Question 1

Under Article 2 of the UCC which of the following factors is the most important in determining which party bears the risk of loss in a contract for the sale of goods

Accepted Answer

The shipping terms in a sales contract are the most important factor in determining which party bears the risk of loss under Article 2 of the UCC. These terms outline when the risk transfers from the seller to the buyer.

Question 2

Under Article 2 of the UCC, a purchaser obtains only such ____________________ to goods as the seller had.

Accepted Answer

The answer of Under Article 2 of the UCC, a...

Question 3

Rosco, of Salem, New York, purchased 2,500 pounds of spaghetti from the Arco Corporation of Buffalo, New York, terms FOB Buffalo. Several boxes of spaghetti were lost in transit. Which statement concerning responsibility for the loss is correct?

Accepted Answer

The term FOB (Free On Board) Buffalo indicates that the risk of loss passed to the buyer, Rosco, when the goods were delivered to the common carrier in Buffalo.

Question 4

Mendon took her diamond ring to a jeweler to have it resized and arranged to pick it up in three days. When she returned, she discovered that a salesperson had sold her ring to a customer who was looking for a used diamond. To legally reclaim the ring from the customer, Mendon would need to prove that the

Accepted Answer

To legally reclaim the ring, Mendon would need to prove that the customer did not purchase the ring in good faith. If the customer knew or should have known that the sale was not authorized, they cannot claim good title to the ring. The other options do not directly impact the legality of the customer's purchase under these circumstances.

Question 5

Kim purchased a portable TV from Edgar without realizing that the TV was stolen. Kim received

Accepted Answer

Kim received no title because one cannot pass a better title than they have, and since Edgar had no title to the stolen TV, he could not pass a valid title to Kim.

Question 6

If a person who holds goods under a voidable title because he or she purchased them through fraud transfers the goods for value and in good faith to a third party, the type of title transferred is

Accepted Answer

The third party, who purchases the goods for value and in good faith, receives a valid title. This is because the law protects innocent third parties in commercial transactions, allowing them to obtain a good title even if the seller had a voidable title due to fraud.

Question 7

If the terms of a contract make it difficult to determine whether a particular transaction is a sale on approval or a sale on return, it will be considered a sale or return if the buyer took the goods

Accepted Answer

In a sale on return, the buyer primarily obtains the goods for resale purposes, not for personal use. If the contract terms are ambiguous, the transaction is considered a sale on return if the buyer's intent is to resell the goods, distinguishing it from a sale on approval, where goods are typically obtained for personal use or inspection.

Question 8

A contract to sell involves ____________________.

Accepted Answer

The answer of A contract to sell involves ____________________....

Question 9

Martin leaves a suit purchased through a catalog at a tailor shop for alterations. The tailor shop also sold men's suits. While the suit was hanging on a rack waiting to be repaired, the tailor accidentally sold Martin's suit to McCabe, who had no knowledge that the suit belonged to someone else. Martin can recover from

Accepted Answer

Martin can recover from the tailor shop because they were responsible for the suit while it was in their care and made the mistake of selling it. McCabe, having bought the suit in good faith without knowledge of its true ownership, is typically protected in such transactions, making it difficult for Martin to recover the suit directly from him.

Question 10

A(n) ____________________ sale occurs when a merchant sells all or a major part of the business assets.

Accepted Answer

The answer of A(n) ____________________ sale occurs when a merchant...

Question 11

In a sale of goods, if the seller breaches the contract by delivering nonconforming goods, risk of loss remains with the seller until the seller ____________________ the defect.

Accepted Answer

The answer of In a sale of goods, if the...

Question 12

On December 15, Maria bought a snow blower from the Tripod Hardware Store, terms thirty days. After the sale had been made, Tripod agreed to deliver the snow blower to Maria's house the following day. Risk of loss passed to Maria

Accepted Answer

The answer of On December 15, Maria bought a snow...

Question 13

For a contract for the sale of goods to be considered a present sale, the

Accepted Answer

For a contract for the sale of goods to be considered a present sale, the goods involved must be physically in existence and identifiable at the time of the contract. This means that the specific goods are already made and can be specifically identified as the items being sold. Future goods or goods that are yet to be manufactured or identified cannot constitute a present sale.

Question 14

Michaels purchased a desk from Erwin who is not in the business of selling furniture. Erwin tendered delivery of the desk after receiving payment in full from Michaels. Michaels told Erwin that she would be unable to take possession of the desk until the next day. In the meantime, thieves stole the desk from Erwin's garage before Michaels had a chance to take possession. The risk of loss

Accepted Answer

The risk of loss remained with Erwin until Michaels took possession of the desk because Michaels had not yet taken possession of the desk when it was stolen, and Erwin is not in the business of selling furniture, which typically means the risk of loss does not pass until the buyer takes possession.

Question 15

Which of the following statements applies to a sale on approval under Article 2 of the UCC?

Accepted Answer

Risk of loss for the goods passes after the buyer accepts the goods, which happens after the trial period if the goods are on approval. This means the buyer has the opportunity to inspect and approve the goods before the risk of loss is transferred from the seller to the buyer.

Question 16

If the seller and buyer do not specify when title and risk of loss pass, the rules of the ____________________ apply.

Accepted Answer

The answer of If the seller and buyer do not...

Question 17

Jones, a merchant does not deliver merchandise to customers but instead requires customers to pick up the merchandise at his place of business. When does risk of loss pass?

Accepted Answer

The risk of loss passes to the buyer when the buyer takes physical possession of the merchandise in situations where the seller does not deliver the merchandise but requires the buyer to pick it up.

Question 18

Berman sold her business, including merchandise and fixtures, to Curran. This is a(n)

Accepted Answer

This is a bulk transfer, which occurs when a business sells its entire inventory and fixtures in a single transaction, typically when the business is being sold or liquidated.

Question 19

Roscoe, of Cleveland, Ohio, ordered twenty computers from the Rand Computer Corporation in St. Louis, Missouri, terms FOB St. Louis. The computers were damaged in transit from St. Louis to Cleveland. The loss is borne

Accepted Answer

The term FOB (Free On Board) St. Louis means that the seller's responsibility ends when the goods are loaded onto the transportation vehicle in St. Louis. Therefore, Roscoe bears the loss since the goods were damaged after the responsibility had been transferred to him.

Question 20

Minor saw an advertisement in a local newspaper that read: "Try a new X-Acto Electric Knife in your own home on approval for five days. No obligation to buy. Fill out the coupon and mail it in today." Minor mailed in the coupon and received the knife. She liked the knife and kept it past the approval period. Title and risk of loss legally passed to Minor

Accepted Answer

The title and risk of loss passed to Minor when she kept the knife beyond the approval period, indicating her tacit approval and acceptance of the product.

Quiz 16: The Sales Contract: Transfer of Title and Risk of Loss