Deck 18: Title and Risk of Loss

Question 1

Title and risk of loss necessarily pass from seller to buyer at the same time.

Answer 1

False

Question 2

It is common for contracting parties to sell and buy goods stored in a grain elevator or warehouse without physical movement of the goods.

Answer 2

True

Question 3

The buyer's "special property" interest that arises upon identification of goods gives the buyer rights other than that to insure the goods.

Answer 3

True

Question 4

Oswald was visiting Alice at Alice's office. Alice stepped out for a minute and Oswald, curious about a doll decorating one of Alice's shelves, picked the doll up to look at it. The doll broke. Oswald quickly put the doll in his briefcase and later that day took it to Hobby Shop for repair, intending to return it to Alice. By mistake Hobby Shop sold the repaired doll to Doris Collector. Doris gets title to the doll.

Question 5

In a consignment situation, the seller is a bailee and an agent for the owner who sells the goods for the owner and takes a commission.

Question 6

Acme Timber Company ordered machinery to harvest timber in swampland from Johnson Equipment "on approval." After two weeks' use the machinery proved inadequate because it was damaged by swamp water while being used for the timber harvesting. Acme bears the loss.

Question 7

In a destination contract, the seller's obligation is to send the goods to the buyer, but not to a particular destination.

Question 8

In a shipment contract, the seller's obligation is to see to it that the goods actually arrive at the destination.

Question 9

According to the Uniform Commercial Code, a "purchaser" is restricted to one who pays cash.

Question 10

Under F.O.B. shipment, the seller's obligation is to put the goods into the possession of a carrier and make a reasonable contract for their transportation, to deliver any necessary documents so the buyer can take possession, and promptly notify the buyer of the shipment.

Question 11

Under a sale-on-approval contract, risk of loss remains with the seller until the buyer accepts, and the buyer's trial use of the goods does not in itself constitute acceptance.

Question 12

A sale cannot occur without a shift in title.

Question 13

As long as the seller retains title to security interest in the goods, he has an insurable interest.

Question 14

It the seller breaches the contract by proffering nonconforming goods, and the buyer rejects them, the nonconforming goods are in the buyer's hands.

Question 15

If goods are sold and delivered to buyer, buyer reserving the right to return them, risk of loss is on buyer until they are returned.

Question 16

Under the Uniform Commercial Code, a person with a voidable title cannot transfer title to a good-faith purchaser for value.

Question 17

Title passes when delivery is completed, even if the good are nonconforming.

Question 18

Certainly a person has insurable interest if he/she has title, but the UCC does not allow a person to have insurable interest with less than full title.

Question 19

If the parties fail to specify how the risk of loss is to be allocated, the UCC states that the risk remains with the seller even after he/she has completed obligations under the contract.

Question 20

According to the Uniform Commercial Code, identification can be made at any time and in any manner explicated agreed to by the parties.

Question 21

When the "buyer" is really only a sales agent for the "seller," it is a _____.

A) consignment sale
B) sale on approval
C) destination contract
D) sale or return
E) shipment contract

Question 22

Seller delivered nonconforming goods to a merchant Buyer, which nonconformity Buyer discovered upon inspection. Buyer rejected the goods; before Seller could pick them up they were damaged through no fault of Buyer. Buyer necessarily bears the loss.

Question 23

Jamie advertised for sale on Greg's List a sofa he had in his living room. Buyer bought it, arrived with a pickup truck to transport it to Buyer's home, and began to move it out of Jamie's house. Title has shifted to Buyer.

Question 24

An action to recover personal property unlawfully taken is called _____.

A) bailment
B) replevin
C) novation
D) conversion
E) trover

Question 25

A(n) _____ is one who has rightful possession but not title.

A) bailee
B) entrustee
C) entrustor
D) obligee
E) assignor

Question 26

If the contracting parties do not stipulate by any means when title shifts, Section 2-401(2) of the UCC provides that _____.

A) the title passes at the time and place of contracting
B) the title passes to the buyer at the time and place at which seller completes his performance with reference to the physical delivery of the goods
C) the title passes at the time when and the place where the documents are delivered to the buyer
D) the seller's obligation is to, at his own expense and risk, transport the goods to that place and there tender delivery of them with appropriate pickup instructions to the buyer
E) the title to goods passes from the seller to the buyer in any manner and on any conditions explicitly agreed on by the parties

Question 27

The term "_____" means that the price includes cost and freight to the named destination.

