week discussion

Q:Distinguish between a “sale on approval” and a” sale or return.” (Read Chapter 16)

List and define all the elements and provide a similar case.

Goldman | Sigismond
9e
1
CHAPTER
16
The Sales Contract:
Transfer of Title and
Risk of Loss
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Learning Objectives
➜ Identify the relevance of title and risk
of loss under the UCC.
➜ Define a present sale and distinguish
it from a contract to sell.
➜ Determine the rules for risk of loss in
the absence of a breach of contract
when goods are destroyed, damaged,
or lost while being picked up at the
sellers’ place of business, while on a
common carrier, or on terms of
approval or return. →
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16.2
Learning Objectives
➜ Determine the circumstances under
which a merchant sells all or a major
part of the business assets at one
time but not in the ordinary course of
business and point out the
implications of this sale. →
Copyright ©2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
16.3
Learning Objectives
➜ Summarize the circumstances under
which people come into possession of
sold or leased goods not belonging to
them and explain the status and their
rights to these goods while in their
possession.
➜ Determine the rules for risk of loss
when there has been a breach of
contract.
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16.4
Relevance of Title and Risk of Loss
in Sales Law
➜ Title prevents the seller’s unpaid
creditors from claiming goods when
the title to those goods has passed to
the buyer.
➜ Title also determines whether goods
are the subject of a present sale or
simply a contract to sell.
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16.5
Title and Risk Triggering Lawsuits
➜ Most lawsuits involve the following
situations:
1. Goods are damaged, destroyed, or
lost after the contract is made.
2. Both the seller and the buyer claim
they are not a fault.
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16.6
Risk, Loss, and Title in the UCC
➜ UCC rules for shifting loss are more
important than the rules for passing
title.
➜ If either party has committed a
breach of contract, the risk of loss
under the UCC usually falls totally or
in part on the party who committed
the breach.
Copyright ©2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
16.7
Present Sale vs. Contract to Sell
➜ Present sale: sale in which title to
goods passes from seller to buyer at
the time parties make the contract.
➜ Contract to sell: sale in which title to
goods passes from seller to buyer at a
future time.
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16.8
Types of Goods
➜ Identified goods: exact goods being
sold that have been decided on by
seller and buyer.
➜ Future goods: goods not yet in
existence and not yet identified.
➜ Fungible goods: a unit is the
equivalent of any other unit.
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16.9
Risk of Loss in the Absence
of Breach
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16.10
Delivery Without Movement
of the Goods
➜ In this case, risk of loss passes upon
the buyer’s receipt of the goods.
➜ Receipt requires taking the physical
possession of the goods.
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16.11
Delivery With Movement of the
Goods—Carrier Cases
➜ It is important for the parties to
provide for shipping terms in their
contract.
➜ The contract may require or
authorize the seller to ship the goods
by carrier in one of two ways:
1. Shipment contracts.
2. Destination contracts.
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16.12
Shipment Contract
➜ Shipment contract: terms indicate
that seller has risk until goods are
given to the carrier for shipment to
buyer.
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16.13
Destination Contract
➜ Destination contract: indicates that
seller has risk until goods are actually
delivered to buyer’s location.
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16.14
Sales on Approval or Return
➜ Sale on approval: transaction in
which goods are delivered to buyer
for trial purposes.
➜ Sale or return: present sale under
which buyer may return goods after a
set or reasonable time.
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16.15
Sale on Approval
➜ The buyer is considered to have accepted
the goods if one of the following occurs:
1. Buyer signifies acceptance by saying
“yes” or performing some act such as
making payment.
2. Buyer keeps the goods beyond the
specified time or beyond a
reasonable time.
3. Buyer subjects the goods to
unreasonable usage inconsistent
with the purpose of trial.
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16.16
Sale or Return
➜ A sale or return is considered a
present sale of goods; consequently,
the buyer accepts title ownership and
risk of loss immediately at the time of
the sale.
➜ This type of sale under the UCC is
made if the buyer purchases goods
primarily for resale.
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16.17
Bulk Sales
➜ Bulk sale: sale of all or a major part of
a merchant’s stock of goods, fixtures,
and equipment at one time.
➜ Article 6 of the UCC.
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16.18
Sales or Leases by Nonowners
➜ Lack of title and authority to sell.
➜ Possession.
➜ Buyer’s ownership.
➜ Seller had void title.
➜ Seller had voidable title.
➜ Merchant was given temporary
possession.
➜ Bill of sale: written proof of
ownership of goods.
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16.19
Merchant Was Given
Temporary Possession
➜ Buyer in the ordinary course of
business: one who purchases goods
in good faith from a seller who
normally deals in the goods.
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16.20
Risk of Loss Where
There Is a Breach of Contract
➜ Breaching party is responsible.
➜ Nonconformity must be serious
enough to allow the buyer to legally
reject the tender (offer) of delivery.
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16.21