valid for fifteen years. Wyoming, valid for one year. 
 Michigan, valid for one year. 
 
 In some Western States like California the seller 
 should beware of short statutes of limitations which 
 may bar him of any remedy at all for the purchase 
 price. 
 
 DISCHARGE 
 
 Some states like Kansas require that a discharge 
 of the contract shall be entered on the record when 
 full payment is made, and in such states the seller 
 may be liable to a penalty for a failure to enter such 
 a discharge. The purpose of these statutes is to pre- 
 vent a fraudulent buyer from keeping an apparent 
 lien outstanding on his property. Otherwise his 
 creditors may thus be prevented from attaching his 
 property through fear of complications with the 
 seller over a conditional bill of sale which has in 
 reality been discharged. In any case it is prudent 
 for the seller to send the buyer on final payment a 
 discharge in proper form to be recorded. The possi-
 
 HOW TO DRAFT A CONDITIONAL SALE 27 
 
 bility that the seller might be charged with collud- 
 ing in a fraudulent scheme to hinder or delay the 
 creditors of the buyer is thus obviated. 
 
 RENEWAL OR REFILING 
 
 In some states the law requires a renewal or refil- 
 ing of an instrument after a certain period to keep 
 it alive, and these states are at present : 
 
 Arizona, refiling every year after three years. 
 
 Colorado, renewal at maturity and every two years thereafter. 
 
 Delaware, refiling annually after three years. 
 
 Kansas, renewal after two years and every two years thereafter. 
 
 Michigan, renewal annually. 
 
 Minnesota, must be renewed within thirty days of the end of two years 
 
 from the date when due and in the same way each year thereafter, 
 
 and this may be done by filing an affidavit of the mortgage showing 
 
 the amount unpaid. 
 Nebraska, must be renewed by filing within thirty days before the end 
 
 of five years from date of original contract, and within thirty days 
 
 before end of each year thereafter, with affidavit. 
 New Jersey, refiling annually after three years. 
 New York, contract must be refiled within thirty days before end of 
 
 each year whether or not property is to be attached to building. 
 North Dakota, renewal within ninety days before end of three years 
 
 from first filing. 
 Ohio, contract must be refiled within thirty days before end of one year 
 
 from date of previous filing. 
 Oklahoma, contract must be renewed within thirty days before end of 
 
 three years of previous filing. 
 South Dakota, refiling annually after three years. 
 Wisconsin, refiling annually after three years. 
 Wyoming, renewal annually. 
 
 PROTECTION AGAINST CONFUSION WITH LANDLORD'S 
 LIEN OR ATTACHMENT TO REAL ESTATE 
 
 Where the contract of conditional sale is properly 
 executed and recorded or filed, the instrument is good 
 protection to the seller. The only consideration 
 which the seller must have in mind beyond this is
 
 28 MODERN AMERICAN LAW LECTURE 
 
 to see that the buyer does not mingle the articles 
 covered by the conditional sale with other property. 
 This may be done by selling them or using them in 
 the course of trade in such a way that they must 
 necessarily be consumed or confused with other 
 property. This may be very dangerous, since a con- 
 tract for conditional sale of goods to be sold again at 
 retail is fraudulent and against public policy in some 
 states, and the original seller is deprived of his rights 
 in the goods. 
 
 Furthermore, the seller must take care that the 
 property, especially if heavy machinery, does not be- 
 come a fixture so attached to realty as to become a 
 part of it. An actual case will serve to illustrate this 
 danger. A contractor bought from a business house 
 a crushing plant which he proceeded to set up in the 
 usual way on a quarry leased from a third party. 
 After a time the contractor became insolvent. The 
 crushing plant had been sold on a conditional bill of 
 sale, but when the seller attempted to get the plant, 
 which was worth some $2500, he found that the owner 
 of the quarry claimed a lien upon it for rent. The 
 owner contended that it had become fixed to the 
 realty and could not be removed. 
 
 After careful consideration, the seller decided that 
 this question had better come up with him as the 
 defendant than in any other way. In accordance 
 with legal advice, the seller sent his men to the quarry 
 at four o'clock in the morning and took off the plant 
 before the land owner knew about it; the land 
 owner never brought suit and the seller saved his 
 crushing plant. Where, however, the article has 
 actually become embedded or fixed so that it cannot
 
 HOW TO DRAFT A CONDITIONAL SALE 29 
 
 be removed without damage to the real estate, the 
 land owner can undoubtedly obtain an injunction 
 against the removal of the machinery. In the 
 case of Allis-Chalmers Co. v. City of Atlantic, 
 144 1ST. W. 346 (Iowa), title to certain machinery sold 
 conditionally was lost because the Supreme Court 
 considered the property had become a fixture to the 
 realty. In such cases the landowner may obtain 
 relief in equity and there obtain an injunction 
 against the removal of the property attached to the 
 realty, although sold on a conditional contract of 
 sale. 1 Some states like Massachusetts, New York, 
 Oregon and Pennsylvania contain special require- 
 ments for recording where the property becomes a 
 part of the real estate. 2 
 
 A list is here given of the states in which the land- 
 lord's lien for rent does not take precedence over the 
 rights of the seller of personal property : 
 
 Alabama New Jersey 
 
 Arizona New Mexico 
 
 Arkansas New York 
 
 California North Carolina 
 
 Connecticut North Dakota 
 
 District of Columbia Ohio 
 
 Idaho Oklahoma 
 
 Indiana Oregon 
 
 Indian Territory Khode Island 
 
 Kansas South Carolina 
 
 Maine South Dakota 
 
 Massachusetts Tennessee 
 
 Michigan Utah 
 
 Minnesota Vermont 
 
 Missouri Washington 
 
 Montana Wisconsin 
 
 Nebraska Wyoming 
 Nevada 
 
 iCamden v. Fairbanks, etc. Co., 86 So. 8 (Ala.). 
 
 2See also Uniform Conditional Sales Act, sec. 7, post p. 45.
 
