blaw ch. 21
On behalf of Premier Shipbuilding Corporation (PSC), 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 PSC after it accepts the nuts and inspects them for defects. -shift to PSC when Steel Parts separates the cases. -remain with Steel Parts until PSC accepts 1,000 cases. -remain with Steel Parts until PSC acknowledges tender of delivery.
-shift to PSC when Steel Parts separates the cases.
Beta Electronics orders 30 hard drives from Alpha Computers, Inc. The hard drives are stored in City Warehouse. Under the terms of the order, Alpha must give Beta a warehouse receipt for the goods, which Beta will then pick up. Title to the goods passes to Beta when: Beta picks up the goods. City Warehouse stores the goods. Beta orders the goods. Alpha gives Beta a warehouse receipt for the goods.
Alpha gives Beta a warehouse receipt for the goods.
Radius Line, Inc., has ordered 40 gross of a promotional video to be shipped to its facility in Valdosta, Georgia, from the manufacturer's facility in Denver, Colorado. The invoice indicates that the goods are to be shipped F.O.B. (free on board) to Atlanta, Georgia. This means that Radius Line will pay shipping costs from: Atlanta to Valdosta. Radius Line will not have to pay any shipping costs. Denver to Valdosta. Denver to Atlanta.
Atlanta to Valdosta.
Diners Café orders five gallons of transfat-free cooking oil from Restaurant Supply, Inc. The seller mistakenly ships the wrong oil, which the buyer keeps, despite the nonconformity. The oil is destroyed in a kitchen fire. The loss is suffered by: Diners only. Restaurant Supply only. Diners, Restaurant Supply, and Diners' customers. Diners and Restaurant Supply, but not Diners' customers.
Diners only.
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: F.A.S. F.O.B. delivery ex-ship. C.I.F.
F.O.B.
The term F.O.B. means: Free on board. Finalize only with buyer. Fixed on board. Freight onto the buyer.
Free on board.
Global Produce Corporation in Hawaii sells 50 tons of pineapple to Ideal Groceries, Inc., in California, F.O.B. Hawaii. The cost of transporting the produce to California will be paid by: Ideal Groceries. Hawaii. Global Produce. California.
Ideal Groceries.
Ideal Gadgets, Inc., and Jolly Outlets Corporation enter into a contract for a sale of kitchenware. The contract requires Ideal to deliver the goods to Ladle Carrier Company for transport to Jolly's warehouse in Metro City. Risk of loss passes to Jolly when: Ladle transports the goods to Jolly's warehouse. the goods arrive in Metro City. Ideal identifies the goods to the contract. Ideal delivers the goods to Ladle.
Ideal delivers the goods to Ladle.
Jansen contracts with Boats R Us to purchase a party barge, but has not yet picked it up from Boats R Us; he has, however, paid the entire purchase price to Boats R Us. Before he can pick it up, the party barge is destroyed in a hurricane. Both parties maintained an insurance policy on the party barge. Which party or parties can recover from the insurance company? Jansen only, because he sustained an actual loss. Neither party can recover from the insurance company. Boats R Us only, because it sustained an actual loss. Jansen or Boats R Us, because both possessed an insurance policy on the party barge.
Jansen only, because he sustained an actual loss.
Jansen contracts with Boats R Us to purchase a party barge, but has not yet picked it up from Boats R Us. Which party or parties might have an insurable interest in the party barge? Jansen, because the goods have been identified, and Boats R Us if Boats R Us has a security interest in the party barge. Jansen, because the goods have not been identified, and Boats R Us if Boats R Us has a security interest in the party barge. Boats R Us only, because the goods have not yet been identified. Jansen only, because the goods have not yet been identified.
Jansen, because the goods have been identified, and Boats R Us if Boats R Us has a security interest in the party barge.
Mica buys 1,000 bales of hay from Nuevo Farms. The parties agree that the hay will be transported F.A.S. via Overland Transport, Inc. Nuevo Farms' truck carrying the hay explodes before reaching Overland Transport. The loss is suffered by: Mica only. Nuevo Farms only. Mica, Nuevo Farms, and Overland Transport. Mica and Nuevo Farms, but not Overland Transport.
