Can anyone answer a question about sale of precious metals - and the point when title transfers?
State/Country relating to question: Colorado
general legal website info
Thanks for the chance to help. I am an attorney with over 12 years experience. Hopefully I can help you with your legal question.Is this a face to face transaction? Over the web? Other?
I am curious how those different conditions would affect the matter.My first contact was by phone. Then, I appeard in person to purchase some metals. Then follow-up was via telephone.
Precious metals are not treated any different than any other commodity.Title transfers at sale...when the contract for sale is complete the title transfer.Example: You go into a store and pay $30 for a sliver round. At that moment (the exchange of $ for the silver) title transfers.Now...if it is remote, it gets more complex...if you purchase from a store online, you need to negotiate who pays the risk of loss for delivery. This would be part of the contract.
OK. That is understood if one pays cash. But what about paying with a personal check? Does title transfer when the money from that check transfers to the seller's bank? Or not at all, if the check is stopped with a stop payment, or insufficient funds?Thanks.
Again it goes back to the agreement. The parties can agree to not have title transfer until the check clears (this is very common with commodities)WIth no agreement, a check is considered a "negotiable instrument" and is treated like cash...so absent agreement title will transfer immediately. But as I mention, most folks who deal in commodities structure the contract to take this into account and will not transfer title of the metals until the check clears.
There is no contract in this case - only an Invoice - which states "TITLE DOES NOT PASS UNTIL PAID FOR IN FULL" Doesn't it depend on whether the buyer takes possession? If the seller allows the buyer to take the purchase with them, then perhaps the title transfers at that point. But if the seller requires confirmation from the bank that the check has cleared, then only ships afterward, wouldn't the point of transfer of title only occur when the money transfers to the seller's bank account?
There is a contract for every sale. That is what a sale is. A contact between two parties to trade items (in this case paper for metal)Remember a contract can be written or verbal.If there is no agreement on when title transfers, then it will transfer when the seller trades (the paper for metal)But both sides retain the ability to sue the other if there is a breach (for example, if the "gold" was painted zinc, the purchaser could sue the seller or if the check bounces, the seller can sue the buyer.
But what about my question regarding possession? If the buyer never takes possession, and the seller never receives payment, what can the seller sue for? If there is found to be a breach of contract, what damages can the seller claim, if the buyer never takes possession?It would seem like a Catch 22. Seller would have to force the buyer to take possession, then try to collect payment. But if the buyer refuses to take possession, then it seems it would be difficult to claim damages.
If the buyer never take possession and the seller never received payment there would be no damages (other than possible bounced check charges)
That's exactly how I see it. But the Seller is now claiming that I owe him for the difference in market value when he sold it back to himself - out of his own inventory - a couple of days later. Of course, he would never send me a check if the market value had gone up instead.So can he claim difference in market value - buying and selling to himself - as damages?
Ahhhh....yes...that could happen...IF there is a change in spot price. That could be considered damages. So, say at the time of the sale the metal was worth $30 and at the time of the breach the metal was worth $29...then he would have damages of $1.That certainly possible.But the damages would have to match up with spot prices...and the can continue to change...since if the go up tomorrow that could change the damages yet again.That is one of the things about the metals market...highly volatile
OK. Sounds bizarre to me that you can sell your own stuff back to yourself, but I don't know much about how spot prices work. (Kinda like the owner of a company giving himself a raise.)That's why I am asking for advice.Do you suggest I agree to pay part of his "losses" even if I have received nothing of value?
It works like this. If there is a breach of contract, the aggrieved party can sue for "reasonably foreseeable damages". In this case, they can sue for the cost of the bounced check ($50 or so) and any loss of value.So, if the value of the metal was $30 at the time of sale...and the contract breaches...and the seller is forced to sell the next week at $29, they can sue for the $1 difference. I would try and negotiate with him...if this goes to court he has to prove the loss....prove he sold that metal to a new buyer at a lower price.
This has already gone to small claims court.The judge continued it for 2 weeks, to give the seller time to prove what he resold the specific piece(s) for.But it seems the seller does not keep records of which pieces are sold. So I am trying to guess what will happen if the seller can't prove what the judge asked for.And what my next move should be.Advice?
If the seller can not prove he sold, then it will presume it was never sold...in that caes they look at the spot price on the day of court...that is the value of the items. IF it is gone down, that is what you owe. If it went up? THen you may not owe anything
12 Years of experience in the law
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