Exam 19: Title to Goods and Risk of Loss

Article 2 of the Uniform Commercial Code establishes precise rules for determining the passage of title in sales contracts.

Define "bailee" and explain who bears the risk of loss when a bailee is in possession of the goods.

In a destination contract, title passes to the buyer when the seller tenders delivery of the goods at the specified destination.

A shipment contract requires the seller to ship the goods to the buyer via a common carrier.

In a destination contract, when is the title to the goods considered to have passed to the buyer?

If no document of title is required, title only passes at the time and place of delivery.

A seller has voidable title interest to goods if he or she obtained the goods through fraud.

An undeveloped real estate property is an example of future goods.

Kenneth purchased a car from his local dealership, Quartent Cars. However, since the car was not available in the color that Kenneth favored, the sales contract stipulated that Kenneth could immediately pick up the car of his preferred color from a nearby warehouse. The warehouse was owned by Mr. Henderson. Kenneth received the document of title for the car upon payment and presented it to Mr. Henderson a week later. But Mr. Henderson informed Kenneth that the car was damaged during a fire at the warehouse. If Mr. Henderson had refused the document of title provided by Kenneth, who would have borne the risk of loss to the car?

Steve brings his watch to Knell Watches to be repaired. Knell Watches sells and repairs watches. Steve entrusts his watch at Knell's until it is repaired. The watch store repairs the watch, but then sells it to Kevin, who buys the watch with a fraudulent check that bounced. Kevin then resells the watch to his friend Jonathan, who is unaware of the stolen nature of the watch. What kind of title did Kevin hold over the watch when he fraudulently bought the watch?

A person with voidable title to goods can transfer the goods title to a good faith purchaser for value.

If the bailee refuses to honor a document of title or other direction to deliver, the risk of loss remains on the buyer.

Acceptance of nonconforming goods is a breach of contract by the buyer.

Which of the following is a good faith purchaser?

A(n) ________ involves the seller entrusting possession of goods to a buyer on a trial basis.

A(n) ________ is an actual piece of paper, such as a warehouse receipt or bill of lading, which is required in some transactions of pickup and delivery of sold goods.

Kenneth purchased a car from his local dealership, Quartent Cars. However, since the car was not available in the color that Kenneth favored, the sales contract stipulated that Kenneth could immediately pick up the car of his preferred color from a nearby warehouse. The warehouse was owned by Mr. Henderson. Kenneth received the document of title for the car upon payment and presented it to Mr. Henderson a week later. But Mr. Henderson informed Kenneth that the car was damaged during a fire at the warehouse. According to the UCC, which of the following parties holds the risk of loss for the damage caused to the car?

The ________ bears the risk of loss during transportation in a destination contract.

In a sale on approval, the risk of loss and title to the goods remain with seller until the buyer's acceptance.

Goods that are part of a larger mass of goods are identified when the specific merchandise is designated.