Chapter 17 - Title, Risk, and Insurable Interest Flashcards Preview

Business Law for Accountants > Chapter 17 - Title, Risk, and Insurable Interest > Flashcards

Flashcards in Chapter 17 - Title, Risk, and Insurable Interest Deck (12):
1

buyer in the ordinary course of business

- a buyer who, in good faith and without knowledge that the sale violates the ownership rights or security interest of a third party in the goods, purchases goods in the ordinary course of business from a person in the business of selling goods of that kind

2

destination contract

- a contract in which the seller is required to ship the goods by carrier and deliver them at a particular destination
- the seller assumes liability for any losses or damage to the goods until they are tendered at the destination specified in the contract

3

document of title

- paper exchanged in the regular course of business that evidences the right to possession of goods (for example, a bill of lading or a warehouse receipt)

4

entrustment rule

- the transfer of goods to a merchant who deals in goods of that kind and who may transfer those goods and all rights to them to a buyer in the ordinary course of business [UCC 2-403(2)]

5

fungible goods

- goods that are alike by physical nature, by agreements or by trade usage
- examples of fungible goods are wheat, oil, and wine that are identical in type and quality

6

good faith purchaser

- a purchaser who buys without notice if any circumstance that would put a person of ordinary prudence on inquiry as to whether the seller has valid title to the goods being sold

7

identification

- in a sale of goods, the express designation of the specific goods provided for in the contract

8

insolvent

- under the Uniform Commercial Code, a term describing a person who ceases to pay "his debts in the ordinary course of business or cannot pay his debts as they become due or is insolvent within the meaning of federal bankruptcy law" [UCC 1-203(23)]

9

insurable interest

- an interest either in a person's life or well-being or in property that is sufficiently substantial that insuring against injury to (or the death of) the person or against damage to the property does not amount to a mere wagering (betting) contract

10

sale on approval

- a type of conditional sale in which the buyer may take the goods on a trial basis
- the sale becomes absolute only when the buyer approves (or is satisfied with) the goods being sold

11

sale or return

- a type of conditional sale in which the title and possession pass from the seller to the buyer; however the buyer retains the option to return the goods during a specified period even though the goods conform to the contract

12

shipment contract

- a contract in which the seller us required to shop the goods by carrier
- the buyer assumes liability for any losses or damage to the goods after they are delivered to the carrier
- generally, all contracts are assumed to be shipment contacts if nothing to the contrary is stated in the contract