Deck 14: Title, Allocation of Risk, and Insurable Interest

Question 1

The UCC requires that before title can pass from the seller to the buyer the product must exist and the good must be identified to the contract.

Answer 1

True

Question 2

The UCC requires that title can only pass by delivery of a written document.

Answer 2

False

Question 3

When Brett sold Luke a basketball and Luke asked that he ship the basketball, title passed once Brett delivered it to the U.S. Postal Service for shipment..

Answer 3

True

Question 4

In order to have an insurable interest, a person must have title and possession of the good.

Question 5

Any person who is willing to pay the insurance premium on a good has an insurable interest.

Question 6

Alex has title to a car and, according to the UCC, it gives her the power to only sell or gift the car.

Question 7

Title confers a claim of ownership of the personal property to the titleholder.

Question 8

What is the name of the organization that published abbreviations that are meant to avoid confusion in international business transactions?

A) International Commercial Code
B) International Chamber of Commerce
C) International Abbreviation Committee
D) International Commercial Abbreviation Code

Question 9

The International Chamber of Commerce abbreviation indicating that goods are to be delivered by the seller to the carrier for shipment is

A) EXW
B) FAS
C) FOB
D) FCA

Question 10

The legal term for ownership is

A) Deed
B) Title
C) Legal rights
D) Bailment

Question 11

Lora agrees to make Aubrey a quilt out of all of her past t-shirts for $50.00. Is that a good according to the UCC?

A) Yes because a promise has legal value
B) Yes because it will exist in the future if completed
C) No because the good does not actually exist at the time of agreement
D) No because the used t-shirts do not have legal value

Question 12

What must be present under the UCC for title to a good to pass to a buyer at the time of contract creation?

A) The good must actually exist at the time of creation of the contract and it must be identified to the contract.
B) The good must be identified to the contract and there must be signatures by both parties of the contract.
C) The good must be identified to the contract and it must have legal value.
D) The good must actually exist at the time of the contract creation and it must have legal value.

Question 13

Hamms and Bacon Bookstore sells a book on its shelf to a school. The agreement states, "Hamms and Bacon Bookstore agrees to sell ISBN# 123-3456-7890 for $10.00." The agreement does not specifically mention that it is for the sale of books. Which statement below is correct according to the UCC?

A) A good does not exist for this agreement as the substance of the agreement is not identified in the agreement such that the reasonable person could understand.
B) A good does not exist for this agreement because it does not state a quantity.
C) A good does exist because there is an exchange of items of legal value.
D) A good does exist because it actually existed at the time of creation of the agreement and the ISBN identified the item in the contract.

Question 14

According to the UCC, which statement below is correct, if a contract is silent as to when title passes and a good must be shipped?

A) It passes once the buyer receives the good.
B) It passes once the buyer has paid for the good.
C) It passes once the good has been delivered to a common carrier.
D) It passes once the buyer accepts the good.

Question 15

A-phone Corporation, a California corporation, enters into an agreement with Matt to sell him a phone. In the contract, Matt specifically states that a representative from A-phone must travel to his home in Uganda and deliver it to Matt in person and title will pass once the phone is safely placed in Matt's hands in Uganda. A-phone drops the phone in the mail as they realize it is too expensive to travel to Uganda to deliver it in person. Which statement below is correct according to the UCC as to when title actually passed?

A) Since the delivery terms in the contract seem unreasonable, the court will reform the contract to determine title passed once it was dropped in the mail.
B) Since the delivery terms in the contract seem unreasonable, the court will declare the contract unenforceable.
C) The UCC allows the parties to the contract to determine when title passes and the court will enforce the parties' agreement.
D) The UCC will apply default rules if the result will be harsh.

Question 16

If a contract does not state when title will pass, the UCC will apply __________ to determine when title passes.

