Law

identification is the first step in determining:

-insurable interest -passage of title -risk of loss

Effect of Breach of Express Warranty

If an express warranty is false, there is a breach of warranty -Warrantor is then liable -It is no defense that the seller or manufacturer who made the express warranty honestly believed that he warranty was true, had exercised due care in manufacturing or handling the product, or had no reason to believe that the warranty was false

document of title

a means whereby the parties can facilitate the transfer of title to the goods without actually moving them or provide a means for a creditor to take an interest in the goods title to the goods passes when the document of title is transferred from the seller to the buyer

CF

acronym for "cost and freight" seller gets the goods to a carrier, and the cost of shipping the goods is included in the contract price

CIF

acronym for "cost, insurance, and freight" seller must get the goods to a carrier AND buy an insurance policy in the buyer's name to cover the goods while in transit costs of the freight and the insurance policy are included in the contract price

COD

acronym stands for "cash on delivery" not a shipping term but a payment term that requires the buyer to pay in order to gain physical possession of the goods

limited warranty

any warranty that does not meet the requirements for a full warranty ex: buyer must pay any cost for repair or replacement of a defective product; warranty covers only part of the product must be conspicuously described as such by the seller

two primary forms of documents of title under Article 7 used to pass title to goods are

bills of lading (issued by a carrier) warehouse receipts

warranty of title

every seller, by the mere act of selling, makes an implied warranty that the seller's title of the goods is good and that the seller has the right to transfer title to the goods no warranty of title arises when the seller makes the sale in a representative capacity damages are often the purchase price b/c the buyer may have to surrender the goods to their rightful owner

Consumer Product Safety Improvement Act (CPSIA)

federal law that sets standards for the types of paints used in toys - a response to lead paint found in toys made in China, requires tracking for international production and increases penalties products most affected are those for children under the age of 12; prohibits lead in products for children under 12

existing goods

goods physically in existence at the time of the contract and owned by the seller when the particular goods have been selected by either the buyer or the seller, or both, as being the goods called for by the sales contract, the goods are identified

fungible goods

goods that, when mixed together, are indistinguishable (e.g., commodities) these goods (like future goods) are identified when they are shipped, marked, or otherwise designated for the buyer; the seller's act of tagging, marking, labeling, or in some way indicating to those responsible for shipping the goods that certain goods are associated with a particular contract or order means that identification has occurred

warranty against encumbrances

goods will be delivered free from any security interest or any other lien or encumbrance of which the buyer at the time of the sales transaction has no knowledge

implied warranty of the merchantability

group of promises, the most important of which is that the goods are fit for the ordinary purposes for which they are sold given in every sale of goods by a merchant

once goods that are the subject matter of a contract have been identified, the buyer holds an

insurable interest in them the buyer's insurance company has an obligation to provide coverage for any mishaps that could occur until the contract is performed completely

identification of the goods to the contract

is a necessary step to provide the buyer an insurable interest

full warranty

obligation of a seller to fix or replace a defective product within a reasonable time without cost to the buyer; no unreasonable burden may be placed on a buyer seeking to obtain warranty service runs with the product and lasts for its full term regardless of who owns the product

strict tort liability

product liability theory that imposes liability upon the manufacturer, seller, or distributor of goods for harm caused by defective goods

warranty of fitness for a particular purpose

seller states that the goods will be fit for the buyer's purpose with the buyer relying on the seller's skill or judgment to select or furnish suitable goods, and the seller, at the time of contracting, knows or has reason to know of both the buyer's particular purpose and the buyer's reliance on the seller's judgment prevails over an express warranty

FOB place of shipment

seller's obligation under the contract is to deliver the goods to a carrier for shipment place the goods in the possession of a carrier and enter into a contract to have the goods shipped

FOB place of destination

seller's responsibility is to get the goods to the buyer holds the seller accountable throughout the journey of the goods across the country

FOB

shipping term that is an acronym for "free on board"

FAS

shipping term that means "free alongside ship" it is the equivalent of FOB for boat transportation requires only that the seller deliver the goods to a ship

insurable interest

the right to obtain a valid insurance policy on goods and can submit claims for losses on the goods

future goods

those not yet owned by the seller or not yet in existence these goods are identified when they are shipped, marked, or otherwise designated by the seller as goods to which the contract refers prior to identification of these goods, the buyer only has a future interest at the time of the contract and has few rights with respect to them

passage of title in FOB destination

title to the goods passes from the seller to the buyer when the goods are tendered to the buyer at the destination tender occurs when the goods have arrived and are available for the buyer to pick up and the buyer has been notified of their availability

passage of title in FOB shipment

title to the goods passes from the seller to the buyer when the seller delivers the goods to the carrier buyer owns the goods once they are in the hands of the carrier

passage of title in nonshipment contracts

when there is no specific agreement for shipment or delivery of the goods and there is no document of title and the goods to the contract have been identified, title passes to the buyer at the time the contract is entered into by the buyer and the seller