Business Law Chapter 20

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

in existence and identified as the goods in the contract.

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

U-Pik-It.

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

a SHIPMENT contract.

Lou's Bicycle Store contracts to buy fifty bicycles from Mountain Bikes, Inc. Unless the contract states otherwise, this is

a SHIPMENT contract.

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

CCC.

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

Catchy DELIVERS the goods to Rapido.

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 exists in

Essen and Fallow, but NOT Gourmet Grocery.

Sole Savers, Inc., and Rite Fit 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

F.O.B.

Focus Camera Shop receives Sharpview-brand lenses from Optical, Inc., under a sale or return agreement. While the lenses are in Focus's possession, title is held by

FOCUS.

Geno's Café orders five gallons of PureMaid-brand transfat-free olive oil from Chefs Supply, Inc. Chefs mistakenly ships soy oil, which Geno's keeps, despite the nonconformity. The oil is destroyed in a fire. The loss is suffered by

Geno's.

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

Harley's Home Store.

Jim's Jewelry Store orders Sho-Off-brand display racks from Kino's Merchandise Presentation, Inc. Kino's mistakenly ships racks of the wrong size and color, which Jim's rejects and returns via Longroad Shipping Company. During the return, the racks are lost. The loss is suffered by

Kino's.

Leo buys a Naturo-brand bicycle from his brother, Mike. Mike agrees to keep the bike at his house until Leo picks it up. During a storm, a tree falls from Ogden's yard onto Mike's garage and destroys the bike. The loss of the bike is suffered by

Leo.

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

Matrix.

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

Mitchell.

Medico Records Company orders thirty hard drives from Nano Computers, Inc. The hard drives are stored in Enviro Warehouse. Under the terms of the order, Nano must give Medico a warehouse receipt for the goods, which Medico will then pick up. Title to the goods passes to Medico when

NANO gives Medico a warehouse receipt for the drives.

Office Reports Corporation (ORC) orders five Zippy-brand inkjet printers from Prime Printers, Inc. (PPI), to be delivered by PPI. Before PPI's truck arrives with the goods, ORC tells PPI it will not pay. The printers are destroyed in transit. The loss is suffered by

ORC to the extent of a deficiency in PPI's insurance coverage.

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 players are lost. The loss is suffered by

Open-Ur-Eyes.

Orange Computer Corporation sells Pad-brand MP3 players to Quik Discount Stores and other retailers. Orange will have an insurable interest in the players as long as

Orange retains TITLE TO THE GOODS.

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

PIE SALES and SAVORY FOODS.

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 suffered by

RRI.

Rita orders 1,000 cases of 1/4-inch nuts from Steel Parts Company's 10,000-case lot. Steel Parts separates 1,000 cases from the lot. Title and risk of loss

SHIFT to Rita when STEEL PARTS separates the cases.

Juice Café buys 25 bags of Florida navel oranges from Sweet Citrus Company. The parties agree to ship the oranges "F.O.B. Juice Café" via Fresh Harvest Truckline. The oranges rot in transit. The loss is suffered by

Sweet Citrus.

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

Timepiece.

Textiles, Inc., and Fab Fabric Corporation enter into a contract for a sale of muslin. The terms do not clearly indicate whether it is a destination or shipment contract. A court would most likely presume that it is

a SHIPMENT contract.

With a bill of lading, Cartage Common Carrier Company acknowledges possession of certain goods and contracts to deliver them. Cartage is

a bailee.

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

a bailment.

Commercial Storage (CS), a bailee, holds goods for Delta Distributors, Inc., which has contracted to sell them to Eagle Company. The goods are to be delivered without being moved. The risk of loss will pass to Eagle when Eagle receives

a negotiable document of title.

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

a receipt for GOODS SIGNED BY A CARRIER.

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

a sale OR return.

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

a sale on APPROVAL.

Weightless Workouts, Inc., offers to sell a home gym to Jessica and sends it to her on a trial basis. This is

a sale on APPROVAL.

A specific grade of corn that fills Dean and Ethel's silo is fungible. This means that the corn is

alike naturally or by agreement or trade usage.

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

alike naturally, by agreement, or by trade usage.

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 acknowledge possession of the goods by a document of title. Excel, Fly-By, and Geo are

bailees.

My-Tee Shirt Corporation orders from Celebrity Sales, Inc., goods that are stored in a Realty, Inc., warehouse. My-Tee pays for the goods, delivery is via the transfer of a negotiable warehouse receipt, and My-Tee moves the goods out of the warehouse. The risk of loss passes to My-Tee when it

receives the negotiable warehouse receipt.

Heavy Equipment Corporation leases six forklifts to Inland Refining Company, but as the forklifts are delivered, they are lost in an explosion. Under the UCC, the parties' rights and obligations with respect to the loss depend on the concept of

risk of loss.

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

risk of loss.

Gene steals Hilary's brooch and sells it to Imelda. Hilary can recover the brooch from Imelda

under any circumstances.

Corona Storage Company holds goods for Durango Sales Corporation, which contracts to sell them to El Dorado Stores, Inc. The goods are to be delivered without being moved and are represented by a negotiable bill of lading. The risk of loss passes to El Dorado

when El Dorado receives the bill of lading.