Okla. Stat. tit. 12A § 1-9-610

Current through Laws 2024, c. 453.

Section 1-9-610 - Disposition of collateral after default

(a) After default, a secured party may sell, lease, license, or otherwise dispose of any or all of the collateral in its present condition or following any commercially reasonable preparation or processing.

(b) Every aspect of a disposition of collateral, including the method, manner, time, place, and other terms, must be commercially reasonable. If commercially reasonable, a secured party may dispose of collateral by public or private proceedings, by one or more contracts, as a unit or in parcels, and at any time and place and on any terms.

(c) A secured party may purchase collateral:

(1) at a public disposition; or

(2) at a private disposition only if the collateral is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations.

(d) A contract for sale, lease, license, or other disposition includes the warranties relating to title, possession, quiet enjoyment, and the like which by operation of law accompany a voluntary disposition of property of the kind subject to the contract.

(e) A secured party may disclaim or modify warranties under subsection (d) of this section:

(1) in a manner that would be effective to disclaim or modify the warranties in a voluntary disposition of property of the kind subject to the contract of disposition; or

(2) by communicating to the purchaser a record evidencing the contract for disposition and including an express disclaimer or modification of the warranties.

(f) A record is sufficient to disclaim warranties under subsection (e) of this section if it indicates "There is no warranty relating to title, possession, quiet enjoyment, or the like in this disposition" or uses words of similar import.

Okla. Stat. tit. 12A, § 1-9-610

Added by Laws 2000 , SB 1519, c. 371, § 117, eff. 7/1/2001.

Oklahoma Code Comment

Section 9-610(a) and (b) generally follow old section 9-504(1) and (3) . New section 9-610, however, specifically provides for a disposition by license whereas that type of disposition was not mentioned in old section 9-504(1) . In addition, old section 9-504 referred to UCC Article 2 on Sales of Goods, whereas new section 9-610 does not include the specific reference to Article 2, because specific reference is not necessary. Revised section 9-610(e) does provide for disclaimers and modifications of warranties relating to title, possession, quiet enjoyment and the like which the secured party makes under revised Article 9 by way of the secured party delivering an authenticated statement specifically disclaiming or modifying such warranties. An authenticated statement is not necessarily a written statement. See new section 9-102(a)(4) . Any exclusion of the implied warranties of merchantability and fitness, found in Article 2, sections 2-314 and 2-315 , should comply with Article 2 section 2-316 . New section 9-610(e) specifically provides a method to exclude or modify the implied warranty of title found in Article 2 section 2-312 .

Under new section 9-610(a), a secured party may dispose of collateral in its existing condition or following a commercially reasonable preparation or processing. Thus, a secured party may (but consistent with its duty of good faith is not required to) consider a cost-benefit analysis to determine whether preparation is appropriate.

New section 9-610 enlarges on what is transferred by the secured party upon disposition under new section 9-617, in that new section 9-617(a) stipulates that a secured party's disposition of collateral also transfers the all of debtor's rights in the collateral. New section 9-610 grants, in addition to the right of quiet enjoyment, the rights of possession and title, even if those rights were not held by the debtor. The secured party, therefore, should be aware that unless the secured party excludes the warranties provided in new section 9-610(d) , on disposition of the collateral the secured party will also provide warranties of title, possession and quiet enjoyment even if those rights were not possessed by the debtor.

Section 9-610(b) provides, as did old section 9-504(3) , that every aspect of the disposition of the collateral must be commercially reasonable. Secured parties may look to new section 9-627 in determining what conduct is commercially reasonable. Generally, under old section 9-504 if a secured party acted in good faith and in accordance with commonly accepted commercial practices such that interested parties might have some meaningful opportunity to learn that the goods are to be sold, the sale was determined to be commercially reasonable. See, e.g., R. J. Enstrom Corp. v. Interceptor Corp., 555 F.2d 277 (10th Cir. 1977); Liberty National Bank & Trust Company of Oklahoma City v. Acme Tool Division of Rucker Company, 540 F.2d 1375 (10th Cir. 1976). Grumman Credit Corporation v. Rivair Flying Service, Inc., 845 P.2d 182 (Okla. 1992). Wilkerson Motor Company, Inc., v. Johnson, 580 P.2d 505 (Okla. 1978).

The rules regarding commercial reasonableness have not been changed by section 9-610 . The reasonableness of the sale is determined by the manner of the sale and not the price. Grumman Credit Corporation v. Rivair Flying Service, Inc., 845 P.2d 182 (Okla. 1992); National Bank and Trust Company of Enid v. Holston, 559 P.2d 440 (Okla. 1976). Price is a component of the sale which a court may consider, but is not alone determinative. See Official Comment 10 to section 9-610 . Price also is an issue when the sale is to a related party. See section 9-615 .

The general policy is one of flexibility in the sale in order that the maximum amount from the sale could be obtained. Brunswick Corporation v. Judgment & P, Inc., 424 F.2d 100 (10th Cir. 1970). Generally, once a secured party takes possession of collateral, although actual possession is not required, the secured party is required to dispose of the collateral within a reasonable time or return the collateral to the debtor. Agistor Credit Corporation v. Unruh, 571 P.2d 1220 (Okla. 1977); Farmers State Bank in Afton v. Ballew, 626 P.2d 337 (Okla. Ct. App. 1981).

Under new section 9-610 the right of a secured party to buy at public or private sale is the same as provided in old section 9-504 .