Deck 22: Title, Risk of Loss, and Insurable Interest

Question 1

The terms FOB and FAS mean the same thing.

Answer 1

False

Question 2

Samantha transfers a void title to Balley who is a good-faith buyer. Balley's title is considered ________.

A) false title
B) void title
C) voidable title
D) excused title
E) manipulated

Answer 2

B

Question 3

Carlinda sold Arun a set of tires. Arun did not know that the tires Carlinda sold him were stolen. What type of title did Arun obtain?

A) Void title
B) Voidable title
C) Stolen title
D) Preferential title
E) False title

Answer 3

A

Question 4

A(n) ________ under the UCC is defined as the passing of title from the seller to the buyer for a price.

A) sale
B) consignment
C) lease
D) assignment
E) ownership

Question 5

The text discusses the case of Landshire Food Service, Inc. v. Coghill, where the defendant, Coghill, sold his Rolls Royce to Bellman who paid with a forged cashier's check. Meanwhile, Hyken, an innocent purchaser for value, purchased the car from Bellman before the fraud was discovered. What was the result of this case?

A) Coghill was entitled to return of the vehicle because the contract with Bellman was void.
B) Coghill was entitled to return of the vehicle because the contract with Bellman was voidable by Coghill.
C) Hyken was entitled to the vehicle because a person who procures title through fraud receives voidable title and is able to transfer good title to a bona fide purchaser.
D) Hyken was entitled to the vehicle because although a person who procures title through fraud receives a void title, the person guilty of fraud may transfer good title to a bona fide purchaser.
E) The car was ordered sold with Coghill and Hyken to split the proceeds.

Question 6

A contract is a sale-or-return contract if the seller allows the buyer to take possession of the goods before deciding whether to complete the contract by making the purchase.

Question 7

Common law states that when a seller transfers goods to a buyer, the buyer gets only voidable title if the buyer is a minor.

Question 8

Title is the legal ownership of a good and does not require possession.

Question 9

The right to insure goods against any risk exposure such as damage or destruction is known as a bondable interest.

Question 10

If a buyer and seller execute a contract and the seller subsequently places the goods with a common carrier for delivery to the buyer, the parties have executed a third-party tender delivery contract.

Question 11

________ is title acquired from someone who already owns the goods free and clear.

A) Good title
B) Variable title
C) Perfected title
D) Preferential title
E) Terminated title

Question 12

Parties to a contract cannot change the UCC's rules regarding when title passes and when risk of loss passes.

Question 13

In cases where a shipment contract is vague or ambiguous on the issue, an origin contract will be presumed.

Question 14

The term tender of delivery refers to the moment the goods are available for the buyer to take.

Question 15

Identification of when the risk of loss attaches is important in regards to the right of indemnification.

Question 16

Delivering a car to a merchant for repair would be considered an entrustment.

Question 17

If an owner entrusts the possession of goods to a merchant who deals in goods of that kind, the merchant has no authority to transfer any rights in the goods to a buyer in the ordinary course of business.

Question 18

When deciding whether someone with a void title can pass a good title, the court will evaluate how the void title was first passed and will give a new buyer good title if the court finds good faith.

Question 19

If the seller does not provide the goods as described in a contract, one option the buyer has is to accept the nonconforming goods as is.

Question 20

Most buyer breaches occur when a buyer changes his or her mind about the price of the goods.

Question 21

A(n) ________ contract requires that the seller make proper shipping arrangements and deliver goods to the buyer via a common carrier, but not guarantee the safety of goods to their destination.

A) destination
B) origin
C) transfer
D) common-carrier
E) risk

Question 22

Which of the following is true if an owner entrusts the possession of goods to a merchant who deals in goods of that kind?

A) The merchant can transfer all rights in the goods to a buyer in the ordinary course of business.
B) The merchant can only transfer voidable title until any funds in the possession of the merchant are transferred to the owner.
C) The merchant can only transfer void title until any funds in the possession of the merchant are transferred to the owner.
D) The merchant can only transfer temporary title until any funds in the possession of the merchant are transferred to the owner.
E) The merchant must have any purchaser sign a document acknowledging that the purchaser will return the goods upon the request of the owner.

Question 23

In a(n) ________, title passes to the buyer at the time and place of shipment.

A) transfer contract
B) consumer purchase contract
C) delivery contract
D) origin contract
E) purchase for resale contract

Question 24

What happens when a buyer with a voidable title sells the goods to a third-party purchaser who makes a good-faith purchase for value?

A) The purchaser gets good title.
B) The purchaser gets voidable title.
C) The purchaser gets void title.
D) The purchaser gets reclaimable title.
E) The purchaser gets good-faith title.

Question 25

________ occurs when purchased goods are in some kind of storage under the control of a third party, such as a warehouseman.

