Question 1

A seller's duty in an F.O.B.destination contract with respect to delivering the goods ends upon placing the goods in the hands of the common carrier.

Accepted Answer

In an F.O.B. destination contract, the seller's duty with respect to delivering the goods ends only when they are delivered to the buyer's specified location. The seller is responsible for arranging and paying for the transportation, and for any damage that may occur during transit. Therefore, the seller's duty does not end upon placing the goods in the hands of the common carrier.

Question 2

If a good faith purchaser for value acquires goods from another good faith purchaser,but the goods were stolen at some point in the past,the last good faith purchaser does not obtain good title.

Accepted Answer

This is known as the "void title" rule, which states that a person who receives stolen goods cannot pass good title to a subsequent purchaser. Therefore, the last good faith purchaser does not obtain good title.

Question 3

If an owner brings a computer to a store to be repaired and the store accidentally sells it to a customer who is a buyer in the ordinary course of business,the buyer from the store has ownership priority over the original owner.

Accepted Answer

This is due to the legal principle known as "good faith purchaser for value", which protects buyers who purchase from a business in a normal and legitimate transaction without knowledge of any previous ownership claims.

Question 4

Under the UCC,for risk of loss purposes,the "sale on consignment" is treated like a "sale on approval."

Accepted Answer

Under the UCC, a "sale on consignment" is treated like a "sale or return," not a "sale on approval."

Question 5

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

Accepted Answer

It is possible for both the buyer and seller of goods to have an insurable interest in the same goods at the same time. For example, if the seller has not yet received payment for the goods, they would have an insurable interest in the goods until payment is received. At the same time, the buyer would have an insurable interest in the goods until they take possession of them.

Question 6

In a consignment,the seller is also known as the consignor.

Accepted Answer

In a consignment, the seller is also known as the consignor as they are the ones giving their goods to another party to sell on their behalf.

Question 7

A thief can transfer good title to stolen goods,as long as the other person purchased them in good faith.

Accepted Answer

In general, a thief cannot transfer good title to stolen goods, even if the buyer purchases them in good faith. The original owner retains the right to reclaim the stolen property.

Question 8

If a contract for the sale of goods is F.O.B.Minneapolis and the seller is in Minneapolis and the buyer is in Chicago,the contract is a shipment contract.

Accepted Answer

F.O.B. stands for "Free on Board" which means the seller is responsible for delivering the goods to a carrier selected by the buyer. In a shipment contract, the seller is responsible for shipping the goods to the buyer's location. In this case, since the contract specified that the goods are F.O.B. Minneapolis, it means the seller is responsible for shipping the goods from Minneapolis to the buyer's location in Chicago, making it a shipment contract.

Question 9

A breach by the buyer will shift the risk of loss to the buyer as soon as the breach occurs if the risk has not already shifted.

Accepted Answer

According to the UCC, a breach by the buyer will shift the risk of loss to the buyer as soon as the breach occurs if the risk has not already shifted.

Question 10

In a sale or return,risk of loss passes to the buyer when the buyer takes possession of the goods.

Accepted Answer

In a sale or return agreement, the buyer takes possession of the goods with the understanding that they may choose to return them within a specified period of time. However, the risk of loss still passes to the buyer upon taking possession.

Question 11

When the seller breaches,the risk of loss often passes to the buyer sooner than it otherwise would.

Accepted Answer

When the seller breaches a contract, the risk of loss typically remains with the seller until the breach is cured or the buyer accepts the goods, rather than passing to the buyer sooner.

Question 12

In an F.O.B.destination contract,the seller must replace the goods if they are lost in transit.

Accepted Answer

In an F.O.B. destination contract, the seller is responsible for the goods until they are delivered to the buyer's specified destination. Therefore, if the goods are lost in transit, it is the seller's responsibility to replace them.

Question 13

One who has voidable title can transfer good title to a good faith purchaser for value.

Accepted Answer

This is known as the "voidable title rule" and it applies to situations where someone may have obtained property through fraud, undue influence, or other means that make their title to the property subject to being voided. If a good faith purchaser for value buys the property from the person with voidable title, the purchaser will generally obtain good title to the property. However, there are some exceptions and limitations to this rule, so it is important to consult with an attorney if you are dealing with a situation involving voidable titles.

Question 14

If a seller delivers nonconforming goods to a buyer and the buyer rejects them,the risk of loss remains on the seller until either the defect is cured or the buyer accepts the nonconforming goods.

Accepted Answer

According to the UCC (Uniform Commercial Code), if the seller delivers nonconforming goods to the buyer and the buyer rejects them, the risk of loss remains on the seller until either the defect is cured or the buyer accepts the nonconforming goods.

Question 15

A consignment is treated as a sale or return under the UCC.

Accepted Answer

Consignment is treated as a sale or return under the UCC (Uniform Commercial Code) which means the consignee can return the unsold inventory to the consignor if the consignor agrees to take back the goods. This is specified under UCC Article 2, which governs the contracts for the sale of goods.

Question 16

If goods are held by the seller to be picked up by the buyer,the risk of loss passes to the buyer upon "tender of delivery," if the seller is a merchant.

Accepted Answer

The answer of If goods are held by the seller...

Question 17

F.O.B.Burlington,Vermont requires the seller to arrange to ship goods and put the goods in the carrier's possession.

Accepted Answer

The answer of F.O.B.Burlington,Vermont requires the seller to arrange to...

Question 18

C.I.F is a pricing term that indicates the seller is responsible for paying the cost of the goods that are the subject of the sale as well as insurance and freight for their delivery.

Accepted Answer

CIF stands for Cost, Insurance, and Freight. It is a pricing term used in international trade that requires the seller to cover the cost of the goods being shipped, as well as the insurance and freight charges to get them to the destination port. Therefore, the statement is true.

Question 19

A merchant-seller bears the risk of loss between the time of contracting and the time the buyer picks up the goods.

Accepted Answer

According to the ICC Incoterms rules, if the chosen term is EXW (Ex Works), the seller's obligation is fulfilled when they make the goods available at their premises. Therefore, the risk of loss or damage to the goods passes from the seller to the buyer at the time of pick-up or collection.

Question 20

Acceptance of a sale on approval can occur if the buyer uses the goods inconsistently with the purpose of the trial.

Accepted Answer

If the buyer uses the goods in a way inconsistent with the purpose of the trial, they are accepting the sale and cannot return the goods. This is known as acceptance on approval.

Quiz 19: Title to Goods and Risk of Loss