Nuevo Farms only.
Silky Material Corporation in New Jersey sells 50 tons of fabric to Tattered Clothing, Inc., in Ohio, "F.O.B. New Jersey." The cost of transporting the fabric to Ohio will be paid by: New Jersey. Ohio. Tattered Clothing. Silky Material.
Tattered Clothing.
Orange Music, Inc., sells Pad-brand MP3 players to Quik Pik Stores and other retailers. Orange has an insurable interest in the players as long as: the goods are in existence. there is no risk of loss. Orange retains title to the goods. Orange remains in business.
Orange retains title to the goods.
Phillipa contracts with Cocoa Makers, Inc., for purchase of 50 cases of special cocoa powder. The cocoa powder must be acquired from Cocoa Makers' headquarters in New York. Phillipa's coffee shop, where she will use the cocoa powder, is located in New Jersey. The contract specifies that Phillipa or her agent will need to pick up the cocoa powder. Phillipa goes to the New York headquarters where the warehouse manager gives her a warehouse receipt for the cases of cocoa powder. Phillipa leaves the cases in the warehouse while she arranges for a truck to transport them to New Jersey. Before the carrier picks up the cocoa powder, there is a huge rain storm and the warehouse floods. The cocoa powder is ruined. If Phillipa sues Cocoa Makers, the court will probably hold that the loss is borne by: -Cocoa Makers because all losses due to weather are borne by the seller. -both parties equally. -Phillipa because the title and risk of loss passed to her when she received the warehouse receipt. -Cocoa Makers because the title and risk of loss had not yet passed to Phillipa because she had not removed the cases.
Phillipa because the title and risk of loss passed to her when she received the warehouse receipt.
Pearl buys a used sport utility vehicle (SUV) from Qual-Tee Motors. The SUV was manufactured by Road Rager, Inc., and previously owned by Simon. After the sale, Pearl acquires the title from: Simon. the state. Road Rager. Qual-Tee.
qual-tee
Real Foods Corporation orders from Savory Company goods that are stored in an Uptown, Inc., warehouse. Real Foods pays for the goods, delivery is via the transfer of a negotiable warehouse receipt, and Real Foods moves the goods out of the warehouse. The risk of loss passes to Real Foods when it: receives the negotiable warehouse receipt. moves the goods out of the warehouse. pays for the goods. orders the goods.
receives the negotiable warehouse receipt.
Isis Foods in St. Louis wanted to buy a shipment from Pocasset Food Sales. The sale was initiated by a purchase order from Isis to Pocasset stating that the shipment was to be "F.O.B. St. Louis." All of Pocasset's invoices stated "Our liability ceases upon delivery of merchandise to carrier." Pocasset delivered the goods to a common carrier, but the shipment was destroyed in transit before reaching St. Louis. The court had to determine whether Isis or Pocasset was liable for the loss. The court most likely held that the risk of loss: -had shifted to Isis, because Isis did not object to the liability clause. -had shifted to Isis, because under an F.O.B. destination contract, the risk shifts to the buyer as soon as the goods are identified. -remained with Pocasset, because under an F.O.B. destination contract, the risk shifts to the buyer as soon as the goods are delivered to the carrier. -remained with Pocasset, because Isis did not consent to the liability clause.
remained with Pocasset, because Isis did not consent to the liability clause.
An insurable interest occurs for the: seller if she or he retains title to the goods. seller and buyer as soon as the contract goods are delivered. seller and buyer as soon as the goods are shipped. seller as soon as the contract goods are delivered.
seller if she or he retains title to the goods.
Rite Hardware Store orders 100 cases of galvanized nails from Safe-T Fastener Company's 1,000-case lot. Safe-T separates 100 cases from the lot. Title and risk of loss: shift to Rite after it accepts the nails and inspects them for defects. shift to Rite when Safe-T separates the cases. remain with Safe-T until Rite accepts 100 cases. remain with Safe-T until Rite acknowledges tender of delivery. Feedback: Correct.
shift to Rite when Safe-T separates the cases.
