Deck 19: Ownership and Risk

Question 1

To determine ownership in goods,the UCC looks at title,insurable interest and identification.

Answer 1

True

Question 2

Ruppart Manufacturing has a contract for the sale of 100 cases of teaching supplies to Teachers Co-op,Inc.Payment of the order is to be made in installments over the next year.Ruppart Manufacturing keeps a security interest in the cases sold to assure payment by Teachers Co-op,Inc.When the order is completed,Ruppart ships the order.Legally:

A)both Ruppart and Teachers have an insurable interest in the supplies.
B)only Ruppart has an insurable interest in the supplies.
C)only Teachers has an insurable interest in the supplies.
D)neither Ruppart nor Teachers has an insurable interest in the supplies.

Answer 2

A

Question 3

Buyer is located in Des Moines,Iowa and seller is located in Sacramento,California.The contract specifies F.O.B.Des Moines.This contract is a:

A)destination contract.
B)sale or return.
C)shipment contract.
D)sale on approval.

Answer 3

A

Question 4

In the case Lindholm v.Brant,the Supreme Court of Connecticut held that Brant was a buyer in ordinary course,and,as such,was entitled to keep the painting.

Question 5

Under the UCC,the party who has title to the goods always has the risk of loss.

Question 6

In a shipment contract,title and risk of loss pass to the buyer when the goods are properly tendered at the destination point.

Question 7

In the case of Lindholm v.Brant,the court ruled:

A)Brant could not be a BIOC because he did not act in good faith.
B)Brant could not be a BIOC since he knew the painting had been stolen.
C)Brant was a BIOC, entitled to keep the painting in question.
D)that whether Brant was a BIOC was irrelevant as the title to the painting was void.

Question 8

Brian left his computer with CompuGeeks for repair.The following week,when he goes back to the shop to pick up his computer,he finds out that CompuGeeks sold it to Ian,a customer who was looking for a used computer.Brian can have his computer back from Ian.

Question 9

Arco sells to Melvin 1,000 computers that are stored in Arco's warehouse.Arco gives Melvin the ownership documents and Melvin will pick up the computers at the warehouse.Title has passed to Melvin.

Question 10

Mike uses fraudulent means to induce Wanda to enter a sales contract.Mike obtains a voidable title to the goods.

Question 11

A purchaser can acquire better title than the seller had.

Question 12

Crops are considered identified when they are harvested.

Question 13

More than one party can have an interest in particular goods.

Question 14

George's Grocery orders two dozen live lobsters from Sea Food Flyers.George's is to keep the lobsters happy by keeping them in a tank following certain instructions to keep the water at the right temperature,etc.The sale is made on a trial basis and George's may return all unsold lobsters at the end of 10 days.This contract is a:

A)contract to sell future goods.
B)conditional sale.
C)sale or return.
D)sale on approval.

Question 15

The buyer and seller may not have an insurable interest in the same goods at the same time.

Question 16

If Terrill steals a digital camera and sells it to Samuel,Samuel will get a valid title as long as he can prove he gave value for the camera and acted in good faith.

Question 17

A buyer has an insurable interest in goods when they are identified.

Question 18

In January,Eddie contracts to sell 100 bushels of soybeans that fall.This contract:

A)is void.He cannot contract to sell a crop before it is even planted; the goods must be in existence.
B)is void.The soybeans must be identified to the contract at the time he contracts to sell them.
C)can be valid; but title to the soybeans cannot pass until the soybeans exist.
D)can be valid, and title to the soybeans passes when the contract is signed.

Question 19

Jamie purchased a compound bow from Tyler.Jamie can prove he is a BFP by showing only that he gave value and acted in good faith.

Question 20

Regardless of the language of the contract,title to goods passes to the buyer at the time and place at which the seller physically delivers the goods.

Question 21

Bernie's stereo has been damaged when his niece spilled some juice on it.He takes it to High Fidelity Co.to be fixed.Five days later,when he returns to the store to pick it up,he finds out that a clerk had sold it to a customer,thinking it was part of their used items inventory.Which of the following is true?

A)High Fidelity did not have the power to transfer Bernie's rights in the stereo.Bernie may recover his stereo from the third party.
B)If the third party buyer was a good faith purchaser, Bernie will not be able to get his stereo back as he entrusted his stereo to High Fidelity.
C)Bernie may recover his stereo provided he was given a receipt by High Fidelity.
D)Bernie may recover his stereo if he can prove that the clerk at High Fidelity was not a good faith seller.

