Deck 18: Title and Risk of Loss

Question 1

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

Answer 1

True

Question 2

Under the UCC, the risk of loss necessarily passes with title.

Answer 2

False

Question 3

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

Answer 3

False

Question 4

Generally, all contracts are assumed to be shipment contracts if nothing to the contrary is stated in the contract.

Question 5

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

Question 6

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 7

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 8

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 9

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 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

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 15

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

Question 16

If an owner holds fungible goods as a tenant in common, he or she can pass title without actually separating the goods.

Question 17

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

Question 18

A warehouse receipt is a receipt signed by a warehouse for goods stored in a warehouse.

Question 19

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

Question 20

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

Question 21

If the tender or delivery of goods is so nonconforming that the buyer has the right to reject them, the risk of loss does not pass to the buyer until cure or acceptance.

Question 22

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 23

NutriRich, Inc., sells fifty cases of Omega 3 capsules to Good Health stores, but before Good Health 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) identification.
B) insurable interest.
C) risk of loss.
D) title.

Question 24

The risk of loss in a shipment contract passes to the buyer when the goods are delivered to the carrier.

Question 25

A buyer has an insurable interest in identified goods only if he or she has title to the goods.

Question 26

A seller has an insurable interest in goods as long as he or she retains title to the goods.

Question 27

If a lessor is a merchant, the risk of loss passes to a lessee on the lessee's receipt of the goods.

Question 28

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 29

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 30

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 31

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 32

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 33

If the goods are so nonconforming that the buyer has the right to reject them, the risk of loss does not pass to the buyer.

Question 34

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

Question 35

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

Question 36

When a seller keeps the goods for pickup, if the seller is a merchant, the risk of loss passes to a buyer when the buyer actually takes physical possession of the goods.

Question 37

If a buyer accepts a shipment of goods and later discovers a defect, acceptance cannot be revoked.

Question 38

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 39

Equipment Rentals Corporation (ERC) agrees to lease two backhoes to Dig & Fill Construction, Inc. Before any inter?est in the backhoes can pass from ERC to Dig & Fill, they must be

A) in existence and identified as the goods in the contract.
B) in ERC's physical possession.
C) in Dig & Fill's physical possession.
D) listed in a document of title and filed in the appropriate state office.

Question 40

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

Question 41

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 42

Mountainside Coffee Company and Nature's Cuisine, Inc., enter into a contract for a sale of coffee beans. The contract includes the term "F.O.B. Ocean City," which is the location of Nature's Cuisine. This means that the contract is

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

Question 43

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 44

Red's Roofing buys asphalt roofing tiles from Shingles, Inc. The parties agree that the tile will be shipped "F.O.B. Shingles warehouse" to Red's Roofing location via Tristate Shipping Corporation. The tiles are lost in transit. The loss is suffered by

A) Tristate Shipping.
B) Shingles, Inc.
C) Red's Roofing.
D) Red's customers by an increase in the prices of goods and services.

Question 45

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 46

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

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

Question 47

Roasters Corporation and Outdoor Barbecue, Inc., enter into a contract for a sale of a commercial grill. The contract requires Roasters to deliver the goods to Speedy Delivery Company for transport to Outdoor. Risk of loss passes to Outdoor when

A) Roasters delivers the goods to Speedy.
B) Roasters and Outdoor enter into their contract.
C) Speedy transports the goods to Outdoor.
D) Outdoor begins to use the grill.

Question 48

Elizabeth buys a car from Silas, who is sixteen 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 49

Brad leaves an iPod at Computer Sales & Repair (CSR) to have the battery replaced. CSR sells the iPod to Doris, who does not know that it belongs to Brad. Brad can recover from

A) no one.
B) CSR.
C) Doris.
D) Apple, Inc., the maker of the iPod.

Question 50

Growers Mart buys one hundred cases of berries from Hilltop Farms. The parties agree that the berries will be transported "F.O.B. Hilltop Farms" via Refrigerated Trucking Company. Refrigerated's truck and the berries are lost in a fire following an accident. The loss of the berries is suffered by

A) Growers Mart.
B) Hilltop Farms.
C) Refrigerated Trucking.
D) all of the parties as tenants in common in equal measure.

Question 51

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 52

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 53

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 54

Outdoor Outfitters Store contracts to buy fifty tents from Pitched Camp, Inc. Unless the contract states otherwise, it is assumed to be

A) none of the choices.
B) a destination contract.
C) a shipment contract.
D) a delivery ex-ship.

