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This entry was published on 2014-12-26
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SECTION 2-401
Passing of Title; Reservation for Security; Limited Application of This Section
Uniform Commercial Code (UCC) CHAPTER 38, ARTICLE 2, PART 4
Section 2--401. Passing of Title; Reservation for Security; Limited

Application of This Section.

Each provision of this Article with regard to the rights, obligations
and remedies of the seller, the buyer, purchasers or other third parties
applies irrespective of title to the goods except where the provision
refers to such title. Insofar as situations are not covered by the other
provisions of this Article and matters concerning title become material
the following rules apply:

(1) Title to goods cannot pass under a contract for sale prior to
their identification to the contract (Section 2--501), and unless
otherwise explicitly agreed the buyer acquires by their identification a
special property as limited by this Act. Any retention or reservation by
the seller of the title (property) in goods shipped or delivered to the
buyer is limited in effect to a reservation of a security interest.
Subject to these provisions and to the provisions of the Article on
Secured Transactions (Article 9), title to goods passes from the seller
to the buyer in any manner and on any conditions explicitly agreed on by
the parties.

(2) Unless otherwise explicitly agreed title passes to the buyer at
the time and place at which the seller completes his performance with
reference to the physical delivery of the goods, despite any reservation
of a security interest and even though a document of title is to be
delivered at a different time or place; and in particular and despite
any reservation of a security interest by the bill of lading

(a) if the contract requires or authorizes the seller to send the

goods to the buyer but does not require him to deliver them

at destination, title passes to the buyer at the time and

place of shipment; but

(b) if the contract requires delivery at destination, title

passes on tender there.

(3) Unless otherwise explicitly agreed where delivery is to be made
without moving the goods,

(a) if the seller is to deliver a tangible document of title,

title passes at the time when and the place where he delivers

such documents and if the seller is to deliver an electronic

document of title, title passes when the seller delivers the

document; or

(b) if the goods are at the time of contracting already

identified and no documents of title are to be delivered,

title passes at the time and place of contracting.

(4) A rejection or other refusal by the buyer to receive or retain the
goods, whether or not justified, or a justified revocation of acceptance
revests title to the goods in the seller. Such revesting occurs by
operation of law and is not a "sale".