A) C. & F.
B) C.I.F.
C) Ex-ship
D) F.O.B.
E) No arrival, no sale

Question 28

_____ means the seller must properly ship conforming goods and if they arrive by any means he must tender them on arrival.

A) C. & F.
B) No arrival, no sale
C) F.O.B.
D) Ex-ship
E) C.I.F.

Question 29

In a shipment contract, what is F.A.S. (free alongside ship)?

A) The contract price, which includes, in a lump sum the cost of the goods and the insurance and freight to the named destination.
B) The seller's obligation is to, at his expense and risk, deliver the goods adjacent to the vessel in the manner usual in that port and to provide the buyer with pickup instructions.
C) The seller's obligation is to, at his own expense and risk, transport the goods to that place and there tender delivery of them with appropriate pickup instructions to the buyer.
D) The seller must properly ship conforming goods and if they arrive by any means he must tender them on arrival but he assumes no obligation that the goods will arrive unless he has caused the non-arrival.
E) The seller's obligation is to put the goods into the possession of a carrier and make a reasonable contract for their transportation, to deliver any necessary documents so the buyer can take possession, and promptly notify the buyer of the shipment.

Question 30

Bernard bought a car from Car Sales, Inc., and received the title, registration information, owner's manual, and keys. But he told the saleswoman, "I am going out of town for three days. Can I leave the car here for now and pick it up Monday afternoon?" Saleswoman said, "Certainly." But Saturday night drunken vandals seriously damaged the car while it was still on the car lot. Bernard bears the loss.

Question 31

_____, which is the reverse of the F.A.S. term, means that the seller's obligation is to make sure the freight bills are paid and that the goods leave the ship's tackle or are otherwise properly unloaded.

A) C. & F.
B) C.I.F.
C) Ex-ship
D) No arrival, no sale
E) F.O.B.

Question 32

When the term "C.I.F." is used, it implies that _____.

A) the seller's obligation is to make sure the freight bills are paid and that the goods leave the ship's tackle or are otherwise properly unloaded
B) the price so includes cost and freight to the named destination
C) the seller must properly ship conforming goods and if they arrive by any means he must tender them on arrival
D) the seller's obligation is to transport the goods to that place and there tender delivery of them with appropriate pickup instructions to the buyer
E) the contract price includes in a lump sum the cost of the goods and the insurance and freight to the named destination

Question 33

Entrustment is based on the general principle of _____.

A) vested rights
B) documentation
C) conversion
D) estoppel
E) consideration

Question 34

What is a shipment contract? Explain the typical choices that are set out in the Uniform Commercial Code at Section 2-319.

Question 35

Seller sold and delivered goods to Buyer, who took possession. Buyer failed to pay for the goods and they were damaged in Buyer's possession. Buyer has the risk of loss.

Question 36

Under a _____, risk of loss (and title) remains with the seller until the buyer accepts, and the buyer's trial use of the goods does not in itself constitute acceptance.

A) shipment contract
B) consignment sale
C) sale-or-return contract
D) sale-on-approval contract
E) destination contract

Question 37

_____ is the unlawful assumption of ownership of property belonging to another.

A) Detinue
B) Trover
C) Replevin
D) Bailment
E) Conversion

Question 38

A _____ has risk of loss and title too passing to the buyer and the buyer bears the risk and expense of returning the goods.

A) shipment contract
B) consignment sale
C) sale-or-return contract
D) sale-on-approval contract
E) destination contract

Question 39

Naomi takes a bracelet, a family heirloom, to AJ Jewelers for cleaning. Naomi is a(n) _____.

A) lessor
B) lessee
C) entrustee
D) assignee
E) entrustor

Question 40

Jose, 16 years old, sold his 1982 Ford Mustang to Buyer for $8,000. Two days later Buyer sold the car to Purchaser. The next week Jose announced he was disaffirming his contract with Buyer on account of his (Jose's) infancy. Jose can recover the car from Purchaser, and Buyer must refund Purchaser's money.

Question 41

a) As between Dubious and Bank, who gets the valuable antique car parts?
b) As between Dubious and Owner, who gets the lawnmower?

Question 42

What is "risk of loss"?

Question 43

a) Who bears the risk of loss for the car parts lost in the fire, and what rights has Able against Dubious for non-delivery, if any?
b) Dubious demands either that C&D return the parts to him, or that he receive payment from C&D as he had billed the company. Who wins?