Exam 21: Title, Risk, and Insurable Interest

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

Title and risk of loss can pass to the buyer from the seller before the goods are identified to the contract.

A buyer has an insurable interest in identified goods only if he or she has title to the goods.

Identification takes place when specific goods are designated as the subject mater of a sales or lease 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

Quest Outdoor Store orders RiverRun-brand kayaks from Sports Merchandise, Inc. Sports Merchandise mistakenly ships kayaks of the wrong size, which Quest rejects and returns via Trans-State Shipping Company. During the re?turn, the kayaks are lost. The loss is suffered by

Drill Makers, Inc., and Edge Mine & Mill Supply Stores enter into a contract for a sale of mining drill bits. The contract indicates that the price includes transportation costs to a specific destination by including the term

The entrustment rule basically allows innocent buyers to obtain legitimate title to goods purchased from merchants even if the merchants do not have good title.

Under a destination contract, the risk of loss passes to the buyer when the goods are duly delivered to the carrier.

When an agreement is ambiguous as go whether it is a shipment or a destination contract, courts will normally presume that it is a destination contract.

Effortless Workouts, Inc., offers to sell a treadmill to Farouk and sends it to him on a trial basis. This is

Brett boards her horse Charley at Dallas's Equestrian Stables. Brett sells the horse to Flem and tells Dallas, "I sold Charley to Flem." Dallas says, "Okay." That night, Charley is kicked in the head by another horse and dies. Who suffers the loss?

Motor Vehicles Service Company orders NoBounce-brand shock absorbers from Parts & Tools, Inc., to be delivered by the seller. Before Parts & Tools' truck arrives with the goods, Motor Vehicles tells Parts & Tools it will not pay. The shock absorbers are destroyed in transit. The loss is suffered by

Any explicit understanding between the buyer and the seller determines when title passes.

Organicos Café orders five gallons of PureMaid-brand transfat-free olive oil from Quico Cooking Supplies, Inc. Quico mistakenly ships soy oil, which Organicos keeps, despite the nonconform?ity. The oil is destroyed in a fire. The loss is suffered by

A contract between Pacific Import Company in Seattle and Atlantic Coast Retail Corporation in Baltimore does not expressly state which party bears the risk of loss but says only that Pacific Import is "to ship goods at the seller's expense." At what point does the risk of loss of the goods pass from the seller to the buyer?

Gas & Wood Stove Shop receives Hearthwarm-brand stoves from Independent Dealer, Inc., under a sale or return agreement. While the stoves are in Gas & Wood's possession, title is held by

A seller with voidable title has the power to transfer good title to a good faith purchaser for value.

Moving & Storage Company holds goods for National Distribution Corporation, which contracts to sell them to Omni Stores, Inc. The goods are to be delivered without being moved and are represented by a negotiable bill of lading. The risk of loss passes to Omni Stores

When a seller keeps the goods for pickup, if the seller is not a merchant, the risk of loss passes to a buyer on tender of delivery.