Question 1

The buyer of a product is located in Des Moines,Iowa and the seller is located in Sacramento,California.The contract specifies F.O.B.Des Moines.What type of contract is this?
A)A destination contract
B)A mixed contract
C)A shipment contract
D)A carrier contract

Accepted Answer

The term F.O.B. (Free On Board) Des Moines indicates that the seller's responsibility is to deliver the goods to Des Moines, making it a destination contract.

Question 2

If a seller includes an express warranty in the written sales contract,any disclaimer is invalid.

Accepted Answer

An express warranty is a promise or affirmation made by the seller with regards to the goods being sold. If an express warranty is included in the written sales contract, any attempt by the seller to disclaim or limit the warranty will be invalid. This is because the express warranty is a contractual term that has been mutually agreed upon by both parties, and cannot be unilaterally changed by the seller.

Question 3

Angela uses fraudulent means to induce Walter to enter a sales contract.Angela obtains a voidable title to the goods.

Accepted Answer

Angela's use of fraudulent means makes the contract voidable, meaning that Walter has the option to either affirm or rescind the contract. Additionally, Angela obtaining a voidable title means that she may not have legal ownership of the goods in question, and Walter may be able to reclaim them if he chooses to rescind the contract.

Question 4

Both the buyer and seller may have an insurable interest in the same goods at the same time.

Accepted Answer

This is possible in cases where the buyer has already paid for the goods, but they are still in the possession of the seller. In this scenario, the buyer would want to insure the goods to protect their investment, while the seller may also want to insure the goods as they are still responsible for their safekeeping until they are delivered to the buyer.

Question 5

The UCC looks solely upon "title" to determine ownership in goods.

Accepted Answer

The Uniform Commercial Code (UCC) considers various factors, not just "title," to determine ownership of goods, including possession, security interests, and terms of the contract.

Question 6

Marco Manufacturing contracted to sell Kurtz Industries 3,000 iron clasps.The contract specified: F.O.B.Kurtz Industries.Upon arrival and inspection,the goods were rejected by Kurtz Industries because they did not conform to the contract specifications.In transit back to Marco Manufacturing,the common carrier's truck overturned and completely destroyed the clasps.Which statement is correct?
A)Marco may sue Kurtz for the contract price, as risk of loss transferred to Kurtz at the F.O.B.point.
B)Kurtz will not be liable for the purchase price. The risk of loss had not yet transferred since the goods were nonconforming.
C)The loss will be split between the parties upon a 50/50 basis.
D)The loss will be assigned to the party who could best bear the loss.

Accepted Answer

The risk of loss had not yet transferred to Kurtz Industries because the goods were nonconforming, meaning they did not meet the contract specifications. Therefore, Marco Manufacturing remains responsible for the loss of the goods in transit back due to the common carrier's truck overturning. Kurtz Industries will not be liable for the purchase price.

Question 7

Regardless of the language of the contract,title to goods passes to the buyer at the time and place at which the seller physically delivers the goods.

Accepted Answer

Title to goods can pass to the buyer at different times based on the terms of the contract, not necessarily at the time and place of physical delivery. The contract can specify different conditions for the transfer of title.

Question 8

In January,Eddie contracts to sell 100 bushels of soybeans in the fall.This contract
A)is void.He cannot contract to sell a crop before it is even planted; the goods must be in existence.
B)is void. The soybeans must be identified to the contract at the time he contracts to sell them.
C)can be valid; but title to the soybeans cannot pass until the soybeans exist.
D)can be valid, and title to the soybeans passes when the contract is signed.

Accepted Answer

While Eddie can contract to sell a crop before it is planted, the soybeans must exist at the time of delivery. This type of contract is known as a future goods contract. In this case, the soybeans are not identified to the contract at the time they are sold, but they will become identified once they come into existence. Therefore, title to the soybeans cannot pass until they exist, but the contract itself can still be valid.

Question 9

Mark,a power tool salesman,promises Jill,a customer,that the Turbo Power Hedge Trimmer 1000 will easily cut through bamboo up to 3 inches thick.Mark's statement constitutes an express warranty if Jill purchases the hedge trimmer.

Accepted Answer

Mark's statement is a promise regarding the product's performance and therefore constitutes an express warranty.

Question 10

Crops are considered identified when they are planted.

Accepted Answer

Crops are considered identified once they are planted as they have been given a physical existence and can be distinguished from other crops.

Question 11

The shipping terms,FOB place of destination,indicate that the seller must deliver the goods at the place named and bears the expense and risk of shipping.

Accepted Answer

FOB (Free On Board) place of destination means the seller is responsible for the goods until they reach the specified destination, covering all costs and risks associated with transportation.

Question 12

Even though a car has an obvious dent in the rear quarter panel,the salesperson tells a potential customer,"This car has never been in an accident." The salesperson's statement creates a valid express warranty.

Accepted Answer

The salesperson's statement contradicts the visible evidence of the dent, thus rendering the statement false. As a result, the statement does not create a valid express warranty.

Question 13

Generally,a contract may include language that limits or alters the damages recoverable for a breach of warranty,as long as the restrictions are not unconscionable.

Accepted Answer

Contracts may include clauses that limit or alter damages recoverable for a breach of warranty, as long as they are not considered unconscionable or unfair.

Question 14

You leave your watch with Bryte Jewelers for repair.Bryte could not transfer ownership interests in the watch to a customer of the jewelry shop without your permission.

Accepted Answer

Leaving a watch for repair with a jewelry shop does not transfer ownership interests in the watch. However, if you give permission or fail to claim the watch within a specific time frame, the jewelry shop may have legal grounds to sell or dispose of the item.

Question 15

In a shipment contract,the risk passes to the buyer when the goods are properly tendered at the destination point.

Accepted Answer

In a shipment contract, the risk of loss passes to the buyer when the goods are delivered to the carrier, not when they are tendered at the destination point.

Question 16

A buyer obtains an insurable interest when the goods are identified to the contract.

Accepted Answer

According to the principle of insurable interest in insurance law, a buyer obtains an insurable interest in the goods when they are identified to the contract. In other words, the buyer's ownership and right to possession of the goods create a financial stake in their safe delivery and condition, which can be protected through insurance.

Question 17

A tag attached to a tree in a nursery identifying the tree as a Southern Magnolia creates an express warranty.

Accepted Answer

A tag attached to a tree in a nursery identifying the tree as a specific type of tree creates an express warranty that the tree is indeed that specific type of tree. In this case, the tag identifies the tree as a Southern Magnolia, creating an express warranty that the tree is a Southern Magnolia.

Question 18

Only one party can have an interest in particular goods at a particular time.

Accepted Answer

Multiple parties can have an interest in particular goods at a particular time, such as in cases of joint ownership, partnerships, or shared use agreements.

Question 19

Ruppart Manufacturing has a contract for the sale of 100 cases of teaching supplies to Teachers Co-op,Inc.Payment of the order is to be made in installments over the next year.Ruppart Manufacturing keeps a security interest in the cases sold to assure payment by Teachers Co-op,Inc.When the order is completed,Ruppart ships the order.Legally
A)both Ruppart and Teachers have an insurable interest in the supplies.
B)only Ruppart has an insurable interest in the supplies.
C)only Teachers has an insurable interest in the supplies.
D)neither Ruppart nor Teachers has an insurable interest in the supplies.

Accepted Answer

Both Ruppart and Teachers have an insurable interest in the supplies because Ruppart has a security interest in the cases sold to Teachers Co-op, Inc. This means that Ruppart has a financial interest in the supplies and would suffer a loss if the supplies were damaged or destroyed. Similarly, Teachers Co-op, Inc. has an interest in the supplies because they have paid for them and are relying on them for their teaching needs. Therefore, both parties have an insurable interest in the supplies.

Question 20

The statute of limitations for breach of warranty under the UCC is
A)one year.
B)two years.
C)three years.
D)four years.

Accepted Answer

The statute of limitations for breach of warranty under the Uniform Commercial Code (UCC) is four years.

Quiz 22: Ownership, Risk and Warranties

The buyer of a product is located in Des Moines,Iowa and the seller is located in Sacramento,California.The contract specifies F.O.B.Des Moines.What type of contract is this?