Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts

تمرين 14

FACTS Martin entered into a written agreement with Melland's, Inc., a farm implement dealer, to purchase a truck and attached haystack mover. According to the contract, Martin was to trade in his old truck and haystack mover unit, to mail or bring the certificate of title to the old unit to Melland's within a week, and to retain the use and possession of the old unit until Melland's had the new one ready. The contract contained no provision allocating the risk of loss of the trade-in unit. After Martin mailed the certificate to Melland's, but while he still had possession of the trade-in unit itself, the unit was destroyed by fire. Martin then sued to compel Melland's to bear the loss of the trade-in, claiming that title had passed to Melland's before the destruction of the old unit. The district court dismissed the cause of action, and Martin appealed.
DECISION Judgment for Melland's Inc. affirmed.
OPINION Erickstad, C. J. Thus the concept of title under the U.C.C. is of decreased importance. *** No longer is the question of title of any importance in determining whether a buyer or seller bears the risk of loss.
***
Thus, the question of this case is not answered by a determination of the location of title, but by the risk of loss provisions in [U.C.C.§ 2-509]. Before addressing the risk of loss question in conjunction with [U.C.C. § 2-509], it is necessary to determine the posture of the parties with regard to the trade-in unit, i.e., who is the buyer and the seller and how are the responsibilities allocated. It is clear that a barter or trade-in is considered a sale and is therefore subject to the Uniform Commercial Code. [Citations.] It is also clear that the party who owns the trade-in is considered the seller. [U.C.C. § 2-304], provides that the ''price can be made payable in money or otherwise. If it is payable in whole or in part in goods each party is a seller of the goods which he is to transfer.'' [Citations.]
Martin argues that he had already sold the trade-in unit to Melland's and, although he retained possession, he did so in the capacity of a bailee (apparently pursuant to [U.C.C. § 2-509(2)]). White and Summers in their hornbook on the Uniform Commercial Code argue that the seller who retains possession should not be considered a bailee within Section 2-509.
***
The courts that have addressed this issue have agreed with White and Summers. [Citations.] It is undisputed that the contract did not require or authorize shipment by carrier pursuant to Section [2-509(1)]; therefore, the residue section, subsection 3, is applicable:
''In any case not within subsection 1 or 2, the risk of loss passes to the buyer on his receipt of the goods if the seller is a merchant; otherwise the risk passes to the buyer on tender of delivery.''
Martin admits that he is not a merchant; therefore, it is necessary to determine if Martin tendered delivery of the trade-in unit to Melland's.
***
It is clear that the trade-in unit was not tendered to Melland's in this case. The parties agreed that Martin would keep the old unit ''until they had the new one ready.''
***
We hold that Martin did not tender delivery of the tradein truck and haystack mover to Melland's pursuant to [U.C.C. § 2-509 ]; consequently, Martin must bear the loss.
INTERPRETATION In a sale involving a nonmerchant seller, the risk of loss stays with the seller until the goods are tendered to the buyer.
ETHICAL QUESTION Did the court fairly decide this case? Explain.
CRITICAL THINKING QUESTION When should risk of loss pass in this type of situation? Explain.