Question 1

Varoom Motors,Inc.,sells Weber an Xtrem-Sport motorcycle. The cycle is held by Yeoman's Warehouse for delivery to Weber at Yeoman's location. Risk of loss passes to Weber when she receives
A)acopy of the sales contract from Varoom.
B)acertificate of title from the state.
C)a negotiable document of title from Yeoman.
D)none of the choices.

Accepted Answer

Risk of loss passes under the Uniform Commercial Code (UCC) when the buyer receives a negotiable document of title. Therefore, choice C is the best answer. The sales contract and certificate of title are not sufficient to transfer the risk of loss.

Question 2

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 suf-fered by
A)Commercial Rents.
B)Delivery Trucks.
C)E Street Warehouse.
D)the thief.

Accepted Answer

The lease agreement between Commercial Rents Corporation and Delivery Trucks, Inc. likely contains a provision that holds Delivery Trucks responsible for any loss or damage to the leased equipment, including theft. Therefore, Commercial Rents Corporation is not responsible for the stolen pressure washer and the loss is suffered by them.

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)Apple,Inc.,the maker of the iPod.

Accepted Answer

CSR had no right to sell Brad's iPod without his permission or knowledge, as he had only left it there for battery replacement. Therefore, CSR is liable for the sale and must compensate Brad for the value of the iPod. Doris, on the other hand, purchased the iPod in good faith and had no way of knowing it belonged to someone else. Therefore, she is not liable and Brad cannot recover from her. Apple, Inc. is also not liable as they were not directly involved in the sale of the iPod.

Question 4

Red's Roofing buys asphalt roofing tiles from Shingles,Inc. The parties agree that the tile will be shipped "F.O.B. Shingles's warehouse" to Red's Roofing location via Tristate Shipping Corporation. The tiles are lost in transit. The loss is suffered by
A)Tristate Shipping.
B)Shingles,Inc.
C)Red's Roofing.
D)Red's customers by an increase in the prices of goods and services.

Accepted Answer

F.O.B. stands for "free on board", which means that the seller (Shingles, Inc.) is responsible for the goods until they are loaded on the carrier (Tristate Shipping Corporation). Once the goods are loaded, the buyer (Red's Roofing) assumes the risk of loss or damage during transit. Therefore, the loss of the tiles is suffered by Red's Roofing, not Tristate Shipping or Shingles, Inc.

Question 5

Paramount Publishing,Inc.,delivers fifty cases of an assortment of books to Quicksilver Delivery,Inc.,without passage of title to deliver the goods to Readmore Bookstore. This is
A)a bailment.
B)alease.
C)asale.
D)none of the choices.

Accepted Answer

A bailment occurs when an owner of goods delivers them to someone else for a specific purpose, but retains ownership of the goods. In this scenario, Paramount Publishing has delivered books to Quicksilver Delivery to be delivered to Readmore Bookstore, but title (ownership) has not passed to Readmore Bookstore yet. This fits the definition of a bailment.

Question 6

Outdoor Outfitters Store contracts to buy fifty tents from Pitched Camp,Inc. Unless the contract states otherwise,it is assumed to be
A)none of the choices.
B)a destination contract.
C)a shipment contract.
D)a delivery ex-ship.

Accepted Answer

Since the contract does not specify a destination for the tents, it can be assumed that it is a shipment contract. In a shipment contract, the seller is responsible for delivering the goods to the carrier for shipment, but the buyer assumes the risk of loss or damage during transit.

Question 7

Pam buys from Midtown Motors a used sport utility vehicle (SUV). The SUV was manufactured by Gem Vehicles,Inc.,and previously owned by Ron. Regarding title to the SUV,Pam acquires
A)whatever title Midtown had.
B)whatever title Gem had.
C)whatever title Ron had.
D)no title.

Accepted Answer

When Pam buys a used vehicle from a dealership like Midtown Motors, she acquires whatever title the dealership had, as they are the ones selling and transferring ownership of the vehicle. In this case, the title would be whatever title Midtown Motors had for the SUV.

Question 8

Home Appliance Corporation contracts with Instate Trucking Company to take a selection of appliance repair parts to Journey Airlines,Inc.,with Journey to transport the goods to a KeepSafe Company warehouse. Instate Trucking,Journey Airlines,and KeepSafe each acknowl-edge possession of the goods by a document of title. Instate Trucking,Journey Airlines,and KeepSafe are
A)bailees.
B)buyers.
C)lessees.
D)sellers.

