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Chapter 23 Outline

Chapter 23 Outline - Chapter 23 Outline Transfer of Title...

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Chapter 23 Outline Transfer of Title and Risk of Loss Intro: Historically title governed nearly every aspect of rights and duties of buyers and sellers in a sales contract. This is not the case with U.C.C. which approaches each issue on its own merits and provides separate and specific rules to control various transactional situations. Chapter 23 covers the transfer of title, the passage of risk of loss, and the transfer of goods in bulk. Transfer of Title: Fundamental to a sale of goods May not pass until goods in the contract have been identified as those to which the contract refers. “Future goods” that are non-existent and unidentified do not constitute a present sale. If buyer rejects goods, title reverts to the seller. In a lease, title does not pass, instead the lessee obtains the right to possess and use the goods. Identification: Generally done during the manufacturing or preparation of goods required to fulfill the contract. May be made by either the buyer or seller. In the absence of explicit agreement, identification occurs: o Upon making of the contract if the goods are existing and identified o When the seller ships, marks, or designates goods if the contract is for all future goods. o If for crops grown within 12 months or the next harvest, when they are planted and start growing, or if for offspring animals to be born within 12 months, when they are conceived.
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Automobile Example: A particular automobile is agreed to be purchased from a car lot. Identification occurs when contract is made. TV Example: A TV is agreed to be purchased from a warehouse filled with such TVs. Identification does not occur until either the buyer or seller selects a particular unit. Fungible goods – Goods for which every unit is the same as every other. Example: If a person agrees to purchase 1000 gallons of gas from a giant gasoline tank, identification occurs when the contract is entered into. Insurable Interest: Unlike in common law, under U.C.C. both the seller and the buyer may have an insurance claim to goods, regardless of who has title to the goods. In a lease the lessor retains the insurable interest until the lessee has opted to purchase the goods if allowed under the contract. Security Interest: Interest that ensures the payment or performance of an obligation. Any reservation by the seller of title to goods delivered to the buyer is limited in effect by a reservation of a security interest. Passage of Title – Title passes when parties intend for it to pass. In the absence of agreement, the code establishes rules for the passage of title depending on how the goods are delivered. Physical Movement of the Goods: Title passes at time and place that the seller completed his performance with regards to delivery of goods.
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Chapter 23 Outline - Chapter 23 Outline Transfer of Title...

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