BU387 Lecture Notes - Lecture 7: Consignor, Measurement Uncertainty, Consignee
Document Summary
Price risk risk that the price of an asset will change. Sales agreements normally specify that is being given up and what is being acquired: Acquired consideration or rights to the consideration; amount, nature and timing are agreed upon. Given up goods/services (nor or in the future); details regarding delivery are agreed upon. Concessionary terms are terms that are more lenient than usual and are meant to induce sales. These may create additional obligations or may reflect the fact that the risks and rewards or control has not yet passed to the customer. Selling on credit, sales to riskier customers, shipping at a later date, extended warranties. Contract establishes the point in time when legal title passes (entitlement/ownership under law) When the customer takes physical possession of the goods straight away, legal title would normally pass at this point. Fob shipping point title passes at the point of shipment. Fob destination title passes when the asset reaches the customer.
