Question 1

Murphy stops at a garage sale and purchases an oak rocking chair.Murphy and the seller agree that Murphy will pick up the rocking chair the next day when Murphy will return with a truck.That night,there is an earthquake and the rocking chair is swallowed up by earth and totally destroyed.In this case,the seller had the risk of loss and must refund the purchase price to Murphy.

Accepted Answer

A) True 
 B)False

Question 2

Tuan,Inc.contracted to buy 200 monogrammed blankets from Titex,Inc.Tuan paid for the blankets in advance.Before segregating and monogramming the blankets,Tuan filed for bankruptcy.Tuan will not be able to recover the blankets because:

Accepted Answer

A)  Tuan is a merchant. 
B)  the blankets were not identified to the contract. 
C)  Tuan became bankrupt after the contract was formed. 
D)  the goods were specially manufactured.

Question 3

Rayco Ski Shop purchased 500 pairs of skis from Skitron.Rayco is located in Colorado.Skitron's business is in Tennessee.The purchase order included the following term: "F.O.B.Colorado." The contract makes no mention of risk of loss or title.The contract can be described as a:

Accepted Answer

A)  shipment contract. 
B)  destination contract. 
C)  bulk transfer. 
D)  sale on approval.

Question 4

Assume that Bubba orders 15 cases of BBQ chips from Mays Potato Chips for his restaurant,Bubba's BBQ.Mays ships 15 cases of regular chips by mistake.If Bubba decides to keep the regular chips,in spite of the nonconformity with the contract,then the destruction of the chips when a water pipe breaks in the food storage room will result in:

Accepted Answer

A)  Mays' having to bear the loss, because it shipped nonconforming goods to Bubba. 
B)  Mays' having to bear the loss, because it failed to insure the chips. 
C)  Bubba's having to bear the loss, because he accepted delivery of the nonconforming chips. 
D)  Bubba's having to bear the loss, because it was a sale on approval contract.

Question 5

Ruppart Manufacturing has a contract for the sale of 100 cases of teaching supplies to Teachers Co-op,Inc.Payment of the order is to be made in installments over the next year.Ruppart Manufacturing keeps a security interest in the cases sold to assure payment by Teachers Co-op,Inc.When the order is completed,Ruppart ships the order.Legally:

Accepted Answer

A)  both Ruppart and Teachers have an insurable interest in the supplies. 
B)  only Ruppart has an insurable interest in the supplies. 
C)  only Teachers has an insurable interest in the supplies. 
D)  neither Ruppart nor Teachers has an insurable interest in the supplies.

Question 6

George's Greenery orders two dozen live dogwood trees from Nancy's Nursery.George's is to keep the dogwoods healthy by keeping them in a greenouse following certain instructions to keep the air at the right temperature,etc.The sale is made on a trial basis and George's may return all unsold dogwood trees at the end of 30 days.This contract is a:

Accepted Answer

A)  contract to sell future goods. 
B)  conditional sale. 
C)  sale or return. 
D)  sale on approval.

Question 7

In the case of Lindholm v.Brant,the court ruled:

Accepted Answer

A)  Brant was a BIOC, entitled to keep the painting in question. 
B)  Brant could not be a BIOC since the seller had a reputation for dishonesty. 
C)  Brant could not be a BIOC because he did not act in good faith. 
D)  no entrustment was involved because Malmberg was not a "merchant who deals in goods of that kind."

Question 8

A gun manufacturer in Helena,Montana agrees to sell guns and ammunition to the ATF in Washington,D.C.The terms of the contract specify that the goods are to be shipped "FOB,Chicago." When does the buyer acquire title and risk of loss?

Accepted Answer

A)  When the goods reach Chicago. 
B)  When the goods are delivered to the carrier in Montana. 
C)  When the goods are tendered in Washington D.C. by the carrier. 
D)  When the goods reach Washington D.C.

Question 9

Explain the concept and significance of identification of goods.Discuss how identification takes place.

Accepted Answer

The answer of Explain the concept and significance of identification...

Question 10

Marco sells goods to Byron for his personal use on the basis that the goods may be returned if Byron is not satisfied with them.The sale is:

Accepted Answer

A)  a "sale or return." 
B)  a "sale on approval." 
C)  a consignment. 
D)  outside the UCC.

Question 11

Crops are considered identified when they are planted.

Accepted Answer

A) True 
 B)False

Question 12

Regardless of the language of the contract,title to goods passes to the buyer at the time and place at which the seller physically delivers the goods.

Accepted Answer

A) True 
 B)False

Question 13

The term F.O.B.:

Accepted Answer

A)  can indicate a destination or shipment contract. 
B)  stands for "freight on board." 
C)  requires the seller to insure the goods for the buyer's benefit. 
D)  shifts the risk of loss to the buyer when the goods are identified.

