Deck 18: Title and Risk of Loss

Question 1

Identification is one of the concepts involved in determining the rights and liabilities of parties to a sales contract.

Answer 1

True

Question 2

In a shipment contract, risk of loss passes to the buyer or lessee when the goods are delivered to the carrier.

Answer 2

True

Question 3

In most situations involving sales or leases, rights and liabilities are generally not determined by who has title to the goods.

Answer 3

True

Question 4

If the seller's title is voidable , a good faith purchaser acquires no title, and the real owner can reclaim the goods.

Question 5

Generally, all contracts are assumed to be destination contracts if nothing to the contrary is stated in the contract.

Question 6

Goods that are not both existing and identified to the contract are called future goods .

Question 7

If the contract calls for the sale or lease of specific goods that are already in existence, identification takes place when the goods are shipped.

Question 8

Title can pass to the buyer from the seller before the goods are identified to the contract.

Question 9

Risk of loss cannot pass from seller to buyer unless the goods are identified to the contract.

Question 10

Identification is not significant for the buyer or lessee because it does not impact their ability to insure the goods.

Question 11

Identification is the express designation of the goods provided for in a contract.

Question 12

A bill of lading is a receipt issued by a carrier that also serves as a contract for transporting the goods .

Question 13

The UCC's provisions relating to passage of title do not apply to leases of goods.

Question 14

When no documents of title are required, title does not pass.

Question 15

Under the UCC, the buyer and the seller can determine in the contract when title passes.

Question 16

In a shipment contract, the seller is required to deliver the goods to a particular destination.

Question 17

The parties can agree in their contract when identification will take place.

Question 18

An owner in common of fungible goods can pass title and risk of loss to the buyer only by actually separating the goods.

Question 19

If the seller's title is void , the seller has the power to transfer good title to a good faith purchaser.

Question 20

A buyer cannot acquire any more right to goods than the seller has to the goods sold.

Question 21

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

Question 22

Safewise Lake Tours contracts with Town & Country Motors to buy six touring boats. The contract lists the boats by their unique hull identification numbers. Under the UCC, identification

A) requires the filing of a copy of the contract in the appropriate state office.
B) occurred when the contract was signed.
C) cannot take place unless the cars are in Town & Country's possession.
D) cannot take place until the cars are in Safewise's possession.

Question 23

Equipment Rental 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 24

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

Question 25

Buyers and lessees have an insurable interest in identified goods even if the risk of loss has not yet passed .

Question 26

After title passes to a buyer, a seller no longer has an insurable interest in the goods.

Question 27

Parties to sales or lease contracts often obtain insurance coverage to protect against damage, loss, or destruction of the goods.

Question 28

In a destination contract, risk of loss passes to the buyer or lessee when the goods are delivered to the carrier.

Question 29

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

Question 30

Generally, the party in breach of a sales contract assumes the risk of loss , even if the other party has the risk of loss at the time of the breach.

Question 31

If the seller is not a merchant, and the goods are being held by the seller for the buyer to pick up, the risk of loss passes to a buyer on tender of delivery.

Question 32

Risk of loss refers to which party will suffer a financial loss if the goods in the contract are lost, destroyed, or damaged.

Question 33

If a buyer accepts a shipment of goods and later discovers a defect, acceptance can be revoked.

Question 34

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

Question 35

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

Question 36

If the seller is a merchant who is holding the goods for the buyer to pick up, the risk of loss passes when the buyer takes physical possession of the goods.

Question 37

Beef, Inc. raises calves to sell. Beef breeds its cows in April, and the cows calve in February of the following year. In January, Cold Cuts Inc. contracts with 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) when Cold takes possession of the calves.

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 until the buyer takes actual possession of the goods.

Question 39

Barley that fills County Grain Co-op's silo is fungible if the barley is

A) alike naturally, by agreement, or by trade usage.
B) fundamentally different.
C) fun, good, and edible.
D) rotting due to a fungus caused by a leaky roof and a delay in shipping.

Question 40

In a sale of couches from Furniture Manufacturer to Home Furnishing Sales, the delivery truck crashes and destroys the furniture. Under the UCC, the rights and liabilities of Furniture Manufacturer and Home Furnishing Sales in this circumstance are generally determined by

A) the right of ownership.
B) who has title.
C) whether the goods are identified.
D) who has the risk of loss.

Question 41

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 42

Quaff Café buys twenty-five crates of apples from Reynaldo Produce, Inc. The parties agree to ship the apples "F.O.B. Quaff" via Swift Trucking Company. The apples rot in transit. The loss is suffered by

A) Quaff.
B) Swift.
C) F.O.B.
D) Reynaldo.

Question 43

Regional Freight LLC delivers a receipt issued by Storage Warehouse for goods stored in its facility to Transnational Inc., a buyer of the goods. This is

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

Question 44

Sure Good Appliance Corporation contracts with Trucking Company to take a selection of appliances to United Railroad, Inc., for United to transport the goods to a VeriSafe Company warehouse. Trucking, United, and VeriSafe each acknowledge possession of the goods by a document of title. These parties are

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

Question 45

Eve buys from Fiesta Autos a used pick-up truck. The truck was manufactured by Gem Vehicles, Inc., and previously owned by Hal. Regarding title to the truck, Eve acquires

A) whatever title Fiesta had.
B) whatever title Gem had.
C) whatever title Hal had.
D) no title.

