Worksheet 14.3: Risk of Loss & Insurable Interest

If a seller breaches a contract by supplying non-conforming goods, risk of loss will not immediately pass to the buyer.

True

Owen buys light fixtures from an online merchant under a contract covered by the UCC. He first receives an insurable interest in the lamp:

at the moment the goods covered by the contract are identified.

If a buyer breaches a contract, the risk of loss to _________goods immediately shifts to the buyer.

identified

If the seller is a merchant, risk of loss to goods held by the seller passes to the buyer when the buyer signs the contract.

False

F.O.B. (free on board)

Indicates that the selling price of goods includes transportation costs to the specific place named in the contract. The seller pays the expenses and carries the insurance to the place named.

Delivery ex-ship (delivery from the carrying vessel)

Means that risk of loss does not pass to the buyer until the goods are proper;y unloaded from the ship or other carrier.

When goods are held by a bailee, risk of loss passes to the buyer when any one of the following occurs: a) The buyer receives a __________ document of title for the goods; b) The bailee ___________the buyer's right to __________the goods; c) The buyer receives a ___________document of title, and the buyer has had ___________to present the document to the bailee and demand the goods. If the bailee ___________to honor the document, the risk of loss remains with the seller.

Negotiable acknowledges possess nonnegotiable a reasonable time refuses

F.A.S. (free alongside)

Requires the seller, at his or her own expense and risk, to deliver the goods alongside the carrier before risk passes to the buyer.

C.I.F. or C.&F. (cost, insurance, and freight or just cost and freight)

Requires, among other things, that the seller "put the goods in insurance of a carrier" before risk passes to the buyer.

Any party purchasing insurance must have a sufficient interest in the insured item to obtain a valid policy. Insurance laws—not the UCC—determine sufficiency.

True

A bailee is someone:

who temporarily cares for your personal property without passage of title.