CH21 Transfer of Title and Risk of Loss
Transfer of Title
if delivery is made by moving goods, title and risk of loss pass at the time and place seller completes performance
buyer accepts nonconforming goods
timely notice of revocation of acceptance, buyer may treat risk of loss as resting on the seller from the beginning of k
no movement of goods
title passes when... -doc of title is received or -at the time of k
voidable
title/ possession of good is acquired under circumstances that permit the former owner to rescind transfer and reacquire title (mistake, duress, undue influence, misrepresentation, fraud, minors)
Destination K
(Best for buyer( -Title passes to buyer on tender of goods at the destination -buyer has risk when they receive goods
Shipment k
(best for seller) -title passes to buyer at the time and place seller delivers goods to the carrier for shipment to the buyer. -Buyer has risk when goods leave warehouse or place of business
Risk of Loss on Seller (merchant)
If the seller is a merchant, risk of loss passes to buyer upon buyers receipt of good (seller has no right to recover purchase price from buyer, but does have right to return of damaged good
Stolen goods
There is no such thing as a good faith purchaser of stolen goods and true owner can always recover stolen property
Risk of Loss
addresses the allocation of loss between the buyer and the seller when goods have been damaged without fault of either party >normally risk of loss passes with title and possession
Trial sales
buyer can return goods even if they conform to k; buyer tries good and determines if they want to keep them
Risk of Loss on Buyer
if buyer posses the goods when k is formed risk of loss is placed on buyer (must pay price of goods)
goods in possession of bailee
delivery made without physical movement of goods title and risk pass with delivery of doc of title
Identification of Goods
designation of specific goods as being the goods to which the k of sale refers. 1st step in transfer of title and risk of loss. can be made by either buyer or seller, and may be made at any time and in any manner agreed upon by parties
Sale on Approval
goods are delivered primarily for buyers use -possession, but not title is transferred to buyer for stated period, or reasonable period of time (buyer uses goods and determines whether they wish to accept them) >title and risk remain with seller until buyer accepts goods >failure to notify seller in reasonable period of time acts as acceptance
Sale or Return
goods are delivered primarily for resale by buyer -goods are sold and delivered to the buyer with agreement that buyer has right to return goods to seller -risk of loss and title is on buyer until goods are returned -return is at buyers risk and expense
If buyer breaches k before risk of loss passes
goods have been identified, buyer breaches k> seller may treat risk of loss as resting on the buyer for a commercially reasonable time
buyer in the ordinary course of business
if item is bought in good faith, in the ordinary course of a business transaction, the buyer takes the goods free of any other ownership rights or security interests
Void title
no title a thief or person who acquires goods from someone under duress has no title and no one can become a good faith purchaser because no title of goods can transfer to them
Good Faith Purchaser
one who acts honestly, gives value, and takes the goods without notice or knowledge of any defect in title
Good Faith Purchase of voidable goods
original owner cannot repossess goods from good faith purchaser, but must sue the seller for breach of k or the tort of conversion
tender
requires that the seller... -puts hold on conforming goods -gives buyer notice that goods are available
Risk of Loss (one party breaches k- includes shipment of non conforming goods)
risk of loss falls on breaching party
Risk of Loss (Non merchant seller)
risk of loss passes on tender of goods from seller to buyer
seller ships nonconforming goods
risk of loss remains on seller until buyer accepts goods or seller remedies defect
