41-02-46. (2-401) Passing of title - Reservation for security - Limited application of
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section.
Each provision of this chapter 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 when the provision refers to such title. Insofar as situations are not covered by the other provisions of this chapter 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 41-02-49) and, unless otherwise explicitly agreed, the buyer acquires
by their identification a special property as limited by this title. 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 chapter on secured transactions (chapter
41-09), 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 the seller's 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 the seller 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, if 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 the seller 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".
41-02-47. (2-402) Rights of seller's creditors against sold goods. 1. Except as provided in subsections 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 chapter (sections 41-02-50 and
41-02-95). 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 that creditor a retention of possession by the seller is
fraudulent 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. 3. Nothing in this chapter shall be deemed to impair the rights of creditors of the seller:
a. Under the provisions of the chapter on secured transactions (chapter 41-09); or
b. If 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 chapter constitute the
transaction a fraudulent transfer or voidable preference.
41-02-48. (2-403) Power to transfer - Good-faith purchase of goods - Entrusting. 1. A purchaser of goods acquires all title which the purchaser's 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;
b. The delivery was in exchange for a check which is later dishonored;
c. It was agreed that the transaction was to be a "cash sale"; or
d. The delivery was procured through fraud punishable as theft under chapter
12.1-23. 2. Any entrusting of possession of goods to a merchant who deals in goods of that kind
gives the merchant 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
regardless of any condition expressed between the parties to the delivery of
acquiescence and regardless of whether the procurement of the entrusting or the
possessor's disposition of the goods have been such as to be theft under chapter
12.1-23.
4. The rights of other purchasers of goods and of lien creditors are governed by the
chapters on secured transactions (chapter 41-09) and documents of title (chapter
41-07).