Study Guide Exam 4 - Study Guide Exam 4 Chapter 12...

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Study Guide Exam 4 Chapter 12 Identification of Goods to the Contract: Identification – occurs when specific goods are tagged, marked, or set aside by the seller to be delivered to a buyer to satisfy a contract. The goods must have a physical existence, and title and risk of loss cannot transfer prior to identification. Once identified, the buyer has an insurable interest (may obtain insurance coverage) in the goods even if the goods are in the possession of the seller. The buyer has a right of recovery against third parties who damage the goods and may claim the goods against creditors of the seller by paying (or tendering) the remaining purchase price if the seller becomes insolvent within ten days after receiving the first payment if the goods are identified to the contract. Fungible Goods: Fungible Goods – goods that are a physically identical part of a larger mass such as bushels of wheat of a particular grade or other commodities are fungible. Title and risk of loss may be transferred without actual separation. Shipment and Destination Contracts: In the absence of an agreement, delivery terms control when title and risk of loss transfer from the seller to the buyer. Shipment contract – the seller is required to deliver the goods to the carrier and then risk of loss transfers to the buyer. Destination contract – the seller has risk of loss until the goods are tendered to the buyer at the destination. If the seller is in Chicago and the buyer is in Atlanta, then F.O.B. (free on board) Chicago is a shipment contract and F.O.B. Atlanta is a destination contract. Documents of Title: Document of Title – a bill of lading or warehouse receipt that evidence a right of possession of goods. If the goods are sold without being moved by the seller, and if the goods are in a warehouse, title passes when the buyer receives a warehouse receipt or other document that allows the buyer to take possession of the goods. If the goods are held by a carrier, then title passes when a bill of lading is delivered to the buyer that would allow the buyer to take possession of the goods. If no documents of title are required and delivery is made without moving the goods, then title passes at the time and place that the sales contract is made if the goods have been identified to the contract. Void and Voidable Title: A thief has void title and can’t transfer title to goods to anyone, even a good faith purchaser. You are always entitled to recover property that has been stolen from you – so mark big ticket items in an inconspicuous place with your driver’s license number. Don’t use a Social Security number because police can’t access them. A good faith purchaser is one who pays value without knowledge of any circumstances that would cause a person of ordinary
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Study Guide Exam 4 - Study Guide Exam 4 Chapter 12...

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