Question 55

Corn that fills County Grain Co-op's silo is fungible if the corn is

A) alike naturally, by agreement, or by trade usage.
B) fundamentally different.
C) fun, good, and edible.
D) rotting due to a leaky roof and a delay in shipping.

Question 56

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 57

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 58

Safety Supply Corporation in New York sells a truckload of protective suits, masks, and other safety gear to Toxic Recovery, Inc., in Connecticut, "F.O.B. New York." Safety Supply arranges with US Truckline to transport the goods. The cost of the transport will be paid by

A) Safety Supply.
B) Toxic Recovery.
C) US Truckline.
D) Toxic Recovery's clients by an increase in the price of loss control services.

Question 59

Ralph, a representative for Statewide Truck & Transport Company, delivers a warehouse receipt to Thelma, the owner of United Storage Warehouse. A warehouse receipt is

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

Question 60

Pipes & Culverts Company orders six irrigation pumps from Quality Plumbing, Inc. The pumps are stored in Restorers Warehouse. Under the terms of the order, Quality must give Pipes & Culverts a warehouse receipt for the goods, which the buyer will then pick up. Title to the goods passes to Pipes & Culverts when

A) Quality stores the drives.
B) Pipes & Culverts orders the drives.
C) Pipes & Culverts picks up the drives.
D) Quality gives Pipes & Culverts a warehouse receipt for the drives.

Question 61

Stubbs buys a Tred-brand bicycle from his brother, Uriah. Uriah agrees to keep the bike at his house until Stubbs picks it up. During a storm, a tree falls from Victor's yard onto Uriah's garage and destroys the bike. The loss of the bike is suffered by

A) Stubbs.
B) Uriah.
C) Tred.
D) Victor.

Question 62

Sweetwater Café orders five gallons of transfat-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 63

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 64

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 65

Consumers Choice store accepts a shipment of EZ2U-brand tablets from Digital Devices, Inc. Consumers Choice later discovers a defect in the tablets, revokes acceptance, and returns the tablets via GoBack, Inc. During the return, the tablets are lost. The loss is suffered by

A) Consumers Choice.
B) Digital Devices.
C) GoBack.
D) Consumers Choice's customers by an increase in prices of other goods.

Question 66

Garden & Field stores order a specific assortment of rose bulbs from Hybrid Flora Company. Hybrid mistakenly ships a selection of annuals, which Garden & Field re?jects and returns via Intra-state Transport, Inc. During the return, the annuals are lost. The loss is suffered by

A) Garden & Field.
B) Hybrid Flora.
C) Intra-state Transport.
D) Garden & Field's customers by an increase in prices of other goods.

Question 67

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 68

Quaff n' Quench Café buys twenty-five bags of Columbia coffee beans from Roasted Bean Brokers, Inc. The parties agree to ship the oranges "F.O.B. Quaff n' Quench " via Swiftline Trucking Company. The oranges rot in transit. The loss is suf?fered by

A) Quaff n' Quench.
B) Swiftline.
C) Columbia.
D) Roasted Bean.

Question 69

Home Appliance Corporation contracts with Instate Trucking Company to take a selection of appliance repair parts to Journey Airlines, Inc., with Journey to transport the goods to a KeepSafe Company warehouse. Instate Trucking, Journey Airlines, and KeepSafe each acknowl?edge possession of the goods by a document of title. Instate Trucking, Journey Airlines, and KeepSafe are

A) bailees.
B) buyers.
C) lessees.
D) sellers.

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

Drill Makers, Inc., and Edge Mine & Mill Supply Stores enter into a contract for a sale of mining drill bits. 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 72

Fresh Stuff Company agrees to sell one hundred cases of uncooked burgers, cut potatoes, shredded lettuce, sliced tomatoes, and other specific food items to Good Eats, Inc. The goods, which Good Eats ex?pressly requires to be fresh, are to be shipped "F.O.B. Good Eats distribution center in Brooklyn, NY." When the goods arrive, Good Eats rejects them and informs Fresh Stuff, claiming that the foods do not conform to Good Eats's freshness re?quirement-the food is old, stale, spoiled, and moldy. A few hours later, the cases are destroyed in a fire at Good Eats's distribution center. Will Fresh Stuff succeed in a suit against Good Eats for the cost of the goods?