Essentials Of Business Law
Chapter 14
Transfer Of Title
McGraw-Hill/Irwin
Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Right Of Ownership
The laws of our country recognize the right of
individuals to own property
Title relating to property is intangible
 Title give the owner the right to possess it
Sale of property
 Owner’s sell not only the property but also the
intangible right of ownership called title
Certificate of title
 Is not title but rather proof of title
A department store bill of sale can be used as
proof of ownership
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Kinds Of Property
Real property
 Land and all articles permanently attached to it
Personal property
 All property other than real property
 Can be tangible or intangible
The Uniform Commercial Code only applies to
personal property
Real property is governed by a separate branch
of law
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Bill Of Sale
A written statement that the seller is
passing ownership to the buyer
The description of the goods should be as
complete as possible
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Bill Of Lading
A receipt for goods to be shipped
 Acknowledges that such goods have been received
 Indicates agreement that the goods will be
transported to the destination specified
Prepared by the common carrier
 Trucking firm, a railroad, or an ocean liner
An airbill is prepared for goods shipped by air
The document is signed by the common carrier
upon acceptance of the goods for shipment
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Bill Of Lading
Two kinds of bills of lading
 Straight bill of lading
• A receipt that is not negotiable
 Order bill of lading
• A receipt that is negotiable
• Proof of title and can be used to transfer title from
one person to another
• Covered by Article 7 of the UCC
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Warehouse Receipt
Goods involved are being stored
Two kinds of warehouse receipts
 Nonnegotiable warehouse receipt
• A receipt that is not negotiable
 Negotiable warehouse receipt
• A receipt that is negotiable
• Proof of title and can be used to transfer title from
one person to another
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When Title Passes
Intent
 When the parties intend for it to pass
Specific time
 When the parties unconditionally agree to sell
specific goods that are in a deliverable state
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Conditional Sale
Contract provisions that specify conditions
that must be met by one of the parties
 Title does not generally pass until these
conditions are met
Two types of conditions found in contract
 Conditions precedent
• Specific conditions must be met before title passes
 Conditions subsequent
• Specific conditions must be met after title has
passed
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Stolen And Lost Goods
A thief has no title to goods he or she has stolen
 Cannot pass title to anyone else
 An innocent purchaser of stolen items would have to
return them to the original owner
A person who finds an article has good title
against anyone except the true owner
 Those purchasing found items must be prepared to
surrender the articles to the true owner
 Proving ownership of a lost article can be difficult
• It is recommended to retain receipts with model and serial
numbers of valuable personal property
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Transfer Of Title By
Estoppel
Estoppel
 A legal bar to the use of contradictory words
or acts in asserting a claim against another
 The title holder is legally prevented from
claiming ownership of the property
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Transfer Of Title By
Estoppel
For title to pass by estoppel, the purchaser
must be able to prove:
 The purchase was made in good faith
• Buyer believes the seller is the real owner or
one appointed to act for the real owner
 The purchase was made from one in rightful
possession
 Value was given by the buyer for that which he
or she now claims ownership
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Examples Of Estoppel
Transfer of money or commercial paper
made out to bearer
Transfer of property to a seller dealing in
the same type of goods
Transfer of property to a seller permitted to
appear as the real owner
Transfer of proof of ownership to an
unauthorized seller
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Transfer Of Title To
Fungible Goods
Goods that are sold by weight or measure
 Wheat, sugar, flour, gasoline, oil
The following rules apply to determine when title
to fungible goods passes
 If goods are ordered without specifying the location
from which they are to come
• Title passes when the goods become clearly identifiable
 If a buyer orders a specific quantity of fungible goods
from a specific mass
• Title passes at once, before the portion ordered is separated
from the rest
• The buyer acquires immediate title to an undivided share of
the specific mass because the units of oil are all the same
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Chapter 14-14