Exam 21: Transfer of Title and Risk of Loss

Duncan Supply has consigned goods to Huffman Hardware. Huffman's creditors may not take possession of the consigned goods to satisfy their claims against Huffman.

Goods must be both existing and identified to the contract before any interest in them can pass.

Growingreen, a gourmet fresh food store that sells only the highest quality fruits, orders 100 lbs. of peaches from Western Fruits "on approval." Growingreen has never dealt with Western before this transaction. The peaches arrived on Saturday, but the owners of Growingreen were too busy to open the crates. Sunday they are closed. Monday at 4 p.m., they opened the boxes and inspected the peaches. They did not meet the high standards of Growingreen, so they nailed the crates shut and ordered a truck to return them the next day. They arrived at Western on Thursday, totally spoiled, a week after they were sent. This is the first time Western knew they were not being accepted. Who is responsible for the damages to the peaches?

Under a shipment contract, the seller passes title to the buyer when the goods arrive.

Title to existing, identified goods can pass whenever the parties agree it will pass.

With regard to Article 6 of the Uniform Commercial Code, which of the following is accurate?

In a lease, the lessee obtains the right to possess and use the goods for a period of time in return for consideration, but title does not pass.

Article 6 of the Code does not:

a. What is an insurable interest? At what point in a sales transaction does the buyer get an insurable interest? b. Is the buyer the only one who has an insurable interest in the goods? Is it possible for both the buyer and the seller to simultaneously hold an insurable interest? Explain.