Question 1

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.

Accepted Answer

F.O.B. (Free On Board) indicates that the price includes transportation costs to a specific destination.

Question 2

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.

Accepted Answer

The answer of Beef Inc. raises calves to sell. Beef...

Question 3

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
A) no one.
B) CSR.
C) Doris.
D) the maker of the iPod.

Accepted Answer

CSR had no right to sell Brad's iPod without his permission, and therefore, they can be held responsible for the sale. Doris bought the iPod in good faith and without knowledge that it was stolen property, so she cannot be held responsible for the sale. The maker of the iPod has no connection to this particular case and cannot be held responsible for it.

Question 4

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.

Accepted Answer

A destination contract requires the seller to deliver the goods to a specific destination, in this case Green Grocer's place of business. A bill of lading is a document used to acknowledge the receipt of goods by a carrier for transport. A shipment contract requires the seller to deliver the goods to a carrier for transport, but does not specify the ultimate destination. A warehouse receipt is a document used to acknowledge the receipt of goods for storage in a warehouse.

Question 5

Mountain 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.

Accepted Answer

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

Question 6

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.

Accepted Answer

A shipment contract requires the seller to ship the goods to the buyer via a common carrier but does not require the seller to deliver the goods to a specific destination. The mention of Sweet Fruits being required to ship the strawberries to Red Bev by Truck Transport Inc. indicates that it is a shipment contract, as the focus is on the shipping obligation rather than the delivery to a specific location.

Question 7

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.

Accepted Answer

The contract to buy tents is assumed to be a shipment contract unless stated otherwise. This means that Pitched Camp, Inc. is responsible for delivering the tents to the carrier and arranging for transportation, but the risk of loss or damage transfers to Outdoor Outfitters Store once the tents are loaded onto the carrier.

Question 8

Pipe 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 Pipe a warehouse receipt for the goods, which the buyer will then pick up. Title to the goods passes to Pipe when
A) Quality stores the pumps.
B) Pipe orders the pumps.
C) Pipe picks up the pumps.
D) Quality gives Pipe the warehouse receipt.

Accepted Answer

Title to the goods passes to Pipe when Quality gives Pipe the warehouse receipt, as this document serves as proof that Quality has fulfilled its obligation to deliver the goods into a storage facility on behalf of Pipe, effectively transferring ownership.

Question 9

Growers Mart buys one hundred cases of berries from Hilltop Farm. The parties agree that the berries will be transported "F.O.B. Hilltop Farm" via Intrastate Trucking Company. Intrastate's truck and the berries are lost in a fire following an accident. The loss of the berries is suffered by
A) Growers.
B) Hilltop.
C) Intrastate.
D) all of the parties as owners in common in equal measure.

Accepted Answer

The term "F.O.B. Hilltop Farm" means "Free on Board at Hilltop Farm," indicating that the seller's responsibility ends, and the buyer's responsibility begins, once the goods are loaded onto the transportation vehicle at the seller's location. Therefore, Growers Mart bears the risk of loss after the berries are loaded onto Intrastate Trucking Company's truck.

Question 10

Runners Feet, a shoe store, orders one hundred pair of athletic shoes from Speedster Inc. 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.
D) the buyer pays for the goods.

Accepted Answer

The answer of Runners Feet, a shoe store, orders one...

Question 11

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.

Accepted Answer

The receipt issued by Storage Warehouse is a warehouse receipt, which is a document that provides proof of ownership of the goods stored in a warehouse. It is commonly used in commercial transactions to transfer ownership and title of the goods. Therefore, the best choice is D- a warehouse receipt.

Question 12

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.

Accepted Answer

According to the contract, Roasters is responsible for delivering the goods to Speedy Delivery Company for transport to Outdoor. Therefore, the risk of loss passes to Outdoor when Roasters delivers the goods to Speedy.

Question 13

Liz buys a Miata from Nate's Mazda, paying with a check that is later dishonored. Liz offers to sell the car to Ogden for cash. With respect to this offer, Liz's title to the car is
A) valid.
B) voidable.
C) void.
D) good.

