Deck 15: Title and Risk of Loss

Question 1

When an owner holds fungible goods as a tenant in common,the owner can pass title to the goods to a buyer only by physi?cally sepa?rating the goods.

Answer 1

False

Question 2

Under a destination contract,the risk of loss passes to the buyer when the goods are duly delivered to the carrier.

Answer 2

False

Question 3

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

Answer 3

False

Question 4

A bill of lading is a receipt that a carrier signs and that serves as a contract for the transportation of goods.

Question 5

If a contract involves a sale of an unborn animal to be born within twelve months,identification takes place when the animal is conceived.

Question 6

Before any interest in specific goods can pass from the seller to the buyer,the goods must exist and be identified to the contract.

Question 7

A buyer from a thief does not acquire title to the goods even if the buyer acts in good faith.

Question 8

Under all circumstances,title passes to the buyer at the time and place at which the seller physically delivers the goods.

Question 9

Under a shipment contract,the risk of loss passes to the buyer when the seller places conforming goods in the possession of the carrier.

Question 10

Under the UCC,title determines all of the rights and remedies of the par?ties to a sales contract.

Question 11

When no document of title is required and delivery is made without moving the goods,title to identified goods passes when a contract for their sale is made.

Question 12

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

Question 13

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

Question 14

C.I.F.stands for "cost,insurance,freight."

Question 15

Entrusting goods to a merchant who deals in goods of the kind gives the merchant the power to transfer all rights to a buyer in the ordinary course of business.

Question 16

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

Question 17

Fungible goods are goods that are alike by physical nature,agreement,or trade usage.

Question 18

If a sale involves crops that are to be harvested within twelve months,iden?tification takes place when the crops are planted or begin to grow.

Question 19

A lessor with voidable title can transfer a valid leasehold in?terest to a good faith lessee for value.

Question 20

If a contract calls for a lease of specific and ascertained goods that are al?ready in existence,identification takes place at the time payment is made.

Question 21

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

Question 22

A contract in which a buyer is allowed to take goods on a trial basis is a sale or return.

Question 23

Quality Farm Supply,Inc. ,sells farm machinery to Rip and other grain farmers.Of these products,fungible goods include

A)grain only.
B)grain and machinery.
C)machinery only.
D)neither grain nor machinery.

Question 24

If a seller is not a merchant,the seller holds the goods,and the buyer is to pick them up,the risk of loss passes to the buyer on tender of delivery.

Question 25

If a seller is a merchant,and the goods are not to be moved,the risk of loss passes to a buyer when the buyer takes physical possession of the goods.

Question 26

When goods are in a consignee's possession,the consignee's creditors will prevail over the consignor in an action to repossess the goods.

Question 27

A buyer and a seller cannot normally have an insurable interest in identical goods at the same time.

Question 28

In a sale or return,the seller delivers the goods to the buyer with the un?derstanding that the buyer can set aside the deal by returning the goods.

Question 29

If a seller is not a merchant,and the goods are not to be moved,the risk of loss remains with the seller until the buyer sells or otherwise disposes of the goods.

Question 30

Pearl buys from Qual-Tee Motors a used sport utility vehicle (SUV).The SUV was manufactured by Road Rager,Inc. ,and previously owned by Simon.After the sale,Pearl has the title of

A)Qual-Tee.
B)Road Rager.
C)Simon.
D)the state.

Question 31

When a buyer agrees to buy goods held by a bailee,unless otherwise ex?plicitly agreed,the risk of loss passes to the buyer when the price is paid.

Question 32

If a seller is a merchant,and the goods are not to be moved,the risk of loss passes to a buyer on tender of delivery.

Question 33

In a sale on approval,title and risk of loss pass only when the buyer accepts the goods.

Question 34

Blend Juice Company contracts to buy a fruit crop from Citrus Farms.Before an inter?est in the fruit can pass from Citrus to Blend,Citrus must

A)arrange for shipment of the fruit and receive payment for it.
B)arrange for shipment of the fruit only.
C)receive payment for the fruit only.
D)none of the above.

