Transcript CHAPTER 13 Ownership and Risk of Loss in Sales

14-2
Risk of Loss and Insurable
Interest in Sales
 GOALS
 Explain the general rules for identifying when risk
of loss transfers
 Identify the point at which insurable interest of
goods transfers
 Identify when risk of loss and insurable interest
transfer in specific situations
LAW for Business and Personal Use
Chapter 14
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 1
WHEN DOES RISK OF LOSS
TRANSFER?
 Goods are shipped by carrier
 Goods are held by a bailee
 Contract is breached after goods are
identified
 Other situations
LAW for Business and Personal Use
Chapter 14
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 2
CHECKPOINT

 Explain the point at which the risk of loss
transfers from seller to buyer when the seller
ships the goods by carrier.
LAW for Business and Personal Use
Chapter 14
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 3
WHEN DOES INSURABLE
INTEREST TRANSFER?
 Buyer has right to:
 Inspect goods at a reasonable hour
 Compel delivery if seller wrongfully withholds
delivery
 Collect damages from third persons who take or
injure the goods
LAW for Business and Personal Use
Chapter 14
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 4
CHECKPOINT

 When does a buyer obtain an insurable
interest in the goods?
LAW for Business and Personal Use
Chapter 14
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 5
TRANSFER OF RIGHTS AND
RISKS IN SPECIFIC SALES
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Cash-and-carry sales
Sales on credit
COD sales
Sale or return
Sale on approval
Sale of an undivided interest
Auction
Bulk transfer
LAW for Business and Personal Use
Chapter 14
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 6
CHECKPOINT

 What is the most common type of transaction
for low-priced items such as groceries, and
when does risk of loss pass from a merchant
to a buyer for these sales?
LAW for Business and Personal Use
Chapter 14
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 7
PREVENT
LEGAL
DIFFICULTIES

To protect yourself in the actual sales transaction . . .

Remember that ownership of goods will not necessarily
prevent transfer of title to them contrary to your wishes
when
 (a)
You have authorized others to sell the goods for you.
They may violate your instructions.
 (b)
You have been defrauded in a sales transaction and
have given a voidable title to the wrongdoer. Before you cancel
the contract and try to get your goods back, the wrongdoer can
transfer good title to a good faith buyer.
 (c)
You have allowed the person who sold to you to keep
possession of your goods. The person who sold them to you
might sell them again.
Continued on the next slide
LAW for Business and Personal Use
Chapter 14
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 8
PREVENT
LEGAL
DIFFICULTIES
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Act promptly in identifying goods to the sales contract and
in completing performance.
In important sales contracts, specify precisely in writing
when title to goods and risk of loss of goods are to transfer.
As a buyer or a seller, carry adequate insurance when
appropriate to cover any insurable interest you may have in
goods that are the subject matter of the sales contract.
Assure yourself of the integrity and financial responsibility of
buyers before selling goods to them on credit, on sale or
return, or on approval.
When the buyer’s credit is questionable, sell for cash or on
a COD basis.
LAW for Business and Personal Use
Chapter 14
© 2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SLIDE 9