1. Ownership and Risk of Loss in Sales
Chapter 14
Ownership and Risk of Loss in Sales

2. Who may transfer the ownership of goods?
•Brad stole an iPhone from Jack’s car. He then sold it to Ian, who knew it was stolen.
•Did either Brad or Ian receive good title to the cassette player?
- No, neither received title and Ian is guilty of receiving stolen property because he knew it was stolen
- The true owner of goods is allowed to sell them for the buyer to have a good title.

3. Definitions Title is defined as:
A bundle of rights associated with the ownership of the goods in question.
A Good Title is defined as:
As goods transferred with the title or obtained in “Good Faith” meaning that the buyer obtained the goods but not the title but was not aware that the title was not passed to the buyer.

4. Types of Goods
Existing Goods: Goods that are currently in the ownership of the of the seller
Identified Goods: Goods that are identified as existing goods and identified as the goods in the contract
Future Goods: Goods that are not Existing or Identified are considered future goods, which means that it is to be contracted to sell not to be sold
Fungible Goods: The UCC defines fungible goods that can be traded in equal value relative to another good, examples are gold, warehouses filled with the same canned goods

5. What does Ownership Mean?
The Owner is the one who legally owns the title and bears the risk of loss of sales, However this also gives the person the rights granted by the title:
Exclusive Possession
Exclusive Use and Enclosure
Acquisition
Conveyance, including bequest
Access Easement
Hypothecation
Partition

6. Transfer of Ownership
As a General Rule Only the Owner may legally transfer the Ownership of the goods.
However there are exception to this general rule:
Person Authorized to transfer ownership I.E
Salespeople, Auctioneers or anyone with permission from the owner
Innocent Third Party Buyers
Holders of the Negotiable documents of the title I.E
warehouse receipts, airbills, ship bills or any other bills proving transport of goods
Merchants with possession of sold goods until pick up

7. Transfer of Ownership
Once the goods are existing and identified the contract normally determines when the title is passed and thus the risk of loss is transferred along the title
Generally the title is passed when the contract is ratified however the contract can determine when the title is passed also some common situations determine when the title is passed

8. Common Situations when title is passed
Seller Delivers good to location
The title is passed when the goods reach designated location
Seller ships, but does not deliver, goods to destination
The title is passed as soon as the goods are shipped off
Seller delivers Document of Title
The title is passed because the documents of the title is given
Seller tenders goods at place of sale
The title is passed when the goods is sold at the place of sale

9. Transfer of Ownership
If the contract does not determine when the title is passed then and an issue arises the situation is brought up to the UCC for a solution

10. 13-2 Risk of Loss and Insurable Interest in Sales
Who gets the responsibility of lost?

11. Risk of Loss
A term to define who bears the responsibility of the loss, It is the person who bears the title is subjected to the risk of loss. This does not necessarily mean that the buyer automatically bears the risk of loss as the person potentially did not have the title
Examples of such Scenarios are:
The Title is not passed to the buyer yet
Holders of the Negotiable Documents of the Title

12. Ownership and Risk of loss of Sales
Goods Shipped By Carrier:
FOB(Free on board)
Seller agrees to ship it to a certain location as soon as it arrives the title is passed on to the buyer
CIF(Cost, Insurance, Freight)
Seller contracts for adequate insurance as soon as it reaches the shipper then the title is passed to the buyer

13. Transferring Risk of Loss
Contract breached after goods are identified:
Seller delivers item so faulty that the buyer can reject it, seller still retains title until the defect is fixed
Insurable Interest
Buyer also have the right to have insurance on the goods being delivered when the goods is identified as her’s

14. Transfer of Rights in Specific Sales
Cash and Carry Sales
-Most common sale, buyer pays for goods and gets title on payment and receives the goods
COD sales
-Title passes once the goods are paid for
Bulk Transfer
-Large transfer of Goods, requires notice to the UCC to prevent dishonest merchant
Sale or Return
-Completed sale in which the buyer has the option to return the goods

15. Transfer of Rights in specific sales
Sale on Approval
-Buyer gains title upon approval of the goods
Sale of an Undivided interest
-Buyer gains title when the buyer pays a fraction interest of the cost
Auction
-Technically not a sale, but a reservation for the sale of the goods