Deck 22: Legal Aspects of Supply Chain Management

Question 1

A warehouser is an insurer of goods.

Answer 1

False

Question 2

If a warehouse receipt provides for the delivery of the goods "to the bearer," the receipt may be negotiated by transfer of the document.

Answer 2

True

Question 3

A negotiable warehouse receipt that provides for delivery of the goods to the order of Jill Jones may be negotiated by delivery of the document to the purchaser.

Answer 3

False

Question 4

General contract law determines whether a limitation clause is a part of the contract between the warehouser and the customer.

Question 5

A bill of lading will be negotiable if its terms are that the goods are to be delivered to "bearer" or to "the order of" a named person.

Question 6

The rights of a holder of a duly negotiated warehouse receipt are extinguished by the warehouser's surrender of goods to the depositor.

Question 7

The rights and duties of warehousers are regulated by the UCC.

Question 8

A transferee of a nonnegotiable warehouse receipt acquires only the title and rights that the transferor had actual authority to transfer.

Question 9

A public warehouser has a lien against the goods stored for reasonable costs incurred from the storage.

Question 10

The term special bailee is an historical term, but a special bailee has no greater duty than any other bailee.

Question 11

Bills of lading for intrastate shipments are governed by the UCC, while those for interstate shipments are regulated by the Federal Bills of Lading Act.

Question 12

A warehouse receipt is considered a document of title.

Question 13

The purchase of a warehouse receipt by due negotiation eliminates all prior claims.

Question 14

To be engaged in warehousing, an enterprise must have appropriate storage buildings.

Question 15

The rights of a transferee of a negotiable bill of lading are defeated if the goods have been stopped in transit.

Question 16

The storage of goods in a warehouse and the shipment of goods by a common carrier are examples of special bailments.

Question 17

A warehouse receipt may be either negotiable or nonnegotiable.

Question 18

Field warehousing is the storage of farm crops in the field where they have been grown.

Question 19

Unlike warehouse receipts, bills of lading and airbills are documents of title.

Question 20

A negotiable warehouse receipt states that the goods received will be delivered to the bearer or to the order of any named person.

Question 21

The common law rights and duties of a warehouser, in the absence of modifying statutes, are for the most part those of a bailee in:

A) a bailment for the sole benefit of the bailee.
B) an ordinary mutual-benefit bailment.
C) a bailment for the sole benefit of the bailor.
D) none of the above.

Question 22

In most states, statutes limit or provide a method of limiting the common law liability of a hotelkeeper.

Question 23

A warehouser that holds itself out to serve the public generally without discrimination is called a(n):

A) public warehouser.
B) general warehouser.
C) nondiscriminatory warehouser.
D) ordinary warehouser.

Question 24

The rights of a holder of a warehouse receipt depend on whether the receipt is:

A) negotiable.
B) rescissory.
C) notarized as a document of title.
D) notarized as a bill of lading.

Question 25

A sale by a factor can pass title to goods from the consignor to the purchaser.

Question 26

A common carrier is liable for all delays in the delivery of goods.

Question 27

The major purpose of field warehousing is to:

A) create warehouse receipts that the owner can pledge as security for loans.
B) create additional space in the firm's own warehouse.
C) allow warehousers an opportunity to service common carriers.
D) transfer title to buyers without requiring them to pick up merchandise at the plant's location.

Question 28

If a common carrier delivers goods to the wrong person, the carrier is liable for breach of contract and for the tort of conversion.

Question 29

Which is not a true statement about a warehouser?

A) A warehouser is a bailee.
B) A warehouser may issue a negotiable or nonnegotiable receipt.
C) A warehouser is an insurer of the goods.
D) A warehouser is liable for damaged goods if damage is caused by the warehouser's negligence.

Question 30

A bill of lading that consigns the goods "to bearer" is called a:

A) nonnegotiable bill of lading.
B) straight bill of lading.
C) negotiable bill of lading.
D) common bill of lading.

Question 31

A factor is a consignee.

Question 32

Contract clauses that limit a common carrier's liability are void as contrary to public policy.

Question 33

A purchaser of a nonnegotiable warehouse receipt:

A) receives no implied warranties.
B) may acquire rights superior to those of the transferor.
C) acquires only the rights and title of the transferor.
D) may be considered to have the rights of a holder in due course.

Question 34

A common carrier transporting goods under a COD shipment is liable if it takes a check in payment and the check bounces.

Question 35

When a carrier accepts goods for land shipment, it ordinarily issues to the shipper a(n):

A) bill of lading.
B) intent to transport memorandum.
C) warehouse receipt.
D) trust receipt.

Question 36

Jeff purchased in good faith a warehouse receipt for 1,000 pairs of running shoes without notice of any defense to it, for value, and in the regular course of his business. Unknown to Jeff, the goods had been stolen from Jane and delivered to the warehouse that issued the receipt purchased by Jeff. Which of the following statements is true?

