Chapter 21 Flashcards
Identification
In a sale of goods, the express designation of the specific goods provided for in the contract
Before any interest in specific goods can pass from the seller to buyer goods must be
- In existence
2. Identified as the specific goods designated in the contract
Fungible goods
Goods that are alike by physical nature, by agreement, or by trade usage. Examples: wheat, oil, wine that are identical in type and quality
Shipment contract
A contract in which the seller is required to ship the goods by carrier. The buyer assumes liability for any losses or damage to the goods after they are delivered to the carrier. Generally all contracts are assumed to be shipment contracts unless otherwise stated
Destination contract
A contract in which the seller is required to ship the goods by carrier and deliver them at a particular destination. The seller assumes liability for any losses or damage to the goods until they are tendered at the destination specified in the contract
Document of title
Paper exchanged in the regular course of business that evidences the right to possession of goods (ex: a bill of lading or a warehouse receipt)
When a title document is required
title passes to the buyer when and where the document is delivered
When a title document is not required
Title passes at the time and place the sales contract is made
Insolvent
Under the UCC, a term describing a person who ceases to pay his debts in the ordinary course of business or cannot pay his debts as they become due or is insolvent within the meaning of federal bankruptcy law
Good faith purchaser
A purchaser who buys without notice of any circumstance that would put a person of ordinary prudence on inquiry as to whether the seller has valid title to the goods being sold
Entrustment rule
The transfer of goods to a merchant who deals in goods of that kind and who may transfer those goods and all rights to them to a buyer in the ordinary course of business
Buyer in the ordinary course of business is
- Buys in good faith
- goods are purchased without knowledge that the sale violates the rights of another person
- The goods are purchased in the ordinary course from a merchant in the business of selling goods of that kind
- The sale to that person comports with the usual or customary practices in the kind of business in which the seller is engaged
Bailment
A situation in which the personal property of one person (a bailor) is entrusted to another (a Bailee) who is obligated to return the bailed property to the bailout or dispose of it as directed
When risk of loss passes
- The buyer receives a negotiable document of title for the goods
- The Bailee acknowledges the buyers right to possess the goods
- The buyer receives a nonnegotiable document of title and the buyer has had a reasonable time to present the document to the Bailee and demand the goods. If the Bailee refuses to honor the document, the risk of loss remains with the seller
Sale on approval
A type of conditional sale in which the buyer may take the goods on a trial basis. The sale becomes absolute only when the buyer approves of or is ratified with the goods being sold
