BLAW - Chapter 22 - Chap 22 Title, Risk of Loss and...

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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. Title is intangible—you cannot see it or feel it. The person who has title to property (the owner) also has the right to possess it. o 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. o 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. o 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. Existence 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. Identification 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 otherwise specified, identification takes place §2-501(1) : 1. when the contract is made, if it is for goods already existing and identified; 2. 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 3. 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: o 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) o 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
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BLAW - Chapter 22 - Chap 22 Title, Risk of Loss and...

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