Deck 19: Title and Risk of Loss

Question 1

A seller with voidable title can transfer good title to a good faith purchaser for value.

Answer 1

True

Question 2

"Unless otherwise explicitly agreed," title passes to the buyer at the time at which the seller orally agrees to deliver the goods.

Answer 2

False

Question 3

In a destination contract,the seller is required to deliver the goods to a particular destination.

Answer 3

True

Question 4

When a lessee sells leased equipment to a third party,the lessor cannot,under any circumstances,recover the equipment from the buyer.

Question 5

A bill of lading serves as a con?tract for the transportation of goods.

Question 6

Before any interest in specific goods can pass from the seller to the buyer,the goods must exist and be identified to the contract.

Question 7

If a sale involves crops that are to be harvested within twelve months,iden?tification takes place when the seeds for the crops are purchased.

Question 8

All UCC provisions relating to the passage of title for the sale of goods also apply to the lease of goods.

Question 9

In most situations involving sales,rights and liabilities are determined by who has the title to the goods.

Question 10

Entrusting goods to a merchant who deals in goods of the kind gives the merchant the power to transfer all rights to a buyer in the ordinary course of business.

Question 11

Owners in common are owners with an undivided share of the whole.

Question 12

Even if goods are not identified to the contract,the title and risk of loss can still pass from the seller to the buyer.

Question 13

Future goods are goods that are not both existing and identified to the contract.

Question 14

A receipt issued by a warehouser for goods stored in a warehouse is a warehouse receipt.

Question 15

Unless a contract provides otherwise,it is assumed to be a shipment contract.

Question 16

Identification,risk of loss,and insurable interest are all concepts that are involved in determining the rights and liabilities of parties to a contract.

Question 17

Identification takes place before specific goods are designated as the subject matter of a sales or lease contract.

Question 18

In contracts involving a sale of unborn animals to be born within twelve months,identification takes place when the animals are born.

Question 19

Fungible goods are goods that are alike naturally or by agreement or trade usage.

Question 20

When a document of title is required,title passes to a buyer when and where the document is delivered.

Question 21

In a sale on approval,title and risk of loss pass before the buyer ac?cepts the goods.

Question 22

In general,a buyer's breach of a contract causes the risk of loss to shift to the buyer.

Question 23

Jason contracts with Golf Carts Unlimited,Inc.to buy five golf carts.The contract lists the five carts as GC001,GC002,GC003,GC004,GC005.Identification

A)requires that Jason verify his identity to take possession of the carts.
B)has taken place.
C)cannot take place until the contract is reviewed by a court.
D)will take place only when Jason pays for the golf carts.

Question 24

The right to cure is the right of a party who tenders nonconforming performance to correct his or her performance within the contract period.

Question 25

On behalf of Premier Shipbuilding Corporation (PSC),Rita orders 1,000 cases of 1/4-inch nuts from Steel Parts Company's 10,000-case lot.Steel Parts separates 1,000 cases from the lot.Title and risk of loss

A)remain with Steel Parts until PSC acknowledges tender of delivery.
B)remain with Steel Parts until PSC accepts 1,000 cases.
C)shift to PSC after it accepts the nuts and inspects them for defects.
D)shift to PSC when Steel Parts separates the cases.

Question 26

Alaskan salmon that fill the hold of Bill and Carla's fishing boat are fungible if the salmon are

A)alike naturally or by agreement or trade usage.
B)fundamentally different.
C)fun,good,and edible.
D)liable to deteriorate over time.

Question 27

A bailee is a buyer or lessee.

Question 28

If a seller is a merchant,and the seller holds the goods,the risk of loss cannot pass to a buyer.

Question 29

The contract term "delivery ex-ship" means that the risk of loss does not pass to the buyer until the goods are properly unloaded from the ship or other carrier.

Question 30

Before a seller can have an insurable interest in goods,the goods must be identified to a contract.

Question 31

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

Question 32

The contract term "free on board" indicates that the selling price of goods includes transportation costs to the specific F.O.B.place named in the contract.

Question 33

If a seller is not a merchant,and the goods are not to be moved,the risk of loss passes to a buyer on tender of delivery.