 30 MODERN AMERICAN LAW LECTURE 
 
 This is also true in Kentucky except where the 
 contract is made while the property is on the prem- 
 ises. But unless the contract of conditional sale has 
 been recorded before the property has been placed 
 on the premises, the landlord's lien defeats the rights 
 of the seller in the following states : 
 
 Florida Mississippi 
 
 Georgia Virginia 
 
 Illinois West Virginia 
 Maryland 
 
 In Iowa, the landlord has no lien where the con- 
 tract is recorded before property is placed on the 
 premises. The law on this point is unsettled in Colo- 
 rado and New Hampshire, while in Maryland, al- 
 though there is no decision exactly in point, the 
 courts are inclined to favor the landlord and a waiver 
 should be obtained. 
 
 The landlord's rights are held superior to those of 
 the seller in Delaware, Louisiana, and Pennsylvania. 
 This is the rule in Texas unless the contract of condi- 
 tional sale is filed before delivery. 
 
 EFFECT AND PRIORITY OF LIEN FOR REPAIRS 
 
 Although there is much conflict of authority it 
 seems to be the better view that the lien of the con- 
 ditional seller is superior to that of an artisan who 
 subsequently does work on the article. 1 
 
 But in some jurisdictions the view prevails that 
 where the conditional sale contemplates continual use 
 and repairs the lien of the artisan for the repairs 
 prevails. 2 
 
 'Baughman Auto Co. v. Emanuel, 137 Ga. 354; 73 S. E. 511. 
 Watts v. Sweeney, 127 Ind. 116, 26 N. E. 680. See comprehensive note 
 in 33 Harvard Law Eeview 868.
 
 HOW TO DRAFT A CONDITIONAL SALE 31 
 DESTRUCTION OF PROPERTY 
 
 The seller should inform himself as to the law of 
 the state into which the sale is made, for some 
 courts hold that the destruction of the property be- 
 fore full payment relieves the buyer from further 
 liability. This is true in : 
 
 Alabama New York 
 
 Georgia Washington 
 
 Massachusetts 
 
 In Louisiana, in case of partial destruction of the 
 property, the buyer may elect to return the property 
 or may keep it and when paying for it deduct the 
 damages. In Pennsylvania, when the property is 
 destroyed before payment, the buyer may recover a 
 portion of the amount he has paid. 
 
 Where property is destroyed by fire or otherwise 
 without the fault of either party, the buyer must 
 stand the loss and is bound to make the balance of 
 his payments according to agreement in the following 
 states : 
 
 Arkansas Oklahoma 
 
 Colorado Tennessee 
 
 Indiana Vermont 
 
 Mississippi North Carolina 
 
 Missouri Virginia 
 
 New Jersey Wisconsin 
 New York 
 
 In either group of states the seller should see to 
 it that insurance in the name of the seller is taken 
 out to cover any loss on the property. In all cases 
 the contract should contain a clause for insurance 
 for the benefit of the seller as far as his interest may 
 appear. For there is some question when the insur-
 
 32 MODERN AMERICAN LAW LECTURE 
 
 ance is taken out by the buyer in his name whether 
 that does not cover simply the interest of the buyer, 
 and it will probably put the seller to considerable 
 expense to prove his rights in any such insurance 
 money and collect upon it. It will be an additional 
 safeguard if the contract expressly provides that any 
 insurance taken out in the name of the buyer shall 
 inure to the seller. But the best way to protect the 
 seller is to take out a policy showing his interest and 
 have it delivered to him at the time he delivers the 
 goods. 
 
 WHEN A SALE BY A BUYER IS A CRIMINAL OFFENSE 
 
 In most of the states there are provisions making 
 the buyer criminally liable if he disposes of the prop- 
 erty subject to conditional sale without the consent 
 of the seller. Such statutes are necessary, as it is 
 the general rule that the buyer after he has paid a 
 portion of the price has not the legal title, but has 
 an equity like the mortgagor of real estate, which 
 he can dispose of unless forbidden by statute. Such 
 a sale would not be a crime at common law, although 
 it might be a breach of his contract with the seller. 
 A statute of this nature is an added protection to the 
 seller, who can better afford to take a business risk 
 in a state where such a statute is in force than in 
 another. If the buyer does violate the statute the 
 seller will have an additional hold on him, although 
 in attacking him on this line one should be careful 
 not to render oneself open to a charge of blackmail. 
 
 In the following states it is made by statute a crim- 
 inal offense for the buyer under a contract of condi-
 
 HOW TO DRAFT A CONDITIONAL SALE 33 
 
 tional sale to sell the property covered by it without 
 the consent of the conditional vendor : 
 
 Alabama Montana 
 
 Arizona Nebraska 
 
 Arkansas Nevada 
 
 California New Jersey 
 
 Colorado New York 
 
 Delaware North Dakota 
 
 District of Columbia Ohio 
 
 Connecticut Oklahoma 
 
 Florida Oregon 
 
 Georgia Pennsylvania 
 
 Indian Territory South Carolina 
 
 Iowa South Dakota 
 
 Kansas Tennessee 
 
 Kentucky Texas 
 
 Louisiana Utah 
 
 Maine Vermont 
 
 Maryland Virginia 
 
 Massachusetts Washington 
 
 Michigan Wisconsin 
 
 Minnesota Wyoming 
 Missouri 
 
 In the following states there is no statute making 
 it a crime for the buyer under a conditional sale con- 
 tract to sell the property covered by it without 
 permission : 
 
 Idaho North Carolina 
 
 Illinois Rhode Island 
 
 Indiana West Virginia 
 New Mexico 
 
 REMEDIES OF SELLER 
 
 A seller under a conditional contract of sale 
 usually has five remedies in case the buyer fails to 
 keep up the instalments. (1) He can take the prop- 
 erty itself; (2) he may bring suit for the money due ; 
 (3) he can bring an action for possession of the
 
 34 MODERN AMERICAN LAW LECTURE 
 
 property ; (4) he may demand the property and then 
 sue for damages for failure to deliver it; (5) or he 
 may bring an action in equity to foreclose the lien 
 under the contract. The last remedy is peculiarly 
 advantageous where the property has become at- 
 tached to real estate and it cannot be removed with- 
 out injury to the property. In such a case the seller 
 cannot bring action for possession, but if he brings 
 a bill in equity for foreclosure all parties in interest 
 can be summoned in and the rights of all parties 
 settled. 
 
