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when the bailee acknowledges the buyer’s right to possess the goods (some courts, not all, hold that the acknowledgement must be to the buyer); or after the buyer receives a nonnegotiable document of title or other written direction to deliver, provided the buyer has had a reasonable time to deliver the document or the order for delivery to the bailee.
[U.C.C. §§ 2-503(4)(b), 2-509(2) (1951); 2 Hawkland UCC Series § 2-509:3, Westlaw (database updated June 2021); Seller’s Tender of Delivery and Shipment of Goods, infra .]
4. Rule in Cases Not Involving Shipment Contracts, Destination Contracts, Sale on Approval, or Goods in a Bailee’s Possession In cases that do not involve shipment contracts, destination contracts, sale on approval, or goods in a bailee’s possession, when risk of loss passes depends on whether the seller is a merchant. If the seller is a merchant, risk of loss passes when the buyer receives the goods. If the seller is not a merchant, risk of loss passes when delivery is tendered. [U.C.C. § 2-509(3) (1951).] 5. Risk of Loss in a Sale on Approval Unless otherwise agreed, in a sale on approval: (1) the buyer may return the goods even if they conform to the contract , and (2) the goods are furnished primarily for the buyer’s use. If the buyer returns the goods, it is at the seller’s risk and expense, and the goods remain the seller’s property until the buyer accepts them. Thus, the goods are not subject to the buyer’s creditors’ claims until that time. Section 2-327 sets forth special rules on risk of loss in a sale on approval. Namely, even if the goods are identified to the contract, the risk of loss remains with the seller until the buyer accepts the goods. Finally, the buyer must accept or return the goods within a reasonable time. [U.C.C. §§ 2-326(1)(a), 2-327(1)(a) (1951); Int’l Harvester Co. v. The Bank of Cal., N.A. , 632 P.2d 522 (Wa. Ct. App. 1981); 2 Hawkland UCC Series § 2-326:2, Westlaw (database updated June 2021).] Note : Ordinary retail sales to consumers, such as sales through mail-order catalogues, are generally not sales on approval, even if the buyer may return the goods for a refund. For a transaction to be a sale on approval, the parties should make clear that the seller is to bear the risk of loss during transit and until the buyer accepts the goods. [ See Wilson v. Brawn of Ca., Inc. , 132 Cal.App.4th 549 (Cal. Ct. App. 2005). But see First Coinvestors, Inc. v. Coppola , 388 N.Y.S.2d 833 (N.Y. Dist. Ct. 1976); DAK Indus., Inc. v. Dot-Line Transportation (In re DAK Indus., Inc.) , 195 B.R. 129 (Bankr. C.D. Cal. 1995).]
Example : A farmer contracted to buy a tractor from a dealership. Per the contract, the farmer could
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