Bus Law Ch.19 Title to Goods and Risk of Loss

Risk of Loss in No Movement Goods

1) If the seller is a merchant the merchant seller bears the risk of of loss between the time of contracting and the time the buyer picks up the goods. 2) If the seller is a non-merchant, risk of loss passes to the buyer on "tender of delivery" of the goods Bailee - a holder of goods who is not a seller or a buyer(warehouse).

Risk of Loss in Condition Sales - sales where the seller entrusts possession of goods to a buyer on a trial basis

1) Sales on Approval - A type of sale in which there is no actual sale unless and until the buyer accepts the goods. Risk and title remains with seller until acceptance 2) Sale or Return - A contract in which the seller delivers goods to a buyer with the understanding that the buyer may return the goods if they are not used or resold within a stated or reasonable period of time. Risk and title pass to buyer when buyer takes possession of goods. 3) Consignment - An arrangement in which a seller(the consignor) delivers goods to a buyer (the consignee) to sell on his or her behalf. Consignment is treated as a sale or return under the UCC so the risk and title pass to the consignee when the consignee takes possession of the goods

Destination Contract

A contract that requires the seller to deliver the goods either to the buyer's place of business or to another destination specified in the sales contract. title passes to the buyer when the seller tenders delivery of the goods at the specified destination.

Delivery of Goods without moving them. (Document of Title)

An actual piece of paper such as a warehouse receipt or bill of lading, that is required in some transactions of pickup and delivery. If document of title is required, title passes when and where the seller delivers the document to the buyer. If no document of title is required, the title of goods pass at the time and place of contracting.

Sales of Goods by NonOwners

Stolen goods - if you purchase/lease something stolen from a thief (void title), you do not acquire title. The original owner can reclaim it from you if you have it. Fraudulently Obtained Goods - voidable title if you obtain goods through fraud. If you purchase/lease from someone with voidable title but you had no idea then you're okay and the original owner cannot reclaim. Entrustment Rule - if an owner entrusts the possession of his or her goods to a merchant who deals in goods of that kind, the merchant has the power to transfer all rights(including title) in the goods to a buyer in the ordinary course of business. The real owner cannot reclaim the goods from the buyer

Risk of Loss in Lease Contracts

If parties do not agree on risk of loss UCC provides the following risk of loss rules: 1) In the case of an ordinary lease, if the lessor is a merchant, the risk of loss passes to the lessee on the receipt of goods. 2) If the lease is a finance lease and the supplier is a merchant, the risk of loss passes to the lessee on the receipt of the goods. 3) If a tender of delivery of goods fails to conform to the lease contract, the risk of loss remains with the lessor or supplier until cure or acceptance.

Risk of loss where Seller Breach a sales contract

If the goods are so nonconforming that the buyer has the right to reject them, the risk of loss remains on the seller until 1) the defect or nonconformity is cured or 2) the buyer accept the nonconforming goods

Passage of Title of Goods

If the parties do not agree to a specific time, title passes to the buyer when and where the seller's performance with reference to the physical delivery is completed.

Risk of Loss in a Shipment Contract

The buyer bears the risk of loss during transportation.

Risk of Loss in a Destination Contract

The seller bears the risk of loss during transportation.

Shipment Contract

a contract the requires the seller to ship the goods to the buyer via common trade. title passes to the buyer at the time and place of shipment