A) Common law
B) Statutory law
C) Restatements
D) Default rules

Question 17

Adelaide's Aprons sells 10 aprons to a store in another state which requires shipment. However, the contract states Adelaide's will ship the goods via Fed Ex but does not state when ownership and responsibility transfers. According to the UCC since the contract is silent on that issue, when will title transfer?

A) Once Adelaide's delivers the aprons to Fed Ex.
B) Once the store accepts delivery.
C) Once Fed Ex delivers the aprons to the store.
D) Once the store pays for the aprons.

Question 18

A document that shows a delivery of title is

A) Registration
B) Secured transaction
C) Bill of lading
D) Requisition

Question 19

Rex Radios sells 400 i-pods to Scott Shops for $4000.00. The contract states that the i-pods are to be delivered to Witt's Warehouse until Scott Shops has room to store the i-pods. Rex delivered the i-pods to Witt's and produced the bill of lading to Scott Shop the next morning. A week later, the warehouse burns down destroying all of the i-pod inventory. According to the UCC, who bears the responsibility of the i-pods?

A) Rex Radios as they are the seller.
B) Witt's Warehouse as they stored the i-pods.
C) Scott Shops as title was passed once Rex delivered bill of lading to Scott.
D) The responsibility will be equally divided among all three parties involved in the transaction, Rex, Scott, and Witt.

Question 20

Anthony buys a couch from Basaba Interiors and arranges to pick it up from the store once he borrows a truck from a friend. Anthony pays for the couch and leaves the store. That night, the store burns down. According to the UCC, who is responsible for the cost of the couch?

A) Anthony
B) Basaba Interiors
C) The court will need to determine who is at fault to determine responsibility
D) The employees of Basaba Interiors

Question 21

A person who acts honestly and provides reasonable value for good is called a

A) Legal owner
B) Good faith buyer
C) Statutory buyer
D) UCC owner

Question 22

Nancy's Purses sells Janet a new purse for $100. Unknown to Janet, Nancy actually stole the purse from another retailor. Will Janet be able to keep the purse?

A) Yes because Janet was innocent and a good-faith buyer.
B) Yes because to do otherwise would result in an unjust enrichment for Nancy.
C) No because while Janet was a good-faith buyer, the purse was stolen.
D) No because Janet should have known the origins of the goods sold.

Question 23

Shylo Art Gallery wrongfully convinces Sally that her painting is a fake painting and offers to pay her $100 which is far under that actual value of the painting. Shortly thereafter, the painting is sold to Hannah in Shylo Art Gallery for $5000, the true value of the painting. Will Hannah be able to keep the painting?

A) No because the painting was acquired by Shylo in a deceptive manner.
B) No because Shylo Art Gallery made an unreasonable profit.
C) Yes because Sally gave up ownership.
D) Yes because Hannah is a good-faith buyer.

Question 24

Which of the following is an example of when a person acquires an insurable interest?

A) Title
B) Consideration
C) Agreement
D) Meeting of the minds

Question 25

In order to have an insurable interest when a loss or damage of a good occurs

A) It must have legal value.
B) It must cause a person to suffer financial or other recognizable loss.
C) It must cause pain and suffering.
D) It must require a loss of service.

Question 26

Shirley lives next to Reid and has always admired his use of lawn ornaments in his landscaping. She particularly loves Reid's life sized elephant and therefore wants to purchase insurance to protect the lawn ornament from loss or damage during shipping as he sells it to a friend in another state. Will Shirley be able to do that?

A) No because she does not own the ornament and will not suffer a recognizable loss.
B) Yes as long as she can prove she suffered an emotional loss.
C) No because perceived damage would be unreasonable.
D) Yes because anyone can acquire an insurable interest.

Question 27

Bosco Bibles sells 500 Bibles to Liberty Christian Academy. Due to the value and importance of the shipment, Bosco Bibles and Liberty Christian Academy want to purchase insurance to cover the Bibles while in transit for delivery and specify it in the contract itself. Which statement below is correct according to the UCC?