Question 46

Runners Feet, a shoe store, orders one hundred pair of athletic shoes from Speedster Inc. with a shipment contract. Absent a contrary agreement between the parties, title will pass to Runners Feet when

A) the parties sign the contract.
B) the goods exist and are identified.
C) the seller physically delivers the goods to the trucking company for delivery.
D) the buyer physically receives the goods at its place of business and pays for them.

Question 47

Pipes & Culverts Company orders six irrigation pumps from Quality Pumps, Inc. The pumps are stored in Re-storage Warehouse. Under the terms of the order, Quality must give Pipes a warehouse receipt for the goods, which Pipes will then pick up. Title to the goods passes to Pipes when

A) Quality stores the pumps at the warehouse.
B) Pipes orders the pumps and the contract is signed.
C) Pipes picks up the pumps from the warehouse.
D) Quality gives Pipes the warehouse receipt.

Question 48

Grocers 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) Grocers.
B) Hilltop.
C) Refrigerated.
D) all of the parties as owners in common in equal measure.

Question 49

Brad leaves a laptop at Computer Sales & Repair (CSR) to have the battery replaced. CSR sells the laptop to Doris, who does not know that it belongs to Brad. Brad can recover

A) from no one.
B) damages from CSR.
C) the laptop from Doris .
D) a new laptop from the maker of the laptop.

Question 50

Liz buys a Miata from Nate's Mazda, paying with a check that is later dishonored. With respect to this offer, Liz's title to the car is

A) valid.
B) voidable.
C) void.
D) good.

Question 51

Safety Corporation in New York sells a truckload of protective suits, masks, and other safety gear to Toxic, Inc., in Connecticut, "F.O.B. New York." Safety arranges with US Truckline to transport the goods. If the goods are destroyed in transit from New York to Connecticut, the loss will be suffered by

A) the seller.
B) the buyer.
C) the carrier.
D) businesses by an increase in the prices of safety gear.

Question 52

United Wear Inc. and Winter Gear stores enter into a contract for a sale of coats. Their contract can indicate 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 53

A contract between Fresh Fruit Corporation and Green Grocer, Inc., requires 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 54

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 55

Roofing Contractor LLC buys roofing tiles from Shingles Inc. The parties agree that the tiles will be shipped "F.O.B. Shingles' warehouse" to Roofing's location via Tristate Shipping Corporation. The tiles are lost in transit. The loss is suffered by

A) Tristate.
B) Shingles.
C) Roofing.
D) consumers by an increase in the prices of tiles and shipping.

Question 56

Great Bikes, Inc., allows Herb to take an Itasca-brand motorcycle for a "test run." Herb tries the bike 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 57

Jill buys a kayak from a LakeCraft store, which agrees to keep it for her until she picks it up. Before Jill gets the kayak, an unforeseen tornado destroys the store and the goods. The loss is suffered by

A) Jill.
B) the maker of the kayak.
C) LakeCraft.
D) the government agency that failed to foresee the tornado.

Question 58

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 59

Outdoor Outfitters Store contracts to buy fifty tents from Pitched Camp, Inc. Unless the contract states otherwise, this document is assumed to be

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

Question 60

Red Bev LLC contracts to buy two tons of strawberries from Sweet Fruits, Inc. The contract states that Sweet Fruits is required to ship the strawberries to Red Bev by Truck Transport Inc. The contract is

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

Question 61

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

A) Indie.
B) Gas & Wood.
C) Gas & Wood's creditors.
D) Hearth.

Question 62

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

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

Question 63

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, but they have not yet entered into a contract. 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.
B) Spuds, Tater, and Tasty.
C) Tater only.
D) none of the choices.

Question 64

Candy Corporation orders Double Chocolate Bars from Edibles Distribution Company. Edibles identifies the goods. Before they are shipped to Candy, an insurable interest in the goods exists in

A) Candy only.
B) Edibles only .
C) both Candy and Edibles.
D) neither Candy nor Edibles.

Question 65

EZ Workouts, Inc., offers to sell a treadmill to Fred 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 66

Organicos Café orders five gallons of PureMaid-brand trans-fat-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.
D) Quico.

Question 67

In the following situations, two parties claim the same goods. Who is most likely to prevail in each circumstance? Explain.
(a)      Czeslaw steals Denise's Ultra HD TV set and sells it to Ezra, an innocent purchaser, for value. Denise learns that Ezra has the set and demands its return.
(b)       Gwendolyn takes her all-terrain vehicle (ATV) for repair to Hank's Sales & Repair, a merchant who fixes and sometimes sells used ATVs. By accident, one of Hank's employees sells Gwendolyn's ATV to John, an innocent purchaser-customer, who takes possession. Gwendolyn wants her ATV back from John.

Question 68

Quest Outdoor Store orders a specified size of RiverRun-brand rafts from Sports Merchandise, Inc. Sports Merchandise mistakenly ships rafts of the wrong size, which Quest rejects and returns via Trans-State Shipping. During the return, the rafts are lost. The loss is suffered by

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

Question 69

Consumers Choice store accepts a shipment of phones from Digital Devices, Inc. Consumers Choice later discovers a hidden defect in the phones, revokes acceptance, and returns the goods via GoBack, Inc. During the return, the goods are lost. The loss is suffered by

A) Consumers Choice.
B) Digital Devices.
C) GoBack.
D) consumers by increases in the prices of other goods and shipping.

Question 70

Paramount Bookstores buys fifty cases of an assortment of books from Quixote Publishing 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 71

Garden & Field stores order a specific assortment of rose bulbs from Hybrid Flora Company. Hybrid mistakenly ships a selection of annuals, which Garden & Field rejects 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) consumers by increases in the prices of other goods and shipping.

Question 72

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?