1. 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 1 14-2Risk 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

2. 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 2 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

3. 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 CHECKPOINT Explain the point at which the risk of loss transfers from seller to buyer when the seller ships the goods by carrier.     

4. 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 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

5. 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 CHECKPOINT  When does a buyer obtain an insurable interest in the goods?     

6. 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 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

7. 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 7 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?     

8. 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 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

9. 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 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.