Okla. Stat. tit. 12A § 2-501

Current through Laws 2024, c. 453.

Section 2-501 - Insurable Interest in Goods; Manner of Identification of Goods

(1) The buyer obtains a special property and an insurable interest in goods by identification of existing goods as goods to which the contract refers even though the goods so identified are nonconforming and he has an option to return or reject them. Such identification can be made at any time and in any manner explicitly agreed to by the parties. In the absence of explicit agreement identification occurs

(a) when the contract is made if it is for the sale of goods already existing and identified;

(b) if the contract is for the sale of future goods other than those described in paragraph (c), when goods are shipped, marked or otherwise designated by the seller as goods to which the contract refers;

(c) when the crops are planted or otherwise become growing crops or the young are conceived if the contract is for the sale of unborn young to be born within twelve (12) months after contracting or for the Sale of crops to be harvested within twelve (12) months or the next normal harvest season after contracting whichever is longer.

(2) The seller retains an insurable interest in goods so long as title to or any security interest in the goods remains in him and where the identification is by the seller alone he may until default or insolvency or notification to the buyer that the identification is final substitute other goods for those identified.

(3) Nothing in this section impairs any insurable interest recognized under any other statute or rule of law.

Okla. Stat. tit. 12A, § 2-501

Laws 1961, p. 88, § 2-501.

Oklahoma Code Comment

This section introduces a new concept into sales law, and is therefore difficult to compare with previous Oklahoma law. By this section, a "special interest" which is elaborated upon in the following sections, and an "insurable" interest is obtained by "identification" of the goods. The term "identification" is not generally defined, and therefore its meaning must be ascertained from this section.

(1) Previously in Oklahoma, as discussed under Section 2-401, a purchaser obtained "title" to the goods, or no interest at all, by virtue of a contract of sale. Therefore, the principle of conveying an "insurable interest" is new, but commercially sound.

(a) Previously in Oklahoma, title to existing goods in a deliverable state passed when the contract was made. See authorities cited at Section 2-401. Note that the Commercial Code makes no distinction between goods in a deliverable state, and those upon which the seller is obliged to perform work or labor. The official comment states that the buyer should obtain an insurable interest even though additional labor is to be performed.

(b) See comments above.

(c) Under the common law doctrine of "potential possession," a vendor could enter into a contract for the sale of future crops or the young of animals, and "title" would pass at the time the seed germinated or the young were conceived. Vold on Sales, 2d Ed., § 45. There have been no previous cases in Oklahoma, but the statutes allowed liens on future crops. 42 O.S. §§ 8, 42. The Commercial Code is consistent with the common law doctrine, except for the limitation in time.

(2) and (3) Although there are no previous Oklahoma cases this is consistent with the vendor's lien concept, in which the seller clearly has an insurable interest, or the insurable interest he may have as a bailee. The last sentence permits the seller to substitute other goods, which, of course, must be construed to mean "other conforming goods." This, too, is limited to cases in which the buyer has not selected particular goods, but has acquiesced in the seller's identification of goods