Deck 19: Title and Risk of Loss

Question 1

In a destination contract,the seller is required or authorized to ship goods by carrier. 

Answer 1

False

Question 2

Any explicit understanding between the buyer and the seller determines when title passes. 

Answer 2

True

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

The entrustment rule basically allows innocent buyers to obtain legitimate title to goods purchased from merchants even if the merchants do not have good title. 

Question 5

If a sale involves crops that are to be harvested within twelve months,identification takes place when the seeds for the crops are harvested. 

Question 6

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

Question 7

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

Question 8

Owners in common are owners with an undivided share of the whole. 

Question 9

When a lessee sells leased equipment to a third party,the lessor cannot,under any circumstances,recover the equipment from the buyer. 

Question 10

Unless a contract provides otherwise,it is assumed to be a shipment contract. 

Question 11

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

Question 12

All UCC provisions relating to the passage of title for sales of goods also apply to leases of goods. 

Question 13

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

Question 14

Title and risk of loss can pass to the buyer from the seller before the goods are identified to the contract. 

Question 15

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

Question 16

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 17

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

Question 18

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 19

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

Question 20

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

Question 21

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 22

A seller has an insurable interest in goods as long as the goods are in existence. 

Question 23

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 24

Ralph,a representative for Statewide Truck & Transport Company,delivers a receipt issued by Thelma,the owner of United Storage Warehouse,for goods held in the warehouse to Vicky,the buyer for Wattage,Inc.This is​ 

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

Question 25

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

Question 26

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 27

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

Question 28

Under the UCC,the risk of loss is necessarily determined by title. 

Question 29

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 30

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

Question 31

Both the buyer and the seller can have an insurable interest in identical goods at the same time. 

Question 32

In a sale or return,title and risk of loss remain with the seller until the buyer accepts the goods. 

Question 33

In a sale on approval,a buyer takes goods primarily for resale,with a right to return any goods that fail to sell. 

Question 34

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

Question 35

When a merchant keeps the goods for the buyer to pick up,the risk of loss passes when the buyer actually takes possession of the goods.

Question 36

Equipment Rentals Corporation (ERC)agrees to lease two backhoes to Dig & Fill Construction,Inc.Before any interest 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 37

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 38

When a bailee is holding goods that are to be delivered under a contract without being moved,the risk of loss cannot pass to a buyer. 

Question 39

If a lessor is a merchant,the risk of loss passes to a lessee when the lessee takes physical possession of the goods. 

Question 40

In a sale or return,a buyer has an option to return the goods and undo the sale. 

Question 41

Red's Roofing buys asphalt roofing tiles from Shingles,Inc.The parties agree that the tile will be shipped "F.O.B.Shingles's 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 42

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 43

Ursula buys a Verismooth boat from a Watercraft store,which agrees to keep the boat for Ursula until she picks it up.Before Ursula gets the boat,an unforeseen tornado destroys the store and the boat.The loss of the boat is suffered by​ 

A) ​Ursula. 
B) ​Verismooth. 
C) ​Watercraft. 
D) ​the government agency that failed to foresee the tornado.

Question 44

Varoom Motors,Inc.,allows Weber to take a Xtrem-brand motorcycle for a "test run." Weber tries the cycle for a few hours,returns,and buys it.This is​ 

A) ​a bailment. 
B) ​a lease. 
C) ​a sale on approval. 
D) ​a sale or return.

Question 45

Elizabeth buys a car from Silas,who is 16 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 46

Pam buys from Midtown Motors a used sport utility vehicle (SUV).The SUV was manufactured by Gem Vehicles,Inc.,and previously owned by Ron.Regarding title to the SUV,Pam acquires​ 

A) ​whatever title Midtown had. 
B) ​whatever title Gem had. 
C) ​whatever title Ron had. 
D) ​no title.

Question 47

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 48

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 49

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 50

Fits Like A Glove Shoes,Inc.,and Retail Footwear Stores enter into a contract for a sale of shoes.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 51

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 owners in common in equal measure.

Question 52

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 acknowledge 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 53

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 54

Regan,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) ​Regan signs the contract. 
B) ​Regan and the Sal's Clothing Shop agent sign the contract. 
C) ​Sal's Clothing Shop physically delivers the dresses to the department store. 
D) ​Regan pays Sal's Clothing Shop for the dresses.

