Deck 19: Title to Goods and Risk of Loss

Question 1

Title for goods cannot pass before the goods are identified to the contract.

Answer 1

True

Question 2

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

Answer 2

True

Question 3

Chairs in a warehouse are identified to a sale contract when the seller explicitly selects and separates the chairs for shipment to the buyer.

Answer 3

True

Question 4

If no document of title is needed,and the goods are identified at the time of contracting,title passes at the time of contracting.

Question 5

The general rule for passage of title is that title passes when the buyer acquires possession of the goods.

Question 6

If the parties do not have a specific agreement regarding the assessment of the risk of loss,the UCC mandates who will bear the risk.

Question 7

Under common law,the risk of loss was based on who had title to the goods.

Question 8

For goods to be selected from like items in inventory,identification cannot occur until the specific goods for the specific customer are separated or tagged for that customer.

Question 9

At common law,the risk of loss to goods is placed on the party that has the insurable interest.

Question 10

Unborn animals are identified when they are conceived.

Question 11

The issuing bank for a letter of credit is called the correspondent bank.

Question 12

In a shipment contract,risk of loss passes to the buyer when the goods are delivered to the common carrier.

Question 13

The parties to a contract may decide when title and risk of loss pass,but if the parties do not specifically agree on such a time,the UCC provides rules for them.

Question 14

Title to goods may pass from the seller to the buyer before the goods are identified to the sales contract.

Question 15

In a lease transaction,title to the leased goods remains with either the lessor or a third party.

Question 16

A destination contract requires the seller to deliver to either the buyer's place of business or to another destination specified in the sales contract.

Question 17

The function of a letter of credit is to substitute the credit of a recognized international bank for that of the buyer.

Question 18

With letters of credit in international transactions,a bill of lading is issued by the common carrier.

Question 19

The unborn young of stock animals are considered future goods.

Question 20

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

Question 21

A seller's duty in an F.O.B.destination contract with respect to delivering the goods ends upon placing the goods in the hands of the common carrier.

Question 22

If a good faith purchaser for value acquires goods from another good faith purchaser,but the goods were stolen at some point in the past,the last good faith purchaser does not obtain good title.

Question 23

If an owner brings a computer to a store to be repaired and the store accidentally sells it to a customer who is a buyer in the ordinary course of business,the buyer from the store has ownership priority over the original owner.

Question 24

Under the UCC,for risk of loss purposes,the "sale on consignment" is treated like a "sale on approval."

Question 25

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

Question 26

In a consignment,the seller is also known as the consignor.

Question 27

A thief can transfer good title to stolen goods,as long as the other person purchased them in good faith.

Question 28

If a contract for the sale of goods is F.O.B.Minneapolis and the seller is in Minneapolis and the buyer is in Chicago,the contract is a shipment contract.

Question 29

A breach by the buyer will shift the risk of loss to the buyer as soon as the breach occurs if the risk has not already shifted.

Question 30

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

Question 31

When the seller breaches,the risk of loss often passes to the buyer sooner than it otherwise would.

Question 32

In an F.O.B.destination contract,the seller must replace the goods if they are lost in transit.

Question 33

One who has voidable title can transfer good title to a good faith purchaser for value.

Question 34

If a seller delivers nonconforming goods to a buyer and the buyer rejects them,the risk of loss remains on the seller until either the defect is cured or the buyer accepts the nonconforming goods.

Question 35

A consignment is treated as a sale or return under the UCC.

Question 36

If goods are held by the seller to be picked up by the buyer,the risk of loss passes to the buyer upon "tender of delivery," if the seller is a merchant.

Question 37

F.O.B.Burlington,Vermont requires the seller to arrange to ship goods and put the goods in the carrier's possession.

Question 38

C.I.F is a pricing term that indicates the seller is responsible for paying the cost of the goods that are the subject of the sale as well as insurance and freight for their delivery.

Question 39

A merchant-seller bears the risk of loss between the time of contracting and the time the buyer picks up the goods.

