chapter 18

A returnable-goods transaction is deemed a sale on approval if: a. the owner sends the goods to a dealer, who deals with the same kind of goods, to sell it to the consumers. b. the consumer purchases the goods for use. c. the merchant who has been entrusted with the good by the owner stores it in a warehouse. d. the merchant purchases the goods for resale.

?

Is this a shipment contract or a destination contract? a. Since nothing is stated on the bill of lading, it is a shipment contract. b. Since nothing is stated on the bill of lading, it is a destination contract. c. Since nothing is stated on the bill of lading it is neither. d. Since nothing is stated on the bill of lading it is both.

a

Saul Boyman contracted to buy a boat from Miguel Alexander. The contract required the boat to be delivered "FOB Stuart, Florida". The boat was manufactured in North Carolina and shipped by Scott Almonte Shipping to Stuart, Florida. Who was responsible for the freight charge? a. Miguel Alexander b. The marina in Stuart, Florida c. Saul Boyman d. Scott Almonte

a

Suppose that Oscar had the lettuce in question grown specifically by a farmer for him. At what point could Oscar obtain an insurable interest in the lettuce? a. At the time of the planting of the lettuce if it is identified as the lettuce in the contract with Oscar. b. At the time of the delivery of the lettuce to the carrier. c. At the time the carrier delivers the lettuce to Oscar. d. After Oscar has had time to inspect the lettuce and seasonably give notice of nonconformance. Feedback

a

Tenet Healthcare Network is a chain of hospitals that has over 50 facilities set up in different states of Paruba. Tenet buys all its medical equipment from Alfred Corporation, which manufactures, wholesales, and markets medical devices and equipment. Tenet checks the products before purchase and requires the manufacturer to ship the products to their warehouse located in Bolivia. Which of the following will hold true, in case of damage to the equipment during shipment? a. Alfred Corporation need not provide new equipment to Tenet as their performance is complete once the goods are delivered to the carrier. b. Alfred Corporation will have to bear the loss. c. Tenet will have to bear the loss expenses as these are existing goods that were identified at the time of contracting. d. Tenet will have to bear the risk of loss as they did not require Alfred Corporation to ship the products as part of the contract.

b

The right of ownership or evidence of ownership of property is called: a. conveyance. b. title. c. possession. d. good.

b

What is the term used when a person has enough interest in an item to want to minimize the risk of loss? a. Security b. Insurable interest c. Acceptance d. Bailment

b

When Paul Adams moved out of the country for a job assignment on a temporary basis, he left his furniture and other belongings with his friend, Larry Barnes, so that Paul can use them when he returns after finishing his assignment. Larry, a dealer who sells second hand furniture, sold Paul's furniture to Natalie, without informing Paul about the sale. However, Natalie is unaware that Paul is the actual owner of the goods she has bought from Larry. Which of the following will be permitted by law in the above scenario? a. Paul can sue Natalie for possessing his goods without his approval. b. Paul can claim the money from Larry that Larry has received from Natalie on selling the furniture. c. Paul can sue Larry for selling his furniture to Natalie without his consent. d. Paul can demand Natalie to return his furniture, as he still holds the title for the goods.

b

A warehouse receipt is a document of title that is: a. issued by a buyer to show a completed sale with right to return goods. b. issued by a carrier when the goods are delivered to the appropriate buyer. c. issued by a storage company for goods stored. d. issued by a seller when the goods are delivered to a carrier for shipment to the buyer.

c

Frederick Prewitt received a shipment of 28 coins with a price of $61, 975 from Numismatic Funding Corp. The literature enclosed with the shipment said it was available "on a 14 day approval basis". The invoice said title did not pass until the buyer paid the account. Prewitt mailed all the coins to Numismatic within 14 days, but Numismatic claimed it never received them. Which of the following should happen? a. The transaction was for existing goods, so the risk of loss fell on Numismatic. b. Prewitt chose the method of shipment, so he bears the risk of loss. c. As the transaction was a sale on approval and Prewitt never accepted the goods, the risk of loss fell on Numismatic. d. Prewitt was the last to have possession of the goods, so he bears the risk of loss.

c

Home Liquors ordered whiskey valued at over $20,000 from Balck Distillery. When the order was ready, Balck informed Royal Trucking that the goods were available to be picked up. Home confirmed the order in a writing that asked that the order be released to Royal. There was no direction regarding where the order was to be delivered. While Royal was on the way to a destination directed by Home, the shipment was hijacked. Balck sued Home for the contract price. In the above scenario, the title and risk of loss to the goods passes when: a. Home sends the written confirmation order. b. the whiskey is delivered to the destination directed by Home. c. Balck delivers the whiskey to Royal. d. Balck informs Royal that the goods are ready to be picked up.

