Question 1

The terms FOB and FAS mean the same thing.

Accepted Answer

FOB (Free On Board) and FAS (Free Alongside Ship) are both Incoterms, but they have different meanings. FOB means the seller is responsible for the goods until they are loaded onto the shipping vessel, while FAS requires the seller to deliver the goods alongside the vessel at the specified port of shipment.

Question 2

Samantha transfers a void title to Balley who is a good-faith buyer. Balley's title is considered ________.
A) false title
B) void title
C) voidable title
D) excused title
E) manipulated

Accepted Answer

A void title means that the title is invalid from the start, and even a good-faith buyer like Balley cannot obtain a valid title from a void title.

Question 3

Carlinda sold Arun a set of tires. Arun did not know that the tires Carlinda sold him were stolen. What type of title did Arun obtain?
A) Void title
B) Voidable title
C) Stolen title
D) Preferential title
E) False title

Accepted Answer

Arun obtained a void title because the tires were stolen, and a thief cannot pass good title to stolen goods.

Question 4

A(n) ________ under the UCC is defined as the passing of title from the seller to the buyer for a price.
A) sale
B) consignment
C) lease
D) assignment
E) ownership

Accepted Answer

A sale under the Uniform Commercial Code (UCC) is specifically defined as the passing of title from the seller to the buyer for a price, which directly matches the description given in the question.

Question 5

The text discusses the case of Landshire Food Service, Inc. v. Coghill, where the defendant, Coghill, sold his Rolls Royce to Bellman who paid with a forged cashier's check. Meanwhile, Hyken, an innocent purchaser for value, purchased the car from Bellman before the fraud was discovered. What was the result of this case?
A) Coghill was entitled to return of the vehicle because the contract with Bellman was void.
B) Coghill was entitled to return of the vehicle because the contract with Bellman was voidable by Coghill.
C) Hyken was entitled to the vehicle because a person who procures title through fraud receives voidable title and is able to transfer good title to a bona fide purchaser.
D) Hyken was entitled to the vehicle because although a person who procures title through fraud receives a void title, the person guilty of fraud may transfer good title to a bona fide purchaser.
E) The car was ordered sold with Coghill and Hyken to split the proceeds.

Accepted Answer

Hyken was entitled to the vehicle because a person who procures title through fraud receives voidable title and is able to transfer good title to a bona fide purchaser for value without notice of the fraud.

Question 6

A contract is a sale-or-return contract if the seller allows the buyer to take possession of the goods before deciding whether to complete the contract by making the purchase.

Accepted Answer

The answer of A contract is a sale-or-return contract if...

Question 7

Common law states that when a seller transfers goods to a buyer, the buyer gets only voidable title if the buyer is a minor.

Accepted Answer

Under common law, a contract with a minor is voidable at the minor's discretion, meaning the minor can choose to affirm or void the contract, which affects the title transferred.

Question 8

Title is the legal ownership of a good and does not require possession.

Accepted Answer

Title refers to the legal right to own something, such as property or a vehicle, and does not necessarily mean that the owner must physically possess the item. Ownership can exist without possession.

Question 9

The right to insure goods against any risk exposure such as damage or destruction is known as a bondable interest.

Accepted Answer

The right to insure goods against any risk exposure such as damage or destruction is known as an insurable interest, not a bondable interest. Insurable interest is a requirement in insurance policies that ensures the policyholder has a direct relationship to and is potentially financially impacted by the risk being insured against.

Question 10

If a buyer and seller execute a contract and the seller subsequently places the goods with a common carrier for delivery to the buyer, the parties have executed a third-party tender delivery contract.

Accepted Answer

The act described is a shipment contract, not a third-party tender delivery contract. In a shipment contract, the seller is obligated to send the goods to the buyer via a common carrier but is not responsible for the actual delivery to the buyer's location.

Question 11

________ is title acquired from someone who already owns the goods free and clear.
A) Good title
B) Variable title
C) Perfected title
D) Preferential title
E) Terminated title

Accepted Answer

Good title is acquired from someone who already owns the goods free and clear, indicating that the seller has the right to sell the property and can transfer ownership without any encumbrances or liens.

Question 12

Parties to a contract cannot change the UCC's rules regarding when title passes and when risk of loss passes.

Accepted Answer

Parties to a contract can agree to modify the default rules set by the Uniform Commercial Code (UCC) regarding when title passes and when risk of loss passes, as long as their agreement does not violate any specific prohibitions in the UCC or other applicable laws.

Question 13

In cases where a shipment contract is vague or ambiguous on the issue, an origin contract will be presumed.

Accepted Answer

In U.S. commercial law, if a shipment contract is ambiguous, it is generally presumed to be an origin contract, meaning the risk of loss passes to the buyer when the goods are delivered to the carrier.

Question 14

The term tender of delivery refers to the moment the goods are available for the buyer to take.

Accepted Answer

Tender of delivery occurs when the seller makes the goods available to the buyer in accordance with the terms of the contract, indicating that the seller is ready and willing to transfer possession of the goods.

Question 15

Identification of when the risk of loss attaches is important in regards to the right of indemnification.

Accepted Answer

Identifying when the risk of loss attaches is crucial in determining the right of indemnification because it establishes who is responsible for damages or losses at any given point in a transaction or agreement, thereby clarifying indemnity obligations.

Question 16

Delivering a car to a merchant for repair would be considered an entrustment.

Accepted Answer

Entrustment occurs when a person (the bailor) delivers an item to another person (the bailee) for a specific purpose, such as repair, without transferring ownership. Delivering a car to a merchant for repair fits this definition.

Question 17

If an owner entrusts the possession of goods to a merchant who deals in goods of that kind, the merchant has no authority to transfer any rights in the goods to a buyer in the ordinary course of business.

Accepted Answer

Under the Uniform Commercial Code (UCC), when an owner entrusts the possession of goods to a merchant who deals in goods of that kind, the merchant has the authority to transfer all rights in the goods to a buyer in the ordinary course of business, making the transaction valid and binding.

Question 18

When deciding whether someone with a void title can pass a good title, the court will evaluate how the void title was first passed and will give a new buyer good title if the court finds good faith.

Accepted Answer

A void title cannot pass a good title to a new buyer, regardless of good faith, because the original title had no legal validity from the outset.

Question 19

If the seller does not provide the goods as described in a contract, one option the buyer has is to accept the nonconforming goods as is.

Accepted Answer

The buyer can choose to accept nonconforming goods as is, potentially negotiating a lower price or compensation for the difference, as one of the remedies available under the Uniform Commercial Code (UCC) and similar laws in many jurisdictions.

Question 20

Most buyer breaches occur when a buyer changes his or her mind about the price of the goods.

Accepted Answer

Most buyer breaches occur when a buyer fails to pay for the goods or refuses to accept delivery, not merely due to a change of mind about the price.

Quiz 22: Title, Risk of Loss, and Insurable Interest