Question 1

NuStores accepts a shipment of QuikView-brand 3D HD DVD players from Open-Ur-Eyes,Inc.NuStores later discovers a defect in the players,revokes acceptance,and returns the players via Playback,Inc.During the return,the play?ers are lost.The loss is suffered by

Accepted Answer

Since NuStores revoked acceptance due to a defect, the risk of loss reverts to the seller, Open-Ur-Eyes, Inc., until the goods are received back.

Question 2

Essen Corporation buys from Fallow Farms,Inc.,a rice crop that Fallow plans to plant and harvest during the next growing season.Essen plans to sell the rice to Gourmet Grocery Stores.After the rice is planted,but before it is harvested,an insurable interest in the rice ex?ists in

Accepted Answer

An insurable interest in the rice exists for Essen and Fallow as they both have a financial stake in the success of the crop. Gourmet Grocery does not yet have an insurable interest as they have not taken possession of the rice and are not yet at risk of any potential loss.

Question 3

Delicioso Tea Company and Savory Stores,Inc.,enter into a contract for a sale of organic tea.The contract includes the term "F.O.B.River City," which is Savory's location.This means that the contract is

Accepted Answer

The answer of Delicioso Tea Company and Savory Stores,Inc.,enter into...

Question 4

Town Style Stores orders Hidebound-brand leather jackets from Cowhide & Cotton Company (CCC).CCC mistakenly ships denim jackets,which Town re?jects and returns via Valu Transport,Inc.During the return,the jack?ets are lost.The loss is suffered by

Accepted Answer

CCC is responsible for the loss because they shipped the wrong goods, and the risk of loss remains with them until the correct goods are delivered.

Question 5

Suki leaves a Update-brand watch at Timepiece Sales & Repair to be fixed.Timepiece sells the watch to Vera,who does not know that the watch belongs to Suki.Suki can recover from

Accepted Answer

Since Suki left the watch at Timepiece Sales & Repair, they were responsible for fixing and returning it to Suki. By selling the watch to Vera without Suki's knowledge or consent, Timepiece Sales & Repair breached their duty to return the watch to its rightful owner. Therefore, Suki can recover from Timepiece Sales & Repair, not Vera, as she has no knowledge or reason to know that the watch was not rightfully owned by Timepiece. Update cannot be held liable in this case as they did not have any role or responsibility in the situation.

Question 6

Matrix Material Corporation in New Jersey sells fifty tons of fabric to Natural Fit Clothing,Inc.,in Ohio,"F.O.B.New Jersey." Matrix arranges with Outbound Truckline to transport the goods.The cost of the transport will be paid by

Accepted Answer

F.O.B. (free on board) means that the seller (Matrix) is responsible for the cost of transportation to the named destination (New Jersey).

Question 7

Open Road Showroom sells new and used motorcycles.Some of the motorcycles are held on consignment,including six consigned by Pedro Cycles,Inc.Like most consignments,Open Road's deal with Pedro Cycles is

Accepted Answer

A bailment is an arrangement where the owner of the goods (Pedro Cycles) transfers possession of them to someone else (Open Road Showroom) for a specific purpose, but retains ownership. In this case, Pedro Cycles has consigned the motorcycles to Open Road Showroom for sale, so they are held on bailment. The other options (sale, delivery ex-ship, lease) do not accurately represent the arrangement between the two companies.

Question 8

Uri sells 100 cases of vitamins to Wanda,but before she 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

Accepted Answer

Under the UCC, the concept of risk of loss determines the parties' rights and obligations in case of loss before the buyer takes physical possession. The risk of loss may be allocated to either the seller or the buyer depending on the circumstances. If the risk of loss is on the seller, the seller bears the loss and must deliver the goods again, or refund the price if the goods cannot be delivered again. However, if the risk of loss is on the buyer, they must still pay the purchase price even if the goods are lost before taking physical possession. Therefore, the parties' rights and obligations with respect to the loss of the vitamins depend on the concept of risk of loss.

Question 9

Mitchell buys 100 bales of hay from New Grain Fields.The parties agree that the hay will be transported "F.O.B.New Grain Fields" via Farm County Trucking Company.Farm County's truck and the hay are lost in a fire following an accident.The loss is suffered by

Accepted Answer

As per the agreement, the hay was being transported F.O.B(New Grain Fields), which means the buyer, Mitchell, would bear the risk of loss once the hay left New Grain Fields' possession. Therefore, Mitchell would suffer the loss of the hay due to the fire, and New Grain Fields would not be responsible for it. The loss would not be suffered by Farm County Trucking as they were engaged in the transportation of the hay and not the owner. The option D is also incorrect as the parties did not hold the ownership of hay in common.

Question 10

Finished Furnishings,Inc.,agrees to lease an Oak Top-brand desk to Research Resources,Inc.(RRI),which agrees to pick it up at Streetside Warehouse.Before RRI retrieves the desk,it is stolen.The loss is suf?fered by

Accepted Answer

RRI is responsible for the loss because they agreed to pick up the desk at Streetside Warehouse. Until RRI actually takes possession of the desk, the liability still rests with them.