 Where there is no provision of law on the subject, 
 the seller will have the right to go and take the prop- 
 erty without formality, using any means necessary 
 to do so short of actual breach of the peace. If the 
 buyer forcibly resists his attempt to take the prop- 
 erty, the seller must then get possession by legal 
 means, as by writ of replevin or foreclosure. Before 
 commencing proceedings to enforce a conditional 
 sale you should first make sure that proper demand 
 has been made, as in many cases the law requires de- 
 mand before a forfeiture can be declared. 
 
 In some states additional protection is furnished 
 the buyer by statutes providing that when the, seller 
 takes the property for failure of the buyer to make 
 the payments he must give certain notice and offer 
 the property at public sale after opportunity to the 
 buyer to redeem his contract. It will be generally 
 held as it has been in New York that a provision in 
 the contract by which the buyer purports in advance 
 to waive his right to have this procedure used is 
 against public policy and void. The buyer cannot in 
 advance waive his statutory right of redemption or
 
 HOW TO DRAFT A CONDITIONAL SALE 35 
 his right to have the property sold at public auction. 
 IN CASE OF BANKRUPTCY 
 
 Where a conditional contract of sale is properly 
 drawn the seller is not a secured creditor of the 
 buyer within the language of the bankruptcy act, 
 and should not file a claim as such, although he can 
 do so if he desires. The trustee in bankruptcy is 
 vested with all the rights of a creditor holding a lien, 
 and therefore the trustee has a right to attack any 
 conditional sale on the ground that it is not properly 
 recorded or filed. Probably the best method of pro- 
 cedure is for the seller to file a petition to the referee 
 setting out the facts and asking for payment in full 
 or for a return of the property. The court will there- 
 upon act on this petition and will undoubtedly sus- 
 tain the 1 rights of the seller if the contract of sale is 
 properly drawn. 
 
 ELECTION OF REMEDIES 
 
 Before bringing proceedings under a conditional 
 sale the seller should consider very carefully just 
 what his remedy will be. It is the law in most states, 
 and it is likely to be so held in any state where it has 
 not yet been decided, that suing for the debt and 
 taking possession of the property under a conditional 
 contract of sale are inconsistent remedies. If the 
 seller pursues one he is deemed to have waived the 
 other. It may well be that bringing suit for the debt 
 will be such an election to pursue that remedy that 
 it will confirm title in the buyer. This will enable 
 him to make a valid sale or mortgage of the property
 
 36 MODERN AMERICAN LAW LECTURE 
 
 to a third person which will be superior then to the 
 seller's lien. An attaching creditor may in the same 
 way obtain a superior lien. 
 
 In all such states where you must elect, the ques- 
 tion will be a practical one as to whether the property 
 covered by the conditional sale in its present condi- 
 tion is worth more than other property of the debtor 
 which you might hope to attach or levy upon in a 
 suit for the purchase price. In considering this ques- 
 tion, the seller should not of course forget that bank- 
 ruptcy proceedings brought by or against the debtor 
 within four months of his attachment will nullify 
 it, while his lien under the conditional sale cannot 
 be affected by bankruptcy. The seller's decision will 
 thus depend on what he can ascertain as to the prop- 
 erty and prospects of the debtor. If the debtor is 
 likely to go into bankruptcy, attempt should be made 
 to enforce the lien given under the contract of condi- 
 tional sale and the vendor's attorney should not bring 
 suit for the purchase price. 
 
 There may be cases, however, where a threat to 
 take the property will be sufficient to obtain a settle- 
 ment. There may be other cases where the com- 
 mencement of suit for the purchase price will achieve 
 the same happy result without the expense and 
 trouble of actually taking the property. All the 
 information available should first be obtained and 
 a decision arrived at in accordance with the prospects 
 of the individual case. In many cases as a matter 
 of business policy it is inexpedient to push customers 
 too hard for the purchase price of goods sold.
 
 HOW TO DRAFT A CONDITIONAL SALE 37 
 
 The seller must elect between taking the property 
 and bringing suit for the debt due, in the following 
 states : 
 
 Arkansas Minnesota 
 
 California Missouri 
 
 Connecticut Nebraska 
 
 Delaware New York 
 
 District of Columbia Ohio 
 
 Florida Oregon 
 
 Indiana Pennsylvania 
 
 Iowa South Carolina 
 
 Kansas Texas 
 
 Maryland Vermont 
 
 Massachusetts Washington 
 
 Michigan Wisconsin 
 
 The rule seems to be that the seller may obtain 
 judgment for the purchase price and if the judgment 
 proves worthless he may still retake the property in 
 the following states : 
 
 Georgia New York 
 
 Michigan North Carolina 
 
 Mississippi South Dakota 
 New Jersey 
 
 In Alabama, a seller can probably sue for the pur- 
 chase price and thereafter replevy the property it 
 there is no intervening lien. No election seems to 
 be necessary in Connecticut and Maine. This is true 
 in Pennsylvania, when no judgment has been ob- 
 tained. It has been held in Massachusetts and New 
 York that a suit on certain instalment notes when 
 due does not waive the buyer's right to take the prop- 
 erty to enforce payment of other notes. 
 
