Deck 17: Title to Goods and Risk of Loss

Question 1

Thomas signed a sales contract with Bricklay's,a firm that supplies bricks for private individuals.The contract specified the type and amount of bricks needed,and that Thomas would pick up the bricks from the Bricklay's warehouse 15 days later.Thomas received a document of title,but failed to pick up the goods on the stipulated date.In this scenario,at what point of time is the title to goods passed over to Thomas?

A) when the sales contract was signed by both Thomas and Bricklay's
B) when Thomas received the document of title
C) when Thomas picks up the bricks from the Bricklay's warehouse
D) when the stipulated date of pick-up of the bricks expires

Answer 1

B

Question 2

In a lease transaction,the title to the goods ________.

A) changes when the goods are identified
B) changes when the goods are delivered
C) does not remain with the lessor
D) does not pass to the lessee

Answer 2

D

Question 3

What kinds of goods are termed as future goods?

A) goods that exist but are to be sold at a future date
B) goods that are not yet in existence
C) goods that can be sold partly in the present and partly at a later date
D) goods that exist without a title

Answer 3

B

Question 4

Which of the following contracts is an example of future goods?

A) an option contract for a lessor's real estate property
B) a contract to buy growing crops
C) a preordered video game
D) a contract to sell a newborn animal

Question 5

Which of the following is true of a contract with the no-arrival,no-sale term?

A) The buyer bears shipping costs and the risk of loss during transport.
B) The seller does not have to deliver replacement goods to the buyer in case of damages during shipment.
C) The seller does not have to bear the expense and risk of loss of the goods during transportation.
D) The buyer has to arrange for the shipment to be handed over to a carrier.

Question 6

Which of the following parties to a shipping contract bears the risk of loss of goods during transport?

A) the seller
B) the carrier
C) the buyer
D) the bailee

Question 7

Nebula Crystals,a firm in New York that manufactures crystal figurines,was contracted by Ruth from Florida to deliver a thousand such crystal figurines.The contract required the firm to deliver and tender the goods alongside the vessel SS Dew Express at the New York harbor.Which of the following shipment term expresses such conditions?

A) no-arrival, no-sale
B) Ex-ship
C) F.A.S. port of shipment
D) C.I.F.

Question 8

When are future goods,other than crops and unborn young,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

Question 9

How are the shipping terms C.I.F.and F.O.B.point of shipment similar to each other?

A) Both require the seller to bear the expense and risk of loss until the goods are tendered to the buyer at the place of destination.
B) Both require the seller to bear the expenses and risk of loss when handing the shipment to a carrier.
C) Both require the seller to deliver and tender the goods alongside the named vessel provided by the buyer.
D) Both require the seller to bear the expense and risk of loss until the goods are unloaded from the ship at its port of destination.

Question 10

In a lease transaction,title to the leased goods remains with the ________.

A) lessor
B) lessee
C) seller
D) buyer

Question 11

Which of the following is true for the passage of title in a contract requiring a document of title?

A) The title passes when the shipping arrangements are made.
B) The title passes at the time and place of contracting.
C) The title passes when the destination of delivery is first mentioned in the contract.
D) The title passes when and where the seller delivers the document to the buyer.

Question 12

________ is a shipping term in a contract that requires the seller to bear the expense and risk of loss until the goods are unloaded from the ship at its port of destination.

A) Ex-ship
B) No-sale, no arrival
C) Free on board point of shipment
D) C.I.F.

Question 13

In a destination contract,when is the title to the goods considered to have passed to the buyer?

A) when the seller specifies a specific destination in the sales contract
B) when the seller tenders delivery of the goods at the specified destination
C) when the seller makes the shipping arrangements
D) when the seller hands over the goods to the common carrier

Question 14

The term ________ refers to the legal,tangible evidence of ownership of goods.

A) tenure
B) title
C) possession
D) pledge

Question 15

A(n)________ refers to an actual piece of paper,such as a warehouse receipt or bill of lading,which is required in some transactions of pickup and delivery of sold goods.

A) codicil
B) letter of credit
C) document of title
D) acceptance draft

Question 16

In a shipment contract,when is the title to the goods considered to have passed to the buyer?

