Quiz 24: Title and Risk of Loss


Refer to the case Schock v Ronderos (394 NW2d 697). Additional Facts Trial court held for defendant, the sellers, arguing that title passed to buyer; hence, buyer bears risk of loss. Buyer appealed the decision. The issue is whether title remained with seller (thence buyer would have a favorable judgment) or transferred to buyer. Relevant Terms, Laws, and Cases NDCC Section 41-02-57 - North Dakota's Commercial Code concerning risk of loss. For sale by a non-merchant (as in this case), buyer bears risk on tender of delivery. Opinion Higher Court affirmed the decision, buyer assumes risk of loss. The court looked at the performance done by sellers for the sale to consider whether there was tender of delivery. It doesn't require for tender of delivery to be actually delivered to the buyer. The court argued that tender of delivery occurred when the sellers prepped the mobile home and let the buyer put in place all necessary equipments to remove the mobile home. Hence, the sellers tendered delivery and buyer must assume risk of loss.

Refer to the case Alamo Rent-A-Car v Mendenhall (937 P2d 69). Additional Facts The issue on appeal is whether the buyer, defendant, had gained the title being sold as a vehicle stolen from the plaintiff, original owners, a car rental firm. Relevant Terms, Laws, and Cases Bona fide purchaser - is a buyer that purchased a property in good faith, not knowing the dispute on the property's title. Title can in some cases be passed to bona fide purchasers. NRS 104.2403 - Nevada statute that allow buyers to gain title of a good, even if good were obtained by larceny or fraud, as long as buyers made purchase in good faith and there is a voidable title. Opinion Higher court reversed the decision. The car belongs to the plaintiff. The higher court conceded that the buyers could be bona fide, good faith purchasers, of the car. However, the other condition of the Nevada statute requires bona fide purchasers to have bought a good with voidable title; the court argued the quick title acquired by the thief was not a voidable title. The court based their decision on the State law, where the quick title was obtained, it State law remarks that a title is not voidable if it was acquired by theft. Hence, the buyers do not have a valid title to the car. It should be returned to plaintiff.

Refer to the case DeWeldon, Ltd v McKean (125 F3d 24). Case Issue Trial court held for the defendant, buyer of the paintings. The plaintiff, painting's alleged owners, appealed their decision. Relevant Terms, Laws, and Cases R.I. Gen. Laws § 6A-2-403 - is a Rhode Island's state statute (adopted from UCC) concerning sales of goods. It states that when an owner entrusts their goods to a merchant, the merchant may sell the goods to a buyer, during ordinary course of business-buyer will gain title of the goods. Opinion Higher court affirmed the decision. Buyer has title to the art, even though he did not buy them from the owner directly. The higher court based their decision on Rhode Island's law (see above), buyer may gain title of goods sold from merchant, in which the goods was entrusted to the merchant by the goods actual owners. The issue which the court decided was whether the art was entrusted to the seller, the artist, and whether the seller was a merchant. The court argued that it was entrusted to the seller, the owner allowed seller to retain possession of the goods and kept it at the seller's home. Furthermore, the court decided that seller was a merchant, as an artist the seller was someone who has expertise in the field regarding the transaction.

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