Question 11

Catchy Gadgets Corporation and Discount Outlets,Inc.,enter into a contract for a sale of kitchenware.The contract requires Catchy to deliver the goods to Rapido Carrier Company for transport to Discount's warehouse.Risk of loss passes to Discount when

Accepted Answer

In a shipment contract, risk of loss passes to the buyer when the seller delivers the goods to the carrier.

Question 12

Harley's Home Store buys furniture from Relax-a-by Furniture,Inc.The parties agree that the furniture will be shipped "F.O.B.Relax-a-by's ware?house" to Harley's via Jiffy Shipping Corporation.The furniture is lost in transit.The loss is suffered by

Accepted Answer

The F.O.B. term means that once the furniture is loaded onto the shipping carrier, the risk of loss or damage transfers to the buyer, which in this case is Harley's Home Store. Therefore, Harley's bears the loss and is responsible for filing a claim with the carrier. Relax-a-by Furniture is not responsible as they fulfilled their obligation by shipping the goods to the agreed-upon location. Jiffy Shipping may be liable if they were responsible for the loss, but the details of who is responsible for the loss should be determined by the contract with Jiffy Shipping.

Question 13

Leasing Equipment Corporation (LEC)agrees to lease five computer workstations to Mapmakers,Inc.Before any inter?est in the workstations can pass from LEC to Mapmakers,they must be

Accepted Answer

According to the Uniform Commercial Code (UCC), for a sales or lease contract to be valid, the goods must be in existence and identified as the subject of the contract. Therefore, the workstations must exist and be identified as the leased equipment before any interest in them can pass from LEC to Mapmakers. Possession or a document of title are not necessary for the validity of the contract.

Question 14

Pie Sales Corporation orders ReadyMade-brand pies from Savory Foods Company.Savory identifies the goods.Before they are shipped to Pie Sales,an insurable interest in the goods exists in

Accepted Answer

An insurable interest exists in both Pie Sales and Savory Foods because Savory Foods has identified the goods for shipment, giving them an interest, and Pie Sales has an interest as the buyer of the goods.

Question 15

Wild Alaskan sockeye salmon that fill the hold of Dexter's fishing boat are fungible if the fish are

Accepted Answer

Fungibility refers to the ability of goods to be replaceable or interchangeable with other goods of the same kind. In this case, the Wild Alaskan sockeye salmon are fungible if they are alike naturally, by agreement, or by trade usage, meaning they have similar characteristics and can be easily exchanged for one another. The other options are not relevant to determining whether the salmon is fungible.

Question 16

Laraby,a representative for Merchandise Shipping Company,delivers a bill of lading to Caitlin,the owner of Dockside Warehouse.A bill of lading is

Accepted Answer

A bill of lading is a document that serves as a receipt signed by a carrier (such as a shipping company) acknowledging that they have taken possession of goods for shipment. It also serves as a contract between the shipper and the carrier, outlining the terms and conditions of the shipment. Option A is incorrect because it refers to an invoice for loading and carting services, which is a separate document. Option B is incorrect because it refers to an order to ship goods, which would be initiated by the shipper or buyer, not the carrier. Option D is incorrect because it refers to a receipt issued by a warehouse for goods already in storage, not for goods being shipped.

Question 17

Marine Recreation,Inc.,allows Nels to take a Marine Recreation boat for a "test run." Nels tries the boat for a few hours,returns,and buys it.This is

Accepted Answer

The transaction between Marine Recreation Inc. and Nels falls under the category of a sale on approval where Nels was allowed to take the boat for a test run before making the purchase. Sale on approval means that the buyer has the right to inspect and use the purchased goods for a limited period and decide whether to return or complete the purchase.

Question 18

Crest Jewelers buys diamonds from Paramount Gems to resell with the right to return the unsold stones in lieu of payment.This is

Accepted Answer

This transaction is a sale or return because Crest Jewelers is buying the diamonds with the understanding that they can return any unsold stones to Paramount Gems instead of paying for them.

Question 19

Twyla buys a Voracious-brand bicycle from U-Pik-It Bike Store,which agrees to keep the bike for Twyla until she picks it up.Before Twyla gets the bike,a fire destroys the store and the bike.The loss of the bike is suffered by

Accepted Answer

The answer of Twyla buys a Voracious-brand bicycle from U-Pik-It...

Question 20

Dragonaire Corporation contracts with Excel Trucking Company to take goods to Fly-By Airlines,Inc.,with Fly-By to transport the goods to a Geo Storage Company warehouse.Excel,Fly-By,and Geo each acknowl?edge possession of the goods by a document of title.Excel,Fly-By,and Geo are

Accepted Answer

Bailees are those who are in possession of goods delivered to them by another for a specific purpose or under a contract, such as in this scenario where Excel, Fly-By, and Geo each have possession of the goods through documents of title. Consignees are those who receive and sell goods on behalf of someone else, while lessees are those who have leased or rented property. Sellers are those who sell goods to others. Therefore, the best choice is A as bailees best fits the description of the roles of Excel, Fly-By and Geo in this situation.

Quiz 20: Title, risk, and Insurable Interest