View
224
Download
0
Category
Tags:
Preview:
Citation preview
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 1
TITLE TO GOODS AND RISK OF LOSS
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall
CHAPTER 13 CHAPTER 13
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 2
Identification of Goods
• Goods named in contract distinguished from seller/lessor’s other goods– E.g., carton marked with buyer’s name.
• Risk of loss cannot pass until goods identified.
• Title cannot pass until goods identified.
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 3
Identification of Goods (continued)
• Parties can agree to time and manner of identification.
• Existing goods identified when specific goods named.
• Future goods identified when born, planted, shipped, marked, or designated.
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 4
Passage of Title
• Title cannot pass until goods exist and have been identified.
• Title passes upon terms agreed to in contract.
• If no terms are stated, title passes when delivery is completed.
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 5
Shipment and Destination Contracts
• Shipment Contract– Seller should make proper shipping
arrangements.– Deliver the goods into the carrier’s hands.
• Destination Contract– Seller delivers goods either to buyer’s place of
business or another destination specified in sales contract.
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 6
Delivery of Goods Without Moving Them
– Buyer is required to pick up goods from seller
– If document of title or bill of lading is required, title passes when seller delivers the document.
– If no document of title and goods are identified, title passes at time of contracting.
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 7
Shipping Terms
Shipment Contracts• F.O.B. point of
shipment.• F.A.S.• C.I.F. or C.&F.
Destination Contracts• F.O.B. place of
destination.• Ex-ship.• No-arrival, no-sale.
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 8
Risk of Loss: No Breach of Sales Contract
• Carrier Cases: Movement of Goods– Shipment Contracts - Risk of loss passes to buyer when seller
delivers the conforming goods to the carrier.– Destination Contracts - Risk of loss passes to buyer when seller
delivers the conforming goods to the specified destination.
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 9
Risk of Loss: No Breach
Noncarrier Cases: No Movement of Goods– Merchant Seller
- Risk of loss passes to buyer when buyer receives the goods.
– Nonmerchant Seller
- Risk of loss passes to buyer upon tender of delivery.
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 10
Risk of Loss: No Breach (continued)
Goods in Possession of a Bailee:– Buyer receives negotiable document of
title or– Bailee acknowledges buyer’s right to
possession, or– Buyer receives a nonnegotiable document
of title and has reasonable time to demand goods.
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 11
Risk of Loss: Conditional Sales
Sale on Approval
• No sale unless and until the buyer accepts the goods.
• Risk of loss, title pass when goods are accepted.
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 12
Sale or Return
• Buyer may return goods unsold after a period of time.
• Risk of loss and title pass to buyer when buyer has possession of goods.
Risk of Loss: Conditional Sales (continued)
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 13
Risk of Loss: Conditional Sales (continued)
Consignment
• Seller (consignor) delivers goods to buyer (consignee) to sell.– Consignor paid a fee if he/she sells the
goods on behalf of the consignor.
• Treated as sale or return.
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 14
Risk of Loss: Breach
Seller in Breach - If seller delivers nonconforming goods to the
buyer, seller retains risk of loss.
Buyer in Breach
- If buyer refuses to take delivery of conforming goods, repudiates the contract or otherwise breaches the contract, buyer takes risk of loss of identified goods.
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 15
Risk of Loss: Lease Contracts
• In ordinary lease, risk of loss retained by lessor.
• In case of finance lease, risk of loss passes to lessee.
• If tendered goods nonconforming, risk of loss remains with lessor or supplier until cure or acceptance.
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 16
Insurable Interest
• Seller has insurable interest as long as seller retains title or has security interest.
• Lessor has insurable interest during term of lease.
• Buyer/lessee has insurable interest in identified goods.
• Both parties may have insurable interest simultaneously.
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 17
Sales by Nonowners
Void Title and Lease: Stolen Goods
• Buyer does not obtain good title to stolen goods.
• Lessee has no leasehold interest in stolen goods.
• Rightful owner can reclaim.
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 18
Sales by Nonowners (continued)
• Seller/lessor has voidable title if goods were obtained by fraud, if a check is later dishonored, or if he/she impersonates another person.
• Can transfer good title to good faith purchaser for value or good faith subsequent lessee.
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 19
Sales by Nonowners (continued)
Entrustment Rule– If owner entrusts the possession of his/her
goods to a merchant who deals in goods of that kind, the merchant has the power to transfer all rights/title in the goods to a buyer in the ordinary course of business.
– The real owner cannot reclaim the goods from this buyer.
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 20
Electronic Contracts and Signatures
• E-signatures effective.
• Electronic record or electronic signature is attributable to a person if it was act of that person or his or her electronic agent.
• Electronic communication is effective even if no individual aware of its receipt.
© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 21
Letters of Credit
• To manage risk of nonpayment or nonreceipt of goods in international transactions.
• Substitutes credit of bank for that of buyer.
• Issuing bank agrees to pay upon delivery of documents from beneficiary (seller).
• Governed by Article 5 of UCC.
Recommended