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

Question 1

Title for goods can pass before they are identified to the contract.

Answer 1

False

Question 2

In a shipment contract,the buyer bears the risk of loss of the goods during transportation.

Answer 2

True

Question 3

A seller has breached the contract if they deliver nonconforming goods.

Answer 3

True

Question 4

In an ordinary lease in which there is no agreement as to who bears the risk of loss,the risk of loss remains with the lessor.

Question 5

Already existing goods are identified when the contract is made and names the specific goods sold or leased.

Question 6

In a sale or return contract,the risk of loss passes to the buyer when the buyer takes possession of the goods.

Question 7

"F.O.B.point of shipment" requires the seller to arrange to ship the goods and put the goods in the carrier's possession.

Question 8

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

Question 9

A warehouse receipt is one form of a document of title.

Question 10

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

Question 11

Goods sent "ex-ship The Maine" makes the buyer solely responsible for the expense and risk of loss while the goods are in route.

Question 12

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.

Question 13

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

Question 14

Lessees obtain title to the goods they lease.

Question 15

Unborn young animals (such as unborn cattle)are identified when the young are conceived.

Question 16

Goods being shipped by boat are sent F.A.S.

Question 17

The identification of goods means distinguishing the goods named in the contract from the seller's or lessor's other goods.

Question 18

Both the buyer and seller of goods can have an insurable interest in the same goods at the same time.

Question 19

If goods are nonconforming,the risk of loss remains on the seller until (1)the defect or nonconformity is cured or (2)the buyer accepts the nonconforming goods.

Question 20

C.I.T.is a pricing term that indicates the cost for which the seller is responsible.

Question 21

Under the UCC,parties to a contract can decide who will bear the risk of loss.

Question 22

One way to create a destination contract is to include the term F.A.S.

Question 23

In a no-arrival,no-sale contract the seller has an obligation to replace goods which do not arrive at the appoint destination.

Question 24

A seller and buyer may not set their own terms for passage of title and must follow the UCC rules for passage of title.

Question 25

Under the common law,the risk of loss is always on the seller.

Question 26

Under common law,parties to a contract can decide who will bear the risk of loss.

Question 27

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

Question 28

A person with voidable title can pass good title to a good faith purchaser or good faith subsequent lessee.

Question 29

When there is no agreement to the contrary,sales contracts are presumed to be shipment contracts.

Question 30

Someone who leases goods that were stolen gets no title to the goods.

Question 31

A tender of delivery occurs when the seller holds the goods available for the buyer to take delivery and notifies the buyer the goods are available for delivery.

Question 32

A non-merchant seller passes the risk of loss to the buyer when the goods are received.

Question 33

Generally,when a sales contract has not been breached and it is a destination contract,the seller is required to replace any goods lost in transit.

Question 34

One way to create a shipment contract is to include the term Ex-ship.

Question 35

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

Question 36

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

Question 37

When there is no movement of goods,the risk of loss passes to the buyer when the goods are received,if the seller is a merchant.

Question 38

The risk of loss rules are the same,regardless of whether a party has breached the sales contract.

Question 39

Under the UCC,who bears the risk of loss depends on who holds title to the goods.

Question 40

Under a destination contract,the title passes to the buyer at the time and place of shipment.

Question 41

A bailee is a seller who has passed the risk of loss to the buyer,but has not transferred the title.

Question 42

A good faith purchaser for value can receive goods with void title.

Question 43

A buyer acquires goods through a sale or return contract.The buyer defaults on a loan owed to its creditors.The goods acquired through the sale and return contract are subject to the creditors claim.

Question 44

In a sale or return contract,the title remains with the seller until the buyer expressly accepts the goods.

Question 45

In a consignment,title passes to the consignee when the consignee takes possession of the goods.

Question 46

If a buyer breaches a sales contract,the buyer only bears the risk of loss after the breach has occurred and not before.

Question 47

In a finance lease the risk of loss passes to the lessee on the receipt of goods.

Question 48

Under the entrustment rule,a merchant can transfer title in goods to a buyer in the ordinary course of business.

Question 49

Improper delivery of goods does not effect who bears the risk of loss in a lease contract.

Question 50

If a buyer presents a bill of lading to a bailee and the bailee refuses to deliver the goods,the risk of loss remains with the seller.

