Deck 19: Title and Risk of Loss

Question 1

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

Answer 1

False

Question 2

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

Answer 2

True

Question 3

C.I.F.stands for "cost,insurance,freight."

Answer 3

True

Question 4

When the risk of loss for goods passes from a seller to a buyer is generally determined by the contract between the parties.

Question 5

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

Question 6

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

Question 7

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 8

The UCC has replaced the common law concept of title in part with the concept of identification.

Question 9

A bill of lading serves as a contract for the transportation of goods.

Question 10

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

Question 11

If a sale involves unborn animals to be born within twelve months after contracting,identification takes place when the animals are born.

Question 12

Under the UCC,title determines all of the rights and remedies of the parties to a sales contract.

Question 13

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

Question 14

"Unless otherwise explicitly agreed," title passes to the buyer at the time and place at which the seller physically delivers the goods.

Question 15

If a sale involves crops that are to be harvested within twelve months,identification takes place when the crops are planted.

Question 16

Under a shipment contract,the risk of loss passes to the buyer when the seller places conforming goods in the possession of the carrier.

Question 17

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

Question 18

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

Question 19

Fungible goods are goods that cannot be delivered by physical transport.

Question 20

Title is one concept that the UCC has substituted for the common law concept of risk of loss.

Question 21

A contract in which a buyer takes goods primarily for resale,with a right to return any goods that fail to sell,is a sale on approval.

Question 22

The UCC treats a consignment as a sale on approval.

Question 23

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

Question 24

Uri sells 100 cases of vitamins to Wanda,but before she takes physical possession,the cases are lost.Under the UCC,the parties' rights and obligations with respect to the loss depend on the concept of

A)physical possession.
B)product liability.
C)risk of loss.
D)title.

Question 25

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

Question 26

When goods are in a consignee's possession,the consignee's creditors will prevail over the consignor in an action to repossess the goods.

Question 27

A bailee is a buyer or lessee.

Question 28

A contract in which a buyer is allowed to take goods on a trial basis is a sale or return.

Question 29

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

Question 30

A buyer has an insurable interest in identified goods.

Question 31

Office Equipment Leasing,Inc.(OEL),agrees to lease five computer workstations to Product Promotion Corporation (PPC).Before any interest in the workstations can pass from OEL to PPC,they must be

A)in existence and identified as the goods in the contract.
B)in existence only.
C)identified as the specific goods designated in the contract only.
D)none of the choices.

Question 32

If a seller is a merchant,and the goods are not to be moved,the risk of loss passes to a buyer when the buyer takes physical possession of the goods.

Question 33

When a buyer agrees to buy goods held by a bailee,unless otherwise explicitly agreed,the risk of loss passes to the buyer when the price is paid.

Question 34

EZ Equipment Corporation leases six forklifts to Fresco Refining Company,but as the forklifts are delivered,they are lost in an explosion.Under the UCC,the parties' rights and obligations with respect to the loss depend on the concept of

A)physical possession.
B)product liability.
C)risk of loss.
D)title.

Question 35

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

Question 36

When a buyer breaches a contract,the risk of loss immediately shifts to the buyer.

Question 37

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

Question 38

In a sale or return,the seller delivers the goods to the buyer with the understanding that the buyer can set aside the deal by returning the goods.

Question 39

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 40

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 41

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 42

Lewey's Bicycle Store contracts to buy fifty bicycles from Mountain Bikes,Inc.Unless the contract states otherwise,this is

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

Question 43

Dirk steals Effie's necklace and sells it to Fiona.Effie can recover the necklace from Fiona

A)only if Fiona did not know that the necklace was stolen.
B)only if Fiona gave legally sufficient consideration for the necklace.
C)only if Fiona knew that the necklace was stolen.
D)under any circumstances.

Question 44

Mica buys 1,000 bales of hay from Nuevo Farms.The parties agree that the hay will be transported F.A.S.via Overland Transport,Inc.Nuevo Farms' truck carrying the hay explodes before reaching Overland Transport.The loss is suffered by

A)Mica and Nuevo Farms,but not Overland Transport.
B)Mica,Nuevo Farms,and Overland Transport.
C)Mica only.
D)Nuevo Farms only.

Question 45

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 46

Aromatic Tea Company contract to sell tea to Savory Stores,Inc.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 47

Barb pays $1,000 for a new computer to Computer Products Corporation,which pays Discount Warehouse,Inc.,$50 to store the computer until Barb retrieves it.Discount Warehouse is

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

Question 48

Real Foods Corporation orders from Savory Company goods that are stored in an Uptown,Inc.,warehouse.Real Foods pays for the goods,delivery is via the transfer of a negotiable warehouse receipt,and Real Foods moves the goods out of the warehouse.The risk of loss passes to Real Foods when it

A)orders the goods.
B)pays for the goods.
C)receives the negotiable warehouse receipt.
D)moves the goods out of the warehouse.