 EFFECT OF EXTENSION 
 
 The seller must beware how he grants the buyer 
 an extension of time for payment as if he does this
 
 38 MODERN AMERICAN LAW LECTURE 
 
 he cannot claim a forfeiture during the time of ex- 
 tension though there was no consideration for the 
 extension. 1 
 
 LACHES 
 
 The seller should always act promptly to protect 
 his rights especially against innocent third parties 
 as he may lose his claim by delay and be estopped to 
 assert his rights. 2 
 
 ILLEGALITY 
 
 The matter of illegality affects the right of a ven- 
 dor to a conditional sale in a peculiar way. In the 
 ordinary contract of sale, mere knowledge on the 
 part of the seller that the article sold is to be used 
 for an illegal purpose is not sufficient to prevent re- 
 covery of the price. The vendor will not lose his 
 rights unless in some way he assists the vendee in the 
 illegal purpose although in Maine and Massachusetts, 
 the contrary has been held with reference to the sale 
 of intoxicating liquors in violation of statute. 3 
 
 The distinction is also made that where the sale 
 is of goods to be used by the vendee in aid of the 
 perpetration of a heinous crime, such as treason, the 
 contract will be considered invalid. But since ordi- 
 narily the agreement of sale is held valid, the vendor 
 may have such remedies as he would usually be 
 allowed with any contract of sale. 
 
 'Keinkey v. Findley Electric Co., 180 N. W. 236 (Minn.). 
 'Barter v. Delno, 194 P. 300 (Cal. App.). 
 
 8 The authorities are reviewed in the case of Graves v. Johnson, 156 
 Mass. 211, 30 N. E. 818, 15 L. E. A. 834.
 
 HOW TO DRAFT A CONDITIONAL SALE 39 
 
 Under the contract of conditional sale, the law is 
 different. Where the vendor reserves the right to 
 retake the property whenever he deems it is insecure 
 even before the deferred payments have matured (as 
 is usually done) the control of the use of the property 
 is left in his hands, hence the law considers that 
 the vendor has joined in the vendee's illegal purpose. 
 Otherwise he would have exercised his privilege of 
 control over the property to prevent its use contrary 
 to public policy. On this theory, the vendor in a bill 
 of conditional sale loses title to the goods against an 
 execution creditor of the vendee. 1 
 
 FORFEITURE OF PROPERTY USED IN ILLEGAL 
 LIQUOR BUSINESS 
 
 A new danger to the seller under a conditional sale 
 has arisen with the advent and general enforcement 
 of prohibition, as he must now at his peril see that 
 the article sold is not used in violation of the prohi- 
 bition laws. The power of the prohibition enforce- 
 ment officers to condemn and sell at public sale any 
 property used in such illegal practices means that 
 such sale will probably be made without regard to 
 the rights of the real owner of the property. Espe- 
 cial danger is run by the conditional vendor of trucks 
 or automobiles as if they are found used for trans- 
 porting liquor they may be confiscated. At this writ- 
 ing the law on this subject can hardly be said to be 
 crystallized but there is already ample authority for 
 cutting off the rights of the conditional vendor, as 
 appears by the following cases : 
 
 'This result was reached in the case of Standard Furniture Co. v. 
 Van Alstine, 22 Wash. 670, 62 Pac. 145, 51 L. E. A. 889, and Abbott 
 Furniture Co. v. Mobley, 141 Ga. 456, 81 S. E. 196.
 
 40 MODERN AMERICAN LAW LECTURE 
 
 Commercial Investment Trust v. U. S., 261 Fed. 330. 
 
 Logan v. U. S., 260 Fed. 746. 
 
 Landers v. Commonwealth, 101 S. E. 778 (Va.). 
 
 United States v. Seven Passenger Paige Car, 259 Fed. 641. 
 
 United States v. Mineey, 254 Fed. 287, 5 A. L. E. 211. 
 
 The vendor may take what comfort he can out of 
 the following cases : 
 
 Shrouder v. Sweat, 148 Ga. 378. 
 
 Hatcher Co. v. Foster, 101 S. E. 299 (Ga. App.). 
 
 One Hudson v. State, 187 P. 806 (Okla.). 
 
 United States v. One Ford Automobile, 259 Fed. 894, 262 Fed. 374. 
 
 State v. Davis, 184 P. 161 (Utah). 
 
 All we can safely say at present is that the con- 
 ditional vendor runs a grave risk if the property is 
 captured while used in violation of the prohibition 
 laws. The subject is discussed in an excellent note 
 in the Harvard Law Review for December, 1920. 
 
 REMEDIES OF BUYER 
 
 Where the seller wrongfully takes possession of 
 the goods sold under conditional sale, the buyer, hav- 
 ing no complete title, cannot maintain trover for 
 conversion of the goods, 1 but he may treat the con- 
 tract as rescinded and sue for the return of the money 
 he has paid on account of it. 2 
 
 THE UNIFORM CONDITIONAL SALES ACT 
 
 A draft of a Uniform Conditional Sales Act was 
 completed in 1918 by the Commissioners on Uniform 
 State Laws and has already been adopted in the fol- 
 lowing states : 
 
 'MacArthur Bros. Mercantile Co. v. Hagihara, 194 P. 336 (Ariz.). 
 *Daskalopolis v. Mulvanity, 111 A. 832 (N. H.).
 
 HOW TO DRAFT A CONDITIONAL SALE 41 
 
 Arizona 
 
 Delaware 
 
 New Jersey (amended by St. 1920, sec. 68). 
 
 South Dakota 
 
 Wisconsin 
 
 West Virginia 
 
 It has also been adopted in Alaska. 
 
 In these jurisdictions, therefore, the rules laid 
 down in the foregoing discussion should be read in 
 connection with this statute. 
 
 The full text of the Uniform Law will be found in 
 the Appendix, and it should be carefully studied as 
 it represents a careful and intelligent attempt not 
 only to avoid the inconsistencies of varying state laws 
 but to place the rights of both parties to a conditional 
 sale on a clear and fair basis.
 
 2 MODERN AMERICAN LAW LECTURE 
 
 APPENDIX 
 
 UNIFORM CONDITIONAL SALES ACT 
 CONTENTS 
 
 SEC. 1. Definition of Terms. 
 
 SEC. 2. Primary Rights of Buyer. 
 
 SEC. 3. Primary Rights of Seller. 
 
