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

Question 1

Tender of delivery is the moment goods are picked up by the buyer.

Answer 1

False
Explanation: Tender of delivery is the moment the goods were available for the buyer to take.

Question 2

Which of the following was the result in the Case Opener involving whether title had passed to the entity that received shipment although shipment was made to the wrong party thereby preventing a lawsuit by the assignee of the original owner against the shipping company?

A) That because the shipper breached its contract by improperly delivering goods, the lawsuit by the assignee was not barred.
B) That because title and risk of loss had not passed from the seller, who had contracted with the shipper, to the buyer at the time of transfer, the lawsuit by the assignee was not barred.
C) That the lawsuit by the assignee was barred because an origin title was involved, and risk of loss had passed to the buyer by the time of delivery, leaving the seller with no rights.
D) That the lawsuit by the assignee was barred because a destination title was involved, and risk of loss had passed to the buyer by the time of delivery, leaving the seller with no rights.
E) That while the original seller may have had rights to sue, the lawsuit by the assignee was barred under the Contracts for the International Sale of Goods.

Answer 2

A
Explanation: According to the court, "Burlington [the shipper] failed to perform the duties required under the contract, that is, to not deliver the goods until the buyer presented and turned over to Burlington the receipt. Burlington breached the express terms of its delivery obligation and thus is liable for the misdelivery."

Question 3

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.

Answer 3

A
Explanation: If an owner entrusts the possession of goods to a merchant who deals in goods of that kind, the merchant can transfer all rights in the goods to a buyer in the ordinary course of business.

Question 4

FOB and FAS are different terms with the same meaning.

Question 5

Which of the following 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 paid interest
D) A collateral interest
E) A valid interest

Question 6

Which of the following types of title does a good-faith buyer hold when the seller transfers a void title?

A) Void
B) Voidable
C) Good
D) Substantiated
E) Excised

Question 7

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

Question 8

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 some time later 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 9

Which of the following is held when someone unknowingly purchases stolen goods?

A) Void title
B) Voidable title
C) Good title
D) Examined title
E) Substantiated title

Question 10

The UCC defines a[n] _____ as the passing of title from the seller to the buyer for a price.

A) Sale
B) Consignment
C) Lease
D) Title swap
E) Ownership

Question 11

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

Question 12

Delivering a car to a merchant for repair cannot qualify as an entrustment.

Question 13

Which of the following is title that is acquired from someone who already owns the goods free and clear?

A) True title
B) Voidable title
C) Good title
D) Examined title
E) Substantiated title

Question 14

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 15

The rule originates in common law that when a seller transfers goods to a buyer,the buyer gets only voidable title if the buyer is a minor.

Question 16

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 17

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

Question 18

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 common-carrier delivery contract.

Question 19

Which of the following was the result in Landshire Food Service Inc.,v.Coghill,the case in the text in which the defendant,Coghill,sold his Rolls Royce to Bellman in return for a forged cashier's check and an innocent purchaser for value,Hyken,meanwhile purchased the car from Bellman before the fraud was discovered?

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 20

Good faith is generally relevant in determining whether someone with a void title can pass a good title.

Question 21

With a simple delivery contract,when does title transfer to the buyer?

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

Question 22

Which of the following was the result in the case in the book involving Tempur-Pedic,the manufacturer of mattresses,when Tempur-Pedic sought to stop the sale of mattresses that Tempur-Pedic has donated to a charity for victims of Hurricane Katrina and attempted to recover mattresses sold by the charity involved?

A) That the charity had void title under the UCC and could not transfer good title, and that Tempur-Pedic could recover all the mattresses both from the charity and from third-party purchasers.
B) That the UCC did not apply because a charity was involved and that Tempur-Pedic was entitled to a temporary restraining order pending trial because of the likelihood that it would prevail based on fraudulent transactions.
C) That under the UCC, Tempur-Pedic was entitled to a temporary restraining order because of the likelihood that it could show at trial that mattresses were not sold to a good-faith purchaser.
D) That under the UCC, Tempur-Pedic would lose because the mattresses were sold to a good-faith purchaser for value.
E) That the UCC did not apply because a charity was involved and that Tempur-Pedic would lose because movable goods were involved.

Question 23

Which of the following occurs when goods are delivered to a buyer via a common carrier,such as a trucking line?

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

Question 24

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 25

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 loss being proportioned 75% to the buyer and 25% to the seller.
E) The buyer and seller with the loss being proportioned 25% to the buyer and 75% to the seller.

Question 26

Which of the following occurs when the sale itself is contingent on approval?