Question 34

Bill orders 1,000 nails from Super Hardware,Inc.Super Hardware keeps its nails in packages of 100,000.Bill and the agent for Super Hardware both sign the contract for the sale of the nails on Monday.The agent separates 1,000 nails on Wednesday.The agent delivers the nails to Bill on Thursday morning,and Bill pays for the nails on Friday.Identification of the nails took place on

A)Monday.
B)Wednesday.
C)Thursday.
D)Friday.

Question 35

If a sale of goods is conditional on the buyer's resale of the purchased goods,then the transaction is a sale or return.

Question 36

A buyer and a seller cannot normally have an insurable interest in iden?tical goods at the same time.

Question 37

A specific grade of corn that fills BioFuel Cooperative's silo is fungible.This means that the corn is

A)alike naturally or by agreement or trade usage.
B)fundamentally different.
C)fundamentally edible.
D)perishable.

Question 38

If a seller is a merchant,and the seller holds the goods,and the buyer is to pick them up,the risk of loss passes to the buyer on tender of delivery.

Question 39

If a lessor is a merchant,the risk of loss passes to a lessee when the lessee takes physical possession of the goods.

Question 40

With a sale on approval,goods held on approval are subject to the claims of the buyer's creditors before acceptance.

Question 41

Grace purchases three tons of fine merino wool on behalf of Woolen Creations.Woolen Creations wants the wool to remain in the warehouse where it is being stored until it is needed.Grace makes an offer for the wool on Monday.The offer is accepted on Tuesday.The warehouser gives Woolen Creations a warehouse receipt on Wednesday.Woolen Creations picks up the wool from the warehouse three months after the sale.Title for the wool passed to Woolen creations

A)on Monday.
B)on Tuesday.
C)on Wednesday.
D)three months after the sale.

Question 42

Raw Material,Inc.,and Sewn Fabric Corporation enter into a contract for a sale of muslin.The terms do not clearly indicate whether it is a destination or shipment contract.A court would most likely presume that it is

A)a bailment contract.
B)a destination contract.
C)a shipment contract.
D)a transportation contract.

Question 43

Levi,a well-known lumber dealer with a good reputation,buys a load of lumber and pays for it with a check that is later dishonored.Sam,who is unaware of the bad check,buys the lumber from Levi.Sam is a(n)

A)good faith purchaser.
B)bad faith purchaser.
C)insolvent purchaser.
D)bailee.

Question 44

A contract between Fresh Fruit Corporation and Green Grocer,Inc.,re?quires Fresh Fruit to deliver goods to Green Grocer's place of business.This is

A)a bill of lading.
B)a destination contract.
C)a shipment contract.
D)a warehouse receipt.

Question 45

Ideal Gadgets,Inc.,and Jolly Outlets Corporation enter into a contract for a sale of kitchenware.The contract requires Ideal to deliver the goods to Ladle Carrier Company for transport to Jolly's warehouse in Metro City.Risk of loss passes to Jolly when

A)Ideal delivers the goods to Ladle.
B)Ideal identifies the goods to the contract.
C)Ladle transports the goods to Jolly's warehouse.
D)the goods arrive in Metro City.

Question 46

Southern Distribution,Inc.,signs a receipt for goods that will also serve as a contract for the goods' transport. This is

A)a bill of lading.
B)a destination contract.
C)a shipment contract.
D)a warehouse receipt.

Question 47

Home Products Store buys furniture from Relax-o Furniture,Inc.The parties agree that the furniture will be shipped "F.O.B.Relax-o's ware?house" to Home Products via Swift Shipping Corporation.The furniture is lost in transit.The loss is suffered by

A)Home Products and Relax-o Furniture,but not Swift Shipping.
B)Home Products,Relax-o Furniture,and Swift Shipping.
C)Home Products only.
D)Relax-o Furniture only.

Question 48

Aromatic Tea Company and Savory Stores,Inc.,enter into a contract for a sale of tea.The contract includes the term "F.O.B.Upriver City," which is Savory's location.This means that the contract is

A)a bailment contract.
B)a destination contract.
C)a shipment contract.
D)a transportation contract.

