Deck 18: Transfer of Title and Risk in Sales Contracts

Question 1

Which of the following is true of a shipment contract?

A)The carrier is liable for the goods while they are in transit from the seller to the buyer.
B)The title and risk of loss pass to the buyer when the goods are delivered to the carrier.
C)The seller has an insurable interest in the goods until they are delivered to the buyer.
D)The title and risk of loss pass to the buyer when the payment is made by the buyer.

Answer 1

B

Question 2

A sale on approval is a completed sale with the right of the buyer to return the goods and thereby set aside the sale.

Answer 2

False

Question 3

The right of ownership of property or evidence of ownership is called title. ​

Answer 3

True

Question 4

When goods are sold at an auction in separate lots, each lot is considered a separate transaction.

Question 5

What is the essential element in determining who bears the risk of loss of goods?

A)The party producing the goods bears the risk of loss.
B)Risk of loss follows the cash in a transaction.
C)Contracts attempting to shift the risk of loss are void due to illegality.
D)The party with control over the goods bears the risk of loss.

Question 6

Which of the following is true of a sale by entrustee?

A)The entrustee has the power to transfer the title of the goods to a third party in the entruster's name.
B)The goods entrusted are subject to the claims of the entrustee's creditors.
C)The entrustee is not liable to the owner for damages caused by the sale of the goods.
D)The entrustee, as a prospective customer, cannot convey the goods if it is obtained by worthless check or fraud.

Question 7

Who bears the risk of loss of damage to unidentified goods?

A)shipper
B)buyer
C)seller
D)auctioneer

Question 8

​ Which of the following best describes the term "title"?

A)It is the right of ownership of property or evidence of ownership.
B)It is the temporary transfer of possession of personal property.
C)It is the transfer of possession of goods for the purpose of sale.
D)It is the right to inherit property in the future.

Question 9

A buyer has a property interest in goods when the seller indicates that certain goods are the ones to be delivered to the buyer under the contract.

Question 10

Generally, people can sell only such interest or title in goods as they possess.

Question 11

Documents that show ownership are called documents of .

A)estoppel
B)consignment
C)bailment
D)title

Question 12

Give examples of some documents of title. What is their function? ​

Question 13

When might a seller retain its right to possession of goods after delivery to a carrier?

A)By stamping them "not for retail sale".
B)By making the shipment cash on delivery.
C)When the buyer has not yet made full payment for goods.
D)When the risk of loss has not passed to the buyer.

Question 14

In a sale or return contract, the cost and risk of return is borne by the seller.

Question 15

In the event of goods damaged through no fault of either the buyer or the seller, the party with control over the goods bears the risk of loss.

Question 16

If the owner entrusts goods to a merchant who deals in goods of that kind, the merchant does not have the power to transfer the entruster's title to anyone who buys in the ordinary course of business.

Question 17

A sale on approval and a sale or return are two names for the same transaction.

Question 18

Which of the following is an example of a consignment?

A)A sells 10 sacks of wheat to B at the market price.
B)A delivers a motorcycle to B for servicing.
C)A sends a shipment of farm produce to B for sale.
D)A sends one ton of wheat to B's warehouse for storage.

Question 19

In an FOB contract, the seller bears the risk of loss until the goods are delivered to the FOB point designated.

Question 20

An insurable interest may arise when a party has sufficient economic interest in the transaction to entitle them to insure the property involved.