LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 16 Slide 1 The Power to Transfer Ownership Describe various types of goods Discuss who may transfer ownership of goods Explain what is required for transfer of ownership of goods Identify when the ownership of goods has transferred LESSON 16-1 GOALS

LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 16Slide 2 HOT DEBATE What are the legal reasons for your suit? What sort of legal arguments could you anticipate the attorney for the church making? Why?

LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 16Slide 3 WHO MAY TRANSFER THE OWNERSHIP OF GOODS? Only the true owner of goods may legally transfer ownership of those goods. The buyer of goods receives only property rights that the seller has in the goods and nothing more.

LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 16Slide 4 WHO MAY TRANSFER THE OWNERSHIP OF GOODS? The person who buys stolen goods from a thief receives possession, buy not title, because the thief did not have good title to give. This is true whether the buyer is innocent or knows that the goods were stolen.

LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 16Slide 5 WHO MAY TRANSFER THE OWNERSHIP OF GOODS? Authorized persons Ex: Salespeople and Auctioneers Buyers in a sale induced by fraud Good faith purchaser – innocent third party to a fraudulent transfer of goods who gives value to the goods and acquires rights in them.

LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 16Slide 6 WHO MAY TRANSFER THE OWNERSHIP OF GOODS? (#6) A buyer may have fraudulently made a contract to buy goods. (#6) That buyer may then sell the goods to a good faith purchaser and the purchaser will have better title to the goods than the fraudulent buyer did. (#6) The original seller must seek damages from the original fraudulent buyer.

LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 16Slide 7 WHO MAY TRANSFER THE OWNERSHIP OF GOODS? Holders of negotiable documents of title In business, certain documents are often used as a substitute for possession of goods. A Holder is a party in possession of commercial paper payable to his or her order or to bearer. (they deemed to have title to the goods)

LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 16Slide 8 WHO MAY TRANSFER THE OWNERSHIP OF GOODS? Merchants with possession of sold goods Occasionally a buyer will allow the merchant seller to temporarily retain possession of the goods after the sale. During this period, the merchant resells and delivers these goods to a good faith purchaser.

LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 16Slide 9 WHO MAY TRANSFER THE OWNERSHIP OF GOODS? (#10) Generally, only the true owner may transfer ownership of goods. (#10) However, persons authorized to do so may also transfer ownership, as may buyers in a sale induced by frauds, holders of negotiable documents of title, and merchants who keep possession of goods they have sold.

LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 16Slide 10 WHAT’S YOUR VERDICT? Did either Brad or Standon receive a good title to the cassette player?

LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 16Slide 11 REQUIREMENTS FOR TRANSFER OF OWNERSHIP For ownership of goods to be transferred in a sale, the goods must be both existing and identified. (#9) Existing goods are physically in existence even though they may not be in a fully assembled and immediately deliverable condition. (owned by the seller) (#9) Identified goods have been specifically designated as the subject matter of a particular sales contract.

LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 16Slide 12 REQUIREMENTS FOR TRANSFER OF OWNERSHIP (#9) Future goods are goods that are not both existing and identified. (#9) Fungible goods are homogeneous or essentially identical in nature and are exceptions to the process of identification.

LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 16Slide 13 REQUIREMENTS FOR TRANSFER OF OWNERSHIP (#7) In many states, ownership and risk of loss in fungible goods pass without selection or identification of specific goods; the buyer therefore becomes the owner at the time of the agreement.

LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 16Slide 14 WHAT’S YOUR VERDICT? Must O’Dell pay for the tuxedos that were set aside?

LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 16Slide 15 WHEN DOES OWNERSHIP TRANSFER? (#11) For ownership of goods to transfer, they must be both existing and identified, unless they are fungible goods in which case they are considered already identified.

LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 16Slide 16 WHEN DOES OWNERSHIP TRANSFER? (#8) It is important to know who the owner is to determine who holds the benefits and burdens of ownership. (#8) Ownership may determine whether money due can be collected. (#8) It also determines who needs to protect the goods from damage or theft by means of insurance.

LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 16Slide 17 WHEN DOES OWNERSHIP TRANSFER? (#12) Seller delivers goods to their destination, ownership transfers on Tender of delivery – to place the goods at the buyer’s disposal or to give notice to the buyer that delivery can be received. (#12) Seller ships, but does not deliver, goods to their destination, ownership passes to the buyer at the time and place of shipment.

LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 16Slide 18 WHEN DOES OWNERSHIP TRANSFER? (#12) Seller delivers document of title, title passes when and where the document is delivered. (#12) If the seller is to tender the goods at the place of sale, title passes at the time and the place where the sales contract is made.

LAW FOR BUSINESS AND PERSONAL USE © SOUTH-WESTERN PUBLISHING Chapter 16Slide 19 WHAT’S YOUR VERDICT? Did a sale take place?