A) A goods-in-bailment contract
B) A third party delivery contract
C) An average bailment contract
D) A conditional goods in delivery contract
E) A goods-in-transfer contract

Question 26

Which of the following occurs when the purchased goods are transferred to the buyer from the seller at either the time of the sale or a later time by the seller's delivery?

A) A voidable delivery contract
B) An average delivery contract
C) A simple delivery contract
D) A complex delivery contract
E) An acknowledged sale

Question 27

With a(n) ________, title transfers to the buyer on the goods being identified to the contract.

A) simple delivery contract
B) title transfer contract
C) buyer in possession contract
D) identifiable goods contract
E) major delivery contract

Question 28

Assume a buyer and seller execute a contract in which the seller is going to deliver a couch later in the day to the buyer. With a simple delivery contract in which the seller is a merchant, which party sustains a loss if, through no fault of either party, the couch is destroyed through fire prior to delivery?

A) The seller
B) The buyer
C) Loss is proportioned 50% to the buyer and 50% to the seller
D) Loss is proportioned 75% to the buyer and 25% to the seller
E) Loss is proportioned 25% to the buyer and 75% to the seller

Question 29

What does "FOB" mean, when used as a shipping term?

A) Fee on Board
B) Fee on Basis
C) Freedom of Board
D) Free on Board
E) Free of Basis

Question 30

Which of the following is true regarding types of common-carrier delivery contracts?

A) Common-carrier delivery contracts include origin and shipment contracts, but not destination or transfer contracts.
B) Common-carrier delivery contracts include destination contracts, but not origin, transfer, or shipment contracts.
C) Common-carrier delivery contracts include transfer contracts, but not origin, shipment, or destination contracts.
D) Common-carrier delivery contracts include origin and transfer contracts, but not destination contracts.
E) Common-carrier delivery contracts include origin and destination contracts, but not transfer contracts.

Question 31

In a destination contract, the ________ bears the risk of loss while the goods are in transit.

A) seller
B) buyer
C) third-party carrier
D) seller and the third party carrier split the risk of loss equally
E) buyer and seller split the risk of loss equally

Question 32

With a simple delivery contract, when is an insurable interest in the buyer created?

A) When money is transferred
B) When the items are delivered
C) When the buyer takes possession
D) When the goods are identified to the contract
E) When goods are identified to the buyer

Question 33

Harold's department store sells Carl a stove. When does the risk of loss transfer to Carl in a simple delivery contract?

A) When Carl pays for the stove.
B) When Carl uses his credit card.
C) When Carl takes possession of the stove.
D) One day after goods are identified to the contract
E) When Harold's gives Carl a receipt of payment.

Question 34

Brenda conditions the buying of two masterpiece sculptures from Fredrick on an appraisal by a certified appraiser. This is known as a(n) ________.

A) transferable contract
B) unapproved contract
C) as-believed delivery contract
D) comprehensive review contract
E) conditional sales contract

Question 35

Assume a buyer and seller execute a contract in which the seller is going to deliver a couch later in the day to the buyer. With a simple delivery contract in which the seller is not a merchant, which party sustains a loss if, through no fault of either party, the couch is destroyed through fire prior to delivery?

A) The seller
B) The buyer
C) Loss is proportioned 50% to the buyer and 50% to the seller
D) Loss is proportioned 75% to the buyer and 25% to the seller
E) Loss is proportioned 25% to the buyer and 75% to the seller

Question 36

Which of the following is true regarding the status of a common carrier in relation to the seller?

A) The common carrier is an agent of the seller.
B) The common carrier is an employee of the seller.
C) The common carrier is both an employee and an agent of the seller.
D) The common carrier is a true carrier of the seller.
E) The common carrier is an independent contractor.

Question 37

When purchased goods are transferred to the buyer from the seller, at either the time of the sale or some time later by the seller's delivery, and the seller has an agent deliver the goods to the buyer, which of the following occurs?

A) A voidable delivery contract
B) An average delivery contract
C) A simple delivery contract
D) A complex delivery contract
E) An acknowledged sale

Question 38

Which of the following is true regarding transportation costs when the designation FOB is used?

A) The selling price includes transportation costs.
B) The selling price does not include transportation costs.
C) The buyer and seller bear transportation costs with the costs apportioned at a rate of 50% to the buyer and 50% to the seller.
D) The buyer and seller with the cost being proportioned 75% to the buyer and 25% to the seller.
E) The buyer and seller with the cost being proportioned 25% to the buyer and 75% to the seller.

Question 39

Fredrick shipped his goods to his buyer Asland via the common carrier UPS. This is known as a(n) ________.

