1 / 15

Fundamentals of Business Law

6 th Edition. Fundamentals of Business Law. Chapter 15 Sales Contracts: Title and Risk of Loss. Introduction. Sale of goods requires different rules than real property transactions: risk should not always pass with title. UCC replaces title with identification, risk, and insurable interest.

lilliehobbs
Download Presentation

Fundamentals of Business Law

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. 6th Edition Fundamentalsof Business Law Chapter 15Sales Contracts: Title and Risk of Loss

  2. Introduction • Sale of goods requires different rules than real property transactions: risk should not always pass with title. • UCC replaces title with identification, risk, and insurable interest.

  3. Identification For any interest to pass to buyer, goods must be: • In existence. • Identified as specific goods in the sales contract (by serial numbers and/or physically separated from others. Except for fungible goods which do not need separation).

  4. Identification • Gives the buyer the right: • To obtain insurance on the goods. • To recover from third parties who damage the good. • Identification occurs: • If goods are designated when contract is made. If goods are not designated when contract is made, then identified at time of designation.

  5. Passage of Title • Unless there is an agreement to the contrary, title passes to the Buyer at the time and place the Seller physically delivers the goods. • Case 15.1 In Re Stewart (2002).

  6. Shipment vs. Destination Contracts • Title passes when agreed to by the parties. • If no agreement, depends on whether the contract is a shipment or destination contract: • Shipment: title passes at time and place of shipment. • Destination: title passes when goods are tendered at the destination.

  7. Delivery Without Movement of Goods • Title passes when agreed by the parties. • If no agreement, title passes: • With document of title: when and where document delivered. • Without document: when sales contract is made, if goods have been identified or when identification occurs if they have not been identified.

  8. Sales or Leases By Non-Owners • Void Title: true owner gets goods back. • Voidable Title: good faith purchaser keeps goods. • Case 15.2 Memphis Hardwood Flooring Co. v. Daniel (2000). • Entrustment rule: good faith purchaser keeps goods.

  9. Risk of Loss: Delivery with Movement of Goods • In a shipment contract, ROL passes when seller tenders goods to carrier. • Case 15.3 Windows, Inc. v. Jordan Panel System Corp. (1999). • In a destination contract, ROL passes when goods tendered at destination.

  10. Risk of Loss: Delivery Without Movement of Goods • Goods Held by Seller: • Document of Title is generally not used. • If Seller is a merchant, ROL passes when buyer takes physical possession of goods. • Goods Held by Bailee (Warehouse). ROL passes when: • Buyer receives document of title; bailee acknowledges Buyer’s right to goods and buyer receives title and has reasonable time to pick up.

  11. Conditional Sales • Sale on Approval. • ROL passes when buyer approves expressly or implicitly. • Sale or Return. (Consignment is sale or return unless it complies with Article 9.) • ROL passes to buyer with possession.

  12. ROL: Seller’s Breach of Contract • Generally breaching party bears ROL. • Seller’s Breach. • Rejection - risk stays with seller. • Revocation of acceptance - risk passes back to seller to the extent that buyer’s insurance does not cover the loss.

  13. ROL: Buyer’s Breach of Contract • Buyer’s Breach. Goods are identified, risk passes to buyer for a reasonable amount of time after seller learns of the breach, to the extent that seller’s insurance does not cover loss.

  14. Insurable Interest • Buyer has an insurable interest in goods that have been identified. • Seller has an insurable interest in goods as long as they retain title or a security interest. • Both buyers and sellers can have an insurable interest at the same time.

  15. Bulk Transfers • Covered by Article 6 of the Uniform. Commercial Code. • A bulk transfer is defined as: • Major part of seller’s inventory. • Not made in the usual course of business. • UCC 6 is becoming obsolete and has been repealed by many states.

More Related