A) A transferable contract
B) An unapproved contract
C) An average delivery contract
D) A conditional sales contract
E) A goods-in-transfer contract

Question 27

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 28

With a simple delivery contract involving a merchant,when does risk of loss transfer to the buyer?

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

Question 29

In a destination contract who bears the risk of loss while the goods are in transit?

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

Question 30

What does the term "FAS" when used as a shipping term represent?

A) Found as Seen
B) Fee as Selected
C) Freedom Alongside
D) Free Alongside
E) Found as Selected

Question 31

What does the term CIF when used as a shipping term represent?

A) Cost, insurance, and freight
B) Collateral, insurance, and freight
C) Commerce, insurance, and freight
D) Cost, indemnity, and freight
E) Cost, insurance, and flight

Question 32

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 33

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 34

Which of the following 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 simple delivery contract
C) An average delivery contract
D) A conditional sales contract
E) A goods-in-transfer contract

Question 35

Which of the following 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) Origin contracts
B) Destination contracts
C) Transfer contracts
D) Common-carrier contracts
E) Risk contracts

Question 36

What does the term "FOB" when used as a shipping term represent?

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

Question 37

Which of the following occurs 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?

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

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 39

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 40

In an origin contract,when does title pass to the buyer?

A) When money is transferred to the seller
B) When the items are delivered to the buyer
C) At the time and place of shipment
D) One day after goods are identified to the contract
E) When goods are identified to the contract

Question 41

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 42

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 43

Assuming that the car was stolen prior to delivery to ABC Motors and without the knowledge of any representative of ABC Motors,what kind of title did ABC Motors have?

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

Question 44

What do the words "deliver to the order of seller" indicate in a goods-in-bailment contract?

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

Question 45

Which of the following is true regarding Connie's rights to the car?

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

Question 46

What kind of title did Frank have?

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

Question 47

What type of contract is presumed based upon the fact that the contract was 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 Ralph's home?

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

Question 48

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 49

Which of the following are types of 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 50

In a conditional sales contract,a contract is a ______ if the seller allows the buyer to take possession of the goods before deciding whether to complete the contract by making the purchase.

A) Sale-on-approval contract
B) Sale-or-return contract
C) Condition-or-sale contract
D) Return-or-purchase
E) Return-or-sale

Question 51

Which of the following is a type of contract that Ralph and Good Times Furniture entered into?

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 52

In a conditional sales contract,a contract is a ______ when the seller and buyer agree that the buyer may return the goods at a later time.

A) Sale-on-approval contract
B) Sale-or-return contract
C) Condition-or-sale contract
D) Return-or-purchase
E) Return-or-sale

Question 53

What kind of title did Betty have?

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

Question 54

Which of the following is true regarding the risk of loss at the time the goods were damaged?

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

Question 55

Assuming the car was stolen without any knowledge of ABC Motors,which of the following is true regarding the manager's statement that Marcy has a good title?

A) The manager is correct.
B) The manager is correct only if Marcy 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 Marcy 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 Marcy has voidable title.
E) The manager is incorrect because Marcy has void title.

Question 56

What kind of title did Billy have?

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

Question 57

Which of the following occurs in a CIF agreement?

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 in possession of a carrier before the risk passes to the buyer.

Question 58

Which of the following is true regarding the manager's statement that Robby's only recourse is against Connie?

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

Question 59

Which of the following is a proper identifying term for Connie?

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

Question 60

Which of the following would the absence of words "to the order of" indicate 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 61

Discuss when title and risk of loss pass to the buyer in a goods-in-bailment contract when (a)the seller has a negotiable document of title (b)the seller has a nonnegotiable document of title and (c)the seller has a contract or other instrument showing ownership that is not a negotiable or nonnegotiable document of title.

Question 62

List and describe good title and void title,and give an example of when void title would be passed.

Question 63

Belinda purchases a couch from Good Furniture Store to use in her home.She pays for the couch,and the store agrees to deliver it.Unfortunately,on the way to her house,the vehicle overheats and burns,destroying the truck and the couch inside.Belinda asks for a refund or another couch.The store owner refuses on the basis that risk of loss had passed to Belinda.What would be the result of a lawsuit between Belinda and Good Furniture Store under the UCC?

Question 64

Set forth the five situations under which a buyer gets only voidable title in a sale.

Question 65

What is the most common way a sales contract is breached? Discuss the available remedies of a buyer in the event a seller does not provide goods described in the contract along with UCC provisions regarding the consequences of a revocation of the contract.