2401-2403

COMMERCIAL CODE
SECTION 2401-2403




2401.  Each provision of this division 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 division 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 2501), and unless
otherwise explicitly agreed the buyer acquires by their
identification a special property as limited by this code. 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 division on secured transactions (Division
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."



2402.  (1) Except as provided in subdivisions (2) and (3), rights of
unsecured creditors of the seller with respect to goods which have
been identified to a contract for sale are subject to the buyer's
rights to recover the goods under this division (Sections 2502 and
2716).
   (2) A creditor of the seller may treat a sale or an identification
of goods to a contract for sale as void if as against him or her a
retention of possession by the seller is fraudulent or void under any
rule of law of the state where the goods are situated, except that
retention of possession in good faith and current course of trade by
a merchant-seller for a commercially reasonable time after a sale or
identification is not fraudulent or void.
   (3) Nothing in this division shall be deemed to impair the rights
of creditors of the seller:
   (a) Under the provisions of the division on secured transactions
(Division 9); or
   (b) Where identification to the contract or delivery is made not
in current course of trade but in satisfaction of or as security for
a pre-existing claim for money, security or the like and is made
under circumstances which under any rule of law of the state where
the goods are situated would apart from this division constitute the
transaction a fraudulent transfer or voidable preference.



2403.  (1) A purchaser of goods acquires all title which his
transferor had or had power to transfer except that a purchaser of a
limited interest acquires rights only to the extent of the interest
purchased. A person with voidable title has power to transfer a good
title to a good faith purchaser for value. When goods have been
delivered under a transaction of purchase the purchaser has such
power even though
   (a) The transferor was deceived as to the identity of the
purchaser, or
   (b) The delivery was in exchange for a check which is later
dishonored, or
   (c) It was agreed that the transaction was to be a "cash sale," or
   (d) The delivery was procured through fraud punishable as
larcenous under the criminal law.
   (2) Any entrusting of possession of goods to a merchant who deals
in goods of that kind gives him power to transfer all rights of the
entruster to a buyer in ordinary course of business.
   (3) "Entrusting" includes any delivery and any acquiescence in
retention of possession for the purpose of sale, obtaining offers to
purchase, locating a buyer, or the like; regardless of any condition
expressed between the parties to the delivery or acquiescence and
regardless of whether the procurement of the entrusting or the
possessor's disposition of the goods have been such as to be
larcenous under the criminal law.
   (4) The rights of other purchasers of goods and of lien creditors
are governed by the divisions on secured transactions (Division 9),
bulk transfers (Division 6) and documents of title (Division 7).