A) simple delivery contract
B) common-carrier delivery contract
C) goods-in-bailment contract
D) average delivery contract
E) delivery-carrier contract

Question 40

________ is the right to insure goods against any risk exposure such as damage or destruction.

A) An insurable interest
B) A compensable interest
C) A promissory interest
D) A collateral interest
E) A bank interest

Question 41

Which of the following is true regarding actions a buyer may take if a seller does not provide goods that were described in the contract?

A) If a seller does not provide goods as described in a contract, the buyer may accept the nonconforming goods as is, reject the goods subject to the seller's curing the deficiency in the goods, or reject the goods if no cure is possible.
B) If a seller does not provide goods as described in a contract, the buyer may reject the goods subject to the seller's curing the deficiency in the goods, but the buyer may not accept the nonconforming goods as is or reject the goods if no cure is possible.
C) If a seller does not provide goods as described in a contract, the buyer may accept the nonconforming goods as is and sue for damages, but the buyer may not reject the goods subject to the seller's curing the deficiency in the goods or reject the goods if no cure is possible.
D) If a seller does not provide goods as described in a contract, the buyer may accept the nonconforming goods as is and sue for damages or the buyer may reject the goods, but the buyer may not reject the goods subject to the seller's curing the deficiency.
E) If a seller does not provide goods as described in a contract, the buyer may accept the nonconforming goods as is, or the buyer may reject the goods subject to the seller's curing the deficiency in the goods, but the buyer may not simply reject the goods.

Question 42

[Used Car Problems] Jamila purchased a used car from Slick Sid's car dealership. Six months later the police seized the car from Jamila on the basis that it was a stolen vehicle. Jamila asked for her money back from Slick Sid's. The manager of Slick Sid's told her that the car was not stolen, but that even if it were, Slick Sid's acted in good faith with no knowledge of a theft; and that, therefore, Jamila, as a good-faith purchaser, had a good title. Slick Sid's had also sold a used car to Hiro who wrote a bad check for the car and left town, but not before selling the car to Doris. Doris purchased the car with no knowledge of any problem with the check. Slick Sid's asked Doris to return the car, but she refused. She explained that she had given the car to her son, Ricky.
What is the term for the kind of title Hiro had?

A) Good
B) Void
C) Voidable
D) Absolute
E) Illegal

Question 43

[Accidental Sale] Julio entrusted his automobile to Slick Sid's for repair. The manager of Slick Sid's, who did a very poor job with inventory, accidentally sold the car to Ramona. Ramona, who paid cash for the car, had no idea that the car did not belong to Slick Sid's and paid fair market value for it. When Julio went to pick up the car, he was very upset that it was gone. The manager of Slick Sid's told him that he was very sorry, but that his only recourse would be against Ramona.
Is the manager correct in saying that Julio's only recourse is against Ramona?

A) The manager is correct.
B) The manager is incorrect only if Julio has a writing signed by a representative of the repair shop guaranteeing the safety of the car.
C) The manager is correct only if Ramona can be found.
D) The manager is correct only if Ramona's deal was for less than 10% of the fair market value of the car.
E) The manager is incorrect, and Julio can sue Slick Sid's.

Question 44

Which statement is correct regarding CIF agreements?

A) Risk of loss occurs when goods are identified to the contract.
B) Risk of loss occurs when the goods are delivered to the buyer.
C) Risk of loss remains with the seller for 5 days after the sale.
D) Risk of loss remains with the seller for 5 days before the sale.
E) The seller puts the goods into the possession of a carrier before the risk passes to the buyer.

Question 45

[Used Car Problems] Jamila purchased a used car from Slick Sid's car dealership. Six months later the police seized the car from Jamila on the basis that it was a stolen vehicle. Jamila asked for her money back from Slick Sid's. The manager of Slick Sid's told her that the car was not stolen, but that even if it were, Slick Sid's acted in good faith with no knowledge of a theft; and that, therefore, Jamila, as a good-faith purchaser, had a good title. Slick Sid's had also sold a used car to Hiro who wrote a bad check for the car and left town, but not before selling the car to Doris. Doris purchased the car with no knowledge of any problem with the check. Slick Sid's asked Doris to return the car, but she refused. She explained that she had given the car to her son, Ricky.
What is the term for the kind of title Ricky had?

A) Good
B) Void
C) Voidable
D) Absolute
E) Illegal

Question 46

The absence of the words "to the order of" indicates which of the following, in a goods-in-bailment contract?

A) A negotiable document
B) A nonnegotiable document
C) A shipment contract
D) An origin contract
E) Nothing, there is no such thing as a goods-in-bailment contract

Question 47

[Accidental Sale] Julio entrusted his automobile to Slick Sid's for repair. The manager of Slick Sid's, who did a very poor job with inventory, accidentally sold the car to Ramona. Ramona, who paid cash for the car, had no idea that the car did not belong to Slick Sid's and paid fair market value for it. When Julio went to pick up the car, he was very upset that it was gone. The manager of Slick Sid's told him that he was very sorry, but that his only recourse would be against Ramona.
What is the proper identifying term for Ramona?