Accepted Answer

Liz's title to the car is voidable because the check used for payment was dishonored. This means that the sale from Nate's Mazda to Liz was not valid, making Liz's title to the car questionable. While Liz can still sell the car to Ogden, Ogden may not have clear title to the car if the issue with the dishonored check is not resolved.

Question 14

When the risk of loss passes is generally determined by
A) the passage of title to identified goods.
B) the acquisition of an insurable interest in specific goods.
C) the expression of a buyer or lessee's interest in obtaining certain goods.
D) the terms of a contract for a sale or lease of goods.

Accepted Answer

The terms of a contract for a sale or lease of goods typically include provisions for when the risk of loss passes from the seller to the buyer or lessor to lessee. This can be based on factors such as delivery, acceptance, or other conditions specified in the contract. The other options may be relevant to determining when risk of loss passes in some situations, but they are not generally the primary factor.

Question 15

EverSafe Corporation in New York sells a truckload of protective suits, masks, and other safety gear to Foundry Inc. in Connecticut, "F.O.B. New York." EverSafe arranges with Go Truckline to transport the goods. The cost of the transport will be paid by
A) the seller.
B) the buyer.
C) the carrier.
D) businesses by an increase in the prices of safety gear.

Accepted Answer

"F.O.B. New York" means that the seller is responsible for the cost of transportation to New York. The buyer is responsible for the cost of transportation from New York to Connecticut.

Question 16

Roofing Contractor LLC buys roofing tiles from Shingles Inc. The parties agree that the tiles will be shipped "F.O.B. Shingles" to Roofing 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.

Accepted Answer

Since the agreement stated that the tiles would be shipped F.O.B. (Free On Board) from Shingles, the responsibility for the loss during transit falls on Roofing Contractor LLC. F.O.B. means that the goods are the responsibility of the buyer as soon as they leave the seller's facility.

Question 17

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.

Accepted Answer

Eve's purchase of the truck from Fiesta creates a contractual relationship between them, and Fiesta is obligated to transfer whatever title it has to Eve. While it is possible that Fiesta's title came from GEM or Hal, the most direct and immediate transfer of title is from Fiesta to Eve. Therefore, Eve acquires whatever title Fiesta had.

Question 18

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.

Accepted Answer

The answer of Quaff Café buys twenty-five crates of apples...

Question 19

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.

Accepted Answer

The parties are bailees because they have possession of the goods through a document of title, but they do not own the goods. Bailees are individuals or businesses that hold another person's property temporarily and are responsible for returning the property to the owner in the same condition it was received.

Question 20

A seller's title to goods being sold is voidable if the goods
A) were bought on credit.
B) were obtained by fraud.
C) were delivered to a buyer but have not yet been paid for.
D) must be sold to a good faith purchaser for value.

Accepted Answer

A seller's title to goods being sold is voidable if the goods were obtained by fraud. This means that if the seller deceived or tricked the buyer into purchasing goods, then the title to those goods is voidable and the buyer may have the right to rescind (cancel) the contract and/or sue the seller for damages. The other options, such as buying on credit or delivering goods without payment, do not necessarily affect the seller's title to the goods. The final option, selling to a good faith purchaser for value, actually strengthens the seller's title to the goods.

Quiz 20: Title and Risk of Loss

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

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

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

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

Mountain 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

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

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

Pipe 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 Pipe a warehouse receipt for the goods, which the buyer will then pick up. Title to the goods passes to Pipe when

Growers Mart buys one hundred cases of berries from Hilltop Farm. The parties agree that the berries will be transported "F.O.B. Hilltop Farm" via Intrastate Trucking Company. Intrastate's truck and the berries are lost in a fire following an accident. The loss of the berries is suffered by

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

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

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

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

When the risk of loss passes is generally determined by

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

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

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

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 seller's title to goods being sold is voidable if the goods