 SEC. 4. Conditional Sales Valid Except as Otherwise Pro- 
 vided. 
 
 SEC. 5. Conditional Sales Void as to Certain Persons. 
 
 SEC. 6. Place of Filing. 
 
 SEC. 7. Fixtures. 
 
 SEC. 8. Railroad Equipment or Rolling Stock. 
 
 SEC. 9. Conditional Sale of Goods for Resale. 
 
 SEC. 10. Filing. 
 
 SEC. 11. Refiling. 
 
 SEC. 12. Cancellation of Contract. 
 
 SEC. 13. Prohibition of Removal or Sale Without Notice. 
 
 SEC. 14. Refiling or Removal. 
 
 SEC. 15. Fraudulent Injury, Concealment, Removal or Sale. 
 
 SEC. 16. Retaking Possession. 
 
 SEC. 17. Notice of Intention to Retake. 
 
 SEC. 18. Redemption. 
 
 SEC. 19. Compulsory Resale by Seller. 
 
 SEC. 20. Resale at Option of Parties. 
 
 SEC. 21. Proceeds of Resale. 
 
 SEC. 22. Deficiency on Resale. 
 
 SEC. 23. Rights of Parties When There Is No Resale. 
 
 SEC. 24. Election of Remedies. 
 
 SEC. 25. Recovery of Part Payments. 
 
 SEC. 26. Waiver of Statutory Protection. 
 
 SEC. 27. Loss and Increase. 
 
 SEC. 28. Act Prospective Only. 
 
 SEC. 29. Rules for Cases Not Provided for. 
 
 SEC. 30. Uniformity of Interpretation. 
 
 SEC. 31. Short Title. 
 
 SEC. 32. Inconsistent Laws Repealed. 
 
 SEC. 33. Time of Taking Effect.
 
 43 
 
 AN ACT CONCERNING CONDITIONAL SALES AND TO 
 MAKE UNIFORM THE LAW RELATING THERETO 
 
 SECTION 1. [Definition of Terms.] In this Act 
 " Conditional sale" means (1) any contract for the 
 sale of goods under which possession is delivered to 
 the buyer and the property in the goods is to vest in 
 the buyer at a subsequent time upon the payment of 
 part or all of the price, or upon the performance of 
 any other condition or the happening of any con- 
 tingency; or (2) any contract for the bailment or 
 leasing of goods by which the bailee or lessee con- 
 tracts to pay as compensation a sum substantially 
 equivalent to the value of the goods, and by which it 
 is agreed that the bailee or lessee is bound to become, 
 or has the option of becoming the owner of such 
 goods upon full compliance with the terms of the 
 contract. 
 
 " Buyer" means the person who buys or hires the 
 goods covered by the conditional sale, or any legal 
 successor in interest of such person. 
 
 " Filing district" means the sub-division of the 
 state in which conditional sale contracts, or copies 
 thereof, are required by this act to be filed. 
 
 " Goods" means all chattels personal other than 
 things in action and money, and includes emblements, 
 industrial growing crops, and things attached to or 
 forming a part of land which are agreed to be severed 
 before sale or under the conditional sale. 
 
 "Performance of the condition" means the occur- 
 rence of the event upon which the property in the 
 goods is to vest in the buyer, whether such event is 
 the performance of an act by the buyer or the hap- 
 pening of a contingency.
 
 44 MODERN AMERICAN LAW LECTURE 
 
 "Person" includes an individual, partnership, cor- 
 poration, and any other association. 
 
 "Purchase" includes mortgage and pledge. 
 
 "Purchaser" includes mortgagee and pledgee. 
 
 "Seller" means the person who sells or leases the 
 goods covered by the conditional sale, or any legal 
 successor in interest of such person. 
 
 SECTION 2. [Primary Eights of Buyer.] The 
 buyer shall have the right when not in default to 
 retain possession of the goods, and he shall also have 
 the right to acquire the property in the goods on the 
 performance of the conditions of the contract. The 
 seller shall be liable to the buyer for the breach of 
 all promises and warranties, express or implied, 
 made in the conditional sale contract, whether or not 
 the property in the goods has passed to the buyer. 
 
 SECTION 3. [Primary Rights of Seller.] The 
 buyer shall be liable to the seller for the purchase 
 price, or for instalments thereof, as the same shall 
 become due, and for breach of all promises made by 
 him in the conditional sale contract, whether or not 
 the property in the goods has passed to the buyer. 
 
 SECTION 4. [Conditional Sales Valid Except as 
 Otherwise Provided.] Every provision in a condi- 
 tional sale reserving property in the seller after 
 possession of the goods is delivered to the buyer, shall 
 be valid as to all persons, except as hereinafter other- 
 wise provided. 
 
 SECTION 5. [Conditional Sales Void as to Certain 
 Persons.] Every provision in a conditional sale re- 
 serving property in the seller shall be void as to any
 
 HOW TO DRAFT A CONDITIONAL SALE 45 
 
 purchaser from or creditor of the buyer, who, with- 
 out notice of such provision,, purchases the goods or 
 acquires by attachment or levy a lien upon them, 
 before the contract or a copy thereof shall be filed as 
 hereinafter provided, unless such contract or copy 
 is so filed within ten days after the making of the 
 conditional sale. 
 
 SECTION 6. [Place of Piling.] The conditional 
 sale contract or copy shall be filed in the office 
 
 in [the city] [county] [regis- 
 tration district] in which the goods are first kept for 
 use by the buyer after the sale. It shall not be nec- 
 essary to the validity of such conditional sale con- 
 tract, or in order to entitle it to be filed, that it be 
 acknowledged or attested. This section shall not 
 apply to the contracts described in Section 8. 
 
 SECTION 7. [Fixtures.] If the goods are so affixed 
 to realty, at the time of a conditional sale or subse- 
 quently as to become a part thereof and not to be 
 severable wholly or in any portion without material 
 injury to the freehold, the reservation of property 
 as to any portion not so severable shall be void after 
 the goods are so affixed, as against any person who 
 has not expressly assented to the reservation. If the 
 goods are so' affixed to realty at the time of a condi- 
 tional sale or subsequently as to become part thereof 
 but to be severable without material injury to the 
 freehold, the reservation of property shall be void 
 after the goods are so affixed as against subsequent 
 purchasers of the realty for value and without notice 
 of the conditional seller's title, unless the. conditional 
 sale contract, or a copy thereof, together with a
 
 46 MODERN AMERICAN LAW LECTURE 
 
 statement signed by the seller briefly describing the 
 realty and stating that the goods are or are to be 
 affixed thereto, shall be filed before such purchase in 
 the office where a deed of the realty would be recorded 
 or registered to affect such realty. As against the 
 owner of realty the reservation of the property in 
 goods by a conditional seller shall be void when such 
 goods are to be so affixed to the realty as to become 
 part thereof but to be severable without material 
 injury to the freehold, unless the conditional sale 
 contract, or a copy thereof, together with a statement 
 signed by the seller briefly describing the realty and 
 stating that the goods are to be affixed thereto, shall 
 be filed before they are affixed, in the office where a 
 deed would be recorded or registered to affect such 
 realty. 
 
 SECTION 8. [Railroad Equipment or Rolling 
 Stock.] No conditional sale of railroad, or street or 
 interurban railway equipment or rolling stock shall 
 be valid as against the purchasers and creditors de- 
 scribed in Section 5, unless the contract shall be 
 acknowledged by the buyer or attested in like man- 
 ner as a deed of real property, and the contract, or a 
 copy thereof, shall be filed or recorded in the office of 
 ; and unless when any engine or car so 
 sold is delivered there shall then be plainly and con- 
 spicuously marked upon each side thereof the name 
 of the seller, followed by the word "owner." 
 
 SECTION 9. [Conditional Sale of Goods for Re- 
 sale.] When goods are delivered under a conditional 
 sale contract and the seller expressly or impliedly 
 consents that the buyer may resell them prior to per-
 
 HOW TO DRAFT A CONDITIONAL SALE 47 
 
 formance of the condition, the reservation of prop- 
 erty shall be void against purchasers from the buyer 
 for value in the ordinary course of business, and as 
 to them the buyer shall be deemed the owner of the 
 goods, even though the contract or a copy thereof 
 shall be filed according to provisions of this act. 
 
 SECTION 10. [Filing.] The filing officer shall 
 mark upon the contract or copy filed with him the day 
 and hour of filing and shall file the contract or copy 
 in his office for public inspection. He shall keep a 
 separate book in which he shall enter the names of 
 the seller and buyer, the date of the contract, the day 
 and hour of filing, a brief description of goods, the 
 price named in the contract and the date of cancella- 
 tion thereof; except that in entering the contracts 
 mentioned in Section 8 the 
 
 shall record either the sum remaining to be paid upon 
 the contract or the price of the goods. Such book 
 shall be indexed under the names of both seller and 
 buyer. For filing and entering such contract or copy 
 the filing officer shall be entitled to a fee of [ten 
 cents] , except that for filing and entering a contract 
 described in Section 8 the 
 shall be entitled to a fee of [one dollar] . 
 
 SECTION 11. [Kefiling.] The filing of condi- 
 tional sale contracts provided for in Sections 5, 6 and 
 7 shall be valid for a period of three years only. The 
 filing of the contract provided for by Section 8 shall 
 be valid for a period of fifteen years only. The 
 validity of the filing may in each case be extended for 
 successive additional periods of one year from the 
 date of refiling by filing in the proper filing district
 
 48 MODERN AMERICAN LAW LECTURE 
 
 a copy of the original contract within thirty days 
 next preceding the expiration of each period, with a 
 statement attached signed by the seller, showing that 
 the contract is in force and the amount remaining 
 to be paid thereon. Such copy, with statement at- 
 tached, shall be filed and entered in the same man- 
 ner as a contract or copy filed and entered for the 
 first time, and the filing officer shall be entitled to a 
 like fee as upon the original filing. 
 
 SECTION 12. [Cancellation of Contract.] After 
 the performance of the condition, upon written de- 
 mand delivered personally or by registered mail by 
 the buyer or any other person having an interest in 
 the goods, the seller shall execute, acknowledge and 
 deliver to the demandant a statement that the con- 
 dition in the contract has been performed. If for 
 ten days after such demand the seller fails to mail 
 or deliver such a statement of satisfaction, he shall 
 forfeit to the demandant five dollars [$5.00] and be 
 liable for all damages suffered. Upon presentation 
 of such statement of satisfaction the filing officer 
 shall file the same and note the cancellation of the 
 contract and the date thereof on the margin of the 
 page where the contract has been entered. For filing 
 and entering the statement of satisfaction the filing 
 officer shall be entitled to a fee of [ten cents] , except 
 that the shall be entitled to a fee 
 
 of [fifty cents] for filing and entering a statement 
 of the satisfaction of a contract described in Sec- 
 tion 8. 
 
 SECTION 13. [Prohibition of Removal or Sale 
 Without Notice.] Unless the contract otherwise
 
 HOW TO DRAFT A CONDITIONAL SALE 49 
 
 provides, the buyer may, without the consent of the 
 seller, remove the goods from any filing district and 
 sell, mortgage or otherwise dispose of his interest in 
 them ; but prior to the performance of the condition, 
 no such buyer shall remove the goods from a filing 
 district in which the contract or a copy thereof is 
 filed, except for temporary uses for a period of not 
 more than thirty days, unless the buyer not less than 
 ten days before such removal shall give the seller 
 personally or by registered mail written notice of 
 the place to which the goods are to be removed and 
 the approximate time of such intended removal ; nor 
 prior to the performance of the condition shall the 
 buyer sell, mortgage or otherwise dispose of his in- 
 terest in the goods, unless he, or the person to whom 
 he is about to sell, mortgage or otherwise dispose of 
 the same, shall notify the seller in writing personally 
 or by registered mail of the name and address of the 
 person to whom his interest in the goods is about to 
 be sold, mortgaged or otherwise transferred, not less 
 than ten days before such sale, mortgage or other 
 disposal. If any buyer does so remove the goods, or 
 does so sell, mortgage or otherwise dispose of his 
 interest in them without such notice or in violation 
 of the contract, the seller may retake possession of 
 the goods and deal with them as in case of default in 
 payment of part or all of the purchase price. The 
 provisions of this section regarding the removal of 
 goods shall not apply, however, to the goods described 
 in Section 8. 
 
 SECTION 14. [Refiling on Removal.] When, 
 prior to the performance of the condition, the goods 
 are removed by the buyer from a filing district in
 
 50 MODERN AMERICAN LAW LECTURE 
 
 this state to another filing district in this state in 
 which such contract or a copy thereof is not filed, or 
 are removed from another state into a filing district 
 in this state where such contract or copy is not filed, 
 the reservation of the property in the seller shall be 
 void as to the purchasers and creditors described in 
 Section 5, unless the conditional sale contract or a 
 copy thereof shall be filed in the filing district to 
 which the goods are removed, within ten days after 
 the seller has received notice of the filing district to 
 which the goods have been removed. The provisions 
 of this section shall not apply, however, to the goods 
 described in Section 8. The provisions of Section 
 11 regarding the duration of the validity of the filing 
 and the necessity for refiling shall apply to contracts 
 or copies which are filed in a filing district other than 
 that where the goods are originally kept for use by 
 the buyer after the sale. 
 
 SECTION 15. [Fraudulent Injury, Concealment, 
 Removal or Sale.] When, prior to the performance 
 of the condition, the buyer maliciously or with in- 
 tent to defraud, shall injure, destroy or conceal the 
 goods, or remove them to a filing district where the 
 contract or a copy thereof is not filed, without having 
 given the notice required by Section 13, or shall sell, 
 mortgage, or otherwise dispose of such goods under 
 claim of full ownership, he shall be guilty of a crime 
 and upon conviction thereof shall be imprisoned [in 
 the county jail] for not more than [one year] or be 
 fined not more than [$500] or both. 
 
 SECTION 16. [Retaking Possession.] When the 
 buyer shall be in default in the payment of any sum
 
 HOW TO DRAFT A CONDITIONAL SALE 51 
 
 due under the contract, or in the performance of any 
 other condition which the contract requires him to 
 perform in order to obtain the property in the goods, 
 or in the performance of any promise the breach of 
 which is by the contract expressly made a ground 
 for the retaking of the goods, the seller may retake 
 possession thereof. Unless the goods can be retaken 
 without breach of the peace, they shall be retaken 
 by legal process, but nothing herein shall be con- 
 strued to authorize a violation of the criminal law. 
 
 SECTION 17. [Notice of Intention to Retake.] Not 
 more than forty nor less than twenty days prior to 
 the retaking, the seller, if he so desires, may serve 
 upon the buyer personally or by registered mail a 
 notice of intention to retake the goods on account 
 of the buyer 's default. The notice shall state the 
 default and the period at the end of which the goods 
 will be retaken, and shall briefly and clearly state 
 what the buyer's rights under this act will be in case 
 they are retaken. If the notice is so served and the 
 buyer does not perform the obligations in which he 
 has made default before the day set for retaking, the 
 seller may retake the goods and hold them subject 
 to the provisions of Sections 19, 20, 21, 22 and 23 
 regarding resale, but without any right of redemp- 
 tion. 
 
 SECTION 18. [Redemption.] If the seller does not 
 give the notice of intention to retake described in 
 Section 17, he shall retain the goods for ten days after 
 the retaking within the state in which they were 
 located when retaken, during which period the buyer, 
 upon payment or tender of the amount due under
 
 52 MODERN AMERICAN LAW LECTURE 
 
 the contract at the time of retaking and interest, or 
 upon performance or tender of performance of such 
 other condition as may be named in the contract as 
 precedent to the passage of the property in the goods, 
 or upon performance or tender of performance of 
 any other promise for the breach of which the goods 
 were retaken, and upon payment of the expenses of 
 retaking, keeping and storage, may redeem the goods 
 and become entitled to take possession of them and 
 to continue in the performance of the contract as if 
 no default had occurred. Upon written demand de- 
 livered personally or by registered mail by the buyer, 
 the seller shall furnish to the buyer a written state- 
 ment of the sum due under the contract and the 
 expense of retaking, keeping and storage. For fail- 
 ure to furnish such statement within a reasonable 
 time after demand, the seller shall forfeit to the 
 buyer [$10] and also be liable to him for all damages 
 suffered because of such failure. If the goods are 
 perishable so that retention for ten days as herein 
 prescribed would result in their destruction or sub- 
 stantial injury, the provisions of this section shall 
 not apply, and the seller may resell the goods immedi- 
 ately upon their retaking. The provision of this 
 section requiring the retention of the goods within 
 the state during the period allowed for redemption 
 shall not apply to the goods described in Section 8. 
 
 SECTION 19. [Compulsory Resale by Seller.] If 
 the buyer does not redeem the goods within ten days 
 after the seller has retaken possession, and the buyer 
 has paid at least fifty per cent of the purchase price 
 at the time of the retaking, the seller shall sell them 
 at public auction in the state where they were at the
 
 HOW TO DRAFT A CONDITIONAL SALE 53 
 
 time of the retaking, such sale to be held not more 
 than thirty days after the retaking. The seller shall 
 give to the buyer not less than ten days' written 
 notice of the sale, either personally or by registered 
 mail, directed to the buyer at his last known place of 
 business or residence. The seller shall also give 
 notice of the sale by at least three notices posted in 
 different public places within the filing district where 
 the goods are to be sold, at least five days before the 
 sale. If at the tune of the retaking $500 or more has 
 been paid on the purchase price, the seller shall also 
 give notice of the sale at least five days before the 
 sale by publication in a newspaper published or hav- 
 ing a general circulation within the filing district 
 where the goods are to be sold. The seller may bid 
 for the goods at the resale. If the goods are of the 
 kind described in Section 8, the parties may fix in 
 the conditional sale contract the place where the 
 goods shall be resold. 
 
 SECTION 20. [Kesale at Option of Parties.] If 
 the buyer has not paid at least fifty per cent of the 
 purchase price at the time of the retaking, the seller 
 shall not be under a duty to resell the goods as pre- 
 scribed in Section 19, unless the buyer serves upon 
 the seller, within ten days after the retaking, a writ- 
 ten notice demanding a resale, delivered personally 
 or by registered mail. If such notice is served, the 
 resale shall take place within thirty days after the 
 service, in the manner, at the place and upon the 
 notice prescribed in Section 19. The seller may vol- 
 untarily resell the goods for account of the buyer 
 on compliance with the same requirements.
 
 54 MODERN AMERICAN LAW LECTURE 
 
 SECTION 21. [Proceeds of Resale.] The proceeds 
 of the resale shall be applied (l).to the payment of 
 the expenses thereof, (2) to the payment of the ex- 
 penses of retaking, keeping and storing the goods, 
 (3) to the satisfaction of the balance due under the 
 contract. Any sum remaining after the satisfaction 
 of such claims shall be paid to the buyer. 
 
 SECTION 22. [Deficiency on Resale.] If the pro- 
 ceeds of the resale are not sufficient to defray the 
 expenses thereof, and also the expenses of retaking, 
 keeping and storing the goods and the balance due 
 upon the purchase price, the seller may recover the 
 deficiency from the buyer, or from anyone who has 
 succeeded to the obligations of the buyer. 
 
 SECTION 23. [Rights of Parties Where There Is 
 No Resale.] Where there is no resale, the seller may 
 retain the goods as his own property without obliga- 
 tion to account to the buyer except as provided in 
 Section 25, and the buyer shall be discharged of all 
 obligation. 
 
 SECTION 24. [Election of Remedies.] After the 
 retaking of possession as provided in Section 16 the 
 buyer shall be liable for the price only after a resale 
 and only to the extent provided in Section 22 
 Neither the bringing of an action by the seller for the 
 recovery of the whole or any part of the price, nor 
 the recovery of judgment in such action nor the col- 
 lection of a portion of the price, shall be deemed 
 inconsistent with a later retaking of the goods as pro- 
 vided in Section 16. But such right of retaking shall 
 not be exercised by the seller after he has collected 
 the entire price, or after he has claimed a lien upon
 
 HOW TO DRAFT A CONDITIONAL SALE 55 
 
 the goods, or attached them, or levied upon them as 
 the goods of the buyer. 
 
 SECTION 25. [Recovery of Part Payments.] If 
 the seller fails to comply with the provisions of Sec- 
 tions 18, 19, 20, 21 and 23 after retaking the goods, 
 the buyer may recover from the seller his actual 
 damages, if any, and in no event less than one-fourth 
 of the sum of all payments which have been made 
 under the contract, with interest. 
 
 SECTION 26. [Waiver of Statutory Protection.] 
 No act or agreement of the buyer before or at the 
 time of the making of the contract nor any agree- 
 ment or statement by the buyer in such contract, 
 shall constitute a valid waiver of the provisions of 
 Sections 18, 19, 20, 21 and 25 ; except that the contract 
 may stipulate that on such default of the buyer as 
 is provided for in Section 16, the seller may rescind 
 the conditional sale, either as to all the goods or as to 
 any part thereof for which a specific price was fixed 
 in the contract. If the contract thus provides for 
 rescission, the seller at his option may retake such 
 goods without complying with or being bound by 
 the provisions of Sections 17 to 25 inclusive, as to the 
 goods retaken, upon crediting the buyer with the full 
 purchase price of those goods. So much of this credit 
 as is necessary to cancel any indebtedness of the 
 buyer to the seller shall be so applied, and the seller 
 shall repay to the buyer on demand any surplus not 
 so required. 
 
 [In Arizona, Delaware, New Jersey, South Dakota 
 and Alaska, Section 26 does not contain the words 
 beginning with "except that the," etc., and ending 
 with "not so required."]
 
 56 MODERN AMERICAN LAW LECTURE 
 
 SECTION 27. [Loss and Increase.] After the de- 
 livery of the goods to the buyer and prior to the 
 retaking of them by the seller, the risk of injury 
 and loss shall rest upon the buyer. The increase of 
 the goods shall be subject to the same conditions as 
 the original goods. 
 
 SECTION 28. [Act Prospective Only.] This act 
 shall not apply to conditional sales made prior to the 
 time when it takes effect. 
 
 SECTION 29. [Rules for Cases Not Provided For.] 
 In any case not provided for in this act the rules of 
 law and equity, including the law merchant, and in 
 particular those relating to principal and agent and 
 to the effect of fraud, misrepresentation, duress or 
 coercion, mistake, bankruptcy, or other invalidating 
 cause, shall continue to apply to conditional sales. 
 
 SECTION 30. [Uniformity of Interpretation.] This 
 act shall be so interpreted and construed as to effectu- 
 ate its general purpose to make uniform the law of 
 those states which enact it. 
 
 SECTION 31. [Short Title.] This act may be 
 cited as the Uniform Conditional Sales Act. 
 
 SECTION 32. [Inconsistent Laws Repealed.] Ex- 
 cept so far as they are applicable to conditional sales 
 made prior to the time when this act takes effect, 
 the following acts shall be and hereby are repealed. 
 [Here repeal all existing acts in the field of con- 
 ditional sales.] 
 
 SECTION 33. [Time of Taking Effect.] This act 
 shall take effect

 
 

 
 r/ora i 
 
 GAYLAMOUNTB) 
 ~ KMPHLET BINDER 
 Syracuse, N.Y, 
 Stockton, Calif. 
 
 UC SOUTHERN REGIONAL LIBRARY FACILITY 
 
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