Question 40

Acceptance of a sale on approval can occur if the buyer uses the goods inconsistently with the purpose of the trial.

Question 41

The International Chamber of Commerce has issued the following for rules on letters of credit:

A) The International Credit Collection Procedures
B) The Uniform Customs and Practices for Documentary Credits
C) The International Convention for the Sale and Delivery of Goods
D) The United Nations Process for Letter of Credit Documentation

Question 42

In a carrier case,what is most important in determining when risk of loss passes from the seller to the buyer?

A) the contract's shipping terms
B) the buyer's insurance policy terms
C) the seller's insurance policy terms
D) when title passes
E) the price of the goods

Question 43

When a seller breaches a contract for the sale of goods by delivering nonconforming goods,the risk of loss:

A) is unaffected by the seller's breach
B) remains on the seller until the nonconformity is cured or the buyer accepts the nonconforming goods
C) remains on the seller indefinitely
D) is transferred to the buyer upon delivery of the nonconforming goods,but is transferred back to the seller if the buyer returns the goods

Question 44

In a noncarrier case,under which of the following sales will risk of loss pass upon tender of delivery?

A) sale by a nonmerchant to a nonmerchant
B) sale by a merchant to a nonmerchant
C) sale by a nonmerchant to a merchant
D) both A and C
E) A,B,and C

Question 45

What would a seller of goods use to assure payment from the sale of goods overseas?

A) bill of lading
B) warehouse receipt
C) letter of credit
D) negotiable draft

Question 46

A provision under the UCC that affects merchants differently from nonmerchants is:

A) the effect of additional terms in an acceptance
B) the firm offer rule
C) transfer of risk of loss in noncarrier cases
D) the written confirmation rule
E) all of the above

Question 47

Once a seller breaches by delivering nonconforming goods,which of the following is true?

A) The risk of loss will remain on the seller,but only if it has not already shifted to the buyer.
B) The risk of loss will shift back to the seller even if it had already shifted to the buyer.
C) The risk of loss will not be affected by the breach.
D) The title will follow the risk of loss.

Question 48

Which of the following statements regarding identification of goods under the UCC is false?

A) Purchased goods that are part of a larger mass are identified when designated as the goods sold to the buyer.
B) Fungible goods may be identified without being separated.
C) Risk of loss may shift to the buyer before identification occurs.
D) Future goods (other than crops and unborn animals) must come into existence before they can be identified.

Question 49

If no carrier is involved,the goods are sold without a document of title,and the goods are identified at the time of contracting,when does title pass?

A) when the buyer pays for them
B) at the time of contracting
C) when the warranty period expires
D) when the buyer picks them up

Question 50

When a buyer may return goods to a seller if the buyer does not resell them within a stated period of time,this is known under the UCC as:

A) a sale or return
B) a sale contingent upon no return
C) a consignment sale
D) a sale on approval
E) a preliminary sale

Question 51

Which of the following best describes the significance of risk of loss in a carrier case?

A) It determines who will bear the loss for any problems that arise under the contract.
B) It determines with certainty which party will pay if the goods are lost or damaged in transit.
C) It determines whether the buyer or seller will pay if the goods are lost or damaged in transit,and other possible sources of recovery,such as insurance,do not cover the loss.
D) It determines the terms of payment under the contract.

Question 52

In which of the following,does the buyer usually try out the goods for the buyer's own use?

A) sale on approval
B) sale or return
C) consignment and sale or return
D) consignment,sale or return,and sale on approval
E) sale or return and sale on approval

Question 53

Identification of goods is significant because:

A) it allows the contract to be a destination contract
B) it is the earliest that risk of loss can pass
C) it determines when a document of title is needed
D) it determines when the implied warranties become effective

Question 54

How does a "no-arrival,no-sale" contract differ from an F.O.B.destination contract?

