Question 1

If a seller is a merchant,and the seller holds the goods,the risk of loss cannot pass to a buyer.

Accepted Answer

A) True 
 B)False  False

Question 2

Quality Computer Company agrees to sell one hundred servers to Social Media Networks,Inc. The servers,which Social Media Networks ex?pressly 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?

Accepted Answer

No,because the goods were nonconforming,and so the cost of their loss will be borne by Quality Computer,the seller. When goods are shipped and destroyed while in the possession of the buyer,if a contract does not state who bears the risk of loss,the determining factor is whether there has been a breach of the contract. There is a breach if the goods are so nonconforming as to give the buyer a right of rejection. In that situation,the risk of loss belongs to the seller until the defects are cured or until the buyer accepts the goods in spite of their defects. It makes no difference,in these circumstances,whether the agreement is a shipment contract or a destination contract. Here,the goods were destroyed without their defects being cured and without the buyer's accepting them anyway.

Question 3

In a destination contract,the seller is required to deliver the goods to a particular destination.

Accepted Answer

A) True 
 B)False  True

Question 4

Before a seller can have an insurable interest in goods,the goods must be identified to a contract.

Accepted Answer

A) True 
 B)False

Question 5

Megan,an agent for a department store,orders one hundred dresses from Sal's Clothing Shop for the Spring Blossom Sale.There is no specific agreement in the sale contract indicating when title will pass to the department store.The title will pass to the department store when

Accepted Answer

A) Megan signs the contract. 
B) Megan and the Sal's Clothing Shop agent sign the contract. 
C) Sal's Clothing Shop physically delivers the dresses to the department store. 
D) Megan pays Sal's Clothing Shop for the dresses. 
A) Megan signs the contract. 
B) Megan and the Sal's Clothing Shop agent sign the contract. 
C) Sal's Clothing Shop physically delivers the dresses to the department store. 
D) Megan pays Sal's Clothing Shop for the dresses.

Question 6

In general,a buyer's breach of a contract causes the risk of loss to shift to the buyer.

Accepted Answer

A) True 
 B)False

Question 7

The right to cure is the right of a party who tenders nonconforming performance to correct his or her performance within the contract period.

Accepted Answer

A) True 
 B)False

Question 8

Krissa wants to buy a horse from Gunnar.Gunnar agrees to let Krissa take the horse for a week to try it out.They sign a contract for a sale on approval.Krissa rides the horse for a week,but then decides that she does not like it.Krissa

Accepted Answer

A) must still buy the horse. 
B) can return the horse with no penalty. 
C) can return the horse,but must buy another one from Gunnar. 
D) can return the horse,but must pay a penalty fee. 
A) must still buy the horse. 
B) can return the horse with no penalty. 
C) can return the horse,but must buy another one from Gunnar. 
D) can return the horse,but must pay a penalty fee.

Question 9

Identification takes place before specific goods are designated as the subject matter of a sales or lease contract.

Accepted Answer

A) True 
 B)False

Question 10

Ideal Gadgets,Inc.,and Jolly Outlets Corporation enter into a contract for a sale of kitchenware.The contract requires Ideal to deliver the goods to Ladle Carrier Company for transport to Jolly's warehouse in Metro City.Risk of loss passes to Jolly when

Accepted Answer

A) Ideal delivers the goods to Ladle. 
B) Ideal identifies the goods to the contract. 
C) Ladle transports the goods to Jolly's warehouse. 
D) the goods arrive in Metro City. 
A) Ideal delivers the goods to Ladle. 
B) Ideal identifies the goods to the contract. 
C) Ladle transports the goods to Jolly's warehouse. 
D) the goods arrive in Metro City.

Question 11

Even if goods are not identified to the contract,the title and risk of loss can still pass from the seller to the buyer.

Accepted Answer

A) True 
 B)False

Question 12

Philip purchases ten lawnmowers through a sale or return contract.He plans to resell the lawnmowers in his garden supply store.The contract specifies that Philip must return the lawnmowers within six months if he decides that he does not want them.After seven months,Philip has sold five mowers,but decides that he does not want to keep trying to sell the rest of them.Philip

Accepted Answer

A) can return the five remaining lawnmowers and not have to pay for them. 
B) cannot return the five remaining lawnmowers because the sale was considered finalized after six months. 
C) can return the five remaining lawnmowers as long as he does so before a year has passed. 
D) can return the five lawnmowers as long as he pays all costs related to shipping them. 
A) can return the five remaining lawnmowers and not have to pay for them. 
B) cannot return the five remaining lawnmowers because the sale was considered finalized after six months. 
C) can return the five remaining lawnmowers as long as he does so before a year has passed. 
D) can return the five lawnmowers as long as he pays all costs related to shipping them.

Question 13

Entrusting goods to a merchant who deals in goods of the kind gives the merchant the power to transfer all rights to a buyer in the ordinary course of business.

Accepted Answer

A) True 
 B)False

Question 14

Diamond Camera Shop receives lenses from Excel Optical,Inc.,under a sale or return agreement.While the lenses are in Diamond's possession,title is held by

Accepted Answer

A) Diamond and Excel jointly. 
B) Diamond only. 
C) Diamond's creditors only. 
D) Excel only. 
A) Diamond and Excel jointly. 
B) Diamond only. 
C) Diamond's creditors only. 
D) Excel only.