Question 22

The term F.O.B.:

A)can indicate a destination or shipment contract.
B)stands for "freight on board."
C)requires the seller to insure the goods for the buyer's benefit.
D)shifts the risk of loss to the buyer when the goods are identified.

Question 23

Which of the following statements about sale on approval is correct? Marco sells goods to Byron for his personal use on the basis that the goods may be returned if Byron is not satisfied with them.

A)The buyer has the right to return the goods to the seller provided he intended to use them himself.
B)The goods are not subject to the buyer's creditors until the buyer accepts them.
C)There is no sale until the buyer accepts the goods.
D)All of the above.

Question 24

A contract that requires a seller to deliver goods to the carrier is:

A)a destination contract.
B)a shipment contract.
C)a C.I.F.contract.
D)a C.O.D.contract.

Question 25

A gun manufacturer in Helena,Montana agrees to sell guns and ammunition to the ATF in Washington,D.C.The terms of the contract specify that the goods are to be shipped "FOB,Chicago." When does the buyer acquire title and risk of loss?

A)When the goods reach Chicago.
B)When the goods are delivered to the carrier in Montana.
C)When the goods are tendered in Washington D.C.by the carrier.
D)When the goods reach Washington D.C.

Question 26

The Grand Hotel of Jonesville,Kentucky,purchased 200 chairs from Holton Furniture,whose business is in Minnesota.The purchase order included the following term: "F.O.B.Minneapolis,MN." The contract makes no mention of risk of loss or title.The contract can be described as a:

A)shipment contract.
B)destination contract.
C)sale or return..
D)sale on approval.

Question 27

In the case Valley Forge Insurance Co.v.Great American Insurance Co.,the court ruled that:

A)title had passed to Kennedy as the car had been delivered to him.
B)both title and risk of loss had passed to Kennedy as the contract was a shipment contract.
C)title had not passed to Kennedy as the full purchase price had not been paid.
D)the risk of loss had been transferred to Kennedy.

Question 28

Which of the following sales would fall within the bulk sales provisions of Article 6?

A)The sale of a substantial part of the equipment of a business.
B)The sale of a substantial part of a store's inventory.
C)The sale of an office building.
D)The sale of the chairs in a barber's shop.

Question 29

Assume that Bubba orders 15 cases of BBQ chips from Mays Potato Chips for his restaurant,Bubba's BBQ.Mays ships 15 cases of regular chips by mistake.If Bubba decides to keep the regular chips,in spite of the nonconformity with the contract,then the destruction of the chips when a water pipe breaks in the food storage room will result in:

A)Mays' having to bear the loss, because it shipped nonconforming goods to Bubba.
B)Mays' having to bear the loss, because it failed to insure the chips.
C)Bubba's having to bear the loss, because he accepted delivery of the nonconforming chips.
D)Bubba's having to bear the loss, because it was a sale on approval contract.

Question 30

What are the requirements for the doctrine of entrustment to apply?

A)The goods must be entrusted to a merchant who deals in goods of the kind.
B)The entrustee may transfer the rights of the entruster only if the buyer is a purchaser in ordinary course.
C)The owner must have delivered the goods to a merchant or permitted him to retain them.
D)All of the above.

Question 31

Microchip Computers is a retailer,which buys its inventory from Acme Co.on credit,giving Acme a security interest in the inventory.Hubert buys a computer from Microchip in the normal course of business.Hubert's title in the computer is:

A)a good title.
B)a voidable title.
C)Hubert has no title in the computer.Title does not pass to Microchip and therefore to Hubert until Microchip pays its debt in full to Acme.
D)Hubert has good title that is subject to Acme's security interest.

Question 32

On impulse,you purchase a travel trailer and ask your acquaintance,Max,if you can leave the trailer at the edge of his restaurant's parking lot until you can have a concrete pad built to store the trailer on your property.Max agrees.When you return for the trailer the next week,it is gone and you find out that Max sold it.You can:

A)recover the trailer because Max did not have any ownership interest to pass.
B)recover, but only if Max bought insurance to cover the trailer while it was on his property.
C)not recover because you "entrusted" the trailer to Max, who then had a right to sell it.
D)not recover because Max had only a voidable title to transfer.

Question 33

Mike sold his car to Beth,who was to pick the car up at Mike's house by 12:00 noon on September 1.Mike was at his house waiting for Beth but she was late.In fact,when Beth arrived she discovered Mike's home and the car destroyed by a fire that started at 1:00 p.m.The risk of loss falls on:

A)Mike because Beth had not taken possession of the car.
B)Beth because Mike was ready, willing, and able to tender the car at 12:00 noon.
C)Beth because under the UCC, the buyer bears the risk of loss.
D)Mike, as he had possession of the car.