Accepted Answer

Instate Trucking, Journey Airlines, and KeepSafe are all bailees as they have acknowledged possession of the goods by a document of title. A bailee is a person or entity that has legal possession of someone else's property and is responsible for taking care of it until it is returned to the owner.

Question 9

Quaff n' Quench Café buys twenty-five crates of oranges from Reynaldo Produce,Inc. The parties agree to ship the oranges "F.O.B. Quaff n' Quench " via Swiftline Trucking Company. The oranges rot in transit. The loss is suf-fered by
A)Quaff n' Quench.
B)Swiftline.
C)Columbia.
D)Reynaldo Produce.

Accepted Answer

The F.O.B. (Free on Board) point was Quaff n' Quench, meaning that Reynaldo Produce had fulfilled its obligation by delivering the oranges to the agreed upon location. The risk of loss or damage during transit was transferred to Quaff n' Quench once the oranges were loaded onto the truck. Therefore, Reynaldo Produce is not responsible for the loss and Quaff n' Quench cannot hold them liable. Swiftline may be liable for the loss if it can be proven that they were negligent in their handling and transportation of the oranges.

Question 10

Big Red Drinks,Inc. contracts to buy two tons of cranberries from Super Fruits,Inc. The contract states that Super Fruits is required to ship the cranberries to Big Red Drinks by Speedy Wind Air Freight. The contract is
A)a bill of lading.
B)a destination contract.
C)a shipment contract.
D)a warehouse receipt.

Accepted Answer

The contract between Big Red Drinks, Inc. and Super Fruits, Inc. is a shipment contract since it specifies that Super Fruits is responsible for shipping the two tons of cranberries to Big Red Drinks. In a shipment contract, the seller is responsible for delivering the goods to the carrier, but the buyer assumes the risk of loss or damage during transportation.

Question 11

Pipes & Culverts Company orders six irrigation pumps from Quality Plumbing,Inc. The pumps are stored in Restorers Warehouse. Under the terms of the order,Quality must give Pipes & Culverts a warehouse receipt for the goods,which the buyer will then pick up. Title to the goods passes to Pipes & Culverts when
A)Quality stores the drives.
B)Pipes & Culverts orders the drives.
C)Pipes & Culverts picks up the drives.
D)Quality gives Pipes & Culverts a warehouse receipt for the drives.

Accepted Answer

Title to the goods passes to Pipes & Culverts when Quality gives Pipes & Culverts a warehouse receipt for the goods. Therefore, option D is the correct choice.

Question 12

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
A)a bill of lading.
B)a destination contract.
C)ashipment contract.
D)a warehouse receipt.

Accepted Answer

The answer of Mountainside Coffee Company and Nature's Cuisine,Inc.,enter into...

Question 13

Safety Supply Corporation in New York sells a truckload of protective suits,masks,and other safety gear to Toxic Recovery,Inc.,in Connecticut,"F.O.B. New York." Safety Supply arranges with US Truckline to transport the goods. The cost of the transport will be paid by
A)Safety Supply.
B)Toxic Recovery.
C)US Truckline.
D)Toxic Recovery's clients by an increase in the price of loss control services.

Accepted Answer

The answer of Safety Supply Corporation in New York sells...

Question 14

A contract between Fresh Fruit Corporation and Green Grocer,Inc.,re-quires 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 location, which in this case is Green Grocer's place of business. A bill of lading is a document that confirms the transportation of goods, a shipment contract requires the seller to deliver the goods to a carrier, and a warehouse receipt documents the storage of goods in a warehouse.

Question 15

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

In this contract, the risk of loss passes to Outdoor when Roasters delivers the goods to Speedy Delivery Company for transport to Outdoor. Therefore, option A is the correct answer. The risk of loss does not pass to Outdoor upon entering into the contract, when the goods are transported, or when Outdoor begins to use the grill.

Question 16

Elizabeth buys a car from Silas,who is sixteen years old. Elizabeth wants to sell the car to her neighbor,John. Elizabeth's title to the car is
A)valid.
B)voidable.
C)void.
D)good.

Accepted Answer

Silas, being sixteen years old, is considered a minor and may not enter into legally binding contracts. Therefore, the contract between Elizabeth and Silas for the sale of the car is voidable, meaning that either party may choose to void the contract. The title to the car that Elizabeth received from Silas would also be voidable.

