Transcript Title, Risk, and Insurable Interest

Title, Risk, Insurable
Interest
Chapter 20
Identification

For an interest in goods to pass from seller
to buyer the goods must
(1) exist and
(2) be identified as the goods subject to
the contract.

Identification is designation of the goods as
the
subject matter of the contract.
Identification

Identification gives the buyer

(1) the right to obtain insurance and

(2) the right to obtain the goods from
the seller.
Transfer of Title and Risk of
Loss

Parties can agree on when and under
what conditions title will pass. If they
do not specify a time, title passes on
delivery [UCC 2-401(2)].

Delivery terms determine when this
occurs.
Delivery

Delivery with Movement of the Goods

Delivery without Movement of the
Goods
Goods Held by the Seller.
Goods Held by a Bailee. (Third Party)
Delivery with Movement of
the Goods
1.Goods transported form Seller to
Buyer
a. Shipment contract,
F.O.B.(Seller’s place of business.
1. Requires seller to deliver goods to
carrier and make arrangement for
transport.
2. Title and Risk transfer when
goods are delivered to carrier.
Delivery with Movement of
the Goods

b. Destination Contract,
F.O.B.(Buyer’s place of business)
1. Requires seller to tender goods at
destination
2. Title and Risk transfer when goods
are tendered
Delivery without Movement
of the Goods (Risk of Loss)

Goods Held by the Seller.
a. If the seller is a merchant, risk of
loss to goods held by the seller
passes to the buyer when the buyer
actually takes physical possession of
the goods.
b. If the seller is not a merchant, the risk
of loss to goods held by the seller
passes to the buyer on tender of
delivery.
Delivery without Movement
of the Goods (Risk of Loss)



When a bailee is holding goods for a
person and goods are to be delivered
without being moved, the goods are usually
represented by a
negotiable or nonnegotiable document of
title (a bill of lading or a warehouse receipt).
Risk of loss passes to the buyer when


(1) the buyer receives a negotiable document of title
for (2) the bailee acknowledges the buyer's right to
possess the goods, or
(3) the buyer receives a nonnegotiable document of
title and has had a reasonable time to present the
document to the bailee and demand the goods.
Delivery without Movement
of the Goods (Title)

Title passes at the time and place the sales
contract is made, if the goods have already
been identified. If the goods have not been
identified, title does not pass until
identification occurs.

Example. Rogers sells lumber to Bodan. It is agreed that
Bodan will pick up the lumber at the yard. If the lumber
has been identified(segregated, marked, distinguished
from all other lumber), title passes to Bodan when the
contract is signed. If the lumber is still in storage bins at
the mill, title does not pass to Bodan until the particular
pieces of lumber to be sold under this contract are
identified
Delivery without Movement
of the Goods (Title)Third
Party)
Document of Title
 When a document of title is required,
title passes to the buyer when and
where the
 document is delivered. Thus, if the
goods are stored in a warehouse, title
passes to
 the buyer when the appropriate
documents are delivered to the buyer.

Delivery without Movement
of the Goods (Title)Third
Party)

No document of Title
Goods Identified:When no documents of
title are required, and delivery is made
without moving the
goods, title passes at the time and place the
sales contract is made, if the goods have
already been identified.
Goods not Identified: If the goods have not
been identified, title does not pass until
identification occurs.
Conditional Sales

Sale or Return.
Contract by which the buyer
purchases the goods but has a
conditional right to return the goods
within a specified time period.
Title and risk of loss remain with the
buyer until the buyer returns the
goods to the seller within the time
period specified.
Conditional Sales

Sale on Approval.
Buyer takes the goods on a trial basis
Title and risk of loss remain with the
seller until the buyer accepts the offer.