The legal analysis conducted by the Court of Appeals focuses on the language of a security agreement between Brace and Kraenzler.  Kraenzler, the borrower, pledged stamping dies as security for a loan extended by Brace to fund a business venture.  Kraenzler ultimately defaulted on his obligations under the loan, and Brace located and sold the stamping dies to a third party.  Kraenzler sued Brace for violation of his rights as a debtor in default under Wis. Stat. §409.602, which requires a "commercially reasonable sale" by a secured party.  The security agreement provided that the ownership of the stamping dies, which served as the collateral, transferred to Brace upon default.  Brace argued, pursuant to Wis. Stat. §401.102(3), that upon default, Kraenzler did not have any additional rights beyond those identified in the security agreement.  Kraenzler, on the other hand, argued that the rights listed in Wis. Stat. § 409.602 are an exception to the provision in §401.102(3) that permits the U.C.C. to be varied by agreement.

The Court evaluated the relationship between Wis. Stat. §401.102(3), which allows parties in mutual agreement to opt out of the standard provisions governing commercial transactions, and Wis. Stat. §409.602, which governs rights of a debtor upon the event of default.  Section 409.602 imposes specific duties upon a secured party to the defaulting debtor, including the requirement that the secured party sell the collateral in a "commercially reasonable manner."  Relying upon National Operating L.P. v. Mutual Life Ins. Co. of N.Y., 244 Wis.2d 839, 630 N.W.2d 116 (2001) as precedent, the Court of Appeals classified §409.602 as an "exception to the exception" and held that a debtor can never contract away certain rights, regardless of whether the contracting parties agree to the waiver. More