Exam 21: Title and Risk of Loss

The entrustment rule basically allows innocent buyers to obtain legitimate title to goods purchased from merchants even if the merchants do not have good title.

Fungible goods are goods that are alike naturally or by agreement or trade usage.

If a lessor is a merchant,the risk of loss passes to a lessee when the lessee takes physical possession of the goods.

Candy Corporation orders Delicioso-brand chocolate from Edibles Distribution Company. Edibles identifies the goods. Before they are shipped to Candy Corporation,an insurable interest in the goods exists in

Defects in goods are cured when the goods are repaired,replaced,or discounted in price by the seller.

Mountainside Coffee Company and Nature's Cuisine,Inc.,enter into a contract for a sale of coffee beans. The contract includes the term "F.O.B. Ocean City," which is the location of Nature's Cuisine. This means that the contract is

Both the buyer and the seller can have an insurable interest in identical goods at the same time.

Any explicit understanding between the buyer and the seller determines when title passes.

When a merchant keeps the goods for the buyer to pick up,the risk of loss passes when the buyer actually takes possession of the goods.

Spuds Corporation buys from Tater Farms,Inc.,a potato crop that Tater plans to plant and harvest during the next growing season. Spuds plans to sell the potatoes to Tasty Foods Restaurants. After the potatoes are planted,but before they are harvested,an insurable interest in the crop ex-ists in

In a destination contract,the seller is required or authorized to ship goods by carrier.

Revocation of nonconforming goods allows the buyer to pass the risk of loss back to the seller,but only to the extent that the buyer's insurance covers the loss.