A bill of lading is a receipt that a carrier signs and that serves as a contract for the transportation of goods. True False
t
A bill of lading serves as a contract for the transportation of goods. True False
t
A buyer from a thief does not acquire title to the goods even if the buyer acts in good faith. True False
t
A buyer has an insurable interest in identified goods. True False
t
A seller may have an insurable interest in goods even after title passes to the buyer. True False
t
A seller with voidable title can transfer good title to a good faith purchaser for value. True False
t
A warehousing company that normally issues documents of title for goods it receives is a bailee. True False
t
Both a buyer and a seller may have an insurable interest in goods at the same time. True False
t
C.I.F. stands for "cost, insurance, freight." True False
t
Fungible goods are goods that are alike by physical nature, agreement, or trade usage. True False
t
Identification takes place when specific goods are designated as the subject matter of a sales or lease contract. True False
t
If a contract involves a sale of an unborn animal to be born within 12 months, identification takes place when the animal is conceived. True False
t
If a lessor is a merchant, the risk of loss passes to a lessee when the lessee takes physical possession of the goods. True False
t
If a seller is a merchant, and the goods are not to be moved, the risk of loss passes to a buyer when the buyer takes physical possession of the goods. True False
t
The UCC has replaced the common law concept of title in part with the concept of identification. True False
t
Under a shipment contract, the risk of loss passes to the buyer when the seller places conforming goods in the possession of the carrier. True False
t
Unless otherwise explicitly agreed, title passes to the buyer at the time and place at which the seller physically delivers the goods. True False
t
When a buyer breaches a contract, the risk of loss immediately shifts to the buyer. True False
t
When no document of title is required and delivery is made without moving the goods, title to identified goods passes when a contract for their sale is made. True False
t
When the risk of loss for goods passes from a seller to a buyer is generally determined by the contract between the parties. True False
t
The UCC Rule that says when the seller turns over the goods to a merchant or leaves the purchased goods with a merchant, if that merchant deals in those goods, the merchant has the power to transfer all the rights to a buyer in the ordinary course of business is known as: the ordinary course of business rule. the merchant rule. the entrustment rule. the good faith purchaser rule.
the entrustment rule.
The general rule is that when a buyer or lessee breaches a contract: the risk of loss passes to the buyer or lessee after 10 days. the risk of loss passes to the buyer or lessee only if there is insurance on the goods. the risk of loss passes to the buyer or lessee immediately. the risk of loss remains with the seller or lessor.
the risk of loss passes to the buyer or lessee immediately.
Dirk steals Effie's necklace and sells it to Fiona. Effie can recover the necklace from Fiona: only if Fiona knew that the necklace was stolen. under any circumstances. only if Fiona gave legally sufficient consideration for the necklace. only if Fiona did not know that the necklace was stolen.
under any circumstances.
A lessor retains an insurable interest in leased goods: from the moment the contract is formed, regardless of whether the goods have been identified. only after the lessor has tendered delivery of the goods. only after the lessee takes possession of the goods. until the lessee exercises an option to buy and the risk of loss has passed to the lessee.
until the lessee exercises an option to buy and the risk of loss has passed to the lessee.
Deep Storage Company holds goods for EZ Sales Corporation, which contracts to sell them to Fabric 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 Fabric Stores: if the goods are lost due to an "act of God." when Fabric Stores receives the bill of lading. if EZ gives the bill of lading to Deep. if Deep refuses to honor the bill of lading.
when Fabric Stores receives the bill of lading.
In a shipment contract title passes to the buyer: when the goods are tendered at the place of delivery. a reasonable time after the buyer inspects the goods. when the goods leave the warehouse of the common carrier. when the goods are delivered to a common carrier.
when the goods are delivered to a common carrier.
