Question 1

The risk of loss for "sale or return" is the same as for a sale "on approval."

Accepted Answer

A) True 
 B)False

Question 2

Jerry bought a stereo from SX Company "on approval." The risk of loss passed to Jerry when he took possession of the stereo.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is correct with regard to risk of loss, where the goods are in the possession of a bailee and are covered by a negotiable document of title?

Accepted Answer

A)  Risk of loss passes when the buyer receives the document. 
B)  Risk of loss passes when the document is tendered to the buyer. 
C)  Risk of loss passes when notification of the arrival of the goods is given to the buyer. 
D)  If the buyer is a merchant, risk of loss passes to the buyer when the goods are delivered. 
A)  Risk of loss passes when the buyer receives the document. 
B)  Risk of loss passes when the document is tendered to the buyer. 
C)  Risk of loss passes when notification of the arrival of the goods is given to the buyer. 
D)  If the buyer is a merchant, risk of loss passes to the buyer when the goods are delivered.

Question 4

Amanda ordered fifty personalized sweatshirts from King Manufacturing Company. After the shirts were specially imprinted, but before they were mailed, Amanda called King Manufacturing to disavow the contract. The next day the sweatshirts were stolen. In this case:

Accepted Answer

A)  Amanda must pay the entire purchase price, because she breached the contract. 
B)  King Manufacturing will have to bear the entire loss, because it had not yet mailed the shirts. 
C)  Amanda must bear the entire loss, because the shirts were identified to the contract. 
D)  King must first seek payment from its insurance carrier, and then collect from Amanda for any amount not covered by insurance. 
A)  Amanda must pay the entire purchase price, because she breached the contract. 
B)  King Manufacturing will have to bear the entire loss, because it had not yet mailed the shirts. 
C)  Amanda must bear the entire loss, because the shirts were identified to the contract. 
D)  King must first seek payment from its insurance carrier, and then collect from Amanda for any amount not covered by insurance.

Question 5

A basic tenet of the law, which is expressly stated in the Code, is that a purchaser of goods obtains such title as his transferor had or had power to transfer.

Accepted Answer

A) True 
 B)False

Question 6

At common law, the risk of loss or damage to goods identified under a contract of sale falls upon:

Accepted Answer

A)  the buyer. 
B)  the seller. 
C)  the party who had title or ownership of the goods at the time of the loss or damage. 
D)  the designated party as determined by the court. 
A)  the buyer. 
B)  the seller. 
C)  the party who had title or ownership of the goods at the time of the loss or damage. 
D)  the designated party as determined by the court.

Question 7

Kevin delivers to Zach nonconforming goods. Zach accepts, but later discovers the defect and rightfully revokes acceptance. If the goods are destroyed through no fault of Kevin or Zach:

Accepted Answer

A)  if Zach's insurance is adequate, it will cover the loss and Kevin would not bear any of the loss. 
B)  Kevin would bear the loss of these nonconforming goods, whether or not Zach has insurance. 
C)  Zach will bear the loss, whether he has insurance or not. 
D)  Kevin and Zach will equally share the loss. 
A)  if Zach's insurance is adequate, it will cover the loss and Kevin would not bear any of the loss. 
B)  Kevin would bear the loss of these nonconforming goods, whether or not Zach has insurance. 
C)  Zach will bear the loss, whether he has insurance or not. 
D)  Kevin and Zach will equally share the loss.

Question 8

How has the Code affected the rights of good faith purchasers with respect to minors?

Accepted Answer

The Code has expanded the rights of good

Question 9

Under a shipment contract, title passes to the buyer at a time and place the seller contracts with the carrier to ship the goods.

Accepted Answer

A) True 
 B)False

Question 10

Security interests, defined by the Code as interests in personal property or fixtures that ensure payment or performance of obligations, are governed by Article 6 of the UCC.

Accepted Answer

A) True 
 B)False

Question 11

Everett bought a washer and dryer for $1,200 from Neely Appliances, which was to deliver the set in two days, on its regular delivery date for Everett's area. However, on the night of the sale, Neely's suffered an accidental fire and the washer and dryer were destroyed. Who has the risk of loss? Who would have the risk of loss if Everett had instead bought a used washer and dryer from his neighbor who was having a moving sale, and the washer and dryer were destroyed after Everett had paid for them and after the neighbor made them available to Everett but before he picked them up?

Accepted Answer

In the first situation, the risk of loss

Question 12

When delivery is to be made without moving the goods, unless otherwise agreed, title passes:

Accepted Answer

A)  at the time and place of contracting under all circumstances. 
B)  when a document of title is created if a negotiable document of title is involved. 
C)  when the goods are identified if they were not identified at the time of contracting. 
D)  at the time the seller completes performance. 
A)  at the time and place of contracting under all circumstances. 
B)  when a document of title is created if a negotiable document of title is involved. 
C)  when the goods are identified if they were not identified at the time of contracting. 
D)  at the time the seller completes performance.

Question 13

Howard stole a computer and then sold it to his friend Ivan for $100. Ivan has:

Accepted Answer

A)  good title to the computer, because he paid for it. 
B)  a voidable title to the computer. 
C)  a void title to the computer. 
D)  good title to the computer, because he is a good faith purchaser for value. 
A)  good title to the computer, because he paid for it. 
B)  a voidable title to the computer. 
C)  a void title to the computer. 
D)  good title to the computer, because he is a good faith purchaser for value.