A) This would be considered overlapping insurance and the UCC does not allow it.
B) This would be considered overlapping insurance and the UCC does allow it.
C) Only the buyer is allowed to purchase insurance on goods and therefore the UCC would not allow it.
D) The UCC would allow the parties to equally share insurance coverage, 50% - 50%.

Question 28

Liz purchases a bed from Bisani Bedding to be shipped via Fed Ex. What type of contract is this?

A) Destination contract
B) Delivery contract
C) Shipment contract
D) Acceptance contract

Question 29

According to the UCC, for the sale of goods that requires shipping, the presumption is that unless stated otherwise, the seller need only deliver the goods to __________ to complete performance.

A) A warehouse
B) The buyer
C) The storefront
D) The common carrier

Question 30

Alex purchases a computer from Dell to be delivered via Fed Ex. Dell delivers the computer to Fed Ex to be shipped to Alex. During the delivery, the Fed Ex driver is having a bad day and just throws the boxes out the window of the delivery truck rather than setting the box by the front door as is standard practice. While throwing the computer it is damaged. Would Dell be responsible for the damage to the computer?

A) Yes because Dell is the seller.
B) Yes but Dell could seek reimbursement from Fed Ex.
C) No because title transfers to Fed Ex once Dell delivers it there.
D) No because title transfers to the buyer once the good is delivered to a common carrier.

Question 31

Abdullah purchases a couch from Murphy Interiors for $500.00 which includes delivery to his house the next day. During transit, the delivery truck gets into an accident and the fabric on the couch is damaged. Who bears the risk of loss in this situation?

A) Abdullah since risk of loss transfers to the buyer at the time of purchase.
B) Murphy Interiors if they were less than half way to Abdullah's house.
C) Abdullah if the delivery was over half way to Abdullah's house.
D) Murphy Interiors since the risk of loss transfers only upon delivery of a conforming good.

Question 32

According to the International Chamber of Commerce abbreviations, CF requires

A) The buyer to pay for cost and freight.
B) The buyer must ascertain whether the goods are properly insured during transit.
C) The seller must ascertain whether the goods are properly insured during transit.
D) The seller must pay for cost and freight.

Question 33

Gabrielle purchase a coffee press from Coffees R Us! to be delivered. When packing the product at Coffees R Us! the employee accidentally breaks it, but ships it anyway. When the box is delivered to Gabrielle's house she accepts the sealed box and immediately runs into the house to open the box. She immediately notices that the coffee press is broken and calls Coffees R Us! to request her money back. What will most likely be the outcome of this situation under the UCC?

A) Since Gabrielle accepted the package, risk of loss shifted to her.
B) Gabrielle may reject the broken coffee press.
C) Coffees R Us retains the risk of loss until Gabrielle uses the coffee press.
D) Gabrielle acquires the risk of loss as soon as she pays for the coffee press.

Question 34

Ron's GPS, Inc. orders 500 Class A cubical satellites to be installed on the GPS units it is manufacturing. When delivery is made on Monday night, the cubical satellites are actually Class B , rather than Class A. The box of satellites is dropped off at Ron's GPS. That night Ron's GPS burns down, destroying all of the Class B cubical satellites. What if any options does Ron have?

Question 35

Explain what is necessary to create a good that can be transferred from buyer to the seller according to the UCC.

Question 36

Moxie Mangoes enters into a contract with Fresh Time Restaurant for 50 cases of mangoes to be delivered via Fed Ex to the restaurant. Moxie delivers the mangoes to Fed Ex as required. The Fed Ex truck breaks down en route of delivery to the restaurant delaying delivery and causes the mangoes to rot and thus become infested with mango worms. Finally after several days' delay, Fed Ex attempts to deliver the mangoes. When Fresh Time realizes the status of the mangoes, it refuses delivery. What recourse does Fresh Time have?

Question 37

Explain when someone has an insurable interest and why a person may want to insure a good in a business transaction.