Question 1

Southern Distribution, Inc., signs a receipt for goods that will also serve as a contract for the goods' transport. This is

Accepted Answer

A bill of lading is a document that serves as both a receipt for goods and a contract for their transportation. It includes details such as the type and quantity of goods, the shipping origin and destination, and the terms of the shipment.

Question 2

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

Accepted Answer

The answer of Mountainside Coffee Company and Nature's Cuisine, Inc.,...

Question 3

Sweets Store buys chocolate from Tasty Candies, Inc. The parties agree that the chocolate will be shipped "F.O.B. Sweets" via United Railroad Corporation. The chocolate is lost in transit. The loss is suffered by

Accepted Answer

The answer of Sweets Store buys chocolate from Tasty Candies,...

Question 4

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

Accepted Answer

In this case, the risk of loss or damage passes from Shingles, Inc. to Red's Roofing at the point of shipment. Therefore, Red's Roofing bears the risk of loss, and they will need to file a claim with Tristate Shipping for the lost tiles. Shingles, Inc. fulfilled their obligation by delivering the tiles to the carrier, and they are not responsible for the loss. The loss does not affect Red's customers directly, so choice D is not applicable.

Question 5

Big Red Drinks, Inc. contracts to buy two tons of cranberries from Super Fruits, Inc. The contract states that Super Fruits is required to ship the cranberries to Big Red Drinks by Speedy Wind Air Freight. The contract is

Accepted Answer

The contract between Big Red Drinks, Inc. and Super Fruits, Inc. is a shipment contract since it specifies that Super Fruits is responsible for shipping the two tons of cranberries to Big Red Drinks. In a shipment contract, the seller is responsible for delivering the goods to the carrier, but the buyer assumes the risk of loss or damage during transportation.

Question 6

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

Accepted Answer

Viewpoint is responsible for the loss because they were in possession of the TV and agreed to keep it for Thorpe until he picked it up. Therefore, they bear the risk of loss in this situation. Thorpe has not yet taken possession of the TV and therefore has no responsibility for the loss.

Question 7

Roasters Corporation and Outdoor Barbecue, 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

Accepted Answer

The contract specifies that Roasters must deliver the goods to Speedy Delivery Company for transport to Outdoor, thus indicating that the intention was for risk of loss to pass when Roasters delivers the goods to Speedy.

Question 8

Elizabeth buys a car from Silas, who is sixteen years old. Elizabeth then wants to sell the car to her neighbor, John. Elizabeth's title to the car is

Accepted Answer

Silas cannot enter into a legally binding contract as he is a minor. Elizabeth can sell the car to John, but the contract is voidable because Elizabeth's title to the car is derived from Silas, who is not legally capable of transferring ownership of the car. If Silas decides to disaffirm (cancel) the contract, Elizabeth will have to return the purchase price to John and the car to Silas.

Question 9

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

Accepted Answer

CSR had no right to sell Brad's property without his consent or knowledge, as they were only supposed to replace the battery. Therefore, Brad can recover from CSR for the sale of his iPod. Doris, on the other hand, purchased the iPod in good faith and was not aware that it belonged to Brad, so she is not at fault. Apple, Inc. is also not liable in this situation as they did not have any involvement in the sale or transfer of the iPod.

Question 10

Growers 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

Accepted Answer

F.O.B. (Free On Board) means the seller is responsible for the goods until they are loaded onto the carrier, in this case, Refrigerated Trucking Company. Therefore, the loss of the berries is suffered by Growers Mart, the buyer.

Question 11

A contract between Fresh Fruit Corporation and Green Grocer, Inc., re?quires Fresh Fruit to deliver goods to Green Grocer's place of business. This is

Accepted Answer

A destination contract requires the seller to deliver the goods to a specific destination, which in this case is Green Grocer's place of business.

Question 12

Megan, an agent for a department store, orders one hundred dresses from Sal's Clothing Shop for the Spring Blossom Sale. There is no specific agreement in the sale contract indicating when title will pass to the department store. The title will pass to the department store when

Accepted Answer

Title will typically pass to the buyer when the seller physically delivers the goods to the buyer. In this case, there is no specific agreement indicating when title will pass, so the default rule applies. Therefore, title will pass to the department store when Sal's Clothing Shop physically delivers the dresses to the department store.

Question 13

Grace purchases three tons of fine merino wool on behalf of Woolen Creations. Woolen Creations wants the wool to remain in the warehouse where it is being stored until it is needed. Grace makes an offer for the wool on Monday. The offer is accepted on Tuesday. The warehouser gives Woolen Creations a warehouse receipt on Wednesday. Woolen Creations picks up the wool from the warehouse three months after the sale. Title for the wool passed to Woolen creations

Accepted Answer

Title for the wool passes when the warehouse receipt is given, which occurred on Wednesday when the warehouser gave one to Woolen Creations.

Question 14

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

Accepted Answer

A shipment contract is the default assumption unless the contract explicitly states otherwise.

Question 15

Corn that fills County Grain Co-op's silo is fungible if the corn is

Accepted Answer

Fungible refers to items that are interchangeable or mutually replaceable. If the corn in the silo is alike naturally, by agreement, or by trade usage, then it is considered fungible. If the corn is fundamentally different or has quality issues like rotting due to a leaky roof and a delay in shipping, then it may not be fungible.

Question 16

Levi, a well-known lumber dealer with a good reputation, buys a load of lumber and pays for it with a check that is later dishonored. Sam, who is unaware of the bad check, buys the lumber from Levi. Sam is a(n)

Accepted Answer

Sam is considered a good faith purchaser because he bought the lumber from Levi without any knowledge of the bad check. He had no reason to believe that Levi was not the rightful owner of the lumber, and therefore, he should not be held responsible for the dishonored check.

Question 17

Fay pays $800 for a new iPad to Global Goods, Inc. Global holds the iPad until Fay picks it up. Global is

Accepted Answer

The answer of Fay pays $800 for a new iPad...

Question 18

Safety Supply Corporation in New York sells a truckload of protective suits, masks, and other safety gear to Toxic Recovery, Inc., in Connecticut, "F.O.B. New York." Safety Supply arranges with US Truckline to transport the goods. The cost of the transport will be paid by

Accepted Answer

The answer of Safety Supply Corporation in New York sells...

Question 19

Ralph, a representative for Statewide Truck & Transport Company, delivers a warehouse receipt to Thelma, the owner of United Storage Warehouse. A warehouse receipt is

Accepted Answer

A warehouse receipt is a document issued by a warehouser or warehouse operator acknowledging receipt of goods stored in a warehouse. It serves as evidence of ownership and can be used to transfer or pledge the goods as collateral for a loan. Option A refers to a bill of lading, Option B refers to a purchase order, and Option C refers to a delivery receipt.

Question 20

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

Accepted Answer

Title to the goods usually passes to the buyer when the seller delivers a warehouse receipt for the goods. In this case, Quality Plumbing, Inc. must give Pipes & Culverts a warehouse receipt for the pumps, and title to the goods will pass to Pipes & Culverts when they receive the warehouse receipt. Therefore, the correct answer is D - Quality gives Pipes & Culverts a warehouse receipt for the drives.

Quiz 18: Title and Risk of Loss