Final answer:
The title to the goods in a sale or return contract remains with the seller until the buyer decides to keep the items. Risk of loss passes to the buyer upon delivery, but the buyer is typically responsible for return expenses, unless stated otherwise. Such contracts in the goods market often include money-back guarantees or service contracts to encourage sales.
Step-by-step explanation:
Under the terms of a sale or return contract, when goods are delivered to a buyer, the risk of loss typically passes to the buyer, and they may have the right to use the goods. However, the title to the goods remains with the seller until the buyer opts to keep the items, which means the seller retains ownership until that point. If the buyer decides not to keep the goods, they must return them to the seller, often at the buyer's expense unless otherwise specified in the contract. This type of contract is beneficial in the goods market, especially when sellers offer goods through mail-order catalogs or over the web. It is a selling strategy that includes offering money-back guarantees, warranties, or service contracts as a promise of quality and to cater to buyers who cannot physically inspect the products before purchasing. These offerings serve as a form of collateral and provide assurance against unforeseen, detrimental events related to the product's performance or quality.