1. Law for Business and Personal Use © Thomson South-Western CHAPTER 13 Ownership and Risk of Loss in Sales 13-1Transfer of Ownership 13-2Risk of Loss and Insurable Interest in Sales

2. Law for Business and Personal Use © Thomson South-Western Chapter 13 Slide 2 13-1 13-1 Transfer of Ownership GOALS Discuss who may transfer ownership of goods Explain what is required for transfer of ownership of goods and when it occurs

3. Law for Business and Personal Use © Thomson South-Western Chapter 13 Slide 3 WHO MAY TRANSFER OWNERSHIP? Authorized persons Buyers in a sale induced by fraud Holders of negotiable documents of title Merchants with possession of sold goods

4. Law for Business and Personal Use © Thomson South-Western Chapter 13 Slide 4 FOCUS Who has the authority to transfer ownership of goods?

5. Law for Business and Personal Use © Thomson South-Western Chapter 13 Slide 5 Besides the owner, who may transfer ownership of goods?

6. Law for Business and Personal Use © Thomson South-Western Chapter 13 Slide 6 REQUIREMENTS FOR OWNERSHIP TRANSFER When does ownership transfer? Common situations Seller delivers goods to their destination Seller ships, but does not deliver, goods to their destination Seller delivers document of title Buyer takes possession at place of sale

7. Law for Business and Personal Use © Thomson South-Western Chapter 13 Slide 7 What two characteristics must goods have in order to have ownership of them transferred?

8. Law for Business and Personal Use © Thomson South-Western Chapter 13 Slide 8 13-2 13-2Risk 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

9. Law for Business and Personal Use © Thomson South-Western Chapter 13 Slide 9 FOCUS Identifying the transfer of risk of loss Seller ships goods by carrier Goods held by bailee Either party breaches after goods identified Goods neither shipped by carrier nor held by bailee

10. Law for Business and Personal Use © Thomson South-Western Chapter 13 Slide 10 WHEN DOES RISK OF LOSS TRANSFER? If seller ships goods by carrier If the goods are held by a bailee If either party breaches after the goods are identified In other cases

11. Law for Business and Personal Use © Thomson South-Western Chapter 13 Slide 11 Explain when the risk of loss transfers from seller to buyer when the seller ships the goods by carrier.

12. Law for Business and Personal Use © Thomson South-Western Chapter 13 Slide 12 WHEN DOES INSURABLE INTEREST TRANSFER? Buyer has right to: Insurable interest Inspect goods at reasonable hour Compel delivery if seller wrongfully withholds delivery Collect damages form third persons who take or injure the goods

13. Law for Business and Personal Use © Thomson South-Western Chapter 13 Slide 13 When does a buyer obtain an insurable interest in the goods?

14. Law for Business and Personal Use © Thomson South-Western Chapter 13 Slide 14 TRANSFER OF RIGHTS AND RISKS IN SPECIFIC SALES Cash-and-carry sales Sales on credit COD sales Sale or return Sale on approval Sale of an undivided interest Auction Bulk transfer

15. Law for Business and Personal Use © Thomson South-Western Chapter 13 Slide 15 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?