In a destination contract title passes to the buyer: when the goods are tendered at the place of delivery. a reasonable time after the buyer inspects the goods. when the goods leave the warehouse of the common carrier. when the goods are delivered to a common carrier.
when the goods are tendered at the place of delivery.
In a destination contract, the risk of loss passes to the buyer or lessor: when the goods are tendered to the buyer or lessor at the specific destination. three days after the goods have been inspected by the buyer or lessor. when the goods leave the carriers' warehouse and are in transit. when the goods are delivered to the carrier.
when the goods are tendered to the buyer or lessor at the specific destination.
Under a destination contract, title passes to the buyer: when the seller knows the destination of the shipment. at the moment the seller ships fungible goods. when the seller delivers the goods to a particular destination, such as the buyer's city or place of business. when the goods are delivered to a carrier, which will then transport the goods to the buyer's city.
when the seller delivers the goods to a particular destination, such as the buyer's city or place of business.
Theodore goes to a large cattle ranch to purchase 100 yearling steers to fatten in his feedlot. Theodore and the rancher sign a shipment contract that requires the rancher to load the cattle into a cattle shipping company's trucks from the pens by his house the following Tuesday. On Tuesday the cattle trucks arrive and the rancher oversees the loading of the cattle. After all the cattle are loaded and the trucks have left the pens by the house, one of the trucks is struck by oncoming traffic while pulling out of the ranch road. Ten of the cattle are killed. A court will probably hold that the loss of the cattle will be borne by: -the rancher because the title and risk of loss for the cattle will not pass to Theodore until the cattle are unloaded at his warehouse. -the loss will be shared equally between Theodore and the rancher. -Theodore because under the terms of the shipment contract the title and risk of loss of the cattle passed to him when they were loaded on the truck. -the rancher because the truck was struck while exiting his property.
Theodore because under the terms of the shipment contract the title and risk of loss of the cattle passed to him when they were loaded on the truck.
Barb pays $1,000 for a new computer to Computer Products Corporation, which pays Discount Warehouse, Inc., $50 to store the computer until Barb retrieves it. Discount Warehouse is: a lessee. a seller. a consignee. a bailee.
a bailee.
With a bill of lading, Cartage Common Carrier Company acknowledges possession of certain goods and contracts to deliver them. Cartage is: a good faith purchaser for value. an F.O.B. a buyer in the ordinary course of business. a bailee.
a bailee.
Aromatic Tea Company contracts to sell tea to Savory Stores, Inc. The contract includes the term "F.O.B. Upriver City," which is Savory's location. This means that the contract is: a shipment contract. a transportation contract. a destination contract. a bailment contract.
a destination contract.
A paper exchanged in the regular course of business to evidence the right to possession of goods is known as: a document of title. passport document. a warehousing document. a document of lading.
a document of title.
Kip, a representative for Lite-Weight Shipping Company, delivers a bill of lading to Meg, the owner of Capacity Storage Warehouse. A bill of lading is: a receipt for goods signed by a carrier. a receipt issued by a warehouser for goods in a warehouse. an order to ship goods by carrier to a certain destination. an invoice for payment for loading and carting.
a receipt for goods signed by a carrier.
Floors & More Store contracts to buy 100 carpets from Ground Cover, Inc. Unless the contract states otherwise, it is assumed that this is: a shipment contract. a warehouse receipt. a destination contract. a bill of lading.
a shipment contract.
Raw Material, Inc., and Sewn 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. a transportation contract. a destination contract. a bailment contract.
a shipment contract.
A specific grade of corn that fills BioFuel Cooperative's silo is fungible. This means that the corn is: fundamentally edible. perishable. fundamentally different. alike naturally or by agreement or trade usage.
alike naturally or by agreement or trade usage.
Alaskan salmon that fill the hold of Bill and Carla's fishing boat are fungible if the salmon are: fun, good, and edible. liable to deteriorate over time. fundamentally different. alike naturally or by agreement or trade usage.
alike naturally or by agreement or trade usage.