Question 14

A sale exists after the buyer takes:

Accepted Answer

A)  the title to the goods. 
B)  the risk of loss on the goods. 
C)  an insurable interest in the goods. 
D)  a special property interest in the goods. 
A)  the title to the goods. 
B)  the risk of loss on the goods. 
C)  an insurable interest in the goods. 
D)  a special property interest in the goods.

Question 15

Under the CISG:

Accepted Answer

A)  loss of, but not damage to, the goods after the risk of loss has passed to the buyer discharges the buyer from the obligation to pay the purchase price. 
B)  if the sales contract involves the carriage of the goods and the seller is not obligated to hand them over at a particular destination, risk of loss passes to the buyer when the goods are handed over to the first carrier. 
C)  if the sales contract does not involve carriage of the goods, the risk of loss passes to the buyer when the goods are tendered to him. 
D)  All of the answers are correct. 
A)  loss of, but not damage to, the goods after the risk of loss has passed to the buyer discharges the buyer from the obligation to pay the purchase price. 
B)  if the sales contract involves the carriage of the goods and the seller is not obligated to hand them over at a particular destination, risk of loss passes to the buyer when the goods are handed over to the first carrier. 
C)  if the sales contract does not involve carriage of the goods, the risk of loss passes to the buyer when the goods are tendered to him. 
D)  All of the answers are correct.

Question 16

The distinction between a void and voidable title is not important in determining the rights of good faith purchasers of goods.

Accepted Answer

A) True 
 B)False

Question 17

A void title may allow good title to pass in special circumstances.

Accepted Answer

A) True 
 B)False

Question 18

Fungible goods are goods for which one unit is the equivalent of any other unit.

Accepted Answer

A) True 
 B)False

Question 19

Inga runs a Swedish health spa in Connecticut. She orders 100 loofah sponges from a company in California. They are sent "F.O.B. Hartford, Connecticut," but they never arrive. What consequence?

Accepted Answer

A)  Inga has to pay anyway since it was a destination contract. 
B)  The California company is required to bear the loss since the sponges had not yet reached the F.O.B. point. 
C)  The California company and Inga will have to split the loss since they did not specify in their contract when the risk of loss would pass to Inga. 
D)  It cannot be determined who has the risk of loss from the information given. 
A)  Inga has to pay anyway since it was a destination contract. 
B)  The California company is required to bear the loss since the sponges had not yet reached the F.O.B. point. 
C)  The California company and Inga will have to split the loss since they did not specify in their contract when the risk of loss would pass to Inga. 
D)  It cannot be determined who has the risk of loss from the information given.

Question 20

In Robinson v. Durham , the court found:

Accepted Answer

A)  the Robinsons were good faith purchasers for value when they bought the car for their business, and they had good title which they passed to Durham. 
B)  the Robinsons had a voidable title, and they passed good title to Durham, who was a good faith purchaser for value. 
C)  there was a breach of warranty of title between the Robinsons and Durham. 
D)  the Robinsons obtained no title from the thief, but they passed good title to Durham since he was a good faith purchaser for value. 
A)  the Robinsons were good faith purchasers for value when they bought the car for their business, and they had good title which they passed to Durham. 
B)  the Robinsons had a voidable title, and they passed good title to Durham, who was a good faith purchaser for value. 
C)  there was a breach of warranty of title between the Robinsons and Durham. 
D)  the Robinsons obtained no title from the thief, but they passed good title to Durham since he was a good faith purchaser for value.

Exam 21: Transfer of Title and Risk of Loss

The risk of loss for "sale or return" is the same as for a sale "on approval."

Jerry bought a stereo from SX Company "on approval." The risk of loss passed to Jerry when he took possession of the stereo.

Which of the following is correct with regard to risk of loss, where the goods are in the possession of a bailee and are covered by a negotiable document of title?

Amanda ordered fifty personalized sweatshirts from King Manufacturing Company. After the shirts were specially imprinted, but before they were mailed, Amanda called King Manufacturing to disavow the contract. The next day the sweatshirts were stolen. In this case:

A basic tenet of the law, which is expressly stated in the Code, is that a purchaser of goods obtains such title as his transferor had or had power to transfer.

At common law, the risk of loss or damage to goods identified under a contract of sale falls upon:

Kevin delivers to Zach nonconforming goods. Zach accepts, but later discovers the defect and rightfully revokes acceptance. If the goods are destroyed through no fault of Kevin or Zach:

How has the Code affected the rights of good faith purchasers with respect to minors?

Under a shipment contract, title passes to the buyer at a time and place the seller contracts with the carrier to ship the goods.

Security interests, defined by the Code as interests in personal property or fixtures that ensure payment or performance of obligations, are governed by Article 6 of the UCC.

When delivery is to be made without moving the goods, unless otherwise agreed, title passes:

Howard stole a computer and then sold it to his friend Ivan for $100. Ivan has:

A sale exists after the buyer takes:

Under the CISG:

The distinction between a void and voidable title is not important in determining the rights of good faith purchasers of goods.

A void title may allow good title to pass in special circumstances.

Fungible goods are goods for which one unit is the equivalent of any other unit.

Inga runs a Swedish health spa in Connecticut. She orders 100 loofah sponges from a company in California. They are sent "F.O.B. Hartford, Connecticut," but they never arrive. What consequence?

In Robinson v. Durham , the court found:

Introduction to Law

Business Ethics

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Introduction to Sales and Leases

Performance

Product Liability: Warranties and Strict Liability

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Relationship of Principal and Agent

Relationship With Third Parties

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature and Formation of Corporations

Financial Structure of Corporations

Management Structure of Corporations

Fundamental Changes of Corporations

Secured Transactions and Suretyship

Bankruptcy

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

Environmental Law

International Business Law

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Wills

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