Question 1

It is possible to have an insurable interest in goods without having title to the goods.

Accepted Answer

A) True 
 B)False

Question 2

What is the difference between the common law and the UCC regarding who carries the risk of loss?

Accepted Answer

A)  Under the common law the seller always carried the risk of loss, but under the UCC it varies depending on the circumstances. 
B)  Under the common law whoever held title carried the risk of loss, but under the UCC it varies depending on the circumstances. 
C)  Under the common law the buyer always carried the risk of loss, but under the UCC it varies depending on the circumstances. 
D)  Under the common law only a party who fails to insure the goods carries the risk of loss, but under the UCC both parties carry the risk of loss. 
E)  There is no difference, under both the common law and UCC whoever holds title to the goods, also carries the risk of loss. 
A)  Under the common law the seller always carried the risk of loss, but under the UCC it varies depending on the circumstances. 
B)  Under the common law whoever held title carried the risk of loss, but under the UCC it varies depending on the circumstances. 
C)  Under the common law the buyer always carried the risk of loss, but under the UCC it varies depending on the circumstances. 
D)  Under the common law only a party who fails to insure the goods carries the risk of loss, but under the UCC both parties carry the risk of loss. 
E)  There is no difference, under both the common law and UCC whoever holds title to the goods, also carries the risk of loss.

Question 3

On October 1,Jackie enters into an agreement with Vanessa to purchase 75 handbags.The contract entered into between Vanessa and Jackie is a destination contract.On October 15,Vanessa identifies the 75 handbags that will be sent to Jackie.On October 20,Vanessa ships the handbags.On October 25,Jackie receives the shipment.When does Vanessa's insurable interest terminate?

Accepted Answer

A)  on October 1 
B)  on October 15 
C)  on October 20 
D)  on October 25 
E)  Vanessa never had an insurable interest. 
A)  on October 1 
B)  on October 15 
C)  on October 20 
D)  on October 25 
E)  Vanessa never had an insurable interest.

Question 4

A destination contract requires the seller to ship the goods to the buyer via a common carrier.

Accepted Answer

A) True 
 B)False

Question 5

Under a lease contract,if the tender of delivery of goods does not conform to the lease contract,when does the risk of loss pass to the lessee?

Accepted Answer

A)  The risk of loss will pass to the lessee when the goods are shipped. 
B)  The risk of loss will pass to the lessee at the time the lease contract is signed. 
C)  The risk of loss will not pass until the tender of delivery is corrected to conform to the lease contract. 
D)  The risk of loss will not pass until the lease contract is ratified. 
E)  The risk of loss never passes to a lessee under a lease contract. 
A)  The risk of loss will pass to the lessee when the goods are shipped. 
B)  The risk of loss will pass to the lessee at the time the lease contract is signed. 
C)  The risk of loss will not pass until the tender of delivery is corrected to conform to the lease contract. 
D)  The risk of loss will not pass until the lease contract is ratified. 
E)  The risk of loss never passes to a lessee under a lease contract.

Question 6

Under Article 2A of the UCC,for which types of lease(s)is the risk of loss on the lessor during the term of the lease?

Accepted Answer

A)  ordinary leases 
B)  finance leases 
C)  both ordinary and finance leases 
D)  neither ordinary nor finance leases 
E)  loss-shifting leases 
A)  ordinary leases 
B)  finance leases 
C)  both ordinary and finance leases 
D)  neither ordinary nor finance leases 
E)  loss-shifting leases

Question 7

If the entrustment rule is satisfied,then the real owner cannot reclaim their property from the buyer.

Accepted Answer

A) True 
 B)False

Question 8

Goods produced in mass production are identified when the merchant ships the specific quantity ordered.

Accepted Answer

A) True 
 B)False

Question 9

In March 2002,a retailer contracted to buy 200 chairs from a manufacturer.The contract terms called for full payment to be made by April 1,with delivery to be made by April 20.This is an F.O.B.destination contract.In the warehouse,the seller marked these 200 chairs as sold to this buyer on March 29.The buyer failed to make timely payment by April 1.What effect does the buyer's failure to make payment have on risk of loss?

Accepted Answer

A)  It has no effect because the contract shipping terms control risk of loss. 
B)  It has no effect because the goods are still in the warehouse of the seller. 
C)  It will immediately and permanently place the risk of loss on the buyer. 
D)  It will immediately place the risk of loss on the buyer for a commercially reasonable time. 
E)  It has no effect because the risk of loss shifted to the buyer upon the formation of the contract. 
A)  It has no effect because the contract shipping terms control risk of loss. 
B)  It has no effect because the goods are still in the warehouse of the seller. 
C)  It will immediately and permanently place the risk of loss on the buyer. 
D)  It will immediately place the risk of loss on the buyer for a commercially reasonable time. 
E)  It has no effect because the risk of loss shifted to the buyer upon the formation of the contract.