A) If the goods fail to reach their destination,the seller must replace them in an F.O.B. destination contract,but not in a no-arrival,no-sale contract.
B) Risk of loss while the goods are in transit is on the seller in an F.O.B. destination contract,but on the buyer in a no-arrival,no-sale contract.
C) Implied warranties exist in the F.O.B. destination contract,but not in the no-arrival,no-sale contract.
D) Identification will occur in an F.O.B. destination contract,but not in a no-arrival,no-sale contract.

Question 55

For which of the following does the risk of loss shift to the buyer upon the buyer taking possession?

A) sale on approval
B) sale or return
C) consignment and sale or return
D) consignment,sale or return,and sale on approval
E) sale or return and sale on approval

Question 56

In a noncarrier case for the sale of goods,which of the following is most important in determining when risk of loss passes?

A) whether the seller is a merchant
B) whether any warranties have been disclaimed
C) whether the buyer is a merchant
D) when title passes

Question 57

When does risk of loss pass in a sale of goods that does not involve a common carrier:

A) upon tender of delivery for both merchant sellers and nonmerchant sellers
B) upon tender of delivery for merchant sellers and when goods are received by the buyer in the case of nonmerchant sellers
C) upon tender of delivery for nonmerchant sellers and when goods are received by the buyer in the case of merchant sellers
D) when goods are received by the buyer for both merchant sellers and nonmerchant sellers

Question 58

Which of the following is true about passage of title?

A) It occurs at the time and place goods are shipped in a shipment contract,and upon reaching the buyer's place of business or other specified location in a destination contract.
B) It always occurs when the goods leave the hands of the seller.
C) It does not occur until the buyer indicates acceptance of the goods.
D) It always passes at the same time that risk of loss passes.
E) It occurs at the time payment is made by the buyer.

Question 59

If a contract calls for the goods to be shipped "F.A.S.the Peerless" it means that:

A) The seller must place the goods on the Peerless and will bear the risk of loss until the goods reach their destination.
B) The seller must place the goods alongside the Peerless and will bear the risk of loss until the goods are loaded onto the ship.
C) The seller must place the goods alongside the Peerless and the risk of loss will shift when this is done.
D) The seller must notify the operator of the Peerless as to the location of the goods,and the risk of loss will shift when they are picked up.
E) The seller must notify the buyer so that the buyer can make arrangements to get the goods to the Peerless and the risk of loss will shift when the notification has been made.

Question 60

In which of the following is the usual reason for the return of the goods that they were not able to be resold?

A) sale on approval
B) sale or return
C) consignment and sale or return
D) consignment,sale or return,and sale on approval
E) sale or return and sale on approval

Question 61

A seller contracted to sell lumber to the buyer.The contract was a destination contract and the goods were to be shipped by common carrier.The lumber was destroyed by fire before it was delivered to the buyer.Which of the following statements best describes this situation?

A) The risk of loss passed to the buyer when the contract was made.
B) The risk of loss passed to the buyer when the goods were delivered to the common carrier.
C) The risk of loss has not yet passed to the buyer and remains on the seller until the goods are delivered.
D) The risk of loss remains on the seller until a document of title is delivered to the buyer.

Question 62

Josh had a computer that needed repair.He took the computer to a used computer dealer that also repaired computers.While talking with the owner,Josh learned that the owner also knew how to repair bicycles.Josh happened to need some repairs done on his bike,so he left it at the computer shop too.A week later,Josh went to pick up his bike and computer.When he got to the store,the owner said he had bad news.He had hired a new employee.The new employee had major difficulties and sold a number of items that were in for repair.He sold both Josh's computer and his bike.The store owner knows who purchased them from the credit card records.In this situation,Josh can recover:

A) his computer,but not his bike
B) his bike,but not his computer
C) both his bike and his computer
D) neither his bike nor his computer

Question 63

Mrs.Smith is moving out of her personal residence to a smaller apartment.Because of this,she wishes to sell her piano.George inspects her piano and decides to buy it.Mrs.Smith receives her money and tells George he can take the piano right now.George says he needs to borrow his friend's truck before he can remove the piano.That night,the piano is destroyed by fire.George sues to recover his money.Which best describes this situation?

