Question 1

Good faith is generally relevant in determining whether someone with a void title can pass a good title.

Accepted Answer

If a person has a void title (as in the best, and most frequent, example: a person has possession of stolen goods), then no matter how honorable the intentions of the seller are, that good-faith seller cannot pass anything to the buyer but another void title.

Question 2

Which of the following is title that is acquired from someone who already owns the goods free and clear?
A) True title
B) Voidable title
C) Good title
D) Examined title
E) Substantiated title

Accepted Answer

Good title is title that is acquired from someone who already owns the goods free and clear.

Question 3

The UCC defines a[n] _____ as the passing of title from the seller to the buyer for a price.
A) Sale
B) Consignment
C) Lease
D) Title swap
E) Ownership

Accepted Answer

The UCC defines a sale as the passing of title from the seller to the buyer for a price.

Question 4

Which of the following is the right to insure goods against any risk exposure such as damage or destruction?
A) An insurable interest
B) A compensable interest
C) A paid interest
D) A collateral interest
E) A valid interest

Accepted Answer

An insurable interest is the right to insure the goods against any risk exposure such as damage or destruction.

Question 5

Which of the following is held when someone unknowingly purchases stolen goods?
A) Void title
B) Voidable title
C) Good title
D) Examined title
E) Substantiated title

Accepted Answer

Void title is not true title. Someone who purchases stolen goods, knowingly or unknowingly, has void title.

Question 6

Which of the following occurs when the purchased goods are transferred to the buyer from the seller at either the time of the sale or some time later by the seller's delivery?
A) A voidable delivery contract
B) An average delivery contract
C) A simple delivery contract
D) A complex delivery contract
E) An acknowledged sale

Accepted Answer

A simple delivery contract occurs when the purchased goods are transferred to the buyer from the seller at either the time of the sale or some time later by the seller's delivery.

Question 7

Which of the following was the result in the Case Opener involving whether title had passed to the entity that received shipment although shipment was made to the wrong party thereby preventing a lawsuit by the assignee of the original owner against the shipping company?
A) That because the shipper breached its contract by improperly delivering goods, the lawsuit by the assignee was not barred.
B) That because title and risk of loss had not passed from the seller, who had contracted with the shipper, to the buyer at the time of transfer, the lawsuit by the assignee was not barred.
C) That the lawsuit by the assignee was barred because an origin title was involved, and risk of loss had passed to the buyer by the time of delivery, leaving the seller with no rights.
D) That the lawsuit by the assignee was barred because a destination title was involved, and risk of loss had passed to the buyer by the time of delivery, leaving the seller with no rights.
E) That while the original seller may have had rights to sue, the lawsuit by the assignee was barred under the Contracts for the International Sale of Goods.

Accepted Answer

According to the court, "Burlington [the shipper] failed to perform the duties required under the contract, that is, to not deliver the goods until the buyer presented and turned over to Burlington the receipt. Burlington breached the express terms of its delivery obligation and thus is liable for the misdelivery."

Question 8

Which of the following was the result in Landshire Food Service Inc., v. Coghill, the case in the text in which the defendant, Coghill, sold his Rolls Royce to Bellman in return for a forged cashier's check and an innocent purchaser for value, Hyken, meanwhile purchased the car from Bellman before the fraud was discovered? A) Coghill was entitled to return of the vehicle because the contract with Bellman was void. B) Coghill was entitled to return of the vehicle because the contract with Bellman was voidable by Coghill. C) Hyken was entitled to the vehicle because a person who procures title through fraud receives voidable title and is able to transfer good title to a bona fide purchaser. D) Hyken was entitled to the vehicle because although a person who procures title through fraud receives a void title, the person guilty of fraud may transfer good title to a bona fide purchaser. E) The car was ordered sold with Coghill and Hyken to split the proceeds.

Accepted Answer

According to the court, "The person who procures title through fraud receives voidable title and is able to transfer good title to a bona fide purchaser. Although the result may seem harsh, the purpose of this rule is to promote the free transferability of property in commerce."

Question 9

If a shipment contract is vague or ambiguous on the issue, an origin contract will be presumed.

Accepted Answer

If a shipment contract is vague or ambiguous, an origin contract will be presumed.

Question 10

Tender of delivery is the moment goods are picked up by the buyer.

Accepted Answer

Tender of delivery is the moment the goods were available for the buyer to take.

Question 11

Delivering a car to a merchant for repair cannot qualify as an entrustment.

Accepted Answer

One form of entrustment occurs when someone entrusts the possession of a good (e.g., a car) to a merchant and asks him to repair that good.

Question 12

Identification of when the risk of loss attaches is important in regards to the right of indemnification.

Accepted Answer

In regard to the right to indemnification if the goods are damaged, when the risk of loss attaches is important.