Question 51

Under a sale or return contract,the seller is responsible for the destruction of goods in the buyer's possession.

Question 52

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

Question 53

In a sale on approval,the title remains with the seller until the buyer accepts the goods.

Question 54

In a sale on approval,the risk of loss passes to the buyer when the goods are delivered.

Question 55

Which of the following statements is not true regarding the identification of goods?

A) The identification of existing goods occurs when the contract is made and specifies the goods.
B) The identification of mass produced goods occurs when the goods are set-aside for the particular buyer.
C) The identification of future goods, other than crops and animals, occurs when the goods are shipped or otherwise set-aside for the particular buyer.
D) Identification of goods can occur in any manner designated between the parties.
E) Identification of goods occurs when the risk of loss transfer from the seller to buyer.

Question 56

Under the entrustment rule,a seller has no title to the goods.

Question 57

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

Question 58

A title is voidable if the seller has stolen the goods.

Question 59

In a consignment,the risk of loss remains with the consignor.

Question 60

A title is voidable if the buyer purchased the goods in a fraudulent manner.

Question 61

Billy enters into a contract with Computer,Inc.Computer,Inc.will send Billy 50 touch-screen computers.Computer,Inc.will allow Billy to sell the computers and to return whatever remains unsold within 30 days.Billy keeps the entire amount that he sells the computers for.What type of conditional sale is this?

A) sale or return
B) sale on approval
C) consignment
D) bailment
E) no-sale, no-cost

Question 62

What is the difference between a sale on approval and a sale or return?

A) There is no difference between a sale on approval and a sale or return because you return the products under both scenarios.
B) Under a sale on approval you must return the goods within a reasonable time and under a sale or return you must return the goods within 30 days.
C) Under a sale on approval the risk of loss is with the buyer, but under a sale or return the risk of loss is with the seller.
D) Under a sale on approval the title is with the buyer, but under a sale or return the title is with the seller.
E) Under a sale on approval a buyer cannot resell the goods unless it is consistent with their use, but under a sale or return a buyer may resell goods as and return those that are unsold.

Question 63

Under a sale on approval which of the following is not considered acceptance,sufficient to create a sale?

A) stating, "these look good to me, i'll keep them"
B) taking delivery of the goods
C) failure to notify the seller of rejection of the goods within the agreed upon time frame
D) using the goods inconsistently with the purpose of the trial
E) buyer paying for the goods to use them for a trial period.

Question 64

Mike owns a mirror shop.Abby is building a ballet studio and needs 50 mirrors.On April 1,Abby contracts with Mike to buy 50 mirrors.The mirrors are located at Mike's shop and the contract states that Abby is free to pick-up the mirrors at anytime.Abby pays for the mirrors on April 15 and picks-up the mirrors on May 1.When does the title pass from Mike to Abby?

A) April 1
B) April 15
C) May 1
D) The title does not pass from Mike to Abby.
E) The title passes when Mike identifies the mirrors for Abby.

Question 65

Fred has 100 tons of stone in a warehouse.Barney agrees to purchase the stone from Fred.The contract states that Barney will pick-up the stone directly from the warehouse.Fred delivers a warehouse receipt to Barney for the stone.Before Barney is able to pick-up the stone,a tornado sweeps through and destroys the stone.Who has the risk of loss?

A) Fred has the risk of loss because Barney did not pick-up the stone yet.
B) The warehouse has the risk of loss because Barney did not pick-up the stone yet.
C) Barney has the risk loss because the risk of loss was transferred when he received the warehouse receipt.
D) Fred, the warehouse and Barney are equally responsible for the risk of loss.
E) Fred and the warehouse are equally responsible for the risk of loss.

Question 66

Tom purchases $300 worth of goods from Nancy.Nancy lives in on a small remote island that is part of the Bahamas.The goods will first travel by boat from the Bahamas to Florida and then by air to Tom.The contract states that the shipping terms are F.A.S.(Illinois)port of shipment.Nancy takes the goods down to the dock and places them on the dock next to a ship called Illinois.Nancy does not insure the goods.Nancy does not make sure the goods are placed on the ship.The goods are lost.Tom sues Nancy for his $300 back,who wins?

