Question 1

Which of the following is correct with regard to risk of loss, where the goods are in the possession of a bailee and are covered by a negotiable document of title?

Accepted Answer

A)  Risk of loss passes when the buyer receives the document. 
B)  Risk of loss passes when the document is tendered to the buyer. 
C)  Risk of loss passes when notification of the arrival of the goods is given to the buyer. 
D)  If the buyer is a merchant, risk of loss passes to the buyer when the goods are delivered.

Question 2

Under a shipment contract, the seller passes title to the buyer when the goods arrive.

Accepted Answer

A) True 
 B)False

Question 3

Explain what a trial sale is. Identify the two types of trial sales recognized by the UCC and explain the test for distinguishing between the two types. Discuss transfer of title and risk or loss with each type of trial sale.

Accepted Answer

The answer of Explain what a trial sale is. Identify...

Question 4

Louella purchases a steam cleaner from Alden for $120. She must believe Alden is the owner of or has the authority to sell the cleaner in order to receive the protection of a good faith purchaser.

Accepted Answer

A) True 
 B)False

Question 5

Inga runs a Swedish health spa in Connecticut. She orders 100 loofah sponges from a company in California. They are sent "F.O.B. Hartford, Connecticut," but they never arrive. What consequence?

Accepted Answer

A)  Inga has to pay anyway since it was a destination contract. 
B)  The California company is required to bear the loss since the sponges had not yet reached the F.O.B. point. 
C)  The California company and Inga will have to split the loss since they did not specify in their contract when the risk of loss would pass to Inga. 
D)  It cannot be determined who has the risk of loss from the information given.

Question 6

In a lease, the lessee obtains the right to possess and use the goods for a period of time in return for consideration, but title does not pass.

Accepted Answer

A) True 
 B)False

Question 7

The Heinrich v. Titus-Will Sales, Inc. case stands for the principle that:

Accepted Answer

A)  the UCC requires proper state licensing for a company claiming to be a merchant to actually have merchant status. 
B)  a buyer in the ordinary course of business acquires good title when buying from a merchant seller who was entrusted with possession of the goods. 
C)  risk of loss depends on who has title to the goods at the time the goods are damaged or destroyed. 
D)  a void title is no title.

Question 8

Tender requires that the seller, at a reasonable time:

Accepted Answer

A)  put and hold conforming goods at the buyer's disposition. 
B)  give notice to the buyer that the goods are available. 
C)  keep the goods available for a reasonable period of time. 
D)  all of these.

Question 9

Brett contracts to purchase a particular Chevrolet from Johnson's car lot. Brett obtains a "special property interest" in the car when:

Accepted Answer

A)  the contract is made. 
B)  the car is tendered to Brett. 
C)  Brett pays for the car. 
D)  Brett accepts the car.

Question 10

Jack is a guest at Harry's home. While there, he goes into the library and picks up a music box that is part of Harry's collection. Jack overwinds the stem and it breaks. Hoping Harry won't notice, Jack takes the music box for repair to a jeweler who sells similar ones. The jeweler fixes it, but forgets to tag it and an unsuspecting clerk sells it to Robert. Jack is frantic. Can Harry get the music box from Robert?

Accepted Answer

A)  No, the jeweler gives good title to a bona fide purchaser for value. 
B)  No, the jeweler was not a merchant with regard to music boxes. 
C)  Yes, Robert was not a buyer in the ordinary course of business. 
D)  Yes, Robert has assumed only Jack's title, which is no title at all.

Question 11

Morris ordered 1,000 sq. ft. of green carpet from RS Company. In error, RS Company shipped 1,000 sq. ft. of gold carpet. In this case, the risk of loss remains with the seller until the seller remedies the defect or until Morris accepts the gold carpet.

Accepted Answer

A) True 
 B)False

Question 12

Security interests, defined by the Code as interests in personal property or fixtures that ensure payment or performance of obligations, are governed by Article 6 of the UCC.

Accepted Answer

A) True 
 B)False

Question 13

Title to existing, identified goods can pass whenever the parties agree it will pass.

Accepted Answer

A) True 
 B)False

Question 14

In a contract where the buyer is to pick up the goods at the seller's place of business and the seller is a merchant, the risk of loss passes to the buyer when the goods are tendered to the buyer.