Question 55

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 56

Quaff n' Quench Café buys twenty-five crates of oranges from Reynaldo Produce,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 suffered by​ 

A) ​Quaff n' Quench. 
B) ​Swiftline. 
C) ​Columbia. 
D) ​Reynaldo Produce.

Question 57

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 58

Roasters Corporation and Outdoor Barbecues,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 59

Commercial Rents Corporation agrees to lease a pressure washer to Delivery Trucks,Inc.,which agrees to pick it up at E Street Warehouse.Before Delivery Trucks retrieves the washer,it is stolen.The loss is suffered by​ 

A) ​Commercial Rents. 
B) ​Delivery Trucks. 
C) ​E Street Warehouse. 
D) ​the thief.

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

Paramount Bookstores buys fifty cases of an assortment of books from Quixotic Publishing Company with the right to return the unsold books in lieu of payment.This is​ 

A) ​a bailment. 
B) ​a lease. 
C) ​a sale on approval. 
D) ​a sale or return.

Question 62

Effortless Workouts,Inc.,offers to sell a treadmill to Farouk and sends it to him on a trial basis.This is​ 

A) ​a bailment. 
B) ​a delivery ex-ship. 
C) ​a sale on approval. 
D) ​a sale or return.

Question 63

Organicos Café orders five gallons of PureMaid-brand transfat-free olive oil from Quico Cooking Supplies,Inc.Quico mistakenly ships soy oil,which Organicos keeps,despite the nonconformity.The oil is destroyed in a fire.The loss is suffered by​ 

A) ​all of the parties as owners in common in equal measure. 
B) ​PureMaid. 
C) ​Organicos Café. 
D) ​Quico Cooking Supplies.

Question 64

Spuds Corporation buys from Tater Farms,Inc.,a potato crop that Tater plans to plant and harvest during the next growing season.Spuds plans to sell the potatoes to Tasty Foods Restaurants.After the potatoes are planted,but before they are harvested,an insurable interest in the crop exists in​ 

A) ​Spuds and Tater, but not Tasty Foods. 
B) ​Spuds, Tater, and Tasty Foods. 
C) ​Tater only. 
D) ​none of the choices.

Question 65

Quality Computer Company agrees to sell one hundred servers to Social Media Networks,Inc.The servers,which Social Media Networks expressly requires to have certain amounts of memory,are to be shipped "F.O.B.Social Media Networks distribution center in Memphis,TN."  When the servers arrive,Social Media Networks rejects them and informs Quality Computer,claiming that the servers do not conform to Social Media Networks' memory requirement.A few hours later,the servers are destroyed in a fire at Social Media Networks' distribution center.Will Quality Computer succeed in a suit against Social Media Networks for the cost of the goods?​

Question 66

Household Appliance Corporation sells Ideal-brand vacuum cleaners to Jolly Discount Stores and other retailers.Household Appliance will have an insurable interest in the vacuums as long as​ 

A) ​Household Appliance remains in business. 
B) ​Household Appliance retains title to the goods. 
C) ​the goods are in existence. 
D) ​there is no risk of loss.

Question 67

Quest Outdoor Store orders RiverRun-brand kayaks from Sports Merchandise,Inc.Sports Merchandise mistakenly ships kayaks of the wrong size,which Quest rejects and returns via Trans-State Shipping Company.During the re-turn,the kayaks are lost.The loss is suffered by​ 

A) ​Quest . 
B) ​Trans-State. 
C) ​RiverRun. 
D) ​Sports Merchandise.

Question 68

Candy Corporation orders Delicioso-brand chocolate from Edibles Distribution Company.Edibles identifies the goods.Before they are shipped to Candy Corporation,an insurable interest in the goods exists in​ 

A) ​Candy Corporation and Edibles Distribution. 
B) ​Delicioso and Edibles Distribution. 
C) ​Candy Corporation and Delicioso. 
D) ​all of the parties as tenants in common.

Question 69

Gas & Wood Stove Shop receives Hearthwarm-brand stoves from Independent Dealer,Inc.,under a sale or return agreement.While the stoves are in Gas & Wood's possession,title is held by​ 

A) ​Independent Dealer. 
B) ​Gas & Wood. 
C) ​Gas & Wood's creditors. 
D) ​Hearthwarm.

Question 70

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 71

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 72

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.