Question 15

Leo buys a bicycle from his brother,Mike,who is a used car dealer.Mike agrees to keep the bike at his house until Leo picks it up. A tree falls on Mike's garage and destroys the bike.The loss is suffered by

Accepted Answer

A) Leo and Mike. 
B) Leo only. 
C) Mike only. 
D) neither Leo nor Mike. 
A) Leo and Mike. 
B) Leo only. 
C) Mike only. 
D) neither Leo nor Mike.

Question 16

A-1 Furnishings,Inc.,agrees to lease a desk to Business Resources,Inc.(BRI),which requests that the desk be left outside City Warehouse for BRI to pick up.Before BRI retrieves the desk,it is stolen.The loss is suf?fered by

Accepted Answer

A) A-1 Furnishings and BRI,but not City Warehouse. 
B) A-1 Furnishings,BRI,and City Warehouse. 
C) A-1 Furnishings only. 
D) BRI only. 
A) A-1 Furnishings and BRI,but not City Warehouse. 
B) A-1 Furnishings,BRI,and City Warehouse. 
C) A-1 Furnishings only. 
D) BRI only.

Question 17

The contract term "free on board" indicates that the selling price of goods includes transportation costs to the specific F.O.B.place named in the contract.

Accepted Answer

A) True 
 B)False

Question 18

Before any interest in specific goods can pass from the seller to the buyer,the goods must exist and be identified to the contract.

Accepted Answer

A) True 
 B)False

Question 19

In a sale on approval,title and risk of loss pass before the buyer ac?cepts the goods.

Accepted Answer

A) True 
 B)False

Question 20

A bill of lading serves as a con?tract for the transportation of goods.

Accepted Answer

A) True 
 B)False

Exam 19: Title and Risk of Loss

If a seller is a merchant,and the seller holds the goods,the risk of loss cannot pass to a buyer.

In a destination contract,the seller is required to deliver the goods to a particular destination.

Before a seller can have an insurable interest in goods,the goods must be identified to a contract.

Megan,an agent for a department store,orders one hundred dresses from Sal's Clothing Shop for the Spring Blossom Sale.There is no specific agreement in the sale contract indicating when title will pass to the department store.The title will pass to the department store when

In general,a buyer's breach of a contract causes the risk of loss to shift to the buyer.

The right to cure is the right of a party who tenders nonconforming performance to correct his or her performance within the contract period.

Krissa wants to buy a horse from Gunnar.Gunnar agrees to let Krissa take the horse for a week to try it out.They sign a contract for a sale on approval.Krissa rides the horse for a week,but then decides that she does not like it.Krissa

Identification takes place before specific goods are designated as the subject matter of a sales or lease contract.

Ideal Gadgets,Inc.,and Jolly Outlets Corporation enter into a contract for a sale of kitchenware.The contract requires Ideal to deliver the goods to Ladle Carrier Company for transport to Jolly's warehouse in Metro City.Risk of loss passes to Jolly when

Even if goods are not identified to the contract,the title and risk of loss can still pass from the seller to the buyer.

Entrusting goods to a merchant who deals in goods of the kind gives the merchant the power to transfer all rights to a buyer in the ordinary course of business.

Diamond Camera Shop receives lenses from Excel Optical,Inc.,under a sale or return agreement.While the lenses are in Diamond's possession,title is held by

Leo buys a bicycle from his brother,Mike,who is a used car dealer.Mike agrees to keep the bike at his house until Leo picks it up. A tree falls on Mike's garage and destroys the bike.The loss is suffered by

A-1 Furnishings,Inc.,agrees to lease a desk to Business Resources,Inc.(BRI),which requests that the desk be left outside City Warehouse for BRI to pick up.Before BRI retrieves the desk,it is stolen.The loss is suf?fered by

The contract term "free on board" indicates that the selling price of goods includes transportation costs to the specific F.O.B.place named in the contract.

Before any interest in specific goods can pass from the seller to the buyer,the goods must exist and be identified to the contract.

In a sale on approval,title and risk of loss pass before the buyer ac?cepts the goods.

A bill of lading serves as a con?tract for the transportation of goods.

Introduction to the Law and Our Legal System

Ethics in Business

The Courts and Alternative Dispute Resolution

Constitutional Law

Torts and Cyber Torts

Intellectual Property and Internet Law

Criminal Law and Cyber Crime

Introduction to Contracts

Offer and Acceptance

Consideration

Capacity

The Legality of Agreements

Mistakes and Other Contract Defects

Written Contracts

Third Party Rights

Contract Discharge and Remedies

E-Contracts

Introduction to Sales and Lease Contracts

Performance and Breach

Warranties and Product Liability

Consumer Protection

The Essentials of Negotiability

Transferability and Liability

Checks and Banking in the Digital Age

Agency

Employment and Immigration Law

Discrimination and Labor Law

Sole Proprietorships,partnerships, Limited

Formation and Termination of a Corporation

Management and Ownership of a Corporation

Secured Transactions

Creditors Rights and Remedies

Bankruptcy

Insurance

Morgages and Foreclosures

Personal Property and Bailments

Real Property

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