Question 1

Home Products Store buys furniture from Ideal Furniture, Inc. The parties agree that the furniture will be shipped "F.O.B. Ideal's ware?house" to Home Products via Jiffy Shipping Corporation. The furniture is lost in transit. The loss is suffered by

Accepted Answer

A)   Home Products and Ideal Furniture, but not Jiffy Shipping.
B)   Home Products, Ideal Furniture, and Jiffy Shipping.
C)   Home Products only.
D)   Ideal Furniture only. C

Question 2

If a seller is not a merchant, the seller holds the goods, and the buyer is to pick them up, the risk of loss passes to the buyer on tender of delivery.

Accepted Answer

A) True 
 B)False  True

Question 3

Crest Jewelers buys diamonds from Excel Gems to resell with the right to return the unsold stones in lieu of payment. This is

Accepted Answer

A)   a bailment.
B)   a consignment.
C)   a sale on approval.
D)   a sale or return. D

Question 4

Diamond Camera Shop receives lenses from Excel Optical, Inc., under a sale or return agreement. While the lenses are in Diamond's possession, title is held by

Accepted Answer

A)   Diamond and Excel jointly.
B)   Diamond only.
C)   Diamond's creditors only.
D)   Excel only.

Question 5

Before a seller can have an insurable interest in goods, the goods must be identified to a contract.

Accepted Answer

A) True 
 B)False

Question 6

Dan steals Eve's necklace and sells it to Fiona. Eve can recover the neck?lace from Fiona

Accepted Answer

A)   only if Fiona did not know that the necklace was stolen.
B)   only if Fiona gave legally sufficient consideration for the necklace.
C)   only if Fiona knew that the necklace was stolen.
D)   under any circumstances.

Question 7

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

Accepted Answer

A)   a bailment contract.
B)   a destination contract.
C)   a shipment contract.
D)   a transportation contract.

Question 8

Kip, a representative for Little Shipping Company, delivers a bill of lading to Meg, the owner of Normal Warehouse. A bill of lading is

Accepted Answer

A)   an invoice for payment for loading and carting.
B)   an order to ship goods by carrier to a certain destination.
C)   a receipt for goods signed by a carrier.
D)   a receipt issued by a warehouser for goods in a warehouse.

Question 9

EZ Equipment Corporation leases six forklifts to Faulty Refining Company, but as the forklifts are delivered, they are lost in an explosion. Under the UCC, the parties' rights and obligations with respect to the loss depend on the concept of

Accepted Answer

A)   physical possession.
B)   product liability.
C)   risk of loss.
D)   title.

Question 10

Delta Products Corporation contracts with Excel Trucking Company to take goods to Flight Airlines, Inc., with Flight to transport the goods to a Geo Storage Company warehouse. Excel, Flight, and Geo each acknowl?edge possession of the goods by a document of title. Excel, Flight, and Geo are

Accepted Answer

A)   bailees.
B)   consignees.
C)   lessees.
D)   sellers.

Question 11

Relax Recreation Toys, Inc., allows Sandy to take a Relax boat for a "test run." Sandy tries the boat for a few hours, returns, and buys it. This is

Accepted Answer

A)   a bailment.
B)   a consignment.
C)   a sale on approval.
D)   a sale or return.

Question 12

Quik Sales Corporation orders goods from Re Stock Company. Re plans to market the goods to consumers generally. Re identifies the goods. Before they are shipped to Quik, an insurable interest in the goods exists in

Accepted Answer

A)   Quik and Re, but not consumers generally.
B)   Quik only.
C)   Quik, Re, and consumers generally.
D)   Re only.

Question 13

Leo buys a bicycle from his brother, Mike, who is a used car dealer. Mike agrees to keep the bike at his house until Leo picks it up. A tree falls on Mike's garage and destroys the bike. The loss is suffered by

Accepted Answer

A)   Leo and Mike.
B)   Leo only.
C)   Mike only.
D)   neither Leo nor Mike.

Question 14

A bailee is a buyer or lessee.

Accepted Answer

A) True 
 B)False

Question 15

Brothers Cafe buys 100 bags of oranges from Sisters Citrus Company. The parties agree to ship the oranges "F.O.B. Brothers Cafe" via Tonnage Trucking Company. The oranges rot in transit. The loss is suf?fered by

Accepted Answer

A)   Brothers Cafe and Sisters Citrus, but not Tonnage Trucking.
B)   Brothers Cafe only.
C)   Brothers Cafe, Sisters Citrus, and Tonnage Trucking.
D)   Sisters Citrus only.

