Deck 19: Title to Goods and Risk of Loss

Question 1

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 1

B

Question 2

In a lease transaction,title to the leased goods passes to the lessee.

Answer 2

False

Question 3

A shipment contract requires the seller to deliver goods to a destination specified in the sales contract.

Answer 3

False

Question 4

Goods that are part of a larger mass of goods are identified when the specific merchandise is designated.

Question 5

A(n)________ is 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)destination contract
B)letter of credit
C)document of title
D)acceptance draft

Question 6

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 seller hands over the goods to the 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 7

Jason orders one hundred remote-controlled toy cars from RyBy Toys.In the contract,it is stipulated that RyBy Toys will transport the toy cars via FlyByNight,a national carrier service.RyBy Toys makes the arrangements and hands over the toys to FlyByNight without the remote-controllers.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 8

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

A)when the buyer 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 9

The UCC allows the title of goods to be passed without its identification.

Question 10

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 is signed by both Thomas and Bricklay's
B)when Thomas receives 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

Question 11

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 12

An undeveloped real estate property is an example of future goods.

Question 13

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 14

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 15

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

A)an option contract for a real estate property
B)a contract to buy a car off a dealer's lot
C)a preordered video game
D)a contract to sell a newborn animal

Question 16

Goods that are already in existence but which are to be sold at a future date are known as future goods.

Question 17

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

Question 18

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

Question 19

Article 2 of the Uniform Commercial Code establishes precise rules for determining the passage of title in sales contracts.

Question 20

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

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

Question 21

From the following options,identify the commonly used shipping term that calls for the seller to arrange to ship the goods and put the goods in the carrier's possession.

A)no-arrival, no-sale contract
B)F.O.B. (free on board)
C)ex-ship
D)C.I.F. (cost, insurance, and freight)

Question 22

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 23

In a no-arrival,no-sale contract,the seller is not required to deliver replacement goods to the buyer.

Question 24

C.&F.is a pricing term that means that the price includes the cost of the goods and the costs of insurance and freight.

Question 25

________ 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)Cost, insurance, and freight (C.I.F.)

Question 26

If no document of title is required,title only passes at the time and place of delivery.

Question 27

What is the passage of title to goods?

Question 28

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

Question 29

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

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

Question 30

What is the method of identification of goods specified under UCC guidelines?

Question 31

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.
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 32

Which of the following is true for the shipping term F.O.B.(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 33

The term "Ex-ship" requires the seller to bear the expense and risk of loss until the goods are unloaded from the ship at its port of destination.

Question 34

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

Question 35

Article 2A (Leases)of the UCC establishes rules regarding title and risk of loss for leased goods.

Question 36

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 37

In an F.O.B.point of shipment,the buyer bears the risk of loss while the goods are in transit.

Question 38

In an F.A.S.port of shipment,the buyer bears the shipping costs and the risk of loss during transport.

Question 39

In an F.O.B.place of destination,the buyer has to bear the expense and risk of loss until the goods are tendered at the place of destination.

Question 40

If a document of title is required,title must pass when and where the seller delivers the goods to the buyer.

Question 41

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 of his preferred color from a nearby warehouse.The warehouse was owned by Mr.Henderson.Kenneth received the document of title for the car upon payment and presented it to Mr.Henderson a week later.But Mr.Henderson informed Kenneth that the car was damaged during a fire at 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 42

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 43

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

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

Question 44

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 45

The delivery term "no-arrival,no-sale" can be added to a shipment contract.

Question 46

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

A)shipment contract
B)destination contract
C)a contract to sell real estate
D)consignment contract

Question 47

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

A)if the buyer refuses to accept nonconforming goods
B)if the buyer accepts nonconforming goods
C)if the buyer refuses to accept conforming goods
D)if the buyer asks replacements for defective goods

Question 48

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 of his preferred color from a nearby warehouse.The warehouse was owned by Mr.Henderson.Kenneth received the document of title for the car upon payment and presented it to Mr.Henderson a week later.But Mr.Henderson informed Kenneth that the car was damaged during a fire at the warehouse.What role does Mr.Henderson fulfill in the contract?

