Exam 21: Title Risk and Insurable Interest

Appliance Corporation sells Best-brand vacuum cleaners to Cash Discount Stores and other retailers. Appliance will have an insurable interest in the vacuums as long as

If the seller is a merchant who is holding the goods for the buyer to pick up, the risk of loss passes when the buyer takes physical possession of the goods.

If the seller's title is void , the seller has the power to transfer good title to a good faith purchaser.

Beef Ranch raises calves to sell. In January, Cold Cuts Inc. contracts with Beef to buy fifty calves. Beef breeds its cows in April, and the cows calve in February of the following year. Identification of the calves to the Cold Cuts contract takes place in

In a shipment contract, risk of loss remains with the seller until the goods are delivered to the buyer at the buyer's place of business.

Goods that are not both existing and identified to the contract are called future goods .

Title can pass to the buyer from the seller before the goods are identified to the contract.

Quality Computer Company agrees to sell one hundred servers to Social Media Networks Inc. The servers, which Social Media Networks expressly requires to have certain amounts of memory, are to be shipped "F.O.B. Social Media Networks distribution center in Memphis, TN." When the servers arrive, Social Media Networks rejects them and informs Quality Computer, claiming that the servers do not conform to Social Media Networks' memory requirement. A few hours later, the servers are destroyed in a fire at Social Media Networks' distribution center. Will Quality Computer succeed in a suit against Social Media Networks for the cost of the goods?

Brad leaves an iPod at Computer Sales & Repair (CSR)to have the battery replaced. CSR sells the iPod to Doris, who does not know that it belongs to Brad. Brad can recover from

Identification is not significant for the buyer or lessee.

Security Insurance Agency contracts with Town Motors to buy six cars. The contract lists the cars by their VINs (vehicle identification numbers). Under the UCC, identification

When the risk of loss passes is generally determined by

If the seller's title is voidable , a good faith purchaser acquires no title, and the real owner can reclaim the goods.

Consumers Choice Store accepts a shipment of phones from Digital Devices Inc. Consumers Choice later discovers a defect in the phones, revokes acceptance, and returns the goods via GoBack, Inc. During the return, the goods are lost. The loss is suffered by

Garden Stores order a specific assortment of rose bulbs from Hybrid Company. Hybrid mistakenly ships a selection of annuals, which Garden rejects and returns via Indie Transport Inc. During the return, the annuals are lost. The loss is suffered by

Ota buys a Prius from Quincy's Toyota, paying with a check that is later dishonored. Ota offers to sell the car to Rafe for cash. With respect to this offer, Ota's title to the car is

Pipe Company orders six irrigation pumps from Quality Pumps Inc. The pumps are stored in Re-storage Warehouse. Under the terms of the order, Quality must give Pipe a warehouse receipt for the goods, which the buyer will then pick up. Title to the goods passes to Pipe when

Jared buys a kayak from a Lake Craft store, which agrees to keep it for him until he picks it up. Before Jared gets the kayak, an unforeseen tornado destroys the store and the goods. The loss is suffered by

The parties can agree in their contract when identification will take place.

Quaff Café buys twenty-five crates of apples from Reynaldo Produce, Inc. The parties agree to ship the apples "F.O.B. Quaff" via Swift Trucking Company. The apples rot in transit. The loss is suffered by