Question 17

Growers 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
A)Growers Mart.
B)Hilltop Farms.
C)Refrigerated Trucking.
D)all of the parties as owners in common in equal measure.

Accepted Answer

The loss of the berries is suffered by Growers Mart because they purchased the berries from Hilltop Farms and agreed to transport them F.O.B. Hilltop Farms through Refrigerated Trucking Company. F.O.B. (Free on Board) indicates that the seller (Hilltop Farms) fulfills their obligation to deliver the goods by loading them onto the truck, and the buyer (Growers Mart) assumes responsibility for any damage or loss that occurs during transportation. Therefore, Growers Mart bears the risk of loss in this situation. The loss is not suffered by Hilltop Farms or Refrigerated Trucking because they fulfilled their obligations under the agreement.

Question 18

Sundry's department store orders one hundred dresses from Taylor's Clothing Company. The contract does not expressly state when title to the goods will pass. Title passes when
A)Sundry's signs the contract.
B)Taylor's signs the contract.
C)Taylor's delivers the goods.
D)Sundry's pays for the goods.

Accepted Answer

According to the Uniform Commercial Code (UCC), in the absence of an express agreement, title to goods passes to the buyer at the time the seller physically delivers the goods to the buyer. Therefore, title to the dresses will pass from Taylor's Clothing Company to Sundry's department store at the time of delivery.

Question 19

NutriRich,Inc.,sells fifty cases of Omega 3 capsules to Good Health stores,but before Good Health takes physical possession,the cases are lost. Under the UCC,the parties' rights and obligations with respect to the loss depend on the concept of
A)identification.
B)insurable interest.
C)risk of loss.
D)title.

Accepted Answer

The UCC governs the sale of goods, and it provides that the risk of loss for goods passes from the seller to the buyer when the goods are delivered, unless the parties agree otherwise. In this case, since the cases were lost before Good Health took physical possession, the question of who bears the risk of loss arises. The concept of risk of loss is what determines each party's rights and obligations with respect to the loss of goods. Therefore, the correct answer is (C) risk of loss.

Question 20

Fits Like A Glove Shoes,Inc.,and Retail Footwear Stores enter into a contract for a sale of shoes. The contract indicates 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 point, usually the point of loading onto a carrier. Therefore, the buyer assumes responsibility and transportation costs from that point forward. This term is commonly used in domestic sales within the United States.

Quiz 21: Title and Risk of Loss

Varoom Motors,Inc.,sells Weber an Xtrem-Sport motorcycle. The cycle is held by Yeoman's Warehouse for delivery to Weber at Yeoman's location. Risk of loss passes to Weber when she receives

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 suf-fered by

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

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

Paramount Publishing,Inc.,delivers fifty cases of an assortment of books to Quicksilver Delivery,Inc.,without passage of title to deliver the goods to Readmore Bookstore. This is

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

Pam buys from Midtown Motors a used sport utility vehicle (SUV) . The SUV was manufactured by Gem Vehicles,Inc.,and previously owned by Ron. Regarding title to the SUV,Pam acquires

Quaff n' Quench Café buys twenty-five crates of oranges from Reynaldo Produce,Inc. The parties agree to ship the oranges "F.O.B. Quaff n' Quench " via Swiftline Trucking Company. The oranges rot in transit. The loss is suf-fered by

Big Red Drinks,Inc. contracts to buy two tons of cranberries from Super Fruits,Inc. The contract states that Super Fruits is required to ship the cranberries to Big Red Drinks by Speedy Wind Air Freight. The contract is

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

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

A contract between Fresh Fruit Corporation and Green Grocer,Inc.,re-quires Fresh Fruit to deliver goods to Green Grocer's place of business. 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

Elizabeth buys a car from Silas,who is sixteen years old. Elizabeth wants to sell the car to her neighbor,John. Elizabeth's title to the car is

Growers 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

Sundry's department store orders one hundred dresses from Taylor's Clothing Company. The contract does not expressly state when title to the goods will pass. Title passes when

NutriRich,Inc.,sells fifty cases of Omega 3 capsules to Good Health stores,but before Good Health takes physical possession,the cases are lost. Under the UCC,the parties' rights and obligations with respect to the loss depend on the concept of

Fits Like A Glove Shoes,Inc.,and Retail Footwear Stores enter into a contract for a sale of shoes. The contract indicates that the price includes transportation costs to a specific destination by including the term