Under the UCC, fungible goods are: priced the same throughout the world. incapable of being delivered physically. alike naturally or considered alike by agreement or by trade usage. fundamentally different from one another.
alike naturally or considered alike by agreement or by trade usage.
A seller has voidable title if the goods being sold were: paid for with a check that later was dishonored. all of these choices. purchased on credit when the seller was insolvent. obtained by the seller through fraud.
all of these choices.
If a seller has "cured" defective goods, they have: repaired them. all of these choices. discounted them. replaced them.
all of these choices.
A sale involving unborn animals that will be born within 12 months of contracting will have identification take place: at the conception of the animals. at the time the animals are delivered to the buyer. at the time of the signing of the contract. at birth of the animals.
at the conception of the animals.
When no document of title is required and delivery is made without moving the goods, title passes to the buyer: at the time and place the sales contract is made, but only if the goods have already been identified. none of these choices. when a carrier issues a bill of lading. 30 days after the buyer pays for the goods.
at the time and place the sales contract is made, but only if the goods have already been identified.
Without an explicit agreement to the contrary, title passes to the buyer: at the time the contract is signed by both parties. when all duties under the contract are discharged. at the time the goods are identified. at the time and the place the seller performs by delivering the goods.
at the time and the place the seller performs by delivering the goods.
Maddox Auto Parts, Inc., contracted with Billy's Mufflers Co. to purchase 35 mufflers from their warehouse supplies. All the mufflers Maddox Auto Parts ordered were already made and packaged and merely required transportation to Maddox Auto Parts. Billy's Mufflers wrote out an order form designating which 35 mufflers were to go to Maddox Auto Parts. If a question as to when Maddox Auto Parts acquired an insurable interest in the mufflers were to arise, a court would likely hold that Maddox Auto Parts gained an insurable interest in the mufflers: 24 hours before delivery. at the time the mufflers were given to the carrier. at the time of delivery. at the time of contracting.
at the time of contracting.
A buyer has an insurable interest in goods when: when the contract is signed by both parties. when all duties under the contract are discharged. at the time the goods are identified. the seller delivers the goods.
at the time the goods are identified.
Wylen decides that he wants to buy the future offspring of a prize lamb. The prize lamb will be inseminated in three days and the baby lamb will be born in nine months. Wylen can first identify the baby lamb that he is going to buy: at the time the lamb is born. once Wylen sees the lamb for the first time. at the time that the lamb is deemed to be medically viable. at the time the lamb is conceived.
at the time the lamb is conceived.
A party who by a bill of lading, warehouse receipt, or other document of title, acknowledges possession of goods and/or contracts to deliver them is known as a: guarantor. possessor. bailee. bailor.
bailee.
With regard to insurable interests: both buyers and sellers can have insurable interests in goods. neither buyers nor sellers can have insurable interests in goods. only buyers can have insurable interests in goods. only sellers can have insurable interests in goods.
both buyers and sellers can have insurable interests in goods.
If the goods are so non-conforming that the buyer has the right to reject them, the risk of loss does not pass to the buyer until: both of these choices. neither of these choices. the buyer accepts the good in spite of their defects. the defects are cured.
both of these choices
If a seller delivers nonconforming goods and then repairs, replaces or discounts the price of the goods, the defects are considered: repaired. ameliorated. fixed. cured.
cured
Blend Juice Company contracts to buy a fruit crop from Citrus Farms. Before an interest in the fruit can pass from Citrus to Blend, Citrus must: a. receive payment for the fruit only. b. arrange for shipment of the fruit only. c. arrange for shipment of the fruit and receive payment for it. d. none of these choices.
d
A contract for the sale of goods in which the seller is required or authorized to ship the goods by carrier and tender the delivery of the goods at a particular destination is called a: destination contract. titled contract. shipment contract. freight contract.
destination contract.
