Quiz 24: Title and Risk of Loss
a) True. The important point is seller is not a merchant. For a non-merchant seller, the title (and risk of loss) is passed to buyer upon tender of delivery, which only require that the goods be held for the buyer. This differs from delivery, which usually occurs when good arrives at buyer's premises. b) False. Formation of the contract doesn't mean that title is passed, seller must tender delivery. c) False. Since, seller is merchant title of good passed to buyer upon tender of delivery. d) False. Since, seller is merchant title of good passed to buyer upon tender of delivery.
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.
a) False. Both parties don't need to be merchants. b) False. The purpose for purchase doesn't define sale on approval. c) True. A sale on approval allows buyer to try or demo a good before actually accepting it; title remains with title until acceptance ("approval") by buyer by confirmation or keeping the good after expiration of trial period. d) False. Buyer doesn't have title to good until he "approve" of it by accepting the good by confirmation or keeping the good after expiration of trial period.