Question 16

With a bill of lading, Cartage Common Carrier Company acknowledges possession of certain goods and contracts to deliver them. Cartage is

Accepted Answer

A)   a bailee.
B)   a buyer in the ordinary course of business.
C)   a good faith purchaser for value.
D)   an F,O,B.

Question 17

Great Workouts, Inc., offers to sell a home gym to Ida and sends it to her on a trial basis. This is

Accepted Answer

A)   a consignment.
B)   a delivery ex-ship.
C)   a sale on approval.
D)   a sale or return.

Question 18

Commercial Storage (CS), a bailee, holds goods for Delta Distributors, Inc., which has contracted to sell them to Eagle Company. The goods are to be delivered without being moved. The risk of loss will pass to Eagle when Eagle receives

Accepted Answer

A)   a copy of Delta's contract with CS.
B)   a copy of Delta's contract with Eagle.
C)   a negotiable document of title.
D)   a notice that Eagle's payment for the goods has cleared.

Question 19

Fine Material Corporation in New Jersey sells fifty tons of fabric to Great Clothing, Inc., in Ohio, F.O.B. New Jersey. The cost of transport?ing the fab?ric to Ohio will be paid by

Accepted Answer

A)   Fine Material.
B)   Great Clothing.
C)   New Jersey.
D)   Ohio.

Question 20

Under a destination contract, the risk of loss passes to the buyer when the goods are duly delivered to the carrier.

Accepted Answer

A) True 
 B)False

Exam 21: Title, Risk, and Insurable Interest

Home Products Store buys furniture from Ideal Furniture, Inc. The parties agree that the furniture will be shipped "F.O.B. Ideal's ware?house" to Home Products via Jiffy Shipping Corporation. The furniture is lost in transit. The loss is suffered by

If a seller is not a merchant, the seller holds the goods, and the buyer is to pick them up, the risk of loss passes to the buyer on tender of delivery.

Crest Jewelers buys diamonds from Excel Gems to resell with the right to return the unsold stones in lieu of payment. This is

Diamond Camera Shop receives lenses from Excel Optical, Inc., under a sale or return agreement. While the lenses are in Diamond's possession, title is held by

Before a seller can have an insurable interest in goods, the goods must be identified to a contract.

Dan steals Eve's necklace and sells it to Fiona. Eve can recover the neck?lace from Fiona

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

Kip, a representative for Little Shipping Company, delivers a bill of lading to Meg, the owner of Normal Warehouse. A bill of lading is

EZ Equipment Corporation leases six forklifts to Faulty Refining Company, but as the forklifts are delivered, they are lost in an explosion. Under the UCC, the parties' rights and obligations with respect to the loss depend on the concept of

Delta Products Corporation contracts with Excel Trucking Company to take goods to Flight Airlines, Inc., with Flight to transport the goods to a Geo Storage Company warehouse. Excel, Flight, and Geo each acknowl?edge possession of the goods by a document of title. Excel, Flight, and Geo are

Relax Recreation Toys, Inc., allows Sandy to take a Relax boat for a "test run." Sandy tries the boat for a few hours, returns, and buys it. This is

Quik Sales Corporation orders goods from Re Stock Company. Re plans to market the goods to consumers generally. Re identifies the goods. Before they are shipped to Quik, an insurable interest in the goods exists in

Leo buys a bicycle from his brother, Mike, who is a used car dealer. Mike agrees to keep the bike at his house until Leo picks it up. A tree falls on Mike's garage and destroys the bike. The loss is suffered by

A bailee is a buyer or lessee.

Brothers Cafe buys 100 bags of oranges from Sisters Citrus Company. The parties agree to ship the oranges "F.O.B. Brothers Cafe" via Tonnage Trucking Company. The oranges rot in transit. The loss is suf?fered by

With a bill of lading, Cartage Common Carrier Company acknowledges possession of certain goods and contracts to deliver them. Cartage is

Great Workouts, Inc., offers to sell a home gym to Ida and sends it to her on a trial basis. This is

Commercial Storage (CS) , a bailee, holds goods for Delta Distributors, Inc., which has contracted to sell them to Eagle Company. The goods are to be delivered without being moved. The risk of loss will pass to Eagle when Eagle receives

Fine Material Corporation in New Jersey sells fifty tons of fabric to Great Clothing, Inc., in Ohio, F.O.B. New Jersey. The cost of transport?ing the fab?ric to Ohio will be paid by

Under a destination contract, the risk of loss passes to the buyer when the goods are duly delivered to the carrier.