The Bulk Sales Law – An Unconscionable Time A-Dying

In February 1685, Charles II of England, aka the “Merry Monarch”, took ill and to his bed.  Despite the ministrations of his doctors, it became clear to all that he was to die, but not easily or quickly.  Throughout the King’s last ordeal, his sense of humor remained intact and he apologized to those assembled at his death bed for “such an unconscionable time a-dying.”

Much the same can be said of California’s Bulk Sales Act – Division 6 of the California Commercial Code.  In December 2010, the California Commission on Uniform State Laws (See Govt. Code § 10279 et seq.) sponsored legislation (SB 12 (Corbett) to repeal the Bulk Sales Act entirely.  My partner, Bob Barnes, has testified twice in support of the repeal before legislative committees on behalf of the State Bar of California’s Business Law Section Commercial Transactions/UCC Committee.  The National Conference of Commissioners on Uniform State Laws concluded:

There is no evidence that in today’s economy, fraudulent bulk sales are frequent enough, or engender credit losses significant enough, to require regulation of all bulk sales, including the vast majority that are conducted in good faith.

One can almost hear Oliver Cromwell’s (who preceded Charles II as England’s ruler) famous exhortation to the Rump Parliament:  ”You have sat too long for any good you have been doing lately . . . Depart, I say; and let us have done with you.”  8 Oliver Cromwell’s Letters and Speeches: With Elucidations 199 (1897).

The Bulk Sales Act has not departed.  It is still on its death bed.  Moreover, it appears that, unlike the unfortunate Charles II, the law may even linger on.  As it turns out, the Bulk Sale Act has a constituency.  According to the most recent Assembly floor analysis, the members of the California Beer and Beverage Distributors  and the California Distributors Association “rely heavily on the protections of escrow and notice under the current bulk sales law, which help them secure their claims for accounts receivable from alcohol retailers that they supply with inventory”.  Thus, the author has now retreated from an outright repeal of the Bulk Sales Act.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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