A) A good-faith purchaser
B) A valid purchaser
C) A void purchaser
D) A voidable purchaser
E) An interested purchaser for value

Question 48

[Used Car Problems] Jamila purchased a used car from Slick Sid's car dealership. Six months later the police seized the car from Jamila on the basis that it was a stolen vehicle. Jamila asked for her money back from Slick Sid's. The manager of Slick Sid's told her that the car was not stolen, but that even if it were, Slick Sid's acted in good faith with no knowledge of a theft; and that, therefore, Jamila, as a good-faith purchaser, had a good title. Slick Sid's had also sold a used car to Hiro who wrote a bad check for the car and left town, but not before selling the car to Doris. Doris purchased the car with no knowledge of any problem with the check. Slick Sid's asked Doris to return the car, but she refused. She explained that she had given the car to her son, Ricky.
If Jamila's car was stolen prior to delivery to Slick Sid's, and no one at the car dealership knew, what kind of title did Slick Sid's have?

A) Void
B) Good
C) Voidable so long as Slick Sid's can prove that it had never been charged with dealing in stolen merchandise.
D) Voidable so long as Slick Sid's can prove that none of its representatives were negligent in disregarding evidence of the theft at any time prior to its resale to Jamila.
E) Voidable so long as no manager of Slick Sid's had made an affirmative representation that the car was not stolen.

Question 49

When Malik shipped his goods he shipped it as "FAS." This shipping term stands for what?

A) Free as Shipped
B) Fee as Selected
C) Formal and Select
D) Free Alongside
E) Founder and Stamped

Question 50

Which countries signed an agreement aimed to halt piracy by allowing registered ships to hire the other country's sailors?

A) Russia and China
B) Singapore and Japan
C) Singapore and Indonesia
D) China and Indonesia
E) China and Japan

Question 51

[Used Car Problems] Jamila purchased a used car from Slick Sid's car dealership. Six months later the police seized the car from Jamila on the basis that it was a stolen vehicle. Jamila asked for her money back from Slick Sid's. The manager of Slick Sid's told her that the car was not stolen, but that even if it were, Slick Sid's acted in good faith with no knowledge of a theft; and that, therefore, Jamila, as a good-faith purchaser, had a good title. Slick Sid's had also sold a used car to Hiro who wrote a bad check for the car and left town, but not before selling the car to Doris. Doris purchased the car with no knowledge of any problem with the check. Slick Sid's asked Doris to return the car, but she refused. She explained that she had given the car to her son, Ricky.
What is the term for the kind of title Doris had?

A) Good
B) Void
C) Voidable
D) Absolute
E) Illegal

Question 52

What does the "I" mean in the shipping term CIF?

A) Indemnity
B) Insurance
C) Indirect
D) Import
E) Intentional

Question 53

Which of the following is true when the designation FAS is used?

A) The buyer, at the buyer's expense, delivers the goods alongside the ship before the risk passes to the seller.
B) The buyer, at the seller's expense, delivers the goods alongside the ship before the risk passes to the seller.
C) The seller, at the seller's expense, delivers the goods alongside the ship before the risk passes to the buyer.
D) The seller, at the buyer's expense, delivers the goods alongside the ship before the risk passes to the buyer.
E) The common carrier, at the carrier's expense, delivers the goods alongside the ship before the risk passes to the buyer.

Question 54

Which of the following statements accurately describes conditional contracts?

A) Sale-on-approval contracts, but not sale-or-return or condition-or-sale contracts
B) Sale-or-return contracts and condition-or-sale contracts, but not sale-on-approval contracts
C) Condition-or-sale contracts and sale-on-approval contracts, but not sale-or-return contracts
D) Sale-on-approval contracts, sale-or-return contracts, and condition-or-sale contracts
E) Sale-on-approval contracts and sale-or-return contracts, but not condition-or-sale contracts

Question 55

The UCC lays out essentially four broad factual scenarios for the sale of goods, which of the following is not one of them?

A) Simple delivery contract
B) Common-carrier delivery contract
C) Conditional sales contract
D) Comprehensive sales contract
E) Goods-in-bailment contracts

Question 56

[Accidental Sale] Julio entrusted his automobile to Slick Sid's for repair. The manager of Slick Sid's, who did a very poor job with inventory, accidentally sold the car to Ramona. Ramona, who paid cash for the car, had no idea that the car did not belong to Slick Sid's and paid fair market value for it. When Julio went to pick up the car, he was very upset that it was gone. The manager of Slick Sid's told him that he was very sorry, but that his only recourse would be against Ramona.
Ramona's rights to the car are best summarized by which of the following statements?

