Article 2 — Sales · Section 2-312
This section outlines the warranty of title in sales contracts, emphasizing the seller's obligations regarding the rightful ownership of goods.
Source: U.C.C. § 2-312
In a contract for sale, there is a warranty by the seller that the title conveyed is good, and its transfer is rightful, and that there are no liens or encumbrances on the goods except those disclosed to the buyer.
UCC § 2-312 mandates that when a seller sells goods, they guarantee that they own the goods and have the right to sell them. Additionally, the seller must disclose any claims or encumbrances on the goods that may affect the buyer's ownership.
A guarantee provided by the seller that they have the legal right to sell the goods and that the title is free from claims.
Legal claims or rights against property as collateral for a debt.
Example 1
A seller sells a car to a buyer and guarantees that he owns the car outright without any loans against it.
Example 2
A seller who is aware of a lien on a piece of machinery being sold must inform the buyer before the sale is completed.