LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 14 Ownership and Risk of Loss in Sales Transfer of Ownership Risk of Loss and Insurable Interest in Sales

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 14 SLIDE 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

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 14 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

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 14 SLIDE 4 CHECKPOINT Besides the owner, who may transfer ownership of goods?     

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 14 SLIDE 5 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 Seller tenders goods at place of sale

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 14 SLIDE 6 CHECKPOINT What two characteristics must goods have in order to have ownership of them transferred?     

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 14 SLIDE Risk 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

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 14 SLIDE 8 WHEN DOES RISK OF LOSS TRANSFER? Goods are shipped by carrier Goods are held by a bailee Contract is breached after goods are identified Other situations

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 14 SLIDE 9 CHECKPOINT Explain the point at which the risk of loss transfers from seller to buyer when the seller ships the goods by carrier.     

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 14 SLIDE 10 WHEN DOES INSURABLE INTEREST TRANSFER? Buyer has right to: Inspect goods at a reasonable hour Compel delivery if seller wrongfully withholds delivery Collect damages from third persons who take or injure the goods

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 14 SLIDE 11 CHECKPOINT When does a buyer obtain an insurable interest in the goods?     

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 14 SLIDE 12 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

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 14 SLIDE 13 CHECKPOINT 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?     

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 14 SLIDE 14 PREVENT LEGAL DIFFICULTIES To protect yourself in the actual sales transaction... Remember that ownership of goods will not necessarily prevent transfer of title to them contrary to your wishes when (a)You have authorized others to sell the goods for you. They may violate your instructions. (b)You have been defrauded in a sales transaction and have given a voidable title to the wrongdoer. Before you cancel the contract and try to get your goods back, the wrongdoer can transfer good title to a good faith buyer. (c)You have allowed the person who sold to you to keep possession of your goods. The person who sold them to you might sell them again. Continued on the next slide

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 14 SLIDE 15 PREVENT LEGAL DIFFICULTIES Act promptly in identifying goods to the sales contract and in completing performance. In important sales contracts, specify precisely in writing when title to goods and risk of loss of goods are to transfer. As a buyer or a seller, carry adequate insurance when appropriate to cover any insurable interest you may have in goods that are the subject matter of the sales contract. Assure yourself of the integrity and financial responsibility of buyers before selling goods to them on credit, on sale or return, or on approval. When the buyer’s credit is questionable, sell for cash or on a COD basis.