Question 49

Silky Material Corporation in New Jersey sells fifty tons of fabric to Tattered Clothing,Inc.,in Ohio,"F.O.B.New Jersey." The cost of transport?ing the fab?ric to Ohio will be paid by

A)Silky Material.
B)Tattered Clothing.
C)New Jersey.
D)Ohio.

Question 50

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

A)January,when the contract is signed.
B)April,when the calves are conceived.
C)February,when the calves are born.
D)a reasonable period of time.

Question 51

Kip,a representative for Lite-Weight Shipping Company,delivers a bill of lading to Meg,the owner of Capacity Storage Warehouse.A bill of lading is

A)an invoice for payment for loading and carting.
B)an order to ship goods by carrier to a certain destination.
C)a receipt for goods signed by a carrier.
D)a receipt issued by a warehouser for goods in a warehouse.

Question 52

Pam buys from Midtown Motors a used sport utility vehicle (SUV). The SUV was manufactured by Gem Vehicles,Inc.,and previously owned by Ron. Regarding title to the SUV,Pam acquires

A)whatever title Midtown had.
B)whatever title Gem had.
C)whatever title Ron had.
D)no title.

Question 53

Fay pays $800 for a new iPad to Global Goods,Inc.Global holds the iPad until Fay picks it up.Global is

A)a bailee.
B)a consignee.
C)a lessee.
D)a seller.

Question 54

Sweets Store buys chocolate from Tasty Candies,Inc.The parties agree that the chocolate will be shipped "F.O.B.Sweets" via United Railroad Corporation.The chocolate is lost in transit.The loss is suffered by

A)Sweets and Tasty,but not United.
B)Sweets only.
C)Sweets,Tasty,and United.
D)Tasty only.

Question 55

Elizabeth buys a car from Silas,who is 16 years old.Elizabeth then wants to sell the car to her neighbor,John.Elizabeth's title to the car is

A)valid.
B)voidable.
C)void.
D)good.

Question 56

Fits Like A Glove Shoes,Inc.,and Retail Footwear Stores enter into a contract for a sale of shoes.The contract indicates that the price includes transportation costs to a specific destination by including the term

A)C.I.F.
B)delivery ex-ship.
C)F.A.S.
D)F.O.B.

Question 57

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

A)Megan signs the contract.
B)Megan and the Sal's Clothing Shop agent sign the contract.
C)Sal's Clothing Shop physically delivers the dresses to the department store.
D)Megan pays Sal's Clothing Shop for the dresses.

Question 58

With a bill of lading,Cartage Common Carrier Company acknowledges possession of certain goods and contracts to deliver them.Cartage is

A)a bailee.
B)a buyer in the ordinary course of business.
C)a good faith purchaser for value.
D)an F.O.B.

Question 59

Leo buys a bicycle from his brother,Mike,who is a used car dealer.Mike agrees to keep the bike at his house until Leo picks it up. A tree falls on Mike's garage and destroys the bike.The loss is suffered by

A)Leo and Mike.
B)Leo only.
C)Mike only.
D)neither Leo nor Mike.

Question 60

Big Red Drinks,Inc.contracts to buy two tons of cranberries from Super Fruits,Inc.The contract states that Super Fruits is required to ship the cranberries to Big Red Drinks by Speedy Wind Air Freight.The contract is

A)a bill of lading.
B)a destination contract.
C)a shipment contract.
D)a warehouse receipt.

Question 61

In the following situations,two parties claim the same goods.Who is most likely to prevail in each circumstance? Explain.
(a) Olan steals Phil's television set and sells it to Quincy,an innocent purchaser,for value.Phil learns Quincy has the set and demands its return.
(b) Riley takes his television set for repair to Slick,a merchant who sells new and used television sets.By accident,one of Slick's employees sells the set to Tuna,an innocent purchaser-customer,who takes possession.Riley wants his set back from Tuna.

Question 62

Summit Sales Corporation orders goods from OverStock Company.Summit plans to market the goods to consumers generally.OverStock identifies the goods.Before they are shipped to Summit,an insurable interest in the goods exists in

A)Summit and OverStock,but not consumers generally.
B)Summit,OverStock,and consumers generally.
C)Summit only.
D)OverStock only.

