Question 1

Tony enters into a contract with Joseph to supply his entire output of guava of each season from his orchid at the then current market price. The guava is to be used by Joseph for making jams. However, the contract didn't contain any clause as to when it can be terminated. Tony gave a one-year notice period to Joseph prior to termination of the contract. Joseph intentionally didn't do any arrangements for himself to acquire guavas from elsewhere. When Tony expressed his inability to supply Joseph the guava after one year, Joseph sued Tony for breach of contract. Whether or not the approach of Joseph is justified?

Accepted Answer

The answer of Tony enters into a contract with Joseph...

Question 2

Which of the following is most important in determining who bears the risk of loss in a sale of goods contract?

Accepted Answer

The agreement between the parties is the most important factor in determining who bears the risk of loss in a sale of goods contract. While shipping terms and possession of the goods may have some impact on this determination, ultimately it will come down to what the parties have agreed to in their contract. Similarly, while title to goods is important in determining ownership rights, it is not the determining factor in determining who bears the risk of loss.

Question 3

Goods are being sold by Anne in Seattle and shipped by ABC Railroad to Brian in Portland, Oregon. In this situation, the term "FOB Seattle" means that the risk of loss passes from the seller to the buyer when:

Accepted Answer

The term "FOB Seattle" clearly indicates that the goods are at the buyer's risk only when they are delivered to their destination.

Question 4

In a _____ contract, the goods are delivered to the buyer primarily for resale with the understanding that the buyer has the right to return them.

Accepted Answer

A sale or return contract is a type of sales contract where the goods are delivered to the buyer with the understanding that the buyer has the right to return them if they cannot be sold to customers. This type of contract is common in the retail industry, where retailers may purchase products from suppliers with the understanding that they can return any unsold products at the end of a certain period.

Question 5

Isaac contracts to sell Boyd all of his requirements of coal. In the past, Boyd has required between 1000 and 1500 tons of coal per year, but the contract contains no estimate of Boyd's needs. In 1998, Boyd's needs increase dramatically, and it demands 10,000 tons of coal from Isaac. Is Isaac obligated to sell Boyd this amount?

Accepted Answer

The answer of Isaac contracts to sell Boyd all of...

Question 6

For which of the following sale contracts does title and risk of loss remain with the seller until the buyer accepts the goods?

Accepted Answer

In a sale on approval, the title and risk of loss remain with the seller until the buyer accepts the goods. The buyer has the option to either accept the goods and take ownership or reject them and return them to the seller. In a sale or return, the buyer takes title and assumes the risk of loss upon delivery, but has the option to return the goods for a refund. In a bulk sale, title and risk of loss pass to the buyer upon delivery. In a sale "FAS [point of origin]," the seller is responsible for the goods until they are loaded onto the shipping vessel, at which point responsibility passes to the buyer.

Question 7

A music store lets Laura take a guitar home with her so that Laura might test how it plays. After playing the guitar for a day, Laura puts it on a sofa and forgets about it. Two weeks later, the guitar is damaged due to fire. Who must bear the risk of loss for the damage to the guitar?

Accepted Answer

The answer of A music store lets Laura take a...

Question 8

Cey Corp. entered into a contract to sell parts to Deck, Ltd. The contract provided that the goods would be shipped "FOB Cey's warehouse." Cey shipped parts different from those specified in the contract. Deck rejected the parts. A few hours after Deck informed Cey that the parts were rejected, they were destroyed by fire in Deck's warehouse. Cey believed that the parts were conforming to the contract. Which of the following statements is correct?

Accepted Answer

When a buyer rightfully revokes acceptance of the goods,the risk of loss is on the seller from the beginning,to the extent that it is not covered by the buyer's insurance.

Question 9

Pulse Corp. maintained a warehouse where it stored its manufactured goods. Pulse received an order from Star. Shortly after Pulse identified the goods to be shipped to Star and before moving them to the loading dock, a fire destroyed the warehouse and its contents. With respect to the goods, which of the following statements is correct?

Accepted Answer

Pulse had title and an insurable interest in the goods because it owned and stored them in its warehouse. Star did not have title or an insurable interest until it took possession of the goods. Therefore, Pulse would be able to make an insurance claim for the loss of the goods.

Question 10

Which of the following factors is most important in deciding who bears the risk of loss between merchants when goods are destroyed during shipment?