A) Mrs. Smith wins; the risk of loss passed to George as soon as the contract was made.
B) Mrs. Smith wins; the risk of loss passed to George when Mrs. Smith said he could take the piano.
C) George wins; the risk of loss does not pass until George takes delivery of the piano.
D) George wins; the risk of loss does not pass until George receives a negotiable warehouse receipt.
E) George wins; the risk of loss stays on Mrs. Smith because the goods were not conforming.

Question 64

A seller and buyer have just agreed that the buyer will purchase 1,000 of the widgets from the thousands that the seller has in its warehouse.The buyer will pick them up at the seller's warehouse.The day before the buyer is to pick them up,the seller's employee sets the 1,000 widgets aside.What is the significance of setting the buyer's widgets aside?

A) It shifts the risk of loss to the buyer.
B) It constitutes identification.
C) It terminates the buyer's ability to revoke.
D) It fully discharges the seller's duties under the contract.

Question 65

To whom can a thief pass good title to stolen goods?

A) any purchaser who gives consideration
B) any purchaser or donee who is unaware that the goods are stolen
C) any good faith purchaser for value
D) any buyer in the ordinary course of business
E) no one

Question 66

Cybermakers has contracted with a computer chip manufacturer to buy a quantity of computer chips for delivery the following month.These computer chips are in the seller's warehouse,and the contract's shipping terms are F.O.B shipping point.At this point,prior to the chips being shipped,who has an insurable interest in the computer chips?

A) the buyer only
B) the seller only
C) both the buyer and seller
D) neither the buyer nor seller

Question 67

When a thief sells stolen goods to someone who does not know that they were stolen and has no reason to know that they were stolen,the buyer receives what kind of title?

A) voidable
B) void
C) good
D) joint

Question 68

Mary runs a ski shop at a popular ski resort.She is approached by Sandy who has several hundred ski hats she would like Mary to buy for her shop.These hats are very funky and artistic.From Mary's experience,she believes that they will either be a big hit and will sell out quickly,or people will look at them and say,"how interesting" and move on.Mary says she does not want to be stuck with a bunch of the hats.Mary says that she will buy them,but wants Sandy to agree to take any back at the end of the season if they didn't sell and Mary decides to not keep them until the following season.This arrangement is:

A) a sale or return
B) a sale on approval
C) a consignment
D) not a contract because Mary has made an illusory promise

Question 69

When a buyer breaches a contract by refusing to take delivery of conforming goods,the buyer:

A) bears the risk of loss only for a commercially reasonable time
B) bears the risk of loss until the breach is cured
C) shifts the risk of loss back to the seller
D) bears the risk of loss only in the case of an unjustified breach

Question 70

A buyer and seller contract for the sale of certain goods,currently in the seller's possession.The contract requires that the goods be delivered by the seller to the buyer's place of business.Title of these goods passes to the buyer when:

A) the seller places the goods in the possession of a common carrier and makes a proper contract for delivery
B) the seller physically delivers these goods to the buyer's place of business
C) the buyer picks up the goods
D) the buyer receives a document of title

Question 71

A seller contracted to sell lumber to the buyer.The contract was a shipment contract and the goods were to be shipped by common carrier.The lumber was destroyed by fire before the common carrier delivered the lumber to the buyer.Which of the following statements best describes this situation?

A) The risk of loss passed to the buyer when the contract was made.
B) The risk of loss passed to the buyer when the goods were delivered to the common carrier.
C) The risk of loss has not yet passed to the buyer and remains on the seller until the goods are delivered.
D) The risk of loss remains on the seller until a document of title is delivered to the buyer.