Accepted Answer

A) True 
 B)False

Question 15

At common law, the risk of loss or damage to goods identified under a contract of sale falls upon:

Accepted Answer

A)  the buyer. 
B)  the seller. 
C)  the party who had title or ownership of the goods at the time of the loss or damage. 
D)  the designated party as determined by the court.

Question 16

a. What is an insurable interest? At what point in a sales transaction does the buyer get an insurable interest? 
b. Is the buyer the only one who has an insurable interest in the goods? Is it possible for both the buyer and the seller to simultaneously hold an insurable interest? Explain.

Accepted Answer

The answer of a. What is an insurable interest? At...

Question 17

If the owner of goods entrusts them to a merchant, the merchant can transfer good title to the goods to a buyer in the ordinary course of business even if the original owner does not want to sell the goods.

Accepted Answer

A) True 
 B)False

Question 18

Goods that have been entrusted to a merchant may be sold by that merchant even when the merchant has been told not to sell the goods, and when a merchant sells such goods to a buyer in the ordinary course of business, that buyer has title that is superior to the title of the original owner who entrusted them to the merchant.

Accepted Answer

A) True 
 B)False

Question 19

Mary orders a dress for $1,000. The designer sends the wrong size. Mary doesn't inspect the dress on arrival and therefore doesn't discover the nonconformity until the day before she is to wear it to her first board meeting as president of Tri-State Engineering. She calls the designer and sends the dress back, but it is lost in the mail. Mary's insurance would cover $400 of the loss. The designer's insurance would cover $900. Who is liable?

Accepted Answer

A)  Mary will bear the whole loss because she accepted the goods. 
B)  The designer will bear the whole loss because Mary returned the nonconforming goods. 
C)  Mary will owe $100, the designer $900. 
D)  The risk is Mary's to the extent of $400.

Question 20

Z, a seller in Miami, enters into a contract which states that goods are to be delivered to X, a buyer in New York. Title is to remain with Z until delivery. This is:

Accepted Answer

A)  a shipment contract. 
B)  an FOB Miami contract. 
C)  a destination contract. 
D)  a consignment.

Exam 21: Transfer of Title and Risk of Loss

Which of the following is correct with regard to risk of loss, where the goods are in the possession of a bailee and are covered by a negotiable document of title?

Under a shipment contract, the seller passes title to the buyer when the goods arrive.

Explain what a trial sale is. Identify the two types of trial sales recognized by the UCC and explain the test for distinguishing between the two types. Discuss transfer of title and risk or loss with each type of trial sale.

Louella purchases a steam cleaner from Alden for $120. She must believe Alden is the owner of or has the authority to sell the cleaner in order to receive the protection of a good faith purchaser.

Inga runs a Swedish health spa in Connecticut. She orders 100 loofah sponges from a company in California. They are sent "F.O.B. Hartford, Connecticut," but they never arrive. What consequence?

In a lease, the lessee obtains the right to possess and use the goods for a period of time in return for consideration, but title does not pass.

The Heinrich v. Titus-Will Sales, Inc. case stands for the principle that:

Tender requires that the seller, at a reasonable time:

Brett contracts to purchase a particular Chevrolet from Johnson's car lot. Brett obtains a "special property interest" in the car when:

Morris ordered 1,000 sq. ft. of green carpet from RS Company. In error, RS Company shipped 1,000 sq. ft. of gold carpet. In this case, the risk of loss remains with the seller until the seller remedies the defect or until Morris accepts the gold carpet.

Security interests, defined by the Code as interests in personal property or fixtures that ensure payment or performance of obligations, are governed by Article 6 of the UCC.

Title to existing, identified goods can pass whenever the parties agree it will pass.

In a contract where the buyer is to pick up the goods at the seller's place of business and the seller is a merchant, the risk of loss passes to the buyer when the goods are tendered to the buyer.

At common law, the risk of loss or damage to goods identified under a contract of sale falls upon:

a. What is an insurable interest? At what point in a sales transaction does the buyer get an insurable interest? b. Is the buyer the only one who has an insurable interest in the goods? Is it possible for both the buyer and the seller to simultaneously hold an insurable interest? Explain.

If the owner of goods entrusts them to a merchant, the merchant can transfer good title to the goods to a buyer in the ordinary course of business even if the original owner does not want to sell the goods.

Z, a seller in Miami, enters into a contract which states that goods are to be delivered to X, a buyer in New York. Title is to remain with Z until delivery. This is: