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Chapter 19
Title to Goods and Risk of Loss
VI. Answers to Critical Legal Thinking Cases
19.1 Conditional Sale
Prewitt wins. Prewitt is not responsible for the loss of the coins in the mail. The delivery of coins by seller
Numismatic to buyer Prewitt was a “sale on approval.” Under the provisions of the Uniform Commercial
Code (UCC) relating to risk of loss in a sale on approval contract, the risk of loss remains with the seller.
Numismatic shipped the coins to Prewitt through the U.S. Postal Service and Numismatic gave no
19.2 Identification of Goods
Yes, the fire truck was identified to the sales contract. Until a seller identifies goods to a sales contract,
title to the goods remains with the seller. Identification means that the goods in the contract have been
distinguished from the seller’s other goods. Identification can occur in different ways. The goods sold can
be specifically named in the contract. In the case of a good that is part of a large mass of goods, the good
is identified when the seller explicitly separates or designates the good sold to the buyer. In this case, the
19.3 Stolen Goods
faith purchaser of the goods, they could not obtain valid title to them. The court held that the original
owner of the jewelry, Michaels Jewelers, had title to the goods and returned the jewelry to them. United
19.4 Passage of Title
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with a forged check, he received voidable title to the car. However, the court also determined that Hyken
was not a good faith purchaser for value. Although there was some question as to whether Hyken had
(Court of Appeals of Missouri)
19.5 Entrustment Rule
Ryan has a valid title to the house. The UCC provides that: where an owner entrusts the possession of his
prefabricated homes, they were able to transfer title to Ryan as a buyer in the ordinary course of business.
Ryan now holds title to the home and Fuqua cannot reclaim it. Fuqua Homes, Inc. v. Evanston Bldg. &
Loan Co., 370 N.E.2d 780, 1977 Ohio App. Lexis 6968 (Court of Appeals of Ohio)
19.6 Risk of Loss
Knitwear placed the yarn in the possession of the truck, the risk of loss passed from Knitwear to All
America. Because the yarn was stolen when All America bore the risk of loss, All America must pay for
the yarn. A. M. Knitwear v. All America, Etc., 41 N.Y.2d 14, 359 N.E.2d 342, 390 N.Y.S.2d 832, 1976
N.Y. Lexis 3201 (Court of Appeals of New York)
VII. Answer to Ethics Case
19.7 Ethics Case
Therefore, the farmers received good title. Mohr and Loyd did not act ethically in this case. They took
tractors owned by Executive but that were left in their possession and sold the tractors to farmers
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