Article 2 — Sales · Section 2-401
This section addresses the concept of passing of title in the sale of goods under the Uniform Commercial Code.
Source: U.C.C. § 2-401
Unless otherwise explicitly stated in this Article, title to goods passes to the buyer at the time when the seller completes their performance with respect to the delivery of the goods, and a buyer’s contractual right to possession of the goods may not be considered a title until the transfer takes place.
UCC § 2-401 outlines when the title of goods sold transfers from the seller to the buyer. Generally, title passes upon the seller completing their delivery obligations unless otherwise specified in the contract.
Legal ownership of goods.
Having physical control of the goods.
The act of transferring possession of goods from the seller to the buyer.
Example 1
A seller ships a set of furniture to a buyer who pays upon receipt. Title transfers to the buyer when the seller hands over the shipping documents to the carrier.
Example 2
If a buyer agrees to buy a dry cleaning machine and the seller sets up the machine at the buyer's location, title transfers at the time of setup, assuming no other terms specified otherwise.