A) when the seller makes the offer to the buyer
B) when the goods are handed over to a common carrier
C) when the seller tenders delivery of the goods at the specified destination
D) when the goods are at the time and place of the shipment

Question 17

Katie owns 100 pairs of shoes.All of Katie's shoes are present 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

Question 18

In which of the following does the title to the goods pass from the seller to the buyer?

A) option contract
B) rental agreement
C) lease
D) sale of goods

Question 19

Which of the following is true for the shipping term "free on board point of shipment"?

A) It requires the seller to bear the expense and risk of loss until the goods are tendered to the buyer at the place of destination.
B) It refers to a pricing term that includes the cost of the goods, and the costs of insurance, and freight.
C) It requires the seller to bear the expense and risk of loss of the goods until delivery has been tendered.
D) The buyer bears the shipping expense and risk of loss while the goods are in transit.

Question 20

Which of the following is an example of delivery of goods without moving them?

A) a contract requiring a document of title
B) a shipment contract
C) a destination contract
D) a contract with the term ex-ship

Question 21

Larry,a merchant seller,had contracted with Simon,to buy welding equipment.The contract stipulated that Larry would pick up the equipment from Simon's warehouse on the 14th day from the date of the contract.Larry could not make the pick up on that date and before he could do so on the 15th day,the warehouse was burned down by miscreants.In this situation,who bears the risk of loss of the goods that were to be received by Larry?

A) The risk of loss lies with Larry for delaying the pickup.
B) The risk of loss lies with Simon for not protecting the goods.
C) The risk of loss is equally shared by Larry and Simon.
D) The risk of loss is shifted to the persons responsible for the fire.

Question 22

Sam owns a record store that buys and sells old vinyl records.Sam sells some records to Tammy through an online shop.Sam is considered a merchant.Sam ships the records to Tammy.When Tammy receives the records they are broken.In this case,________ bears the risk of loss.

A) Sam
B) Tammy
C) the carrier
D) the online shop

Question 23

Which of the following would contain the term "no-arrival,no-sale" in their contract?

A) shipment contract
B) destination contract
C) lease contract
D) consignment contract

Question 24

In which of the following cases is a buyer in breach of a sales contract?

A) if the buyer fails to provide a document of title to a bailee
B) if the buyer accepts nonconforming goods
C) if the buyer refuses to accept conforming goods
D) if the buyer asks for replacements for defective goods

Question 25

Kenneth purchased a car from his local dealership,Quartent Cars.However,since the car was not available in the color that Kenneth favored,the sales contract stipulated that Kenneth could immediately pick up the car from a nearby warehouse it was housed in.The warehouse was owned by Mr.Henderson.Kenneth received the document of title for the car upon payment and presented it to Mr.Henderson around a week later.But Mr.Henderson informed Kenneth that the car was damaged during a fire in the warehouse.According to the UCC,which of the following parties holds the risk of loss for the damage caused to the car?

A) The risk is to be borne by Kenneth.
B) Mr. Henderson has to take up the loss.
C) Quartent Cars must take the risk of loss.
D) The risk is to be borne jointly by Mr. Henderson and Quartent Cars.

Question 26

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 for the 100 tons of stone to Barney.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 the stone yet.
B) The warehouse has the risk of loss because Barney did not pick the stone yet.
C) The risk of loss was passed to Barney when he received the warehouse receipt.
D) Fred, the warehouse, and Barney are equally responsible for the risk of loss.

Question 27

The ________ bears the risk of loss during transportation in a destination contract.

A) buyer
B) seller
C) carrier
D) lesser

Question 28

When goods are under the possession of a bailee,the risk of loss passes to the buyer when ________.

A) the buyer receives a negotiable document of title covering the goods
B) the bailee does not acknowledge the buyer's right to possession of the goods
C) the buyer does not present a document of title to the bailee
D) the bailee refuses to honor the document or direction

Question 29

Tendon Car Parts sells car spare parts through an e-commerce website.The spare parts are stored at Pickins Warehouse,from where it is delivered to customers.Linda bought an item from Tendon through the e-commerce website.In this scenario,who is considered the bailee of the goods?

A) Linda
B) Tendon Car Parts
C) Pickins Warehouse
D) the e-commerce website

Question 30

The term ________ refers to a type of sale in which there is no actual sale unless and until the buyer accepts the goods.

A) consignment
B) sale or return contract
C) sale on approval
D) option contract

Question 31

Which of the following is true of a destination contract containing a "no-arrival,no-sale" clause?