Question 63

Diamond Camera Shop receives lenses from Excel Optical,Inc.,under a sale or return agreement.While the lenses are in Diamond's possession,title is held by

A)Diamond and Excel jointly.
B)Diamond only.
C)Diamond's creditors only.
D)Excel only.

Question 64

Philip purchases ten lawnmowers through a sale or return contract.He plans to resell the lawnmowers in his garden supply store.The contract specifies that Philip must return the lawnmowers within six months if he decides that he does not want them.After seven months,Philip has sold five mowers,but decides that he does not want to keep trying to sell the rest of them.Philip

A)can return the five remaining lawnmowers and not have to pay for them.
B)cannot return the five remaining lawnmowers because the sale was considered finalized after six months.
C)can return the five remaining lawnmowers as long as he does so before a year has passed.
D)can return the five lawnmowers as long as he pays all costs related to shipping them.

Question 65

Krissa wants to buy a horse from Gunnar.Gunnar agrees to let Krissa take the horse for a week to try it out.They sign a contract for a sale on approval.Krissa rides the horse for a week,but then decides that she does not like it.Krissa

A)must still buy the horse.
B)can return the horse with no penalty.
C)can return the horse,but must buy another one from Gunnar.
D)can return the horse,but must pay a penalty fee.

Question 66

Good Food Corporation buys from Home Farms,Inc.,a rice crop that Home Farms plans to plant and harvest during the next growing season.Good Food plans to sell the rice to Interstate Grocery Stores.After the rice is planted,but before it is harvested,an insurable interest in the rice ex?ists in

A)Good Food and Home Farms,but not Interstate Grocery.
B)Good Food,Home Farms,and Interstate Grocery.
C)Good Food only.
D)Home Farms only.

Question 67

Sweetwater Café orders five gallons of trans fat-free cooking oil from Restaurant Supply,Inc.The seller mistakenly ships the wrong oil,which the buyer keeps,despite the nonconform?ity.The oil is destroyed in a kitchen fire.The loss is suffered by

A)Sweetwater and Restaurant Supply,but not Sweetwater customers.
B)Sweetwater,Restaurant Supply,and Sweetwater customers.
C)Sweetwater only.
D)Restaurant Supply only.

Question 68

Regal Recreation Sales,Inc.,allows Sandy to take a Regal boat for a "test run." Sandy tries the boat for a few hours,returns,and buys it.This is

A)a bailment.
B)a consignment.
C)a sale on approval.
D)a sale or return.

Question 69

Quality Computer Company agrees to sell one hundred servers to Social Media Networks,Inc. The servers,which Social Media Networks ex?pressly requires to have certain amounts of memory,are to be shipped "F.O.B.Social Media Networks distribution center in Memphis,TN." When the servers arrive,Social Media Networks rejects them and informs Quality Computer,claiming that the servers do not conform to Social Media Networks' memory requirement. A few hours later,the servers are destroyed in a fire at Social Media Networks' distribution center. Will Quality Computer succeed in a suit against Social Media Networks for the cost of the goods?

Question 70

A-1 Furnishings,Inc.,agrees to lease a desk to Business Resources,Inc.(BRI),which requests that the desk be left outside City Warehouse for BRI to pick up.Before BRI retrieves the desk,it is stolen.The loss is suf?fered by

A)A-1 Furnishings and BRI,but not City Warehouse.
B)A-1 Furnishings,BRI,and City Warehouse.
C)A-1 Furnishings only.
D)BRI only.

Question 71

Twyla buys an HD TV from Viewpoint Electronics store,which agrees to keep the TV for Twyla until she picks it up.Before she gets the TV,a fire destroys the store and the set.The loss is suffered by

A)neither Twyla nor Viewpoint
B)Twyla and Viewpoint.
C)Twyla only.
D)Viewpoint only.

Question 72

Quality Watches,Inc.,ships an assortment of timepieces to Retail Jewelers,Inc.,which agrees to pay for items that are not re?turned within six months.This is

A)a bailment.
B)a consignment.
C)a sale on approval.
D)a sale or return.