Question 1

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

Accepted Answer

The answer of In the following situations,two parties claim the...

Question 2

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

Accepted Answer

The answer of Summit Sales Corporation orders goods from OverStock...

Question 3

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

Accepted Answer

The answer of Diamond Camera Shop receives lenses from Excel...

Question 4

Philip purchases ten lawnmowers through a sale or return contract.He plans to resell the lawnmowers in his garden supply store.The contract specifies that Philip must return the lawnmowers within six months if he decides that he does not want them.After seven months,Philip has sold five mowers,but decides that he does not want to keep trying to sell the rest of them.Philip

Accepted Answer

The contract specifies that Philip must return the lawnmowers within six months if he does not want them. Since he has exceeded the six-month timeframe, the sale is considered final and Philip cannot return the five remaining lawnmowers.

Question 5

Krissa wants to buy a horse from Gunnar.Gunnar agrees to let Krissa take the horse for a week to try it out.They sign a contract for a sale on approval.Krissa rides the horse for a week,but then decides that she does not like it.Krissa

Accepted Answer

The contract for a sale on approval means that Krissa has the option to return the horse with no penalty if she decides she does not want to buy it. Therefore, she can return the horse without any obligation to buy it.

Question 6

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 ex?ists in

Accepted Answer

An insurable interest exists when a person or entity will suffer a financial loss if the insured event (in this case, damage or loss to the rice crop) occurs. Good Food and Home Farms have an insurable interest because they have a financial stake in the crop as they have invested in it. However, Interstate Grocery does not have an insurable interest because they do not own or have any financial stake in the crop until it is actually purchased from Good Food. Therefore, the correct answer is A.

Question 7

Sweetwater Café orders five gallons of trans fat-free cooking oil from Restaurant Supply,Inc.The seller mistakenly ships the wrong oil,which the buyer keeps,despite the nonconform?ity.The oil is destroyed in a kitchen fire.The loss is suffered by

Accepted Answer

The buyer, Sweetwater Café, kept the nonconforming oil despite the mistake by the seller, Restaurant Supply. Therefore, Sweetwater assumed the risk of loss for the product and is responsible for the loss suffered in the kitchen fire. Restaurant Supply is not liable for the loss since Sweetwater accepted the nonconforming oil. Sweetwater customers are not affected by this situation.

Question 8

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

Accepted Answer

This is a sale on approval, as Sandy was allowed to test the boat before making the purchase.

Question 9

Quality Computer Company agrees to sell one hundred servers to Social Media Networks,Inc. The servers,which Social Media Networks ex?pressly 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?

Accepted Answer

The answer of Quality Computer Company agrees to sell one...

Question 10

A-1 Furnishings,Inc.,agrees to lease a desk to Business Resources,Inc.(BRI),which requests that the desk be left outside City Warehouse for BRI to pick up.Before BRI retrieves the desk,it is stolen.The loss is suf?fered by

Accepted Answer

The answer of A-1 Furnishings,Inc.,agrees to lease a desk to...

Question 11

Twyla buys an HD TV from Viewpoint Electronics store,which agrees to keep the TV for Twyla until she picks it up.Before she gets the TV,a fire destroys the store and the set.The loss is suffered by

Accepted Answer

Viewpoint Electronics store is liable for the loss as they had possession and control of the TV at the time of the fire. Twyla had not yet taken ownership of the TV, so she is not responsible for the loss. Therefore, Viewpoint is solely responsible for the loss.

Question 12

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

Accepted Answer

This type of transaction is known as sale or return, where the goods are shipped to the buyer, but the ownership is retained by the seller until the buyer pays for the items or decides to keep them beyond the agreed-upon return period. Therefore, Quality Watches, Inc. is taking a risk by shipping the items, but they have the potential to make a sale and receive payment if Retail Jewelers, Inc. decides to keep the timepieces.

Quiz 19: Title and Risk of Loss