N.Y. Uniform Commercial Code Law § 2-a-511: Merchant Lessee's Duties as to Rightfully Rejected Goods

Section 2-A-511. Merchant Lessee's Duties as to Rightfully Rejected

Goods.

(1) Subject to any security interest of a lessee (Section 2-A-508(5)),

if a lessor or a supplier has no agent or place of business at the

market of rejection, a merchant lessee, after rejection of goods in his

or her possession or control, shall follow any reasonable instructions

received from the lessor or the supplier with respect to the goods. In

the absence of those instructions, a merchant lessee shall make

reasonable efforts to sell, lease, or otherwise dispose of the goods for

the lessor's account if they threaten to decline in value speedily.

Instructions are not reasonable if on demand indemnity for expenses is

not forthcoming.

(2) If a merchant lessee (subsection (1)) or any other lessee (Section

2-A-512) disposes of goods, he or she is entitled to reimbursement

either from the lessor or the supplier or out of the proceeds for

reasonable expenses of caring for and disposing of the goods and, if the

expenses include no disposition commission, to such commission as is

usual in the trade, or if there is none, to a reasonable sum not

exceeding 10 percent of the gross proceeds.

(3) In complying with this section or Section 2-A-512, the lessee is

held only to good faith. Good faith conduct hereunder is neither

acceptance or conversion nor the basis of an action for damages.

(4) A purchaser who purchases in good faith from a lessee pursuant to

this section or Section 2-A-512 takes the goods free of any rights of

the lessor and the supplier even though the lessee fails to comply with

one or more of the requirements of this Article.