Transcript Title, Risk, and Insurable Interest

Title, Risk, and Insurable Interest
Chapter 10
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.