University:
Indiana University Bloomington
Course:
Financial and Managerial Accounting: Information for Decisions - John J. Wild
Academic year:

2024
Views:

425

Pages:

2
Author:

bratrochanter

Summary of Appendix B: UCC Article 2 - Detailed Provisions Delivery Terms and Shipment 1. C.I.F. and C. & F. Terms (§ 2–320): o C.I.F. (Cost, Insurance, Freight): Seller covers the cost of goods, freight, and insurance to the destination, providing necessary shipping documents to the buyer. o C. & F. (Cost and Freight): Similar to C.I.F., but without the obligation for the seller to provide insurance. o Buyer must make payment against the documents tendered. 2. "Ex-Ship" Delivery (§ 2–322): o Delivery occurs when goods are unloaded from the ship. o Risk of loss transfers to the buyer upon unloading. 3. "No Arrival, No Sale" (§ 2–324): o Seller is not obligated for the arrival of goods unless they caused the non-arrival. If goods deteriorate or partially arrive, the buyer may proceed as if a casualty occurred. 4. Form of Bill of Lading (§ 2–323): o Requires proper documentation for overseas shipments. o Incomplete document sets may require indemnity for acceptance. 5. "Letter of Credit" Terms (§ 2–325): o A buyer’s failure to provide an agreed letter of credit is a breach. o Delivery of a proper letter of credit suspends payment obligations unless dishonored. Sales with Return or Approval 1. Sale on Approval and Sale or Return (§ 2–326): o Sale on Approval: Goods are primarily for use, and title/risk of loss remains with the seller until acceptance. o Sale or Return: Goods are for resale, and the buyer holds title/risk of loss, subject to creditor claims. 2. Special Incidents (§ 2–327): o Risk and title transfer differ between "approval" (upon acceptance) and "return" (held by buyer). o Returning goods is at the buyer’s risk and expense in "sale or return" transactions. Auctions 1. Sale by Auction (§ 2–328): o Auctions are "with reserve" unless explicitly stated otherwise. o Withdrawal of goods is permitted in "with reserve" auctions until the sale is finalized. o Sellers or agents bidding without notice of liberty for such bids allows buyers to void the sale or claim the last good faith bid. Title and Risk of Loss 1. Passing of Title (§ 2–401): o Title transfers based on explicit agreements or when the seller completes delivery obligations. o Rejection or revocation of acceptance by the buyer reverts title to the seller. 2. Buyer’s Right to Goods (§ 2–502): o Buyers can claim goods paid for if the seller fails to deliver or becomes insolvent. 3. Power to Transfer and Entrusting (§ 2–403): o A person with voidable title can transfer good title to a good faith purchaser. o Entrusting goods to a merchant grants them the power to sell those goods in the ordinary course of business. Identification and Insurable Interest 1. Identification of Goods (§ 2–501): o Identification occurs when goods are designated to a contract, granting the buyer a special property interest. o This includes goods in existence or to be manufactured or grown. Key Principles 1. Risk Allocation (§ 2–319–2–324): o Risk of loss is heavily influenced by terms like C.I.F., C. & F., "ExShip," or "No Arrival, No Sale." o Documentation and delivery terms dictate obligations and timing. 2. Protection for Good Faith Purchasers: o Buyers in ordinary business transactions are protected against claims of ownership, provided they act in good faith.