A) The seller is required to bear the expense and risk during transportation.
B) The seller is required to replace any goods lost in transit.
C) The buyer has to pay for destroyed goods.
D) The risk of loss passes once the shipping has been arranged.

Question 32

Which of the following transactions represents a conditional sale?

A) entrustment sale
B) good faith sale
C) auction sale
D) consignment

Question 33

Kenneth purchased a car from his local dealership,Quartent Cars.However,since the car was not available in the color that Kenneth favored,the sales contract stipulated that Kenneth could immediately pick up the car from a nearby warehouse it was housed in.The warehouse was owned by Mr.Henderson.Kenneth received the document of title for the car upon payment and presented it to Mr.Henderson around a week later.But Mr.Henderson informed Kenneth that the car was damaged during a fire in the warehouse.If Mr.Henderson had refused the document of title provided by Kenneth,who would have borne the risk of loss to the car?

A) Jointly by Quartent Cars and Kenneth.
B) Only by Kenneth.
C) Only by Quartent Cars.
D) Only by Mr. Henderson.

Question 34

If the movement of goods is not required,and the seller is a nonmerchant,the risk of loss ________.

A) passes to the buyer upon "tender of delivery" of the goods
B) remains with the seller after acceptance
C) is passed on to a merchant buyer before the goods are shipped
D) is to be borne by the carrier responsible for the delivery of the goods

Question 35

Kenneth purchased a car from his local dealership,Quartent Cars.However,since the car was not available in the color that Kenneth favored,the sales contract stipulated that Kenneth could immediately pick up the car from a nearby warehouse it was housed in.The warehouse was owned by Mr.Henderson.Kenneth received the document of title for the car upon payment and presented it to Mr.Henderson around a week later.But Mr.Henderson informed Kenneth that the car was damaged during a fire in the warehouse.What role does Mr.Henderson fulfill in the contract?

A) the seller
B) the consignee
C) the bailee
D) the supplier

Question 36

Jason orders 100 remote-controlled toy cars from Ryby Toys.In the contract,it is stipulated that RyBy Toys would transport the toy cars via FlyByNight,a national carrier service.RyBy Toys makes the arrangements and hands over the toys,minus the remote-controllers,to FlyByNight,to be delivered to Jason.What was the nature of the contract between Jason and RyBy Toys?

A) lease contract
B) destination contract
C) option contract
D) shipment contract

Question 37

A(n)________ involves the seller entrusting possession of goods to a buyer on a trial basis.

A) destination contract
B) option contract
C) finance lease
D) conditional sale

Question 38

If the movement of goods is not required,and the seller is a merchant,the risk of loss ________.

A) does not pass to the buyer until the goods are received
B) remains with the seller after acceptance
C) is passed on to a nonmerchant-buyer before the goods are shipped
D) is to be borne by the buyer before delivery of goods

Question 39

A holder of goods who is not a seller or a buyer is referred to as a ________.

A) consignor
B) broker
C) bailee
D) consignee

Question 40

Jason orders 100 remote-controlled toy cars from RyBy Toys.In the contract,it is stipulated that RyBy Toys would transport the toy cars via FlyByNight,a national carrier service.RyBy Toys makes the arrangements and hands over the toys,minus the remote-controllers,to FlyByNight,to be delivered to Jason.In the event that the goods are destroyed in transit,which of the following parties would bear the risk of loss as per the sales contract?

A) Jason would bear the risk of loss irrespective of the fate of the goods.
B) FlyByNight would bear the risk of loss as they had the responsibility to deliver the goods.
C) RyBy Toys would bear the risk as they shipped nonconforming goods.
D) The risk of loss would be shared between RyBy Toys and Jason.

Question 41

A title for goods obtained by a seller through fraud,impersonation,or a dishonored check is referred to as a(n)________.

A) unenforceable title
B) voidable title
C) conditional title
D) unequivocal title

Question 42

________ title is a situation in which a thief acquires no title to goods he or she steals.

A) Void
B) Voidable
C) Entrusted
D) Valid

Question 43

What is the role of a financing statement in a consignment if the consignor files it?

A) It protects the consignor from bearing a risk of loss for the goods.
B) It protects the consignor from possible payment revocation by the consignee.
C) It gives the buyer's creditors claim over the goods.
D) It gives the seller's creditors claim over the goods.

