Chapter 23

Chapter 23 - Chapter 23: Chapter Transfer of Title and Risk...

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Unformatted text preview: Chapter 23: Chapter Transfer of Title and Risk of Loss Transfer BUL 3350 - Chapter 23 Topics Covered in this Chapter A. Transfer of Title B. Risk of Loss C. Bulk Sales Bulk BUL 3350 - Chapter 23 2 Transfer of Title Transfer Identification – designation of specific goods Identification as goods to which the contract of sale refers. as Insurable Interest – buyer obtains an Insurable insurable interest and specific remedies in the goods by the identification of existing goods as goods to which the contract of sale refers. goods Security Interest – an interest in personal Security property or fixtures that ensures payment or performance of an obligation. performance BUL 3350 - Chapter 23 3 Passage of Title Title passes when the parties intend it to Title pass; when the parties do not specifically agree, the Code provides rules to determine when title passes. determine Physical Movement of the Goods – Physical when delivery is to be made by moving the goods, title passes at the time and place where the seller completes his performance with reference to delivery. performance No Movement of the Goods BUL 3350 - Chapter 23 4 Power to Transfer Title The purchaser of goods obtains such title as The her transferor either has or had the power to transfer; however, to encourage and secure good faith acquisitions of goods, it is necessary to protect third parties in certain circumstances. circumstances. Void Title – no title can be transferred. Void no Voidable Title – the good faith purchaser Voidable acquires good title. acquires Entrusting of Goods to a Merchant – buyers Entrusting in the ordinary course of business acquire good title when buying from merchants. good BUL 3350 - Chapter 23 5 Void Title Transferor Transferee void transfer of goods A B $ goods ma yr eco ve rg oo ds C Good faith purchaser BUL 3350 - Chapter 23 6 Voidable Title Transferor Transferee voidable transfer of goods A B $ goods ma yn ot rec ov er go od s C 7 Good faith purchaser BUL 3350 - Chapter 23 Entrusting of Goods to a Merchant Entruster Merchant A ma yn ot entrusts stereo B $ stereo rec ov er g oo ds C Buyer in ordinary course of business BUL 3350 - Chapter 23 8 Risk of Loss Risk Definition – allocation of loss between seller & buyer where goods are damaged, destroyed, or lost without the fault of either party. or Risk of Loss Where There Is a Breach • Breach by the Seller – if the seller ships to the Breach buyer goods that do not conform, the risk of loss remains on the seller until the buyer has accepted the goods or until seller has remedied the defect. the • Breach by the Buyer – the seller may treat the risk Breach of loss as resting on the buyer for a commercially reasonable time to the extent of any deficiency in the seller's effective insurance coverage. the BUL 3350 - Chapter 23 9 Risk of Loss Risk of Loss in Absence of a Breach • Agreement of the Parties – the parties may by Agreement agreement allocate the risk of loss. agreement • Trial Sales – unless otherwise agreed, if the goods Trial are delivered primarily for the buyer's use, the transaction is a sale on approval (risk of loss remains with the seller until “approval” or acceptance of the goods by the buyer); if they are delivered primarily for resale by the buyer, it is a sale or return (the risk of loss is on the buyer until she returns the goods). she BUL 3350 - Chapter 23 10 Risk of Loss Risk of Loss in Absence of a Breach • Contracts Involving Carriers – in shipment Contracts contracts, the seller bears the risk of loss and expense until the goods are delivered to the carrier for shipment; in destination contracts, the seller bears the risk of loss and expense until tender of the goods at a particular destination. the • Goods in Possession of Bailee • All Other Sales – for merchant seller, risk of loss All passes to buyer on the buyer's receipt of the goods; for nonmerchant seller, risk of loss passes to buyer upon tender of goods. upon BUL 3350 - Chapter 23 11 Passage of Risk of Loss Passage in Absence of Breach in Agreement by parties? Yes As allocated by agreement No Trial sale Contract involving carrier Goods in possession of bailee Goods in possession of buyer Risk of loss passes to buyer at time of contract All other sales Sale on approval? Shipment contract? Negotiable document of title? Seller is a 4 merchant Risk passes to buyer upon receipt of goods Seller is not a 5 merchant Risk passes to buyer upon tender of goods 12 Yes No 1 Yes 2 No Yes 3 No BUL 3350 - Chapter 23 Continued on next slide… (match arrow numbers) Passage of Risk of Loss in Absence of Passage Breach (cont.) Breach 1 2 3 Yes No Sale or return Yes No Destination contract Yes No Non-negotiable document of title? Risk shifts upon buyer’s receipt of document Risk on seller until approved Risk on buyer until returned Risk on seller until delivered to carrier Yes Risk shifts to buyer upon tender of document No No document of title Risk on seller until goods tendered at destination BUL 3350 - Chapter 23 Risk shifts to buyer upon written acknowledgment by seller or bailee 13 Bulk Sales Bulk Definition – a transfer, not in the ordinary course of the transferor's business, of a major part of his inventory. business, Requirements of Article 6 – transfer is Requirements ineffective against any creditor of the transferor, unless certain requirements are met. are BUL 3350 - Chapter 23 14 ...
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This note was uploaded on 03/17/2011 for the course BUL 3350 taught by Professor Bailey during the Spring '11 term at FSU.

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