Question 1

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

Accepted Answer

Under the shipment contract, risk of loss passes to the buyer when the seller delivers the goods to the carrier for transportation to the buyer. Therefore, risk of loss passes to Outdoor when Roasters delivers the goods to Speedy Delivery Company.

Question 2

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

Accepted Answer

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

Question 3

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

Accepted Answer

The document delivered by Regional Freight LLC is a warehouse receipt, which serves as proof of ownership and storage of the goods in the warehouse facility. It is not a bill of lading as it does not serve as a contract of carriage, nor is it a shipment or destination contract as it only relates to the storage of the goods.

Question 4

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

Accepted Answer

The parties are bailees because they have possession of the goods based on a document of title. A bailee is a person or entity who temporarily takes possession of someone else's property, in this case, the appliances, and has the responsibility of returning them in the same condition they received them.

Question 5

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

Accepted Answer

Eve acquires whatever title Fiesta Autos had because when a buyer purchases a vehicle from a seller, they receive the title that the seller possesses. Fiesta Autos, as the seller, transfers its title to Eve.

Question 6

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

Accepted Answer

In a shipment contract, title passes to the buyer when the seller delivers the goods to the carrier for shipment.

Question 7

Pipes & Culverts 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 Pipes a warehouse receipt for the goods, which Pipes will then pick up. Title to the goods passes to Pipes when

Accepted Answer

Title to the goods passes to Pipes when Quality gives Pipes the warehouse receipt, as this is the point at which Pipes has the right to take possession of the goods.

Question 8

Grocers 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. Hilltop Farms" means "Free On Board" at Hilltop Farms, indicating that the risk of loss passes to Grocers Mart once the berries are loaded onto the truck at Hilltop Farms. Therefore, Grocers Mart bears the loss.

Question 9

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

Accepted Answer

The answer of Brad leaves a laptop at Computer Sales...

Question 10

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

Accepted Answer

Liz's title to the car is voidable because the check she used to pay for the car was later dishonored. This means that the contract for the sale of the car is voidable at the option of Nate's Mazda.

Question 11

Safety Corporation in New York sells a truckload of protective suits, masks, and other safety gear to Toxic, Inc., in Connecticut, "F.O.B. New York." Safety arranges with US Truckline to transport the goods. If the goods are destroyed in transit from New York to Connecticut, the loss will be suffered by

Accepted Answer

"F.O.B. New York" means "Free On Board" at the point of shipment, which indicates that the buyer assumes the risk of loss once the goods are shipped. Therefore, the buyer, Toxic, Inc., bears the risk of loss during transit.

Question 12

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

Accepted Answer

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

Question 13

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

Accepted Answer

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

Question 14

Commercial Rents Corporation agrees to lease a pressure washer to Delivery Trucks, Inc., which agrees to pick it up at E Street Warehouse. Before Delivery Trucks retrieves the washer, it is stolen. The loss is suffered by

Accepted Answer

The lease agreement most likely placed the risk of loss or damage to the equipment on Commercial Rents Corporation until Delivery Trucks, Inc. took possession of it. Therefore, the loss of the pressure washer would be suffered by Commercial Rents Corporation.

Question 15

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

Accepted Answer

Under the "F.O.B. Shingles' warehouse" term, the risk of loss passes to Roofing Contractor LLC when the tiles are delivered to the carrier, Tristate Shipping Corporation. Therefore, Roofing bears the loss if the tiles are lost in transit.

Question 16

Great Bikes, Inc., allows Herb to take an Itasca-brand motorcycle for a "test run." Herb tries the bike for a few hours, returns, and buys it. This is

Accepted Answer

A "sale on approval" occurs when a buyer takes possession of goods for a trial period before deciding to purchase them. Herb's test run of the motorcycle fits this description.

Question 17

Jill buys a kayak from a LakeCraft store, which agrees to keep it for her until she picks it up. Before Jill gets the kayak, an unforeseen tornado destroys the store and the goods. The loss is suffered by

Accepted Answer

The loss is suffered by LakeCraft, as they had possession of the kayak and were responsible for its safekeeping until Jill picked it up. The occurrence of a tornado would fall under the category of force majeure or an act of God, which absolves neither party of liability but does mean that the loss is not due to the fault of either Jill or the manufacturer of the kayak.

Question 18

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 19

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

Accepted Answer

A shipment contract is assumed when a seller is required to ship goods by carrier but without specifying any further obligations. The seller fulfills their obligation when they deliver the goods to the carrier.

Question 20

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

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.

Quiz 18: Title and Risk of Loss