Question 49

Bree leaves a pair of new shoes at Cobbler's Shoe Store to be dyed.Cobbler's sells the shoes to Dian,who does not know that the shoes belong to Bree.Bree can recover from

A)Cobbler's Shoe Store only.
B)Cobbler's Shoe Store or Dian.
C)Dian only.
D)neither Dian nor Cobbler's Shoe Store.

Question 50

Perfect Fit Furnishings,Inc.,agrees to lease a desk to Research Resources,Inc.(RRI),which requests that the desk be left outside Streetside Warehouse for RRI to pick up.Before RRI retrieves the desk,it is stolen.The loss is suffered by

A)Perfect Fit and RRI,but not Streetside Warehouse.
B)Perfect Fit only.
C)Perfect Fit,RRI,and Streetside Warehouse.
D)RRI only.

Question 51

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 transporting the fabric to Ohio will be paid by

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

Question 52

Deep Storage Company holds goods for EZ Sales Corporation,which contracts to sell them to Fabric Stores,Inc.The goods are to be delivered without being moved and are represented by a negotiable bill of lading.The risk of loss passes to Fabric Stores

A)if Deep refuses to honor the bill of lading.
B)if EZ gives the bill of lading to Deep.
C)if the goods are lost due to an "act of God."
D)when Fabric Stores receives the bill of lading.

Question 53

A contract between Fresh Fruit Corporation and Green Grocer,Inc.,requires 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 54

Angie buys a lamp from Brite Lites Store,which agrees to keep it for Angie until she picks it up.Before Angie gets the lamp,a fire destroys the store and the lamp.The loss is suffered by

A)Angie and Brite Lites.
B)Angie only.
C)Brite Lites only.
D)neither Angie nor Brite Lites

Question 55

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 56

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 57

Gins pays $2,000 for a new HDTV to Imagine Corporation.Imagine holds the set until Gina picks it up.Imagine is

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

Question 58

Leo buys a boat from his neighbor Moe,who is a fishing guide.Moe agrees to keep the boat in his storage shed until Leo picks it up.A tree falls on Moe's shed and destroys the boat.The loss is suffered by

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

Question 59

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 60

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 61

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

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

Question 62

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 63

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

Question 64

Li'l Jewelry Store orders display racks from Mark-Up Supplies,Inc.(MSI).MSI mistakenly ships racks of the wrong size and color,which Li'l rejects and returns via Nevermind Shipping Company.During the return,the racks are lost.The loss is suffered by

A)Li'l only.
B)Li'l and MSI,but not Nevermind.
C)Li'l,MSI,and Nevermind.
D)MSI only.

Question 65

Moto Company sells new and used motorcycles.Some of the motorcycles are held on consignment,including six consigned by Nu Cycles,Inc.While the u cycles are in Moto's possession,title to them is held by

A)Moto and Nu jointly.
B)Moto only.
C)Moto's creditors only.
D)Nu only.

Question 66

Office Applications Company (OAC)orders six laser printers from Printing Products,Inc.(PPI),to be delivered by PPI.Before PPI's truck arrives with the goods,OAC tells PPI it will not pay.The printers are lost in transit.The loss is suffered by

A)OAC only.
B)OAC to the extent of a deficiency in PPI's insurance coverage only.
C)PPI to the extent of a deficiency in OAC's insurance coverage only.
D)PPI only.

Question 67

Tone Style Stores orders leather jackets from Universa Clothing Company.Universa mistakenly ships denim jackets,which Tone rejects and returns via Valu Transport,Inc.During the return,the jackets are lost.The loss is suffered by

A)Tone only.
B)Tone and Universa,but not Valu.
C)Tone,Universa,and Valu.
D)Universa only.

Question 68

Diners Cafe orders five gallons of corn oil from EZ Distributors,Inc.EZ mistakenly ships olive oil,which Diners keeps,despite the nonconformity.The oil is destroyed in a fire.The loss is suffered by

A)Diners and EZ,but not Diners' customers.
B)Diners,EZ,and Diners' customers.
C)Diners only.
D)EZ only.

Question 69

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 Silky,a merchant who sells new and used television sets.By accident,one of Silky's employees sells the set to Tuna,an innocent purchaser-customer,who takes possession.Riley wants his set back from Tuna.

Question 70

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

A)Quik and Re,but not consumers generally.
B)Quik only.
C)Quik,Re,and consumers generally.
D)Re only.

Question 71

Timekeep Watches,Inc.,ships an assortment of timepieces to Unique Jewelers,Inc.,which agrees to pay for items that are not returned within six months.This is

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

Question 72

NuStores accepts a shipment of DVD players from Open-Ur-Eyes Video,Inc.NuStores later discovers a defect in the players,revokes acceptance,and returns the players via Playback,Inc.During the return,the players are lost.The loss is suffered by

A)NuStores only.
B)NuStores and Open-Ur-Eyes,but not Playback.
C)NuStores,Open-Ur-Eyes,and Playback.
D)Open-Ur-Eyes only.