A) Ramona can keep the car only if the repair shop voluntarily agrees to pay Julio the fair market value of the car.
B) Ramona can keep the car without paying anyone anything only if the repair shop is bankrupt or insolvent.
C) Ramona can keep the car without paying anyone anything extra.
D) Ramona must give the car to Julio.
E) Ramona must return the car to the repair shop.

Question 57

Which of the following references goods that are in some kind of storage so the seller cannot transfer physical possession of them?

A) Goods in transit
B) Goods in bailment
C) General to contract
D) Stored pending payment
E) Stored in transit

Question 58

With goods in bailment, when is an insurable interest created?

A) Only when either party has title to the goods
B) When either party has title or a risk of loss, but not under any other circumstances
C) When either party has title, risk of loss, or other economic interest attached to the goods
D) Two days after either party has title to the goods
E) Never. There is no such thing as an insurable interest in a goods-in-bailment contract

Question 59

In a goods-in-bailment contract , what does "deliver to the order of seller" indicate?

A) A negotiable document
B) A nonnegotiable document
C) A shipment contract
D) An origin contract
E) An execution contract

Question 60

[Used Car Problems] Jamila purchased a used car from Slick Sid's car dealership. Six months later the police seized the car from Jamila on the basis that it was a stolen vehicle. Jamila asked for her money back from Slick Sid's. The manager of Slick Sid's told her that the car was not stolen, but that even if it were, Slick Sid's acted in good faith with no knowledge of a theft; and that, therefore, Jamila, as a good-faith purchaser, had a good title. Slick Sid's had also sold a used car to Hiro who wrote a bad check for the car and left town, but not before selling the car to Doris. Doris purchased the car with no knowledge of any problem with the check. Slick Sid's asked Doris to return the car, but she refused. She explained that she had given the car to her son, Ricky.
Which statement is true regarding the manager's assertion that Jamila has a good title, assuming the car was in fact stolen?

A) The manager is correct.
B) The manager is correct only if Jamila can establish true consumer status meaning that she had not bought or sold over three cars in the previous six months.
C) The manager is correct only if Jamila can establish true consumer status meaning that she had not bought or sold over three cars in the previous year.
D) The manager is incorrect because Jamila has voidable title.
E) The manager is incorrect because Jamila has void title.

Question 61

Which of the following statements is true about an insurable interest?

A) An insurable interest is the right to insure goods in one's possession.
B) It is not relevant when an insurable interest is created.
C) Only the buyer can insure itself for potential damage to goods.
D) Only the seller can insure itself for potential damage to goods.
E) Both the buyer and seller can insure themselves for potential damage to goods.

Question 62

In the text's case of National Compressor Corp. v. Carrow and McGee, the court considered whether a buyer, who purchased a compressor that was subsequently destroyed in a fire on a third party's premises before the buyer took possession, had an insurable interest since title had not yet passed and thus could bring suit against the third party. What was the court's ruling?

A) The buyer could not sue the third party because it did not have an insurable and special interest.
B) The buyer had an insurable and special interest but could not sue the third party because the goods had not been identified to the contract.
C) The buyer had an insurable and special interest and could sue the third party because the goods had been identified to the contract.
D) The buyer had an insurable and special interest and could sue the third party regardless of whether or not goods had been identified to the contract.
E) The buyer could not sue the third party because title had not passed and thus, it did not have an insurable interest.

Question 63

[Wrecked Toaster] Ivan goes to upscale housewares store Smith-Napa to buy himself a nice new toaster, because his old one broke. The store does not have the model he wants in stock, but they can have it shipped from the warehouse directly to Ivan. It is agreed that the toaster will be placed with a common carrier for delivery. The contract between Ivan and Smith-Napa is ambiguous regarding whether the seller had the duty to deliver the goods only to the common carrier's hands or whether the seller had the duty to deliver the goods to Ivan's home. Unfortunately, on the way to Ivan's home, through no fault of the delivery driver, the delivery truck was involved in a collision, and the toaster was damaged beyond repair.
Ivan and Smith-Napa entered into which of the following contracts?

A) A common-carrier delivery contract
B) A trucking contract
C) A goods-in-bailment contract
D) A conditional sales contract
E) A conditional delivery contract

Question 64

Which statement about the risk of loss at the time the goods were damaged is correct?

A) The risk of loss was with Smith-Napa.
B) The risk of loss was with Ivan.
C) The risk of loss was split 50-50 between Ivan and Smith-Napa.
D) The risk of loss was with Ivan only if the driver is determined to be an agent of Smith-Napa.
E) The risk of loss was with Smith-Napa only if the driver is determined to be an agent of Smith-Napa.

Question 65

What was the court's ruling in City of Richmond v. Petroleum Marketers, Inc., the case in the text in which the court considered where the sale of petroleum occurred-where the contracts for the purchase of the oil were executed or where the goods were, in fact, delivered?