Question 35

Rite Hardware Store orders 100 cases of galvanized nails from Safe-T Fastener Company's 1,000-case lot.Safe-T separates 100 cases from the lot.Title and risk of loss

A)remain with Safe-T until Rite acknowledges tender of delivery.
B)remain with Safe-T until Rite accepts 100 cases.
C)shift to Rite after it accepts the nails and inspects them for defects.
D)shift to Rite when Safe-T separates the cases.

Question 36

A warehousing company that normally issues documents of title for goods it receives is a bailee.

Question 37

The UCC treats a consignment as a sale on approval.

Question 38

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 39

A contract in which a buyer takes goods primarily for resale,with a right to return any goods that fail to sell,is a sale on approval.

Question 40

Before a seller can have an insurable interest in goods,the goods them?selves must be identified to a contract.

Question 41

Moto Company sells new and used motorcycles.Some of the motorcycles are held on consignment,including six consigned by Nu Cycles,Inc.While the cycles are in Moto's possession,title to them is held by

A)Moto and Nu jointly.
B)Moto only.
C)Moto's creditors only.
D)Nu only.

Question 42

Dirk steals Effie's necklace and sells it to Fiona.Effie can recover the neck?lace from Fiona

A)only if Fiona did not know that the necklace was stolen.
B)only if Fiona gave legally sufficient consideration for the necklace.
C)only if Fiona knew that the necklace was stolen.
D)under any circumstances.

Question 43

Diamond Camera Shop receives lenses from Eye Optical,Inc. ,under a sale or return agreement.While the lenses are in Diamond's possession,ti?tle is held by

A)Diamond and Eye jointly.
B)Diamond only.
C)Diamond's creditors only.
D)Eye only.

Question 44

Royal Cafe buys 100 bags of oranges from Sweet Citrus Company.The par?ties agree to ship the oranges "F.O.B.Royal" via Terrific Trucking Company.The oranges rot in transit.The loss is suf?fered by

A)Royal and Sweet,but not Terrific.
B)Royal,Sweet,and Terrific.
C)Royal only.
D)Sweet only.

Question 45

Dazzle Products Corporation contracts with Excel Trucking Company to take goods to Flight Airlines,Inc. ,with Flight to transport the goods to a Geo Storage Company warehouse.Excel,Flight,and Geo each acknowledge possession of the goods by a document of title.Excel,Flight,and Geo are

A)bailees.
B)consignees.
C)lessees.
D)sellers.

Question 46

Home Products Store buys furniture from Imperial Furniture,Inc.The par?ties agree that the furniture will be shipped "F.O.B.Imperial's warehouse" via Jiffy Shipping Corporation.The furniture is lost in transit.The loss is suffered by

A)Home Products and Imperial Furniture,but not Jiffy Shipping.
B)Home Products,Imperial Furniture,and Jiffy Shipping.
C)Home Products only.
D)Imperial Furniture only.

Question 47

Real Foods Corporation orders from Savory Company goods that are stored in an Uptown,Inc. ,warehouse.Real Foods pays for the goods,delivery is via the transfer of a negotiable warehouse receipt,and Real Foods moves the goods out of the warehouse.The risk of loss passes to Real Foods when it

A)orders the goods.
B)pays for the goods.
C)receives the negotiable warehouse receipt.
D)moves the goods out of the warehouse.

Question 48

Mica buys 1,000 bales of hay from Nuevo Farms.The parties agree that the hay will be transported F.A.S.via Overland Transport,Inc.Nuevo Farms' truck carrying the hay explodes before reaching Overland Transport.The loss is suffered by

A)Mica and Nuevo Farms,but not Overland Transport.
B)Mica,Nuevo Farms,and Overland Transport.
C)Mica only.
D)Nuevo Farms only.