c

Sharon Russell agreed to sell Robert Clouser a boat for $8,500. Clouser made a down payment of $1,700, with the balance to be paid on possession after Russell replaced the engine and drive train. Clouser was to take deliver at Russell's marina. While being tested by Russell's employees, the boat hit a seawall and was destroyed. Russell's insurance only covered damage if the boat was not owned by Russell. In this jurisdiction, there was no document of title. Should the insurance company have to pay?? a. Because the boat was still being used by Russell's employee, the boat belonged to Russell and the insurance company did not have to pay. b. Because Russell still had complete control of the boat, she was still the owner and the insurance company did not have to pay. c. Because the boat was an existing good and delivery was to be made without being moved, the insurance company was liable. d. Because Clouser had made a down payment, title passed and the insurance company had to pay.

c

W.A. Andres rented his motor home to a man claiming to be Phillip Robertson, but who was really Lewis Murphy. Murphy obtained an Alabama registration for the motor home under the name L.E. Boggs. Nebraska provided Boggs a certificate of title, which was transferred to Murphy. Murphy traded the home to McDonald Chevrolet, Inc., after applying for an Indiana certificate of title. Otis Johnson purchased the motor home from McDonald. By this time, the rental agreement had expired. Finally, the motor home was seized by the Indiana State Police. To whom should the police return it? a. Lewis Murphy b. McDonald Chevrolet c. W.A. Andres d. Otis Johnson

c

What law governs international sales? a. Foreign Corrupt Practices Act b. Taft-Hartley Act c. Convention on Contracts for the International Sale of Goods (CISG) d. Fair Credit Reporting Act

c

Which of the following is most likely to be regarded as a consignment sale? a. A consumer purchasing the goods from a manufacturer for personal use b. A manufacturer delivering the goods to a carrier for shipping them to the buyer c. A manufacturer sending the goods to a dealer to act as an agent in selling the goods to the public d. A merchant purchasing the goods for resale from a manufacturer

c

Baldwin Enterprises, a popular home builder, purchased wood for their construction from JB Group. Since it was a cash on delivery sale, JB Group decided not to deliver the wood till the payment was made and stored it in their warehouse. Due to severe rains in the city, the wood stored in the warehouse was damaged. Which of the following will be permitted by law in the above scenario? a. JB Group can only claim a discounted price from Baldwin as the goods were damaged in its warehouse. b. JB Group can claim the money from Baldwin, even though the goods were damaged and not delivered to the buyer. c. Baldwin can recover the losses from JB group for not taking reasonable care of the products. d. Baldwin can treat the contract as avoided as goods were damaged in the seller's warehouse.

d

In a sales contract that calls for goods to be sold free on board a designated point, the seller: a. bears the risk and expense till the goods are delivered to a carrier for shipment to the buyer b. bears the risk and expense till the goods are approved by the buyer after trial c. bears the risk and expense immediately after the goods are purchased from the seller d. bears the risk and expense until the goods are delivered at the point designated in the contract

d

Jenkins Inc. is a dealer in home furnishings. Jenkins Inc. bought fifty kitchen cabinets on credit from KraftsWorld, who manufactures kitchen cabinets and other storage solutions. Jenkins sold these kitchen cabinets to Rayland Group, a home builder in Nairu, before paying off KraftsWorld. Lauren Dale, who is responsible for procuring materials for Rayland was unaware that Jenkins had not paid KraftsWorld. Who among the following will hold title to these cabinets in the above scenario? a. Lauren Dale b. Jenkins Inc. c. KraftsWorld Inc. d. Rayland Group

d

Reilly Automotive Corporation is a car manufacturing company that buys door handles and locks with a central locking system from Wage Automotives. Depending on the demand for its cars, Reilly sends an order to Wage to manufacture the components and send them to Kaersk, a transport company, to ship the products. In the above scenario, the title and risk of loss to the goods will pass on to Reilly when: a. Reilly approves the components received from Wage. b. Wage completes the manufacture of components to suit the specifications provided by Reilly. c. Wage delivers the products to the required destination specified by Reilly in the sales contract. d. Wage sends the products to Kaersk to be shipped to Reilly.

d

South Valley Bank purchased a software program from Carrecom Technologies that would assist them in data management and lowering of overall cost and complexity of their processes. As per their sales policies, Carrecom allowed the bank to try the software for a set period of time before deciding on making the purchase. The sales contract also stated that the sale will be considered complete only after the bank approves the product. This is an example of: a. a sale or return. b. a consignment sale. c. a bailment. d. a sale on approval.

d

When does the risk of loss from damage to the lettuce occur? a. Since it is a destination contract risk of loss is with the seller until delivery to the buyer. b. Since it is a destination contract risk of loss transfers to the buyer upon delivery to the carrier. c. Since it is a shipment contract risk of loss is with the seller until delivery to the buyer. d. Since it is a shipment contract risk of loss transfers to the buyer upon delivery to the carrier.

d

Which of the following is true of a shipment contract? a. Under a shipment contract, the seller is required to deliver goods to a particular destination. b. Under a shipment contract, the title and risk of loss pass to the buyer when the goods are delivered to the carrier. c. Under a shipment contract, the title and risk of loss remain with the seller until the goods are delivered to the buyer. d. Under a shipment contract, the destination to which the goods have to be delivered has to be clearly mentioned in the contract by the buyer.

d