Business Law Chapter 19

Front 1

Risk of loss

Back 1

This remains with the party who holds the title.

Front 2

Identification of goods

Back 2

Distinguishing the good named in a contract from the seller's or lessor's other goods.

Front 3

Example of goods in a larger mass and how they are identified.

Back 3

goods in large mass identified when specific merchandise is designated. Ex. Contract to buy 150 crates of oranges from a supplier who has 1000 crates. Buyers goods identified when seller tags the 150 cases to be sent.

Front 4

Future goods and Ex.

Back 4

Goods not yet in existence. These include ungrown crops, unborn stock animals.

Front 5

Title

Back 5

Legal, tangible evidence of ownership of goods.

Front 6

When does passage of title occur?

Back 6

Passes any time in any manner on any conditions explicitly stated by parties. If none are stated, title passes to buyer when and where seller's performance with regards to physical delivery is completed.

Front 7

Shipment contract. What responsibilities does shipper have?

Back 7

Contract requiring seller to ship goods to buyer via common shipment.
Shipper's responsibilities include making shipping arrangement and delivering goods into carriers hands. Title passes at shipment.

Front 8

Destination contract

Back 8

Requires seller to deliver goods either to buyers place of business or another specified location indicated in the contract. Title passes when seller delivers goods.

Front 9

Document of title

Back 9

Actual piece of paper such as a warehouse receipt or bill of lading, required in some transactions of pickup and delivery.

Front 10

If goods named in a sales contract are located at a warehouse when does title pass?

Back 10

when seller delivers to buyer warehouse receipt representing the goods.

Front 11

If no document title is needed and goods are identified at time of contracting when does title pass?

Back 11

title passes at the time and place of contracting.

Front 12

Shipment contract

Back 12

Requires seller to deliver goods conforming to the contract to a carrier. Risk of loss passes to buyer when seller delivers to carrier. Buyer bears loss during transport. FOB Shipping.

Front 13

FOB point of shipping

Back 13

Buyer bears risk of loss during transport.

Front 14

Destination contract

Back 14

Contract requiring seller to deliver goods to a specific destination. Requires seller to bear loss until arrival. FOB destination

Front 15

FOB Destination

Back 15

Seller bears risk of loss during transport.

Front 16

No movement of goods - Merchant-seller

Back 16

If seller is a merchant, risk of loss does not pass to the buyer until goods are received. Seller bears rick of loss until buyer picks up goods.

Front 17

No movement of goods - Nonmerchant seller

Back 17

Pass risk of loss to buyer upon tender of delivery which occurs when seller places or holds goods avail to be taken for delivery and notifies buyer of this fact.

Front 18

Bailee

Back 18

Holder of goods who is not a seller or buyer. i.e. a warehouse

Front 19

If goods are to be delivered to buyer without the seller moving them the risk transfers to the buyer when:

Back 19

1. Buyer receives negotiable document of title covering goods.
2. Bailee acknowledges buyer's right to possession
3. Buyer receives nonnegotiable document of title or other written direction to deliver AND has reasonable time to present document or direction to bailee and demand goods.

Front 20

Sale on approval

Back 20

A type of sale in which there is no actual sale unless and until buyer accepts goods. Seller allows customer to take goods for specified time to see if they fit customer's needs. They retain risk of loss.

Front 21

In a sale on approval how is acceptance indicated?

Back 21

1. Buyer expressly indicates.
2. Fails to notify seller of rejection in a reasonable time or during trial period
3. Uses goods inconsistently with purpose of trial (Sells to another person)

Front 22

Sale or return contract definition and when does risk of loss transfer.

Back 22

A contract in which the seller delivers goods to a buyer with the understanding that the buyer may return them if they are not used or resold within stated or reasonable time. Risk of loss and title to goods pass when buyer takes possession of goods.

Front 23

Consignment

Back 23

An arrangement in which a seller delivers goods to a buyer to sell. Title and risk of loss of goods pass to buyer when they take possession of goods.

Front 24

cosignor

Back 24

seller

Front 25

cosignee

Back 25

buyer

Front 26

How can a seller breach a sales contract?

Back 26

If he or she delivers nonconforming goods to the buyer.

Front 27

If a seller delivers nonconforming goods what can the seller do if they are highly nonconforming?

Back 27

If they can reject them risk of loss remains with seller until:
1. Defect or deformity is cured.
2. Buyer accepts nonconforming goods.

Front 28

A buyer can breach a sales contract in 3 ways:

Back 28

1. Refuses delivery of conforming goods.
2. Repudiates the contract.
3. Otherwise breaches the contract.

Front 29

When a buyer breaches a contract who bears the risk?

Back 29

The risk of loss normally passes to him and he bears the risk of any loss of any goods identified in the contract. BUT only liable for loss in excess of insurance recovered by seller.

Front 30

Can leasor and lessee decide who has risk of loss?

Back 30

yes

Front 31

If parties do not agree on who bears risk for leases, what 3 rules does UCC have?

Back 31

1. In ordinary lease, if lessor is a merchant, risk of loss passes to lessee on receipt of goods.
2. In finance lease, supplier is a merchant, risk of loss passes to lessee on receipt of goods.
3. If tender of delivery of goods fails to conform to lease contract, risk of loss remains with lessor until acceptance.

Front 32

void title

Back 32

A situation in which a thief acquires no title to goods they steal. Real owner can reclaim goods from purchaser or lessee

Front 33

voidable title

Back 33

A title that a purchaser has if the goods were obtained by fraud, a check that is later dishonored, or impersonation of another person.

Front 34

good faith purchaser for value

Back 34

A person to whom good title can be transferred from a person with a voidable title. The real owner cannot reclaim goods from a good faith purchaser for value because they have paid sufficient consideration to the person they honestly believe owns those goods.

Front 35

good faith subsequent lessee

Back 35

a person to whom a lease interest can be transferred from a person with voidable title. The real owner cannot reclaim the goods from lessee until lease expires.

Front 36

Buyer in the ordinary course of business

Back 36

A person who in good faith and without knowledge that the sale violates the ownership or security interests of a third party buys goods in the ordinary course of business from a person in the business of selling goods of that kind. A buyer in the ordinary course of business takes the goods free of any third party interest in the goods.