A) Title to the petroleum passed when the product was pumped into whatever facility the buyer provided.
B) Title to the petroleum passed when the product was pumped out of the seller's holding tank and into the seller's rented tanks.
C) Goods were identified to the contract when the product was pumped out of the seller's holding tank and into the seller's rented tanks.
D) Title did not pass when the product arrived at the buyer's facility.
E) Title did not pass when the product was pumped out of the seller's holding tank.

Question 66

[Singapore Sculptures] Mavis purchased a sculpture for her home in Hawaii from Juno, who owns an art gallery in Singapore. Mavis tells Juno she is concerned about shipping because there is no agreement between Singapore and Indonesia regarding piracy and she wants to ensure that Juno will be responsible for any damage to the sculpture until Mavis can pick it up on the dock when the ship arrives in Hawaii. Juno tells Mavis there are no longer any piracy concerns in the area and that he will be responsible for the sculpture until it is removed from the ship in Hawaii. Another customer, Adler, also purchases a sculpture. Juno delivers both sculptures to the dock. Mavis' sculpture is accompanied by their contract and Adler's sculpture is accompanied by a document containing the words "Deliver to the Order of Juno", and is endorsed by Juno. The ship travels through a storm, capsizes, and the sculptures are destroyed.
What type of document is the one containing the words "Deliver to the Order of Juno", which accompanies Adler's sculpture?

A) A negotiable document of title.
B) A non-negotiable document of title
C) A contract
D) A good in bailment
E) Another type of instrument showing ownership that is not a negotiable or nonnegotiable document of title.

Question 67

Cora, an artist, entrusts her paintings with Kasper, the owner of an art gallery. Kasper sells Cora's paintings to Gianni. What kind of title does Gianni have?

A) Good title, even though Kasper had no title at all.
B) Good title, but only because Cora and Kasper had good title.
C) Voidable title, because Kasper had no title at all.
D) Voidable title, but only because the sale is contingent upon Cora's approval.
E) Good title, but only if Cora approves of the sale.

Question 68

[Kool Klothes] Cleo recently opened an exclusive designer clothing store. She contracts with Kool Klothes to sell their high-end designer line. The contract states Kool will ship clothes each week, and Cleo has a month to pay for the clothes or she can return any merchandise she does not sell. The arrangement works well for several months, but then Kool Klothes notices several suits Cleo returns via a courier service are damaged. Also, during a weekly delivery of the Kool Klothes truck, the driver gets into a car accident, and several formal ball gowns are damaged.
What type of contract does Cleo have with Kool Klothes?

A) Simple delivery contract
B) Common carrier delivery contract
C) Goods in bailment contract
D) Sale-on-approval contract
E) Sale-or-return contract

Question 69

Frieda purchased a large desk at a garage sale. She asked the seller if she could leave the desk at the side of the road so she could go home and get her pickup truck. When she returned, she found that the desk had been struck by a car and demolished. Can Frieda get her money back?

A) Yes, because the risk of loss does not transfer until she takes possession.
B) Yes, because the seller allowed Frieda to leave the goods until she takes possession.
C) Yes, because the goods were not tendered until she takes possession.
D) No, because the desk was available for Frieda to take when she purchased it and thus she bore the risk of loss.
E) No, because, even though the desk was available for Frieda to take when she purchased it, the risk of loss does not transfer until delivery.

Question 70

[Singapore Sculptures] Mavis purchased a sculpture for her home in Hawaii from Juno, who owns an art gallery in Singapore. Mavis tells Juno she is concerned about shipping because there is no agreement between Singapore and Indonesia regarding piracy and she wants to ensure that Juno will be responsible for any damage to the sculpture until Mavis can pick it up on the dock when the ship arrives in Hawaii. Juno tells Mavis there are no longer any piracy concerns in the area and that he will be responsible for the sculpture until it is removed from the ship in Hawaii. Another customer, Adler, also purchases a sculpture. Juno delivers both sculptures to the dock. Mavis' sculpture is accompanied by their contract and Adler's sculpture is accompanied by a document containing the words "Deliver to the Order of Juno", and is endorsed by Juno. The ship travels through a storm, capsizes, and the sculptures are destroyed.
Assuming Adler must bear the risk of loss of his sculpture, if he sues the ship to recover damages, would the lawsuit likely be dismissed?

A) No, because Adler had an insurable and special interest and, thus, has standing to sue.
B) No, because the ship was not at fault.
C) Yes, because Adler bears the risk of loss according to his contract with Juno.
D) Yes, because Adler did not have an insurance interest in the sculpture.
E) Yes, because the ship was not a party to the contract.