Question 44

Acceptance to the goods under a sale on approval can occur if the buyer ________.

A) notifies the rejection of goods within reasonable time
B) uses the goods inconsistently with the purpose of the trial
C) uses the goods but does not expressly indicate its acceptance
D) is allowed to use the goods for a specific period of time

Question 45

Who among the following is a good faith purchaser for value?

A) a person who pays sufficient consideration for the goods
B) a person who obtains the goods by fraud or impersonation of another person
C) a merchant who sells the goods entrusted to him by others
D) a seller who has a voidable title to goods

Question 46

Which of the following is true about a sale or return contract?

A) A buyer cannot resell the goods received under the contract.
B) A seller need not accept the goods returned by a buyer.
C) A sale is considered final if the buyer fails to return the goods within a reasonable time.
D) A sale is made on an approval by trial basis.

Question 47

Robert steals a truckload of plasma televisions that belong to Karson Electronics Store in an armed robbery.He then resells it to Stu-Mart,who is unaware of the stolen nature of the goods.Karson Electronics Store then traces the plasma televisions to Stu-Mart.Robert is also arrested for the theft.Which of the following is true for Karson Electronics' legal course for reclaiming the televisions or damages?

A) Stu-Mart is a good-faith purchaser here and as such does not have to hand over the televisions to Karson.
B) Stu-mart must hand over the televisions to Karson as their title to the goods is void.
C) Karson's only recourse is against Robert to claim damages.
D) Karson's cannot reclaim the goods, but can sue Stu-Mart for negligence and damages.

Question 48

A consignment deal would be an example of a(n)________.

A) unconditional contract
B) sale or return contract
C) sale or approval contract
D) unequivocal contract

Question 49

In a sale on approval,the risk of loss and title to the goods pass to the buyer when the ________.

A) seller receives notification of the rejection of goods within reasonable time
B) buyer uses the goods consistently with the purpose of trial
C) seller ships the goods to the buyer's destination
D) buyer accepts the goods under the contract

Question 50

If the parties to a contract do not agree as to who will bear the risk of losses,the risk of loss remains with the lessor or supplier ________.

A) if the goods fail to conform to the lease contract
B) until the lessee provides a written confirmation of acceptance
C) if the goods under the contract are in the lessee's possession
D) after the lessee receives the goods

Question 51

Which of the following is a difference between a sale or return contract and a sale on approval contract?

A) For sale or return, the risk of loss is borne by the buyer; while in a sale on approval, it is borne by the seller.
B) For sale or return, the goods are sold to the buyer; while in a sale on approval, the buyer is allowed a time period to test the goods.
C) For sale or return, failure to notify rejection is not acceptance; while in a sale on approval, failure to notify rejection is acceptance.
D) For sale or return, goods sold can be returned; while in a sale on approval, goods sold can never be returned.

Question 52

Steve brings his watch to Knell Watches to be repaired.Knell Watches sells and repairs watches.Steve entrusts his watch at Knells' until it is repaired.The watch store repairs the watch,but then sells it to Kevin,who buys the watch with a fraudulent check that bounced.Kevin then resells the watch to his friend Jonathan,who is unaware of the stolen nature of the watch.Who can legally claim ownership over the watch in court?

A) Jonathan
B) Steve
C) Knell Watches
D) Kevin

Question 53

Steve brings his watch to Knell Watches to be repaired.Knell Watches sells and repairs watches.Steve entrusts his watch at Knells' until it is repaired.The watch store repairs the watch,but then sells it to Kevin,who buys the watch with a fraudulent check that bounced.Kevin then resells the watch to his friend Jonathan,who is unaware of the stolen nature of the watch.What kind of title does Jonathan hold over the watch?

A) an unequivocal title
B) a conditional title
C) a voidable title
D) a void title

Question 54

________ refers to an arrangement in which a seller delivers goods to a buyer to sell on his or her behalf.

A) Consignment
B) Void entitlement
C) Entrustment
D) Leasing

Question 55

If the lease is a finance lease and the supplier is a merchant,the risk of loss passes to the ________ on the receipt of the goods.

A) lessee
B) lessor
C) supplier
D) financer

Question 56

Which of the following is a good faith purchaser?

