Business transactions or activities are characterized by many risks, which can result in mass failure. As a result, parties to any business transaction rely on insurance coverage to protect themselves against any risk, including the damage or loss of property. However, insurance policyholders must have sufficient interest in the insured commodities in order to be accorded a valid policy. Thus, both insurance laws and Uniform Commercial Code (UCC) provide a framework for any transaction or contract that involves the sales or exchange of properties ( Clarkson et al., 2010) . The transaction between Mendoza and Willow Glen involving the sale of broccoli is an example of a scenario involving insurance interests.
Question 1
According to the UCC, an identification can only occur when a given item or good is clearly designated as the subject matter of the transaction or sales ( Clarkson et al., 2010). Normally, in the case of existing items, the identification becomes effective when the contract is signed. However, the identification is likely to delay when the transaction involves future goods. Therefore, in the case of a crop of broccoli, the identification is expected to take place when the crop has been planted and start to grow. Mendoza does not have any interest in broccoli crop when it is yet to be planted in Willow Glen’s one-thousand-acre farm, as Glen may decide not to plant the crop after the agreement. Nonetheless, Mendoza will develop a lot of interests when the plant is already planted, especially when it starts to grow. Thus, based on the UCC, broccoli crop will be identified when it starts to grow.
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The identification is important because it gives parties to the contract, especially buyers or lessee, in this case, Mendoza, the opportunity to insure broccoli crop. Specifically, Mendoza will have sufficient interest in the crop and the right to insure it against any risks such as bad weather or crop failure. Also, identification under UCC is significant as it gives Mendoza the right to claim any damage associated with the crop ( Clarkson et al., 2010 ) . Also, the identification will increase Glen’s interest in the crop, protecting it against any possible risks. Identification enhances the interest of both buyers and sellers of a given product.
Question 2
It is not possible for a title to any item to pass from the buyer to the seller when the good does not exist and has not been identified based on the contract. A title refers to tangible evidence of ownership of any item. Therefore, the title can only be passed to Mendoza when a mature broccoli crop has been delivered successfully to him according to the agreed contract. Specifically, the title is transferred at the place and time of shipment ( Clarkson et al., 2010) . It is the responsibility of Glen to organize proper shipment arrangement. Importantly, the transfers of broccoli crop from Glen to Mendoza should be done in good faith and within the reasonable value or price. The title is likely to be passed to Mendoza from Glen on in March of the following year. The title always passes to the buyer after the successful delivery of the item from the seller.
The title is passed at the time of delivery or shipment because the items can be damaged before they are acquired by the buyer ( Clarkson et al., 2010 ) . In this case, broccoli takes about one year to mature or to be ready for harvest. There is a possibility that the crop can be destroyed before maturity, making it impossible for Mendoza to acquire it in one year. Mendoza needs to confirm that the broccoli crops are in good quality based on the terms contained in the contract. Thus, the passage of title at the time of delivery or shipment reduces the breach of contract while at the same time, it ensures that the buyer gets quality products.
Question 3
In many cases, it is assumed that the goods will not be damaged while in transit, even though there is a possibility of that to occur. The UCC provides a clear guideline on what should be done when the good is damaged while in transit. It is the terms in the transaction contract that determines the party who bears the responsibility in case of such damage ( Erauw, 2005) . The phrase “F.O.B. Willow Glen’s field” means that the risk of damage while broccoli crop is in transit shifts from Glen to Mendoza. Willow Glen has the responsibility of ensuring that the crop is of high quality and it is safely delivered to Falcon. The interest passes from Willow Glen to Mendoza when the crop is successfully delivered to Falcon and ready for transit. As a result, based on the sales contract, it is Mendoza who bears the loss when the Falcon’s truck overturns and spills the entire load.
Question 4
Based on the sales contract between Mendoza and Willow Glen, the latter is required to deliver FreshBest broccoli to the Falcon Trucking before it finally reaches the buyer, Mendoza. Mendoza automatically assumes the risks of loss or damage when the goods safely reach Falcon Transit ( Erauw, 2005) . Nonetheless, in the case that Willow Gen delivers wrong or low-quality broccoli to Falcon, it is Willow Glen that bears the responsibility. It is Willow Glen who bears the loss in case Falcon Transit delivers FamilyPac broccoli to Mendoza. Willow Glen is the cause of confusion, leading to the delivery of wrong goods to the buyer. Mendoza has a right not to accept the broccoli, leaving Willow Glen with the responsibility of bearing the loss. Willow Glen should have spelled broccoli that was to be delivered to Mendoza.
The Debate Question
The shipment process is characterized by a lot of risks, leading to a controversial debate on who should bear the loss in case of damage, especially between the seller and the buyer. According to the common laws that guide contracts, it is the party who holds title to the item or goods who is supposed to bear the risk of loss when the goods are in transit ( Miller, 2016) . Thus, changing the law to make the buyer responsible for the goods being shipped is not fair because it increases shipment and destination risks, especially when he or she does not hold the title of the item. Some goods are highly perishable or fragile, and shifting the role of insuring the goods in transit to the buyer alone increases the risk of transportation significantly. As a result, many factors should be considered before requiring buyers to obtain insurance for the goods being shipped. Both buyer and seller should maintain interests in the goods in transit until it reaches the final decision successfully ( Maggs, 2007) . Any change in the shipment and destination contract should be sensitive to the interests of both sellers and buyers.
References
Clarkson, K. W., Jentz, G. A., Cross, F. B., & Miller, R. L. (2010). Business Law: Text and Cases - Legal, Ethical, Global, and Corporate Environment (14 th ed.). Cengage Learning.
Erauw, J. (2005). CISG Articles 66-70: the risk of loss and passing it. Journal of Law & Communication , 25(1) , 203-217.
Maggs, G. E. (2007). A Complaint About Payment Law Under the UCC: What You See Is Often Not What You Get. Ohio State Law Journal , 68(2) , 201-218.
Miller, R. L. (2016). Business Law Today, Comprehensive . Cengage learning.