Question 14

Roger purchased a tennis racquet from Rafael.Roger can prove he is a BFP by showing only that he gave value and acted in good faith.

Accepted Answer

A) True 
 B)False

Question 15

Dick steals Jane's camcorder and sells it to Sid.Jane can recover the camcorder from Sid:

Accepted Answer

A)  under any circumstances. 
B)  only if Sid knew that the camcorder was stolen from Jane. 
C)  only if Sid did not know that the camcorder was stolen from Jane. 
D)  only if Sid paid less than the fair market value for the camcorder.

Question 16

Sanco contracted to sell 1,000 cases of oil to AMF.The oil is located in a public warehouse,which has issued a warehouse receipt for it.Which of the following is correct?

Accepted Answer

A)  The risk of loss passes to the buyer when the contract is made. 
B)  The risk of loss passes to the buyer when the goods are tendered to him. 
C)  The risk of loss passes to the buyer when the warehouse receipt is delivered to the buyer. 
D)  The risk of loss passes to the buyer when the buyer gets the oil to its final destination.

Question 17

Arco sells to Melvin 1,000 computers that are stored in Arco's warehouse.Arco gives Melvin the ownership documents and Melvin will pick up the computers at the warehouse.Title has passed to Melvin.

Accepted Answer

A) True 
 B)False

Question 18

Hill Computers is a retailer,which buys its inventory from Acme Co.on credit,giving Acme a security interest in the inventory.Hubert buys a computer from Hill in the normal course of business.Hubert's title in the computer is:

Accepted Answer

A)  a good title. 
B)  a voidable title. 
C)  Hubert has no title in the computer. Title does not pass to Hill and therefore to Hubert until Hill pays its debt in full to Acme. 
D)  Hubert has good title that is subject to Acme's security interest.

Question 19

Oceanside entered into a contract with the seller Old Tennessee,for the purchase of $6,431 worth of plants.The terms were sale and delivery C.O.D.with the express provision of "No Risk to Supplier," and a large logo at the top of papers stating:
"NOTICE: ALL SHIPMENTS TRAVEL AT RISK AND COST OF PURCHASER."
The plants were shipped by an experienced truck common carrier.Upon arrival in New York,it appeared as though some plants were in a poor state because of excessive heat.Although the carrier on its own marked the bill of lading to indicate that the temperature in the truck should be 50 degrees,this was not done for at least a portion of the journey.Oceanside rejected the shipment by writing "rejected" on the back of the trucker's bill of lading.However,the plants were retained "on consignment" at Oceanside's premises.There were no other formal written rejections or official notices of breach or defects given by the buyer to seller at any point prior to trial.Discuss who has the risk of loss.

Accepted Answer

The answer of Oceanside entered into a contract with the...

Question 20

A buyer has an insurable interest in goods when they are identified.

Accepted Answer

A) True 
 B)False

Exam 21: Ownership And Risk

Tuan,Inc.contracted to buy 200 monogrammed blankets from Titex,Inc.Tuan paid for the blankets in advance.Before segregating and monogramming the blankets,Tuan filed for bankruptcy.Tuan will not be able to recover the blankets because:

Rayco Ski Shop purchased 500 pairs of skis from Skitron.Rayco is located in Colorado.Skitron's business is in Tennessee.The purchase order included the following term: "F.O.B.Colorado." The contract makes no mention of risk of loss or title.The contract can be described as a:

In the case of Lindholm v.Brant,the court ruled:

A gun manufacturer in Helena,Montana agrees to sell guns and ammunition to the ATF in Washington,D.C.The terms of the contract specify that the goods are to be shipped "FOB,Chicago." When does the buyer acquire title and risk of loss?

Explain the concept and significance of identification of goods.Discuss how identification takes place.

Marco sells goods to Byron for his personal use on the basis that the goods may be returned if Byron is not satisfied with them.The sale is:

Crops are considered identified when they are planted.

Regardless of the language of the contract,title to goods passes to the buyer at the time and place at which the seller physically delivers the goods.

The term F.O.B.:

Roger purchased a tennis racquet from Rafael.Roger can prove he is a BFP by showing only that he gave value and acted in good faith.

Dick steals Jane's camcorder and sells it to Sid.Jane can recover the camcorder from Sid:

Sanco contracted to sell 1,000 cases of oil to AMF.The oil is located in a public warehouse,which has issued a warehouse receipt for it.Which of the following is correct?

Arco sells to Melvin 1,000 computers that are stored in Arco's warehouse.Arco gives Melvin the ownership documents and Melvin will pick up the computers at the warehouse.Title has passed to Melvin.

Hill Computers is a retailer,which buys its inventory from Acme Co.on credit,giving Acme a security interest in the inventory.Hubert buys a computer from Hill in the normal course of business.Hubert's title in the computer is:

A buyer has an insurable interest in goods when they are identified.