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Unit 3 - Chapter 21 Identification and risk of loss Sales...

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Chapter 21. Identification and risk of loss. Sales Contracts 1. When talking about identification of goods of contract, the specific items are identified in some way or another, such as tagging the items to identifying the specific goods of subject matter of a contract. After the buyer has some recognition of the good he can go and purchase insurance on them, because A cannot purchase insurance on B’s goods. The idea behind this code is that after the goods are tagged or specified, it gives the buyer and insurable interest, because now the buyer is planning on obtaining the goods even though the buyer does not have a title yet. Risk of Loss 1. Presuppose the existing of a contract, and it is in place. Risk of loss deals with the problem after the contract is made and before the buyer receives the goods, they are lost or damaged. Does buyer ____ ____. The party who has risk of loss eats the costs. How to determine passage of risk of loss, if it’s a contract where goods are not to be moved and buyer will pick them up the risk of loss passes when the seller notifies the goods are ready to be picked up by the buyer. If after a reasonable time passes and goods are still there and are lost or stolen the buyer still owes the seller for the goods. If goods are to be moved then there is a shipment or delivery contract; in both the seller is responsible for getting goods to the buyer, and when he does his part, when does seller fully execute? a. Shipment contract – the seller will ship the goods to buyer. Seller fully executes when seller leaves goods at the carrier. If something happens while goods are in transit the buyer eats the costs and owes the seller the price. i. Sellers plant b. Delivery contract – the seller will deliver the goods to buyer. Seller fully executes when goods arrive at the buyers’ place of business and the risk of loss passes to the buyer. If goods are damaged during transit here the buyer does not owe the seller anything. i. Destination ii. Buyers’ plant. 2. The risk of loss passes from seller to buyer as soon as seller fully executes his part of the contract. If delivery is not specified Shipment is the default. 3. A material breach of contract discharges the non breaching party from any further duty of action. 4. Seller has the right to treat the contract as resting on the buyer for a reasonable length of time but only to an extent of efficiency of sellers insurance.
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Sale on Approval and sale for return (still talking about risk of loss) 1. Title is of secondary importance, but when talking of sale on approval. a. Presupposes that parties (seller and buyer) seller allows buyer to be in position of goods in order to test them and decide if he wants to buy them. At any time before accepting the contract you have the right to return the product. Only responsible for product if it’s damaged on your negligence otherwise seller is responsible and eats the costs. During the time of approval the title remains with the seller until the time of acceptance.
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