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Texas Business & Commerce Code - Section 2.401. Passing Of Title; Reservation For Security; Limited Application Of This Section

Legal Research Home > Texas Lawyer > Business & Commerce Code > Texas Business & Commerce Code - Section 2.401. Passing Of Title; Reservation For Security; Limited Application Of This Section

§ 2.401. PASSING OF TITLE;  RESERVATION FOR SECURITY;  
LIMITED APPLICATION OF THIS 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 where 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:
	(a)  Title to goods cannot pass under a contract for sale 
prior to their identification to the contract (Section 2.501), 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 9), title to goods passes from the seller to the buyer in 
any manner and on any conditions explicitly agreed on by the 
parties.
	(b)  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
		(1)  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
		(2)  if the contract requires delivery at destination, 
title passes on tender there.
	(c)  Unless otherwise explicitly agreed where delivery is to 
be made without moving the goods,
		(1)  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
		(2)  if the goods are at the time of contracting already 
identified and no documents are to be delivered, title passes at the 
time and place of contracting.
	(d)  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".

Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.  
Amended by Acts 2005, 79th Leg., ch. 122, § 6, eff. Sept. 1, 
2005.

Last modified: August 10, 2007