BL-Chapt21 - Print Chapter Page 1 of 20 Title, Risk, and...

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Title, Risk, and Insurable Interest Chapter Introduction 21-1 Identification 21-1a Existing Goods 21-1b Future Goods 21-1c Goods That Are Part of a Larger Mass 21-2 When Title Passes 21-2a Shipment and Destination Contracts 21-2b Delivery without Movement of the Goods 21-2c Sales or Leases by Nonowners 21-3 Risk of Loss 21-3a Delivery with Movement of the Goods 21-3b Delivery without Movement of the Goods 21-3c Conditional Sales 21-3d Risk of Loss When a Sales or Lease Contract Is Breached 21-4 Insurable Interest 21-4a Insurable Interest of the Buyer or Lessee 21-4b Insurable Interest of the Seller or Lessor Chapter Recap Page 1 of 20 Print Chapter 2010-8-30 ..
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Chapter Introduction Before the creation of the Uniform Commercial Code (UCC), title –the right of ownership–was the central concept in sales law, controlling all issues of rights and remedies of the parties to a sales contract. There were numerous problems with this concept, however. For example, it was frequently difficult to determine when title actually passed from the seller to the buyer, and therefore it was also difficult to predict which party a court would decide had title at the time of a loss. Because of such problems, the UCC divorced the question of title as completely as possible from the question of the rights and obligations of buyers, sellers, and third parties (such as subsequent purchasers, creditors, or the tax collector). In some situations, title is still relevant under the UCC, and the UCC has special rules for locating title. These rules will be discussed in the sections that follow. In most situations, however, the UCC has replaced the concept of title with three other concepts: (1) identification, (2) risk of loss, and (3) insurable interest. In lease contracts, of course, the lessor-owner of the goods retains title. Hence, the UCC's provisions relating to passage of title do not apply to leased goods. Other concepts discussed in this chapter, though, including identification, risk of loss, and insurable interest, relate to lease contracts as well as to sales contracts. Page 2 of 20 Print Chapter 2010-8-30 ..
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21-1 21-1a 21-1b 21-1c Identification Existing Goods Future Goods Goods That Are Part of a Larger Mass Before any interest in specific goods can pass from the seller or lessor to the buyer or lessee, the goods must be (1) in existence and (2) identified as the specific goods designated in the contract. Identification takes place when specific goods are designated as the subject matter of a sales or lease contract. Title and risk of loss cannot pass to the buyer from the seller unless the goods are identified to the contract [UCC 2–105(2)]. (As mentioned, title to leased goods remains with the lessor–or, if the owner is a third party, with that party.) Identification is significant because it gives the buyer or lessee the right to insure (or to have an insurable interest in) the goods and the right to recover
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This note was uploaded on 10/12/2011 for the course ACCT 362 taught by Professor Mint during the Fall '11 term at CUNY Queens.

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BL-Chapt21 - Print Chapter Page 1 of 20 Title, Risk, and...

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