Question 34

Which of the following statements about the good faith purchaser is correct?

A)He is also known as the bona fide purchaser.
B)He gave value for the goods.
C)He may acquire good title from a seller with voidable title.
D)All of the above.

Question 35

Sanco contracted to sell 1,000 cases of oil to AMF.The oil is located in a public warehouse,which has issued a warehouse receipt for it.Which of the following is correct?

A)The risk of loss passes to the buyer when the contract is made.
B)The risk of loss passes to the buyer when the goods are tendered to him.
C)The risk of loss passes to the buyer when the warehouse receipt is delivered to the buyer.
D)The risk of loss passes to the buyer when the buyer gets the oil to its final destination.

Question 36

Assume that Dick steals Jane's camcorder and sells it to Sid.Jane can recover the camcorder from Sid:

A)under any circumstances.
B)only if Sid knew that the camcorder was stolen from Jane.
C)only if Sid did not know that the camcorder was stolen from Jane.
D)only if Sid paid less than the fair market value for the camcorder.

Question 37

Which of the following statements about identification is correct?

A)It permits the buyer to obtain insurance on the goods.
B)For unborn animals, it takes place when they are conceived.
C)It must occur before title can pass.
D)All of the above.

Question 38

Graham,an adult,purchases a car from a minor,and subsequently sells it to Harlow,another adult.Harlow paid full value for the car and had no reason to know that Graham had purchased the car from a minor.Which of the following best describes this situation?

A)Graham had good title and Harlow gets good title.
B)Graham had good title and Harlow gets a voidable title.
C)Graham had voidable title and Harlow gets good title.
D)Graham had void title and Harlow gets void title.

Question 39

Marco Manufacturing contracted to sell Kurtz Industries 3,000 iron clasps.The contract specified: F.O.B.Kurtz Industries.Upon arrival and inspection,the goods were rejected by Kurtz Industries because they did not conform to the contract specifications.In transit back to Marco Manufacturing,the common carrier's truck overturned and completely destroyed the clasps.Which statement is correct?

A)Marco may sue Kurtz for the contract price, as risk of loss transferred to Kurtz at the F.O.B.point.
B)Kurtz will not be liable for the purchase price.The risk of loss had not yet transferred since the goods were nonconforming.
C)The loss will be split between the parties upon a 50/50 basis.
D)The loss will be assigned to the party who could best bear the loss.

Question 40

In the case Harmon v.Dunn,the court addressed the issue of:

A)The passing of risk of loss in case of the sale of a stolen good.
B)The passing of risk of loss in case of breach of contract.
C)The passing of risk of loss when there is no breach of contract and the goods are held by a bailee.
D)The passing of risk of loss in case of death of the bailee.

Question 41

Oceanside entered into a contract with the seller Old Tennessee,for the purchase of $6,431 worth of plants.The terms were sale and delivery C.O.D.with the express provision of "No Risk to Supplier," and a large logo at the top of papers stating:
"NOTICE: ALL SHIPMENTS TRAVEL AT RISK AND COST OF PURCHASER."
The plants were shipped by an experienced truck common carrier.Upon arrival in New York,it appeared as though some plants were in a poor state because of excessive heat.Although the carrier on its own marked the bill of lading to indicate that the temperature in the truck should be 50 degrees,this was not done for at least a portion of the journey.Oceanside rejected the shipment by writing "rejected" on the back of the trucker's bill of lading.However,the plants were retained "on consignment" at Oceanside's premises.There were no other formal written rejections or official notices of breach or defects given by the buyer to seller at any point prior to trial.Discuss who has the risk of loss.

Question 42

Discuss the concept of entrustment.

Question 43

Baker Furniture sold 50 living room sets to King's Department Store.The parties did not agree on passage of title,but the delivery term was F.O.B.place of shipment.Discuss title and risk of loss regarding the furniture.

Question 44

Explain the concept and significance of identification of goods.Discuss how identification takes place.

Question 45

Discuss the concept of insurable interests.

Question 46

Rayco entered into a contract to buy Chia Pets from We Grow 'Em.The contract specified that the shipment would be "F.O.B.destination; title to pass on the date of shipment." The goods were destroyed in transit to Rayco.Rayco argues that the loss is We Grow 'Em's.Analyze the situation and determine who is liable for the loss.