Question 72

Seller agrees to sell and deliver goods to the buyer.The terms were F.O.B.destination.The goods were delivered to the common carrier,but were destroyed in transit.Both parties have insurance policies that will cover the loss,if they have an insurable interest.Which of the following statements best describes this situation?

A) The seller has an insurable interest in the goods until they are delivered to the buyer.
B) The buyer had an insurable interest in the goods ever since they were identified to this contract.
C) Since the seller has the risk of loss,only the seller will be able to collect insurance proceeds.
D) A,B,and C are true.
E) A and C only are true.

Question 73

Seller contracts to sell goods to the buyer.This was a destination contract.However,the buyer refused to accept these goods and returned them to the seller,even though they were the proper goods under the contract.Before the seller received them,the goods were destroyed by fire.Which of the following best describes this situation?

A) The risk of loss passes to the buyer when the contract was made.
B) The risk of loss passes to the buyer when the goods were delivered to the common carrier.
C) The risk of loss is on the seller because the goods were nonconforming goods.
D) The risk of loss is on the buyer because the goods were conforming goods.

Question 74

A seller contracted to sell goods to the buyer.The goods were to be held by the seller until the buyer could pick them up.The seller informed the buyer that the goods were ready to be picked up.Several days later,before the buyer could pick up the goods,the goods were destroyed by fire.The seller is a merchant.Which of the following statements best describes this situation?

A) The risk of loss passed to the buyer when the contract was made.
B) The risk of loss passed to the buyer when the goods were tendered to the buyer.
C) The risk of loss has not yet passed to the buyer.
D) The risk of loss remains on the seller until a document of title is delivered to the buyer.

Question 75

Theona Thief stole an expensive watch.Theona then sold it through the classified ads to Andy.Andy had no reason to know it had been stolen.Andy took it to a watch dealer to be cleaned and appraised.He left it at the dealer on May 2,and he was told it would be ready on May 6.On May 8,an employee at the watch store sold the watch to Billy.On May 10,Valerie Victim notices the watch on Billy's wrist and demands its return.Who gets the watch?

A) Theona
B) Andy
C) Billy
D) the watch dealer
E) Valerie

Question 76

A seller contracted to sell goods to the buyer.The goods were to be held by the seller until the buyer could pick them up.The seller informed the buyer that the goods were ready to be picked up.Several days later,before the buyer could pick up the goods,the goods were destroyed by fire.The seller is not a merchant.Which of the following statements best describes this situation?

A) The risk of loss passed to the buyer when the contract was made.
B) The risk of loss passed to the buyer when the goods were tendered to the buyer.
C) The risk of loss has not yet passed to the buyer.
D) The risk of loss passed to the buyer a reasonable time after she was notified that the goods could be picked up.

Question 77

In general,what is the effect on risk of loss when a party breaches a contract?

A) The breaching party will bear the risk of loss for some period of time.
B) The breaching party will permanently bear the risk of loss.
C) The breach can speed up shift of the risk of loss to the buyer,or return the risk to the seller.
D) A and C are true.

Question 78

When a buyer of goods has obtained the goods properly from the seller,but later fails to pay for them,what kind of title does the buyer have?

A) voidable
B) void
C) good
D) joint

Question 79

Ralph purchases a car from a minor and subsequently sells it to Jack,another adult who had no reason to know of the previous transaction and who paid full value for the car.Which of the following best describes this situation?

A) Ralph had good title and Jack gets good title.
B) Ralph had good title and Jack gets voidable title.
C) Ralph had voidable title and Jack gets good title.
D) Ralph had voidable title and Jack gets voidable title.

Question 80

Under the UCC,an entrusting of goods to a merchant who deals in that kind of goods gives the merchant:

A) the power to transfer all rights of the entrustor to a buyer in the ordinary course of business
B) no power to transfer all rights of the entrustor to a buyer in the ordinary course of business
C) the power to transfer all rights of the entrustor to anyone who makes a demand for the goods
D) the power to transfer all rights of the entrustor to anyone except to a buyer in the ordinary course of business