A) Jeff holds a duly negotiated document of title and is not subject to Jane's title.
B) Jane is entitled to the goods and will prevail over Jeff.
C) Jeff is not a holder of a duly negotiated document.
D) Jane cannot recover the goods but can sue the warehouse for conversion.

Question 37

A person who attends a banquet given at a hotel is considered a guest for purposes of determining the liability of the hotelkeeper.

Question 38

Intrastate bills of lading are regulated by the:

A) Federal Bills of Lading Act.
B) Interstate Commerce Commission.
C) Uniform Commercial Code.
D) Common Carriers Regulatory Act.

Question 39

At common law, a hotelkeeper was absolutely liable for damage to, or loss of, a guest's property unless the hotelkeeper could show that the damage or loss was caused solely by an act of God, a public enemy, an act of a public authority, the inherent nature of the property, or the fault of the guest.

Question 40

As a general rule, a hotelkeeper has a lien on the property of boarders or lodgers.

Question 41

A common carrier must:

A) receive and carry proper and lawful goods of all persons who offer them for shipment.
B) furnish adequate facilities.
C) follow the instructions of the shipper.
D) all of the above.

Question 42

The Willett Seed Company stored its goods with the Augusta Warehouse Company and received a negotiable warehouse receipt. The Willett Seed Company then borrowed money from the Georgia Railroad Bank and pledged the warehouse receipt as security. The seed company defaulted, and the bank demanded the goods from the warehouse. The warehouse stated that it already had delivered the goods to the seed company on the strength of that company's promise that it would surrender the receipt shortly thereafter. The bank sued the warehouse for the value of the goods. Will the bank win?

Question 43

When goods are delivered to a common carrier for immediate shipment and while they are in transit, who is normally liable for any loss or damage to the goods?

A) the shipper
B) the consignee
C) the carrier
D) the individual designated as responsible in the bill of lading

Question 44

A hotelkeeper's lien on the baggage of a guest is terminated when:

A) the hotel delivers the baggage to the guest.
B) the guest pays the hotel bill in full.
C) the hotelkeeper converts the baggage of the guest.
D) all of the above.

Question 45

Hal was a merchant who deposited 2,000 barrels of olive oil in a public warehouse operated by Welcome Warehouse. Hal was issued a warehouse receipt for the 2,000 barrels that by its terms was deliverable "to bearer." Hal had engaged in many other transactions with Welcome and was in arrears for quite a bit of money to Welcome. Hal duly negotiated the warehouse receipt to Esmeralda Enterprises in payment of cash. Hal's financial affairs continued to deteriorate and Welcome never was paid the debt. When Esmeralda's agent requested the oil and offered to remit the warehouse receipt, Welcome refused to release the oil, claiming a lien on the oil for Hal's debt. Esmeralda sued. Decide the case.

Question 46

A common carrier of goods has the right to:

A) make reasonable and necessary rules for the conduct of its business.
B) charge a rate that enables a fair return.
C) charge demurrage.
D) all of the above.

Question 47

The relationship of guest and hotelkeeper ends:

A) when the guest's bill is paid.
B) when the guest advises the hotelkeeper that the guest is leaving.
C) when the guest leaves or ceases to be a transient.
D) when the guest asks to take on the more permanent status of boarder.

Question 48

A transferor makes certain implied warranties to the transferee when a bill of lading is transferred. These warranties are:

A) that the bill of lading is genuine, that its transfer is rightful, and that the transferor has no knowledge of any defects.
B) not applicable if the instrument is nonnegotiable.
C) not applicable to negotiable transfers.
D) none of the above.

Question 49

When consigned goods are sold by a factor:

A) title passes when the consignor approves the sale.
B) title passes even if the goods have been stolen, provided the factor is ignorant of this fact.
C) the sale passes the title of the owner to the buyer.
D) strict compliance with the Federal Factors Act is required to pass title.

Question 50

What is not included in a common carrier's lien on goods that it transports?

A) consequential damages
B) demurrage
C) costs of preserving the goods
D) costs of a sale to enforce the lien

Question 51

The legal definition of a guest of a hotel requires that the person:

A) live at least five miles from the hotel.
B) is a guest of a registered occupant of the hotel.
C) is a transient.
D) stay at the hotel for at least 22 hours.

Question 52

A common carrier transporting goods under a COD shipment may:

A) make delivery without first obtaining payment.
B) not make delivery without first receiving payment.
C) accept a check as payment and have no liability.
D) not avoid liability without a signed release.

Question 53

Bob Brown entered the Hotel Lux to attend a conference being held within the hotel. Sam Smith had arrived to attend the same conference, had registered at the front desk, and had obtained a room. Sally Jones also intended to participate in the conference and was in essence living at the hotel at the time. What relationship exists between the hotel and each of these individuals? What can be said of the hotel's obligations to each individual under these circumstances?