A) Tom wins because Nancy did not make sure the goods were placed on the ship.
B) Tom wins because Nancy held the risk of loss until the goods were delivered to Tom.
C) Tom wins because Nancy has a duty to send Tom a replacement order or refund his money.
D) Tom wins because Nancy was under an obligation to insure the goods and she didn't.
E) Nancy wins because Tom bears the risk of loss once the goods are placed on the dock of the Illinois ship.

Question 67

John contracts to buy $600 of medical supplies from Tim.The contract states the shipping term is ex-ship.The goods are lost in transport.Tim argues that a shipment contract was created and therefore he is not responsible for the lost shipment.John argues that a destination contract was created and therefore he is not responsible.Who is right and why?

A) John is right because ex-ship creates a destination contract.
B) John is right because the UCC presumes that contracts are destination contracts and parties may not make agreements to the contrary.
C) Tim is right because ex-ship creates a shipment contract.
D) Tim is right because the UCC presumes that contracts are shipment contracts and parties may not make agreements to the contrary.
E) John and Tim are both incorrect because ex-ship means that the carrier is responsible for the lost goods.

Question 68

Which term can be used to create a destination contract?

A) F.A.S.
B) Ex-ship
C) C.I.F.
D) C&F
E) F.O.B. point of shipment

Question 69

Which of the follow is an element of a consignment?

A) The consignee only remits a small fee to the consignor when goods are sold.
B) The consignor retains the risk of loss and title.
C) A consignee's creditors may have a claim to consigned goods under certain circumstances.
D) The consignor retains the risk of loss, but passes title to the consignee.
E) The consignor keeps title, but passes the risk of loss to the consignee.

Question 70

What does "the risk of loss" mean?

A) It is the risk that a party may not pay for goods delivered.
B) It is the risk that a contract may be unprofitable for a business.
C) It is the risk that goods delivered may be nonconforming or have material defects.
D) It is the risk that goods in transit may be lost or destroyed.
E) It is the risk that a third-party may interfere with the performance of a contract for the delivery of goods.

Question 71

Which term can be used to create a shipment contract?

A) F.O.B. place of destination
B) Ex-ship
C) No-arrival, no-sale
D) F.A.S.
E) Common carrier point of shipment

Question 72

When are future goods identifiable?

A) when the parties enter into the contract
B) when the buyer pays for the goods
C) when the seller begins manufacturing the goods
D) when the seller ships the goods
E) when the buyer accepts delivery of the goods

Question 73

What is a title?

A) the name of the goods being sold
B) legal, tangible evidence of ownership of the goods
C) the contract in which goods pass from seller to buyer
D) a record of the sale of goods
E) a receipt kept by the buyer, to document the terms of a purchase of goods

Question 74

What is the difference between the common law and the UCC regarding who 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 75

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?

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 76

Under which of the following shipping terms the shipper bear the risk of loss during transport,but is not under a duty to deliver replacement goods?

A) No-arrival, no-sale
B) Ex-ship
C) F.O.B. point of shipment
D) F.O.B. place of destination
E) F.A.S.

Question 77

Matt owns a manufacturing plant that makes widgets.Matt will manufacture the next set of widgets on June 1.On January 2,Sarah makes a contract to buy 100 widgets,once they are made.On June 1,Matt makes the widgets.On June 10,Matt ships Sarah's 100 widgets.On June 12,Sarah pays for the widgets.Sarah receives the widgets on June 15.When are Sarah's 100 widgets identified?

A) on January 2, when Sarah and Matt entered into the contract
B) on June 1, when Matt made the widgets
C) on June 10, when Matt shipped the widgets
D) on June 12, when Sarah pays for the widgets
E) on June 15, when Sarah receives the widgets

Question 78

When does the risk of loss pass to a bailee?

A) When the buyer refuses delivery of the goods.
B) When the seller delivers a document of title to the buyer, but before the buyer takes possession of the goods.
C) When the contract is made between the buyer and seller, but before the buyer takes possession of the goods.
D) If the bailee refuses to acknowledge the buyer's right to the possession of the goods.
E) The risk of loss never passes to the bailee.

Question 79

When does title pass in a lease contract?

A) when the goods are identified
B) when the goods are delivered
C) when the risk of loss transfers from the buyer to the seller
D) a title never passes in a lease contract
E) when the parties enter into the lease contract

Question 80

Which of the following is a conditional sale?

A) entrustment sale
B) good faith sale
C) a sale by a merchant to a buyer in the ordinary course of business.
D) consignment
E) bailment