A) a person who buys goods from a person with a voidable title
B) a person who buys stolen goods without being aware of it
C) a buyer who agrees to hold goods for a person till the delivery of the goods is made
D) a buyer to whom goods are delivered by a seller to sell on the seller's behalf

Question 57

In a sale or return contract,the risk of loss and title to the goods pass to the buyer when the buyer ________.

A) enters into the contract
B) takes possession of the goods
C) expressly indicates acceptance
D) breaches the contract

Question 58

Steve brings his watch to Knell Watches to be repaired.Knell Watches sells and repairs watches.Steve entrusts his watch at Knells' until it is repaired.The watch store repairs the watch,but then sells it to Kevin,who buys the watch with a fraudulent check that bounced.Kevin then resells the watch to his friend Jonathan,who is unaware of the stolen nature of the watch.According to the entrustment rule,what legal recourse does Steve have to reclaim the watch or collect damages?

A) Steve can sue Kevin for damages.
B) Steve can sue Knell Watches for damages.
C) Steve can reclaim the watch from Jonathan.
D) Steve cannot reclaim the watch but can sue Jonathan for damages.

Question 59

In the case of an ordinary lease,if the lessor is a merchant,the risk of loss passes to the lessee ________.

A) after the inspection of the goods
B) after the acceptance of the goods
C) on the shipment of the goods
D) on the receipt of the goods

Question 60

Delapaz Motors receives 10 motorcycles from a manufacturer on a sale or return basis.Delapaz pays $5,000 for each vehicle.Delapaz sells six motorcycles within a reasonable time.Two of the remaining motorcycles are damaged from a fire accident.Which of the following is true in this case?

A) Delapaz cannot recover the value of the damaged vehicles from the manufacturer.
B) The manufacturer must return the complete payment received from Delapaz.
C) The risk of loss remains with the manufacturer, so it has to pay for the damages incurred.
D) The manufacturer should compensate for all four unsold vehicles.

Question 61

The Uniform Commercial Code (UCC)provides that title to goods can pass from seller to buyer if the goods are not identified to a sales contract.

Question 62

Under Article 2A of the Uniform Commercial Code (UCC),parties to the lease contract have the right to insure their goods against losses.

Question 63

In both shipment and destination contracts,the risk of loss is on the seller during transportation.

Question 64

If a contract authorizes goods to be delivered without requiring the seller to move them and a document of title is needed for delivery,the title passes from a seller to a buyer at the time of contracting.

Question 65

If the parties do not have a specific agreement concerning the assessment of the risk of loss,the Uniform Commercial Code (UCC)has the power to mandate who will bear the risk of loss when goods are lost or damaged.

Question 66

Typically,goods that are sent via carrier are considered to be sent in pursuant to a shipment or a destination contract.

Question 67

A shipment contract requires the buyer to make all the necessary shipping arrangements.

Question 68

If a shipment contract specifies "F.O.B.point of shipment," the buyer is responsible for making all the shipping arrangements.

Question 69

A seller or lessor retains the risk of loss of the goods until he or she identifies them to a sales or lease contract.

Question 70

Article 2 of the Uniform Commercial Code (UCC)adopts concise rules for risk of loss that are tied to title to the goods.

Question 71

Future goods other than crops and unborn young are identified when the goods are shipped,marked,or otherwise designated by the seller or lessor as the goods to which the contract refers.

Question 72

Under the Uniform Commercial Code,the rights and obligations of the buyer,the seller,and the third parties are determined based on who held technical title to the goods.

Question 73

If a contract specifies "F.A.S.The Oceanking,New Orleans," the seller bears the risk of loss until it hands over the goods to the carrier.

Question 74

A destination contract is enforceable only if the place of delivery is the buyer's place of business.

Question 75

When the pricing term in a contract includes the costs of the goods and the costs of the insurance and freight,the buyer bears the loss of risk during transportation.

Question 76

The common law allows the parties to a contract to agree on who will bear the risk of loss if the goods subject to the contract are lost.

Question 77

Sales contracts can authorize goods to be delivered without requiring the seller to move them.

Question 78

If goods held by a bailee are to be delivered to the buyer without the seller moving them,the risk of loss passes to the seller when the bailee acknowledges the buyer's right to possession of the goods.

Question 79

Common law placed the risk of loss to goods on the party who held title to the goods.

Question 80

Unless otherwise indicated,sales contracts are presumed to be shipment contracts rather than destination contracts.