Question 71

[Singapore Sculptures] Mavis purchased a sculpture for her home in Hawaii from Juno, who owns an art gallery in Singapore. Mavis tells Juno she is concerned about shipping because there is no agreement between Singapore and Indonesia regarding piracy and she wants to ensure that Juno will be responsible for any damage to the sculpture until Mavis can pick it up on the dock when the ship arrives in Hawaii. Juno tells Mavis there are no longer any piracy concerns in the area and that he will be responsible for the sculpture until it is removed from the ship in Hawaii. Another customer, Adler, also purchases a sculpture. Juno delivers both sculptures to the dock. Mavis' sculpture is accompanied by their contract and Adler's sculpture is accompanied by a document containing the words "Deliver to the Order of Juno", and is endorsed by Juno. The ship travels through a storm, capsizes, and the sculptures are destroyed.
What is the term used for the goods while they are in storage on board the ship?

A) Goods in storage
B) Goods in bailment
C) Goods on board
D) Free on board
E) Free on bailment

Question 72

[Kool Klothes] Cleo recently opened an exclusive designer clothing store. She contracts with Kool Klothes to sell their high-end designer line. The contract states Kool will ship clothes each week, and Cleo has a month to pay for the clothes or she can return any merchandise she does not sell. The arrangement works well for several months, but then Kool Klothes notices several suits Cleo returns via a courier service are damaged. Also, during a weekly delivery of the Kool Klothes truck, the driver gets into a car accident, and several formal ball gowns are damaged.
With regard to the damage to the formal ball gowns, who bears the risk of loss?

A) Kool Klothes, because it is the seller in a sale-or-return contract.
B) Kool Klothes, because it is a merchant and in a simple delivery contract, risk of loss transfers on delivery of the goods to the buyer.
C) Cleo, because she is the buyer in a sale-or-return contract.
D) Cleo, because the dresses are goods in bailment.
E) Cleo, because under a sale-or-return contract, she can return the dresses.

Question 73

[Scuba Supplies] The Dive Shop ordered ten Mega2000 Diving Tanks, ten SuperSlick wetsuits, and ten pairs of Awesome swim fins from ScubaCo under a destination contract. The tanks were scheduled to be delivered first, and the remaining items would arrive the following day. Upon the first delivery, The Dive Shop noticed that ScubaCo sent ten Mega500 Diving Tanks, an inferior model. The Dive Shop's owner called ScubaCo and was told that ScubaCo had sold out of the Mega2000 model, but the Mega500 was the same price, was "pretty much the same", and The Dive Shop had to pay for the order or it would be in breach of contract. The following day, ScubaCo checked the remainder of the order which consisted of the wetsuits and fins and verified it to be correct. It delivered the remainder of the order, however, The Dive Shop refused delivery. On the way to its next delivery, the carrier truck ran off the side of the road and the goods were lost.
Is ScubaCo correct that The Dive Shop must accept the ten Mega500 tanks?

A) Yes, because they are conforming goods.
B) Yes, because, even though they are not conforming goods, they are substantially the same.
C) No, The Dive Shop can cure the deficiency in the goods on its own.
D) No, The Dive Shop's only recourse is to demand the conforming goods be provided.
E) No, The Dive Shop can either accept the nonconforming goods or reject the goods subject to the seller's curing the deficiency in the goods (and reject them if no cure is possible).

Question 74

[Singapore Sculptures] Mavis purchased a sculpture for her home in Hawaii from Juno, who owns an art gallery in Singapore. Mavis tells Juno she is concerned about shipping because there is no agreement between Singapore and Indonesia regarding piracy and she wants to ensure that Juno will be responsible for any damage to the sculpture until Mavis can pick it up on the dock when the ship arrives in Hawaii. Juno tells Mavis there are no longer any piracy concerns in the area and that he will be responsible for the sculpture until it is removed from the ship in Hawaii. Another customer, Adler, also purchases a sculpture. Juno delivers both sculptures to the dock. Mavis' sculpture is accompanied by their contract and Adler's sculpture is accompanied by a document containing the words "Deliver to the Order of Juno", and is endorsed by Juno. The ship travels through a storm, capsizes, and the sculptures are destroyed.
Are Mavis' concerns about a lack of agreement between Singapore and Indonesia accurate?

A) Yes, there are no anti-piracy agreements between the two countries.
B) Yes, even though there are agreements between the two countries, they have taken no steps to halt piracy.
C) No, both countries have signed an agreement that aims to halt piracy.
D) No, although the countries have not signed an agreement that aims to halt piracy, there are no risks involved in shipping on international waters.
E) Yes, there are no agreements between the two countries that affect shipping.

