CO Code § 4-2-501 (2021)
2021 Colorado Code|Title 4 - Uniform Commercial Code|Article 2 - Sales|Part 5 - Performance|§ 4-2-501. Insurable Interest in Goods - Manner of Identification of Goods

  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:   When the contract is made if it is for the sale of goods already existing and identified;    If the contract is for the sale of future goods other than those described in paragraph (c) of this subsection, when goods are shipped, marked, or otherwise designated by the seller as goods to which the contract refers; or    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 months after contracting or for the sale of crops to be harvested within twelve months or the next normal harvest season after contracting, whichever is longer.       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.    Nothing in this section impairs any insurable interest recognized under any other statute or rule of law.     History. Source: L. 65: P. 1321, § 1. C.R.S. 1963: § 155-2-501. History. Source: L. 65: P. 1321, § 1. C.R.S. 1963: § 155-2-501.    Cross references:   For offenses relating to this title, see part 5 of article 5 of title 18.   Official Comments   Copyright by the American Law Institute and the National Conference of Commissioners on Uniform State Laws. Reproduced with the permission of the Permanent Editorial Board for the Uniform Commercial Code. All rights reserved. —   Editor's note:   The Official Comments to the Uniform Commercial Code are available only in the printed book form of Colorado Revised Statutes. As noted above, the Official Comments are subject to copyright by the American Law Institute and the National Conference of Commissioners on Uniform State Laws. At this time, Colorado has a license to reprint the Official Comments in the printed book form.   Editor's note:   The numbering and sequencing of C.R.S. subsections do not necessarily correspond with the numbering and sequencing of subsections in the uniform act.   OFFICIAL COMMENT   Prior Uniform Statutory Provision: See Sections 17 and 19, Uniform Sales Act.   Purposes:   1. The present section deals with the manner of identifying goods to the contract so that an insurable interest in the buyer and the rights set forth in the next section will accrue. Generally speaking, identification may be made in any manner “explicitly agreed to” by the parties. The rules of paragraphs (a), (b) and (c) apply only in the absence of such “explicit agreement”.   2. In the ordinary case identification of particular existing goods as goods to which the contract refers is unambiguous and may occur in one of many ways. It is possible, however, for the identification to be tentative or contingent. In view of the limited effect given to identification by this Article, the general policy is to resolve all doubts in favor of identification.   3. The provision of this section as to “explicit agreement” clarifies the present confusion in the law of sales which has arisen from the fact that under prior uniform legislation all rules of presumption with reference to the passing of title or to appropriation (which in turn depended upon identification) were regarded as subject to the contrary intention of the parties or of the party appropriating. Such uncertainty is reduced to a minimum under this section by requiring “explicit agreement” of the parties before the rules of paragraphs (a), (b) and (c) are displaced-as they would be by a term giving the buyer power to select the goods. An “explicit” agreement, however, need not necessarily be found in the terms used in the particular transaction. Thus, where a usage of the trade has previously been made explicit by reduction to a standard set of “rules and regulations” currently incorporated by reference into the contracts of the parties, a relevant provision of those “rules and regulations” is “explicit” within the meaning of this section.   4. In view of the limited function of identification there is no requirement in this section that the goods be in deliverable state or that all of the seller's duties with respect to the processing of the goods be completed in order that identification occur. For example, despite identification the risk of loss remains on the seller under the risk of loss provisions until completion of his duties as to the goods and all of his remedies remain dependent upon his not defaulting under the contract.   5. Undivided shares in an identified fungible bulk, such as grain in an elevator or oil in a storage tank, can be sold. The mere making of the contract with reference to an undivided share in an identified fungible bulk is enough under subsection (a) to effect an identification if there is no explicit agreement otherwise. The seller's duty, however, to segregate and deliver according to the contract is not affected by such an identification but is controlled by other provisions of this Article.   6. Identification of crops under paragraph (c) is made upon planting only if they are to be harvested within the year or within the next normal harvest season. The phrase “next normal harvest season” fairly includes nursery stock raised for normally quick “harvest,” but plainly excludes a “timber” crop to which the concept of a harvest “season” is inapplicable.   Paragraph (c) is also applicable to a crop of wool or the young of animals to be born within twelve months after contracting. The product of a lumbering, mining or fishing operation, though seasonal, is not within the concept of “growing”. Identification under a contract for all or part of the output of such an operation can be effected early in the operation.   Cross References:   Point 1: Section 4-2-502 .   Point 4: Sections 4-2-509 , 4-2-510 and 4-2-703 .   Point 5: Sections 4-2-105 , 4-2-308 , 4-2-503 and 4-2-509 .   Point 6: Sections 4-2-105(1) , 4-2-107(1) and 4-2-402 .   Definitional Cross References:   “Agreement”. Section 4-1-201 .   “Contract”. Section 4-1-201 .   “Contract for sale”. Section 4-2-106 .   “Future goods”. Section 4-2-105 .   “Goods”. Section 4-2-105 .   “Notification”. Section 4-1-201 .   “Party”. Section 4-1-201 .   “Sale”. Section 4-2-106 .   “Security interest”. Section 4-1-201 .   “Seller”. Section 4-2-103 .   ANNOTATION   Identification of fungible goods in a contract for the sale of goods already existing and identified occurs at the time of contract, so this is sufficient to satisfy the statute and allow the seller to recover under the contract. Great Western Sugar v. Pennant Prods., 748 P.2d 1359 (Colo. App. 1987).   Applied in Mari v. Wagner Equipment Co., Inc., 721 P.2d 1208 (Colo. App. 1986).