Also known as: identifies goods to the contract · identified goods to the contract · identifying goods to the contract · identification of goods to the contract · goods identification · identification to the contract
Written by attorneys · grounded in primary & secondary sources — see below
The designation of particular existing goods as the specific items to fulfill a sales contract. This step is required before any property interest can pass to the buyer and before certain seller remedies such as an action for the price become available when the goods cannot reasonably be resold.
Ironclad Industries completed 50,000 serialized debit cards bearing RiverCity Bank's unique account numbers and stored them in a separate area of the warehouse. When RiverCity refused delivery after a merger, Ironclad sued for the full contract price. Because the cards had been finished and set aside exclusively for this buyer, the identification requirement was satisfied and Ironclad could recover the price.
Integrity Partners ordered custom plastic casings from Nova Plastics. After signing but before any production began, Integrity Partners canceled the order. Nova Plastics then designated a specific batch of raw materials and began manufacturing the exact casings ordered. This post-repudiation identification allowed Nova to preserve its remedies under the sales article even though the buyer had repudiated.
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Goods must be both existing and identified before any interest in them can pass to the buyer. Until identification occurs, the contract is treated as one for future goods and no ownership interest transfers.
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No. Identification designates the goods but does not by itself transfer risk of loss. Risk ordinarily passes at delivery or according to the parties' shipping terms unless the contract provides otherwise.
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A seller may recover the full contract price when goods have been identified to the contract and cannot, after reasonable effort, be resold at a reasonable price. The seller must then hold the goods for the buyer subject to resale credit rules.
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Yes. After repudiation the seller may identify goods to the contract notwithstanding the breach and may also salvage unfinished goods. This preserves the seller's remedies even though the buyer has refused to perform.
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Identified things attached to realty that are to be severed may be treated as goods once the parties designate them in the contract. Their status as goods for the sale does not require prior physical removal.
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