Question 75

[Singapore Sculptures] Mavis purchased a sculpture for her home in Hawaii from Juno, who owns an art gallery in Singapore. Mavis tells Juno she is concerned about shipping because there is no agreement between Singapore and Indonesia regarding piracy and she wants to ensure that Juno will be responsible for any damage to the sculpture until Mavis can pick it up on the dock when the ship arrives in Hawaii. Juno tells Mavis there are no longer any piracy concerns in the area and that he will be responsible for the sculpture until it is removed from the ship in Hawaii. Another customer, Adler, also purchases a sculpture. Juno delivers both sculptures to the dock. Mavis' sculpture is accompanied by their contract and Adler's sculpture is accompanied by a document containing the words "Deliver to the Order of Juno", and is endorsed by Juno. The ship travels through a storm, capsizes, and the sculptures are destroyed.
Who has the risk of loss for the sculpture purchased by Adler?

A) Juno, because the contract was silent as to who bore the risk of loss.
B) Juno, because the document contained the words "deliver to the order of Adler".
C) Adler, because the contract was silent as to who bore the risk of loss.
D) Adler, because Juno endorsed a negotiable instrument to him.
E) The ship, because it had possession of the sculpture at the time of the loss.

Question 76

Jonas sold his motorcycle to his co-worker's brother, Byron, who gave Jonas a check and took the motorcycle home. When Jonas goes to cash Byron's check he discovers the check is denied for insufficient funds. What recourse does Jonas have?

A) Jonas has the right to cancel the contract and reclaim his motorcycle because Byron's title is voidable.
B) Jonas has the right to demand the payment due him under the contract. However, title passed to Byron because Jonas was not aware of the bad check at the time of delivery.
C) Jonas has the right to reclaim his motorcycle because Byron's title is void.
D) If Byron resells the motorcycle to a third party, then Byron can reclaim the motorcycle from the third party.
E) Jonas can do nothing.

Question 77

[Wrecked Toaster] Ivan goes to upscale housewares store Smith-Napa to buy himself a nice new toaster, because his old one broke. The store does not have the model he wants in stock, but they can have it shipped from the warehouse directly to Ivan. It is agreed that the toaster will be placed with a common carrier for delivery. The contract between Ivan and Smith-Napa is ambiguous regarding whether the seller had the duty to deliver the goods only to the common carrier's hands or whether the seller had the duty to deliver the goods to Ivan's home. Unfortunately, on the way to Ivan's home, through no fault of the delivery driver, the delivery truck was involved in a collision, and the toaster was damaged beyond repair.
Because the contract was ambiguous about whether the seller had the duty to deliver the goods to either the common carrier's hands or all the way to Ivan's home, what type of contract is presumed?

A) Transit
B) Location
C) Destination
D) Origin
E) Voidable

Question 78

[Kool Klothes] Cleo recently opened an exclusive designer clothing store. She contracts with Kool Klothes to sell their high-end designer line. The contract states Kool will ship clothes each week, and Cleo has a month to pay for the clothes or she can return any merchandise she does not sell. The arrangement works well for several months, but then Kool Klothes notices several suits Cleo returns via a courier service are damaged. Also, during a weekly delivery of the Kool Klothes truck, the driver gets into a car accident, and several formal ball gowns are damaged.
With regard to the damaged suits, who bears the risk of loss?

A) Kool Klothes, because Cleo is sending the goods back to the seller and had not purchased them.
B) Kool Klothes, because under a sale-or-return contract, title to the suits never passed to Cleo.
C) Cleo, because she is the buyer in a sale-or-return contract and only if there is no agreement to the contrary.
D) Cleo, because the dresses are goods in bailment.
E) Cleo, because under a sale-or-return contract, she can return the dresses.

Question 79

Tasha buys a bicycle from Kelvin. Jeremy steals the bicycle from Tasha, and then sells it to Bronson. Bronson gives the bicycle to his nephew, Cedric, as a gift. Who has good title to the bicycle?

A) Kelvin
B) Jeremy
C) Tasha
D) Bronson
E) Cedric

Question 80

[Singapore Sculptures] Mavis purchased a sculpture for her home in Hawaii from Juno, who owns an art gallery in Singapore. Mavis tells Juno she is concerned about shipping because there is no agreement between Singapore and Indonesia regarding piracy and she wants to ensure that Juno will be responsible for any damage to the sculpture until Mavis can pick it up on the dock when the ship arrives in Hawaii. Juno tells Mavis there are no longer any piracy concerns in the area and that he will be responsible for the sculpture until it is removed from the ship in Hawaii. Another customer, Adler, also purchases a sculpture. Juno delivers both sculptures to the dock. Mavis' sculpture is accompanied by their contract and Adler's sculpture is accompanied by a document containing the words "Deliver to the Order of Juno", and is endorsed by Juno. The ship travels through a storm, capsizes, and the sculptures are destroyed.
What shipping term should Mavis include in the contract to ensure Juno carries the risk of loss until the sculpture leaves the ship?

A) FOB
B) FAS
C) CIF
D) C&F
E) Delivery ex-ship