Question 13

If an owner entrusts the possession of goods to a merchant who deals in goods of that kind, the merchant has no authority to transfer any rights in the goods to a buyer in the ordinary course of business.

Accepted Answer

If an owner entrusts the possession of goods to a merchant who deals in goods of that kind, the merchant can transfer all rights in the goods to a buyer in the ordinary course of business.

Question 14

FOB and FAS are different terms with the same meaning.

Accepted Answer

FOB (free on board) means that the selling price includes transportation costs, and the seller carries the risk of loss to either the place of shipment or the place of destination. FAS (free alongside) means that the seller, at seller's expense, delivers the goods alongside the ship before the risk passes to the buyer.

Question 15

If a buyer and seller execute a contract and the seller subsequently places the goods with a common carrier for delivery to the buyer, the parties have executed a common-carrier delivery contract.

Accepted Answer

If a buyer and seller execute a contract and the seller subsequently places the goods with a common carrier for delivery to the buyer, the parties have executed a common-carrier delivery contract.

Question 16

What happens when a buyer with a voidable title sells the goods to a third-party purchaser who makes a good-faith purchase for value?
A) The purchaser gets good title.
B) The purchaser gets voidable title.
C) The purchaser gets void title.
D) The purchaser gets reclaimable title.
E) The purchaser gets good-faith title.

Accepted Answer

When a buyer with the voidable title turns around and sells the goods to a third-party purchaser. If that third-party purchaser made a good-faith purchase for value (as opposed to receiving the goods as a gift), he or she gets good title, not void or voidable title.

Question 17

Which of the following types of title does a good-faith buyer hold when the seller transfers a void title?
A) Void
B) Voidable
C) Good
D) Substantiated
E) Excised

Accepted Answer

If a void title is held by the seller, then a good title is never passed-a void title always begets a void title.

Question 18

The rule originates in common law that when a seller transfers goods to a buyer, the buyer gets only voidable title if the buyer is a minor.

Accepted Answer

The rule that the buyer gets only voidable title if the buyer is a minor originates in common law.

Question 19

An insurable interest is the right to insure the goods against any risk exposure such as damage or destruction.

Accepted Answer

An insurable interest is the right to insure the goods against any risk exposure such as damage or destruction.

Question 20

Which of the following is true if an owner entrusts the possession of goods to a merchant who deals in goods of that kind?
A) The merchant can transfer all rights in the goods to a buyer in the ordinary course of business.
B) The merchant can only transfer voidable title until any funds in the possession of the merchant are transferred to the owner.
C) The merchant can only transfer void title until any funds in the possession of the merchant are transferred to the owner.
D) The merchant can only transfer temporary title until any funds in the possession of the merchant are transferred to the owner.
E) The merchant must have any purchaser sign a document acknowledging that the purchaser will return the goods upon the request of the owner.

Accepted Answer

If an owner entrusts the possession of goods to a merchant who deals in goods of that kind, the merchant can transfer all rights in the goods to a buyer in the ordinary course of business.

Quiz 22: Title, Risk of Loss, and Insurable Interest

Good faith is generally relevant in determining whether someone with a void title can pass a good title.

Which of the following is title that is acquired from someone who already owns the goods free and clear?

The UCC defines a[n] _____ as the passing of title from the seller to the buyer for a price.

Which of the following is the right to insure goods against any risk exposure such as damage or destruction?

Which of the following is held when someone unknowingly purchases stolen goods?

Which of the following occurs when the purchased goods are transferred to the buyer from the seller at either the time of the sale or some time later by the seller's delivery?

Which of the following was the result in the Case Opener involving whether title had passed to the entity that received shipment although shipment was made to the wrong party thereby preventing a lawsuit by the assignee of the original owner against the shipping company?

If a shipment contract is vague or ambiguous on the issue, an origin contract will be presumed.

Tender of delivery is the moment goods are picked up by the buyer.

Delivering a car to a merchant for repair cannot qualify as an entrustment.

Identification of when the risk of loss attaches is important in regards to the right of indemnification.

If an owner entrusts the possession of goods to a merchant who deals in goods of that kind, the merchant has no authority to transfer any rights in the goods to a buyer in the ordinary course of business.

FOB and FAS are different terms with the same meaning.

If a buyer and seller execute a contract and the seller subsequently places the goods with a common carrier for delivery to the buyer, the parties have executed a common-carrier delivery contract.

What happens when a buyer with a voidable title sells the goods to a third-party purchaser who makes a good-faith purchase for value?

Which of the following types of title does a good-faith buyer hold when the seller transfers a void title?

The rule originates in common law that when a seller transfers goods to a buyer, the buyer gets only voidable title if the buyer is a minor.

An insurable interest is the right to insure the goods against any risk exposure such as damage or destruction.

Which of the following is true if an owner entrusts the possession of goods to a merchant who deals in goods of that kind?