Question 49

Global Produce Corporation in Hawaii sells fifty tons of pineapple to Ideal Groceries,Inc. ,in California,F.O.B.Hawaii.The cost of transport?ing the produce to California will be paid by

A)California.
B)Global Produce
C)Ideal Groceries.
D)Hawaii.

Question 50

Sugary Treats Store buys chocolate from Tasty Candies,Inc.The parties agree that the chocolate will be shipped "F.O.B.Sugary Treats" via United Railroad Corporation.The chocolate is lost in transit.The loss is suffered by

A)Sugary Treats and Tasty Candies,but not United Railroad.
B)Sugary Treats,Tasty Candies,and United Railroad.
C)Sugary Treats only.
D)Tasty Candies only.

Question 51

Perfect Fit Furnishings,Inc. ,agrees to lease a desk to Research Resources,Inc.(RRI),which requests that the desk be left outside Streetside Warehouse for RRI to pick up.Before RRI retrieves the desk,it is stolen.The loss is suf?fered by

A)Perfect Fit and RRI,but not Streetside Warehouse.
B)Perfect Fit only.
C)Perfect Fit,RRI,and Streetside Warehouse.
D)RRI only.

Question 52

Marvel Electronix orders thirty hard drives from Nano Computers,Inc.The hard drives are stored in Onyx Warehouse.Under the terms of the order,Nano must give Marvel a warehouse receipt for the goods,which Marvel will then pick up.Title to the goods passes to Marvel when

A)Nano gives Marvel a warehouse receipt for the goods.
B)Marvel orders the goods.
C)Marvel picks up the goods.
D)Onyx Warehouse stores the goods.

Question 53

Angie buys a lamp from Brite Lites Store,which agrees to keep it for Angie until she picks it up.Before Angie gets the lamp,a fire destroys the store and the lamp.The loss is suffered by

A)Angie and Brite Lites.
B)Angie only.
C)Brite Lites only.
D)neither Angie nor Brite Lites

Question 54

Barb pays $1,000 for a new computer to Computer Products Corporation,which pays Discount Warehouse,Inc. ,$50 to store the computer until Barb retrieves it.Discount Warehouse is

A)a bailee.
B)a consignee.
C)a lessee.
D)a seller.

Question 55

Gins pays $2,000 for a new HDTV to Imagine Corporation.Imagine holds the set until Gina picks it up.Imagine is

A)a bailee.
B)a consignee.
C)a lessee.
D)a seller.

Question 56

Bree leaves a pair of new shoes at Chalky's Shoe Store to be dyed.Chalky's sells the shoes to Dian,who does not know that the shoes belong to Bree.Bree can recover from

A)Chalky's Shoe Store only.
B)Chalky's Shoe Store or Dian.
C)Dian only.
D)neither Dian nor Chalky's Shoe Store.

Question 57

Timekeep Watches,Inc. ,ships an assortment of timepieces to Unique Jewelers,Inc. ,which agrees to pay for items that are not re?turned within six months.This is

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

Question 58

Leo buys a boat from his neighbor Moe,who is a fishing guide.Moe agrees to keep the boat in his storage shed until Leo picks it up.A tree falls on Moe's shed and destroys the boat.The loss is suffered by

A)Leo and Moe.
B)Leo only.
C)Moe only.
D)neither Leo nor Moe.

Question 59

Track & Truck Distribution,Inc. ,signs a receipt for goods that will also serve as a contract for the transportation of the goods.This is

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

Question 60

Floors & More Store contracts to buy 100 carpets from Ground Cover,Inc.Unless the contract states otherwise,it is assumed that this is

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

Question 61

Quality Computer Company agrees to sell one hundred hard drives to Retail Electronics,Inc.The hard drives,which Retail Electronics ex?pressly requires to have certain amounts of memory,are to be shipped "F.O.B.Retail Electronics distribution center in Memphis,TN." When the drives arrive,Retail Electronics rejects them and informs Quality Computer that the drives do not conform to Retail Electronics' memory re?quirement.A few hours later,the drives are destroyed in a fire at Retail Electronics' distribution center.Will Quality Computer succeed in a suit against Retail Electronics for the cost of the goods?

