Quiz 16: The Sales Contract: Transfer of Title and Risk of Loss

When one party breaches a sales contract, the UCC places the risk of loss on the party responsible for the breach.

Title and risk of loss must pass from seller to buyer according to the provisions of the UCC.

In a sale of goods, risk of loss is generally more important than when title passes from seller to buyer.

The UCC shifted the emphasis from title to risk of loss because it was often difficult to tell exactly when the title was passed from the seller to the buyer.

A contract for the sale of goods is either a present sale or a contract to sell.

A contract to sell is a sale of identified goods.

Goods become identified when the seller and the buyer decide on the exact goods to be sold.

Whether the seller is a merchant or a nonmerchant and if no shipment or delivery is required by the seller, risk of loss passes when the buyer actually takes possession of the goods.

In some sales of goods, the seller is required to ship the goods to the buyer.

Under the common law the location of title formed the basis of the sale of goods to the buyer.

A sale on approval is a present sale.

If goods delivered to a buyer are intended to be resold to consumers, the transaction is considered to be a sale on approval.

Title determines whether goods are the subject of a present sale or a contract to sell.

Generally, a buyer obtains no better title to goods than the seller had.

A bill of sale is proof of ownership.

Under the UCC, A) risk of loss is placed on the party who has title. B) risk of loss is always placed on the buyer. C) risk of loss is always placed on the seller. D) none of these.

The UCC, Article 2, A) places increased emphasis on the concept of title. B) places less emphasis on the concept of title. C) eliminates the concept of title. D) none of these.

Goods that are not in existence and not yet identified are called A) personal goods. B) unidentified goods. C) future goods. D) unsatisfactory goods.

DeBruin went to CompuTown to buy an Ibex personal computer. The store was sold out but agreed to order one. This transaction is a A) present sale. B) COD sale. C) contract to sell. D) sale on approval.

When goods are in existence and identifiable, title passes from the seller to the buyer A) at the time the parties make the contract. B) when the buyer pays for the goods. C) when the seller tenders the goods. D) when the buyer takes possession.

For a contract for the sale of goods to be considered a present sale, the A) goods must be considered future goods. B) goods must be physically in existence and identifiable. C) goods must be specially ordered. D) sale must take place at the merchant's place of business.

Jones, a merchant does not deliver merchandise to customers but instead requires customers to pick up the merchandise at his place of business. When does risk of loss pass? A) When the customer takes physical possession of the merchandise B) When the contract is made C) A reasonable time after the purchase is made but before delivery to the customer D) When the buyer receives a negotiable document of title

On December 15, Maria bought a snow blower from the Tripod Hardware Store, terms thirty days. After the sale had been made, Tripod agreed to deliver the snow blower to Maria's house the following day. Risk of loss passed to Maria A) on December 15. B) on December 16. C) on January 15. D) when the bill was fully paid.

Which of the following statements applies to a sale on approval under Article 2 of the UCC? A) both buyer and seller must be merchants. B) the buyer must be purchasing the goods for resale. C) risk of loss for the goods passes after the trial period is up. D) title to goods passes to the buyer on the delivery of the goods to the buyer for trial purposes.

Roscoe, of Cleveland, Ohio, ordered twenty computers from the Rand Computer Corporation in St. Louis, Missouri, terms FOB St. Louis. The computers were damaged in transit from St. Louis to Cleveland. The loss is borne A) by Roscoe. B) by Roscoe and Rand Computer Corporation. C) 50 percent by Roscoe and 50 percent by Rand Computer Corporation. D) by Rand Computer Corporation.

Rosco, of Salem, New York, purchased 2,500 pounds of spaghetti from the Arco Corporation of Buffalo, New York, terms FOB Buffalo. Several boxes of spaghetti were lost in transit. Which statement concerning responsibility for the loss is correct? A) The Arco Corporation will not suffer the loss because risk of loss passed to Rosco when the agreement was made. B) Rosco will suffer the loss because risk of loss passed to him when the goods were delivered to the common carrier at Buffalo. C) The Arco Corporation will suffer the loss because risk of loss did not pass to Rosco until the goods arrived at Salem. D) Rosco will not suffer the loss because risk of loss did not pass to him until the goods were delivered to his door.

Michaels purchased a desk from Erwin who is not in the business of selling furniture. Erwin tendered delivery of the desk after receiving payment in full from Michaels. Michaels told Erwin that she would be unable to take possession of the desk until the next day. In the meantime, thieves stole the desk from Erwin's garage before Michaels had a chance to take possession. The risk of loss A) passed to Michaels when Erwin tendered delivery. B) passed to Michaels at the time payment in full was made. C) remained with Erwin until Michaels took possession of the desk. D) remained with Erwin for a reasonable time after Michaels took possession of the desk.

Under Article 2 of the UCC which of the following factors is the most important in determining which party bears the risk of loss in a contract for the sale of goods A) how the goods were lost. B) who has title to the goods. C) the shipping terms in a sales contract. D) the method of shipping the goods.

Minor saw an advertisement in a local newspaper that read: "Try a new X-Acto Electric Knife in your own home on approval for five days. No obligation to buy. Fill out the coupon and mail it in today." Minor mailed in the coupon and received the knife. She liked the knife and kept it past the approval period. Title and risk of loss legally passed to Minor A) when she mailed the coupon to the seller. B) when the knife was delivered to her home. C) when she kept the knife beyond the five-day period. D) at no time, because approval was never given.

Berman sold her business, including merchandise and fixtures, to Curran. This is a(n) A) present sale. B) sale on approval. C) bulk transfer. D) auction.

If the terms of a contract make it difficult to determine whether a particular transaction is a sale on approval or a sale on return, it will be considered a sale or return if the buyer took the goods A) primarily for use rather than for resale. B) primarily for resale rather than for use. C) on COD terms. D) in bulk.

Kim purchased a portable TV from Edgar without realizing that the TV was stolen. