Code of the District of Columbia

§ 28:6-103. Applicability of article. [Repealed]

(Dec. 30, 1963, 77 Stat. 714, Pub. L. 88-243, § 1; Apr. 9, 1997, D.C. Law 11-239, § 2, 44 DCR 936; Oct. 26, 2000, D.C. Law 13-201, § 201(g)(2), 47 DCR 7576; Oct. 23, 2014, D.C. Law 20-215, § 31, 61 DCR 13083.)

Prior Codifications

1981 Ed., § 28:6-103.

1973 Ed., § 28:6-103.

Section References

This section is referenced in § 28:6-107.

Effect of Amendments

D.C. Law 13-201, enacting a new Article 9 of the Uniform Commercial Code applicable July 1, 2001, made conforming amendments to this section applicable upon the same date.

Editor's Notes

Applicability of D.C. Law 20-215: Section 32 of D.C. Law 20-215 provided that the act shall apply as of January 1, 2016.

Uniform Commercial Code Comment

Prior Uniform Statutory Provision:Sections 6-102 and 6-103 (1987 Official Text).

Changes: New choice-of-law provision; exclusions from the Article clarified, revised, and expanded.

Purposes of Changes and New Matter: 1. Subsection (1)(a) follows Section 6-102(3) of the 1987 Official Text and makes Article 6 applicable only when the seller’s principal business is the sale of inventory from stock. This Article does not apply to a sale by a seller whose principal business is the sale of goods other than inventory, e.g., a farmer, is the sale of inventory not from stock, e.g., a manufacturer who produces goods to order, or is the sale of services, e.g., a dry cleaner, barber, or operator of a hotel, tavern, or restaurant.

2. The choice-of-law rule in subsections (1)(b) and (2) derives from Section 9-103(3) and should be interpreted consistently with the Official Comment and case law construing that Section. Any agreement between the buyer and the seller with regard to the law governing a bulk sale does not affect the choice-of-law rule in this Article.

3. Some of the transactions excluded by subsection (3), e.g., those excluded by subsection (3)(a), may not be bulk sales. This Article nevertheless specifically excludes them in order to allay any doubts about the Article’s applicability. Certain transactions, e.g., the sale of fully encumbered inventory that remains subject to a security interest, may be excluded by more than one subsection.

4. Subsections (3)(a), (b), (c), (d), and (e) derive from subsections (1) and (3) of Section 6-103 (1987 Official Text).

5. Subsections (3)(f), (g), and (h) restate subsections (2), (4), and (5) of Section 6-103 with minor changes.

6. Subsections (3)(i), (j), and (k) relate to sales in which the buyer assumes specified debts of the seller. A bulk sale does not fall within any of these subsections unless the buyer’s assumption of debts is binding and irrevocable.

Subsection (3)(j) derives from subsection (6) of Section 6-103 (1987 Official Text) and is available to buyers who are not insolvent (as defined in Section 1-201(23)), assume all the seller’s business debts in full, and give notice of the assumption. Subsection (3)(k) derives from subsection (7) of Section 6-103 (1987 Official Text) and excludes transactions in which the risks to creditors are minimal. Like subsection (3)(j), this subsection applies only if the buyer assumes all the seller’s business debts in full and gives notice of the assumption. In addition, the buyer must be a new organization that is organized to take over and continue the seller’s business, the seller must receive nothing from the sale other than an interest in the new organization, and the seller’s interest must be subordinate to the claims arising from the assumption. Sales that may qualify for the exclusion include the incorporation of a partnership or sole proprietorship.

Buyers often are reluctant to assume debts of which they have no knowledge. Subsection (3)(i), which is new, permits a qualifying buyer to exclude a sale from this Article by assuming only those debts owed to claimants of whom the buyer has knowledge after the buyer either conducts a reasonable inquiry to discover claimants or obtains a list of claimants from the seller. A buyer who takes a verified list from the seller is held to have knowledge of the claimants on the list and is entitled to rely in good faith on the list without making further inquiry. The protection afforded by the assumption of these debts, while not perfect, is sufficiently great to eliminate the need for compliance with Article 6.

7. Subsection (3)(l) is new. Although the bulk sale of even a very small business may be of concern to some creditors, losses to creditors from sales of assets in which the seller’s equity is less than $10,000 are not likely to justify the costs of complying with this Article. Sales of assets having a value of more than $25,000,000 have not presented serious risks to creditors. Publicity normally attends sales of that magnitude, and the sellers are unlikely to be able successfully to remove the proceeds from the reach of creditors. As used in this subsection, “price” includes all consideration for the assets, not only new consideration. Compare “Net contract price” ( Section 6-102(1)(k)). If the auctioneer or liquidator does not make an estimation, then no presumption arises.

8. Subsection (3)(m) is new. This Article assumes that creditors are aware of statutes that may require their debtors to conduct bulk sales under specified circumstances, e.g., upon the termination of a franchise or of a contract between a dealer and supplier, and are able to take account of any risk that those sales may impose.

Cross-References: Point 1: Section 9-109.

Point 2: Sections 1-105 and 9-103.

Point 3: Section 6-102.

Point 4: Sections 9-111, 9-503, 9-504, and 9-505.

Point 6: Sections 1-201 and 1-203.

Point 7: Section 6-102.

Definitional Cross-References: “Asset”. Section 6-102.

“Auctioneer”. Section 6-102.

“Bulk sale”. Section 6-102.

“Buyer”. Section 2-103.

“Claimant”. Section 6-102.

“Collateral”. Section 9-105.

“Date of the bulk sale”. Section 6-102.

“Date of the bulk-sale agreement”. Section 6-102.

“Debt”. Section 6-102.

“Insolvent”. Section 1-201.

“Inventory”. Section 9-109.

“Knowledge”. Section 1-201.

“Liquidator”. Section 6-102.

“Net contract price”. Section 6-102.

“Notice”. Section 1-201.

“Organization”. Section 1-201.

“Presumed”. Section 1-201.

“Proceeds”. Section 9-306.

“Sale”. Section 2-106.

“Secured party”. Section 9-105.

“Security interest”. Section 1-201.

“Seller”. Section 2-103.

“Send”. Section 1-201.

“United States”. Section 6-102.

“Value”. Section 6-102.

“Verified”. Section 6-102.