Question 10

Kathy has decided to spend some money on herself and goes out to purchase a big screen television and a home theater system.She goes to Best Circuit,a national chain and sees the exact television she wants and it's on sale.She purchases the television for cash and then looks at the home theater systems.She sees a few that she likes and one that she loves.Unfortunately the one she loves is more than her budget allows so she decides to wait until it goes on sale.The next day she's mentions home theatre system to a coworker who tells her that she knows someone that sells home theater systems very inexpensively.She calls this "friend" who meets her at lunch time and has the theater system she wants in the trunk of his car.It's in a sealed box and the price is 25% off what Best Circuit sells it for.Kathy purchases the system for cash and takes it home.A week later,the police show up at her door.It seems that Best Circuit paid the manufacturer with a bounced check when obtaining the television.The "friend" turned out to be a thief that sold her a stolen theater system.Does Jan get to keep the television and home theater system or must she relinquish them?

Accepted Answer

When Kathy went to Best Circuit to purch

Question 11

What type of title does a buyer have in goods under a Sale on Approval before acceptance?

Accepted Answer

A)  void 
B)  voidable 
C)  no title 
D)  restricted title 
E)  valid title 
A)  void 
B)  voidable 
C)  no title 
D)  restricted title 
E)  valid title

Question 12

The only difference between a shipment and destination contract is who bears the risk of loss.

Accepted Answer

A) True 
 B)False

Question 13

What type of title does a thief have in stolen goods?

Accepted Answer

A)  void 
B)  voidable 
C)  no title 
D)  restricted title 
E)  valid title 
A)  void 
B)  voidable 
C)  no title 
D)  restricted title 
E)  valid title

Question 14

Katie owns 100 pairs of shoes.All of Katie's shoes are located in a warehouse.Katie sells her 100 pairs of shoes to Jane.Jane agrees to pick-up the shoes from the warehouse.Katie drives to Jane's house and drops off a warehouse receipt for the shoes.Jane then drives from her house to the warehouse to pick-up the shoes.When does passage of title occur?

Accepted Answer

A)  when Jane enters into the contract to buy the shoes from Katie 
B)  when Jane pays Katie for the shoes 
C)  when Katie drops off the warehouse receipt to Jane 
D)  when Jane goes to the warehouse and picks-up the shoes 
E)  when Katie identifies the goods 
A)  when Jane enters into the contract to buy the shoes from Katie 
B)  when Jane pays Katie for the shoes 
C)  when Katie drops off the warehouse receipt to Jane 
D)  when Jane goes to the warehouse and picks-up the shoes 
E)  when Katie identifies the goods

Question 15

If the parties do not agree to a specific time,title passes to the buyer when and where the seller's performance with reference to the physical delivery is completed.

Accepted Answer

A) True 
 B)False

Question 16

When goods are entrusted to a merchant,what type of title does the merchant have in the goods?

Accepted Answer

A)  void 
B)  voidable 
C)  no title 
D)  restricted title 
E)  valid title 
A)  void 
B)  voidable 
C)  no title 
D)  restricted title 
E)  valid title

Question 17

In a sale on approval,a buyer accepts goods,if the buyer uses the goods inconsistently with the purpose of the trial.

Accepted Answer

A) True 
 B)False

Question 18

What is the most favorable shipping terms to buyers? Why? What about to sellers? Why?

Accepted Answer

The most favorable shipping term to buye

Question 19

It is possible for a seller to deliver goods without moving them.

Accepted Answer

A) True 
 B)False

Question 20

Under a shipment contract,the title passes to the buyer when the seller tenders delivery of the goods at the specified destination.

Accepted Answer

A) True 
 B)False

Exam 17: Performance of Sales, Leases and E-Contracts

It is possible to have an insurable interest in goods without having title to the goods.

What is the difference between the common law and the UCC regarding who carries the risk of loss?

A destination contract requires the seller to ship the goods to the buyer via a common carrier.

Under a lease contract,if the tender of delivery of goods does not conform to the lease contract,when does the risk of loss pass to the lessee?

Under Article 2A of the UCC,for which types of lease(s)is the risk of loss on the lessor during the term of the lease?

If the entrustment rule is satisfied,then the real owner cannot reclaim their property from the buyer.

Goods produced in mass production are identified when the merchant ships the specific quantity ordered.

What type of title does a buyer have in goods under a Sale on Approval before acceptance?

The only difference between a shipment and destination contract is who bears the risk of loss.

What type of title does a thief have in stolen goods?

If the parties do not agree to a specific time,title passes to the buyer when and where the seller's performance with reference to the physical delivery is completed.

When goods are entrusted to a merchant,what type of title does the merchant have in the goods?

In a sale on approval,a buyer accepts goods,if the buyer uses the goods inconsistently with the purpose of the trial.

What is the most favorable shipping terms to buyers? Why? What about to sellers? Why?

It is possible for a seller to deliver goods without moving them.

Under a shipment contract,the title passes to the buyer when the seller tenders delivery of the goods at the specified destination.

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