lecture notes ch. 22

lecture notes ch. 22 - CHAPTER OUTLINE I Identification...

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C HAPTER O UTLINE I. Identification Before an interest in goods can pass from seller to buyer, the goods must exist, and they must be identi- fied to the contract [UCC 2–105(2)].  For passage of title, goods must be identified in a way that will dis- tinguish them from all similar goods. Identification gives a buyer the right to obtain insurance on goods  and the right to recover from third parties who damage goods. Sometimes, identification allows the  buyer to take goods from the seller. A. E XISTING G OODS If a sale involves specific goods already in existence, identification occurs when the  contract is made. B. F UTURE G OODS If a sale involves unborn animals to be born within twelve months, identification  occurs when the animals are conceived. If a sale involves crops to be harvested  within twelve months, identification occurs when the crops are planted or begin to  grow. Identification of other future goods occurs when they are shipped, marked, or  otherwise designated as the contract goods. C. G OODS T HAT A RE P ART OF A L ARGER M ASS Problems may occur when goods exist in a larger mass, in which case identification can often be  made only by separating the goods from the mass.  If owners hold fungible goods in common, title  and risk can pass without separation [UCC 2–105(4)]. II. When Title Passes A. S HIPMENT AND D ESTINATION C ONTRACTS If the parties do not expressly agree to when and under what conditions title passes, it passes at  the time and place at which the seller delivers the goods [UCC 2–401(2)], according to the delivery  terms.  Under a shipment contract, title passes at the time and place of shipment.  Under a desti- nation contract, title passes when goods are tendered at the destination.   127
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128           INSTRUCTOR’S MANUAL TO ACCOMPANY  BUSINESS LAW , ELEVENTH EDITION B. D ELIVERY WITHOUT M OVEMENT OF THE G OODS When a buyer is to pick up goods and a document of title is required, title passes when and where  the document is delivered.  When a buyer is to pick up goods and a document of title is not re- quired, title passes at the time and place of contracting, if the goods have been identified; if they  have not, title passes on identification [UCC 2–401(3)]. C. S ALES OR L EASES BY N ONOWNERS 1. Void Title If a seller or lessor is a thief, his or her title is void, the buyer or lessee acquires no title, and  the owner can reclaim the goods.
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CHAPTER 20:  THE FORMATION OF SALES AND LEASE CONTRACTS            129 2. Voidable Title If a seller or lessor obtained goods by fraud; with a check that is later dishonored; on 
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