Accepted Answer

The agreement between the parties is the most important factor in deciding who bears the risk of loss between merchants. This is because merchants have the freedom to negotiate and agree upon terms that suit their respective needs and interests. Therefore, the terms of the agreement will generally dictate which party bears the risk of loss, including who is responsible for insuring the goods and who is liable in the event of loss or damage during shipment.

Question 11

Which of the following terms in a contract for the sale of goods requires the seller to insure the goods?

Accepted Answer

CIF (Cost, Insurance, and Freight) term requires the seller to obtain marine insurance for the goods being shipped.

Question 12

If goods have been delivered to a buyer pursuant to a sale or return contract, the:

Accepted Answer

In a sale or return contract, title to the goods initially passes to the buyer upon delivery, but the buyer has the option to return the goods to the seller within a specified time period. However, the risk of loss for the goods passes to the buyer upon delivery, which means that the buyer is responsible for any damage or loss that occurs to the goods while they are in their possession. Therefore, choice D is the correct answer.

Question 13

The common law placed the risk of loss on _____ at the time of the loss.

Accepted Answer

The transportation of goods from sellers to buyers can be a risky business and losses may occur without anyone's fault.The common law placed the risk on the party who had technical title at the time of the loss.The Code,however,provides very specific rules to determine the bearer of any losses.

Question 14

Press Publishers sold 100 copies of a new hardback book entitled "Business Law" to Boardwalk Books. The contract between Press Publisher and Boardwalk Books provides, in relevant part, that Boardwalk may return to Press any unused copies of the book within six months. During the six-month period, Boardwalk sold only five copies of these books. However, twenty copies were damaged from sitting on the bookshelf for six months and having customers rip pages and spill coffee on them. Boardwalk wants to return all ninety-five copies to Press. Discuss.

Accepted Answer

The answer of Press Publishers sold 100 copies of a...

Question 15

An exception to the general rule is that if goods are entrusted to a merchant who deals in goods of that kind, the merchant has:

Accepted Answer

According to the exception to the general rule, if goods are entrusted to a merchant who deals in goods of that kind, the merchant has the power to transfer all rights of the entruster to a buyer in the ordinary course of business. This means that the merchant can sell the goods without the physical presence of the owner and transfer all the rights of the owner to a buyer who purchases the goods in good faith in the normal course of business. Therefore, option B is the correct answer. The other options are incorrect as they do not reflect the exception to the general rule.

Question 16

The Benson Bearing Company sells Textron, Inc. a quantity of baseball bats that were stored in an independent warehouse at the time of the sale. The contract says that Textron is to pick up the bats at the warehouse. The risk of loss passes to Textron:

Accepted Answer

If the goods are in the possession of a third-party bailee (like a warehouseman)and are to be delivered without being moved,the risk of loss passes to the buyer upon delivery to him by a negotiable document of title for the goods.

Question 17

In a _____ contract, the goods are delivered to the buyer primarily for the buyer's use.

Accepted Answer

In a sale on approval,the goods are delivered to the buyer primarily for the buyer's use.The buyer is given the opportunity to examine or try the goods so as to decide whether to accept them;the risk of loss and title to the goods do not pass to the buyer until the buyer accepts the goods.

Question 18

Maple Interiors, located in Boston, contracted to sell and ship sofas to Peach Furniture, located in Atlanta. The contract stated that the goods were to be shipped "F.O.B. Boston, via XYZ railroad". Maple delivered the sofas to XYZ railroad. They were shipped from Boston but never seen again. Both Peach and Maple had assumed that the other party had the risk of loss, so neither had obtained insurance. Who must bear this loss?

Accepted Answer

The term FOB (free on board)calls for the seller to deliver the goods free of expense and at the seller's risk at the place designated.In the example the goods were delivered to Boston and to XYZ railroad thus,Maple,the seller,was no longer responsible for risk.

Question 19

What is the UCC approach to the risk of loss of goods during transportation?

Accepted Answer

The answer of What is the UCC approach to the...

Question 20

Stone, a merchant seller in Seattle, contracted with Rose, a merchant buyer in Rochester, for the sale of goods to be shipped by truck. The terms of the contract were "F.O.B. Seattle". Stone delivered the goods to the carrier. After leaving Seattle, the truck containing the goods was never seen again. Stone has demanded payment for the goods, and Rose has refused. If Stone sues, the outcome will be:

Accepted Answer

Since Stone did not fulfill his responsibility of delivering the shipment to Rose (which is indicated by the "F.O.B Seattle"),he cannot claim payment for it.

Quiz 19: Formation and Terms of Sales Contracts