Chap 22 Title, Risk of Loss and Insurable Interest
A sale of goods is the transfer of title from the seller to the buyer for a consideration known as the price.
is intangible—you cannot see it or feel it.
The person who has title to property (the owner) also has the right to possess
Note that there is a difference between possession and title.
The person who has title to property has the right to give up
their right to possess it—for example, renting it to someone else.
On the other hand, you may have possession of something, but you don’t actually own it.
When you sell something, you sell not only the property but also the intangible right of ownership called title.
The automobile certificate of title (used in most states) is not actually title but proof of title
risk of loss
TRANSFER OF TITLE
Title in goods can pass from one person to another only if the goods exist
and have been identified
to the contract.
Goods must exist before title can pass. Although most goods do exist when people buy and sell them, some have not yet
come into being, such as crops to be grown later. A farmer may contract to sell corn even before it is planted, but title to the
corn cannot pass until the corn exists.
Goods must be identified to the contract before title can pass. This means that the parties must have designated the specific
goods being sold.
Identification may be made by either the seller or the buyer, at any time, and in any manner agreed upon. Therefore, if not
identification takes place §2-501(1)
when the contract is made, if it is for goods already existing and identified;
when the seller ships, marks (puts a label on them), or otherwise designates existing goods, if the contract is for
goods which did not already exist at the time of the contract; or
when the crops are planted or start growing, if the contract is for crops to be grown within twelve months, or at the
time of the next normal harvest, or when the young animals are conceived, if the contract is for the offspring of animals
to be born within twelve months.
PASSING OF TITLE
Once goods exist and are identified to the contract, title can pass from one person to another.
Title may pass in any manner the parties agree upon (UCC § 2- 401). The parties can decide, for example, that title passes
when the goods leave the manufacturer’s factory, or when they reach the shipper who will transport them. If the parties do
not agree on passing title, § 2- 401 decides.
There are two possibilities:
Generally, when the goods are being moved, title passes to the buyer when the seller completes whatever transportation
it is obligated to do. § 2-401(2)
When the goods are not being moved,
title passes when the seller delivers ownership documents to the buyer. Suppose
Seller, located in Louisville, has already manufactured 5,000 baseball bats, which are stored in a warehouse in San