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

Question 49

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 50

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 does not have to pay for destroyed goods.
D)The risk of loss passes once the shipping has been arranged.

Question 51

If the bailee refuses to honor a document of title or other direction to deliver,the risk of loss remains on the buyer.

Question 52

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 53

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 of his preferred color from a nearby warehouse.The warehouse was owned by Mr.Henderson.Kenneth received the document of title for the car upon payment and presented it to Mr.Henderson a week later.But Mr.Henderson informed Kenneth that the car was damaged during a fire at 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)The risk would have to be borne jointly by Quartent Cars and Kenneth.
B)The risk would have to be borne by Kenneth.
C)The risk would have to be borne by Quartent Cars.
D)The risk would have to be borne by Mr. Henderson.

Question 54

Jason orders one hundred remote-controlled toy cars from RyBy Toys.In the contract,it is stipulated that RyBy Toys will transport the toy cars via FlyByNight,a national carrier service.RyBy Toys makes the arrangements and hands over the toys to FlyByNight without the remote-controllers.Which of the following is a breach of contract?

A)Jason refusing the delivery of toys
B)Jason accepting the delivery of toys
C)RyBy shipping the toys without remote-controllers
D)FlyByNight delivering the toys without remote-controllers

Question 55

________ 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 56

Jason orders one hundred remote-controlled toy cars from RyBy Toys.In the contract,it is stipulated that RyBy Toys will transport the toy cars via FlyByNight,a national carrier service.RyBy Toys makes the arrangements and hands over the toys to FlyByNight without the remote-controllers.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 57

In a destination contract,the seller is required to replace any goods lost in transit.

Question 58

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

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

Question 59

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

A)destination contract
B)option contract
C)unequivocal transaction
D)conditional sale

Question 60

Larry,a merchant seller,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.But 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 pick up.
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 61

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 62

In the case of an ordinary lease,if the lessor is a merchant,the risk of loss remains with the lessor even after the lessee receives the goods.

Question 63

In a sale or return contract,the buyer has the option of returning all the goods to the seller.

Question 64

A seller has voidable title interest to goods if he or she obtained the goods through fraud.

Question 65

An entrusted merchant has the power to transfer all rights in the goods to a buyer in the ordinary course of business.

Question 66

In a sale on approval,the risk of loss and title to the goods remain with seller until the buyer's acceptance.

Question 67

Explain in detail the risk of loss in lease contracts.

Question 68

In a case in which a buyer purchases goods from a thief who has stolen them,the purchaser does not acquire title to the goods.

Question 69

When is a buyer in breach of a sales contract?

Question 70

Robert steals a truckload of plasma televisions that belong to Karson Electronics Store.He then resells it to Stu-Mart,which 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's legal course for reclaiming the televisions or recovering 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 its 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 71

In a sale on approval,there is no sale unless and until the buyer accepts the goods.

Question 72

Which of the following is a good faith purchaser?

A)a person who pays sufficient consideration for good to someone he honestly believes has good title
B)a person who buys stolen goods without being aware of it
C)a buyer who agrees to hold goods for a person until 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 73

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

Question 74

Steve brings his watch to Knell Watches to be repaired.Knell Watches sells and repairs watches.Steve entrusts his watch at Knell's 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 75

A person with voidable title to goods can transfer the goods title to a good faith purchaser for value.

Question 76

In a sale or return contract,the risk of loss and title is with the seller even when the buyer takes possession of the goods.

Question 77

Acceptance of nonconforming goods is a breach of contract by the buyer.

Question 78

The real owner cannot reclaim goods from a good faith purchaser.

Question 79

Steve brings his watch to Knell Watches to be repaired.Knell Watches sells and repairs watches.Steve entrusts his watch at Knell's 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 did Kevin hold over the watch when he fraudulently bought the watch?

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

Question 80

Steve brings his watch to Knell Watches to be repaired.Knell Watches sells and repairs watches.Steve entrusts his watch at Knell's 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