A bailee is a buyer or lessee. True False
f
A buyer and a seller may never have an insurable interest in goods at the same time. True False
f
A receipt issued by a warehouser for goods stored in a warehouse is a bill of lading. True False
f
A seller can never have an insurable interest in goods after title passes to the buyer. True False
f
A seller with void title can transfer good title to a good faith purchaser for value. True False
f
Fungible goods are goods that cannot be delivered by physical transport. True False
f
If a contract calls for a lease of specific and ascertained goods that are already in existence, identification takes place at the time payment is made. True False
f
If a seller is a merchant, and the goods are not to be moved, the risk of loss passes to a buyer on tender of delivery. True False
f
If a seller is not a merchant, and the goods are not to be moved, the risk of loss remains with the seller until the buyer sells or otherwise disposes of the goods. True False
f
If a seller is not a merchant, and the seller holds the goods, the risk of loss cannot pass to a buyer. True False
f
Under all circumstances, title passes to the buyer at the time and place at which the seller physically delivers the goods. True False
f
Under the UCC, title determines all of the rights and remedies of the parties to a sales contract. True False
f
Unless a contract provides otherwise, it is assumed to be a destination contract. True False
f
When a buyer agrees to buy goods held by a bailee, unless otherwise explicitly agreed, the risk of loss passes to the buyer when the price is paid. True False
f
When a buyer breaches a contract, the risk of loss immediately shifts to the seller. True False
f
When a lessee sells leased equipment to a third party, the lessor cannot, under any circumstances, recover the equipment from the buyer. True False
f
According to the UCC, the buyer has an insurable interest in contract goods: from the moment the contract is formed, regardless of whether the goods have been identified. only after the seller has tendered delivery of the goods. only after the buyer takes possession of the goods. from the moment the goods are identified to the contract.
from the moment the goods are identified to the contract.
Goods that are alike by physical nature, agreement or trade usage and usually stored in large containers are known as: jointly-held goods. commingled goods. fungible goods. common goods.
fungible goods.
Goods that are not in existence at the time of the contracting are called: unknown goods. future goods. fungible goods. innate goods.
future goods
Quality Farm Supply, Inc., sells farm machinery to Rip and other grain farmers. Of these products, fungible goods include: machinery only. neither grain nor machinery. grain and machinery. grain only.
grain only.
In a sale of goods, the express designation of the goods provided for in the contract is known as: identification. marking. titling. designation.
identification.
Office Equipment Leasing, Inc. (OEL), agrees to lease five computer workstations to Product Promotion Corporation (PPC). Before any interest in the workstations can pass from OEL to PPC, they must be: identified as the specific goods designated in the contract only. none of the choices. in existence only. in existence and identified as the goods in the contract.
in existence and identified as the goods in the contract.
The sufficiency of an interest in goods is determined by: the Constitution. federal laws. the UCC. insurance laws.
insurance laws.
Leo buys a boat from his neighbor Moe, who is a fishing guide. Moe agrees to keep the boat in his storage shed until Leo picks it up. A tree falls on Moe's shed and destroys the boat. The loss is suffered by: Moe only. neither Leo nor Moe. Leo only. Leo and Moe.
leo only
When the sales contract does not call for the seller to ship or deliver the goods, the passage of title depends on whether the seller: agrees to be entrusted with the goods. has agreed to a destination contract. is a good faith purchaser. must deliver a document of title.
must deliver a document of title.
James contracts with Big Seed Cotton Farms, Inc., to purchase all the cotton grown on 50 acres of Big Seed Cotton's land. The contract is signed in January, but the cotton will not be planted for several months. In February, James attempts to purchase insurance on the cotton. James will: -be able to purchase insurance if he pays an extra high premium because the cotton has not yet been planted. -never be able to purchase insurance for the cotton because crops cannot be insured. -be able to purchase insurance because title for the cotton passed to him at the time of contract. -not be able to purchase insurance on the cotton because it has not yet been planted so he does not yet have an insurable interest.
not be able to purchase insurance on the cotton because it has not yet been planted so he does not yet have an insurable interest.
Identification takes place when the goods are shipped or marked if they are: existing goods. future goods such as unborn animals. future goods such as crops. part of a larger mass.
part of a larger mass.