IACCM Contract Management Forum

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2017-05-03 06:47:34

Transfer of Risk versus transfer of title


Could someone please throw some light on the difference between the two concepts and their repercussions?
 •  IACCM  •   2017-05-03 10:53:51
Transfer of title occurs when ownership of a product or asset passes from one party to another. Transfer of risk (in this context) relates to which party bears risk associated with loss or damage. While the two may occur simultaneously, often they do not. A review of INCOTERMS may assist you in understanding the variations. The rules also vary to some extent based on jurisdiction.

As an example, in some jurisdictions, risk of loss often passes when a product is delivered, but title may not pass until payment has been received. In others (such as the US), passing of title and risk of loss may be simultaneous, but the supplier retains a security interest (right of repossession). As you will see from this example, it is important to understand the linkage between these varoious rights and obligations.
 •  Reliance Defence Limited  •   2017-05-11 04:24:36
Thank You
 •  Baker Hughes, a GE Company  •   2017-05-23 13:13:32
Additionally Title Transfer conceptually is how the parties want to address revenue recognition and Tax liabilities, considering ownership transfer is a taxable event.
Risk of Loss, if it is not defined in the contract is assumed to be happened on delivery for supply contract.
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