Question 62

Tone Style Stores orders leather jackets from Universa Clothing Company.Universa mistakenly ships denim jackets,which Tone rejects and returns via Valu Transport,Inc.During the return,the jackets are lost.The loss is suffered by

A)Tone only.
B)Tone and Universa,but not Valu.
C)Tone,Universa,and Valu.
D)Universa only.

Question 63

Diners Cafe orders five gallons of corn oil from EZ Distributors,Inc.EZ mistakenly ships olive oil,which Diners keeps,despite the nonconformity.The oil is destroyed in a fire.The loss is suffered by

A)Diners and EZ,but not Diners' customers.
B)Diners,EZ,and Diners' customers.
C)Diners only.
D)EZ only.

Question 64

Regal Recreation Sales,Inc. ,allows Sandy to take a Regal boat for a "test run." Sandy tries the boat for a few hours,returns,and buys it.This is

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

Question 65

NuStores accepts a shipment of DVD players from Open-Ur-Eyes Video,Inc.NuStores later discovers a defect in the players,revokes acceptance,and returns the players via Playback,Inc.During the return,the play?ers are lost.The loss is suffered by

A)NuStores only.
B)NuStores and Open-Ur-Eyes,but not Playback.
C)NuStores,Open-Ur-Eyes,and Playback.
D)Open-Ur-Eyes only.

Question 66

Li'l Jewelry Store orders display racks from Mark-Up Supplies,Inc.(MSI).MSI mistakenly ships racks of the wrong size and color,which Li'l rejects and returns via Nevermind Shipping Company.During the return,the racks are lost.The loss is suffered by

A)Li'l only.
B)Li'l and MSI,but not Nevermind.
C)Li'l,MSI,and Nevermind.
D)MSI only.

Question 67

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 Silky,a merchant who sells new and used television sets.By accident,one of Silky's employees sells the set to Tuna,an innocent purchaser-customer,who takes possession.Riley wants his set back from Tuna.

Question 68

Office Applications Company (OAC)orders six laser printers from Printing Products,Inc.(PPI),to be delivered by PPI.Before PPI's truck ar?rives with the goods,OAC tells PPI it will not pay.The printers are lost in transit.The loss is suffered by

A)OAC only.
B)OAC to the extent of a deficiency in PPI's insurance coverage only.
C)PPI to the extent of a deficiency in OAC's insurance coverage only.
D)PPI only.

Question 69

Deep Storage Company holds goods for EZ Sales Corporation,which con?tracts to sell them to Fabric Stores,Inc.The goods are to be delivered without being moved and are represented by a negotiable bill of lading.The risk of loss passes to Fabric Stores

A)if Deep refuses to honor the bill of lading.
B)if EZ gives the bill of lading to Deep.
C)if the goods are lost due to an "act of God."
D)when Fabric Stores receives the bill of lading.

Question 70

Peak Sales Corporation orders goods from Quick Stock Company.Peak plans to market the goods to consumers generally.Quick identifies the goods.Before they are shipped to Peak,an insurable interest in the goods exists in

A)Peak and Quick,but not consumers generally.
B)Peak,Quick,and consumers generally.
C)Peak only.
D)Quick only.

Question 71

Good Food Corporation buys from Home Farms,Inc. ,a rice crop that Home Farms plans to plant and harvest during the next growing season.Good Food plans to sell the rice to Interstate Grocery Stores.After the rice is planted,but before it is harvested,an insurable interest in the rice exists in

A)Good Food and Home Farms,but not Interstate Grocery.
B)Good Food,Home Farms,and Interstate Grocery.
C)Good Food only.
D)Home Farms only.

Question 72

Orange Music,Inc. ,sells Pad-brand MP3 players to Quik Pik Stores and other retailers.Orange has an insurable in?ter?est in the players as long as

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