25-1 chapter 19 title to goods and risk of loss. identification of goods and passage of title ...
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Identification of Goods and Passage of Title
Identification of goods: Distinguishing of the goods named in a contract from the seller’s or lessor’s other goods
Already existing goods are identified when a contract is made and names the specific goods sold or leased
Goods that are part of a larger mass of goods are identified when the specific merchandise is designated
19-2Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
Identification of Goods and Passage of Title
Future goods: Goods not yet in existence Identified when the goods are shipped, marked, or
otherwise designated by the seller or lessor as the goods to which the contract refers
19-3Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
Identification of Goods and Passage of Title
Title: Legal, tangible evidence of ownership of goods Passage of title to goods
Title cannot pass until goods exist and have been identified
Title passes upon terms agreed to in contract If no terms are stated, title passes when delivery is
completed
19-4Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
Identification of Goods and Passage of Title
Shipment Contract
The seller is required to:
Make proper shipping arrangements
Deliver the goods into the carrier’s hands Destination Contract
Seller delivers goods either to buyer’s place of business or another destination specified in sales contract
19-5Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
Identification of Goods and Passage of Title
Delivery of goods without moving them
Buyer is required to pick up the goods from the seller
If the document of title or bill of lading is required, the title passes when the seller delivers the document
If no document of title and goods are identified, the title passes at the time of contracting
19-6Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
Risk of Loss Where There is No Breach of the Sales Contract
Carrier cases: Movement of Goods
Shipment Contracts
Risk of loss passes to buyer when seller delivers the conforming goods to the carrier
Destination Contracts
Risk of loss passes to buyer when seller delivers the conforming goods to the specified destination
19-7Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
Risk of Loss Where There is No Breach of the Sales Contract
Noncarrier Cases: No Movement of Goods Merchant Seller
Risk of loss passes to buyer when buyer receives the goods
Nonmerchant Seller Risk of loss passes to buyer upon tender of
delivery
19-8Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
Risk of Loss Where There is No Breach of the Sales Contract
Goods in possession of a bailee The buyer receives negotiable document of title, or The bailee acknowledges buyer’s right to
possession, or The buyer receives a nonnegotiable document of
title and has reasonable time to demand goods
19-9Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
Risk of Loss Where There is a Breachof the Sales Contract
Seller in breach of a sales contract Seller retains risk of loss on the delivery of
nonconforming goods to the buyer The risk of loss remains on the seller until:
The defect or nonconformity is cured, or The buyer accepts the nonconforming goods
19-10Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
Risk of Loss Where There is a Breachof the Sales Contract
Buyer in breach of a sales contract A buyer breaches a sales contract if he or she:
refuses to take delivery of conforming goods repudiates the contract otherwise breaches the contract
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 19-11
Risk of Loss in Conditional Sales
Sale on Approval No sale unless and until the buyer accepts the
goods Risk of loss and title pass when the goods are
accepted by the buyer
19-12Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
Risk of Loss in Conditional Sales
Sale or Return Buyer may return goods unsold after a period of
time Risk of loss and title pass to buyer when buyer has
possession of goods
19-13Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
Risk of Loss in Conditional Sales
Consignment Seller (consignor) delivers goods to buyer
(consignee) to sell Consignor paid a fee for selling goods on behalf
of the consignor Treated as sale or return
19-14Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
Risk of Loss: Lease Contracts
In ordinary lease, risk of loss retained by lessor In case of finance lease, risk of loss passes to lessee If tendered goods are nonconforming, risk of loss
remains with the lessor or the supplier until cure or acceptance
19-15Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
Sale of Goods by Nonowners
Void title: A situation in which a thief acquires no title to goods he or she steals
Buyer does not obtain good title to stolen goods Lessee has no leasehold interest in stolen goods Rightful owner can reclaim
19-16Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
Sale of Goods by Nonowners
Fraudulently Obtained Goods A seller or lessor has voidable title or voidable
leasehold interest to goods obtained by: Fraud A check that is later dishonored Impersonation of another person
19-17Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
Sale of Goods by Nonowners
Entrustment rule: If the owner entrusts the possession of his/her goods to a merchant who deals in goods of that kind, the merchant has the power to transfer all rights in the goods to a buyer in the ordinary course of business The real owner cannot reclaim the goods from this
buyer
19-18Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
Case 19.1: Entrustment Rule
Case Lindholm v. Brant 925 A.2d 1048, Web 2007 Conn. Lexis 264 (2007) Supreme Court of Connecticut
Issue
Is Brant a buyer in the ordinary course of business who has a claim of ownership to Red Elvis that is superior to that of the owner Lindholm?
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 19-19
Electronic Communications and Signatures
E-signatures are legally effective and can be enforced against contracting parties
Electronic record or electronic signature is attributable to a person if it was act of that person or his or her electronic agent
Electronic communication is effective even if no individual aware of its receipt
19-20Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.
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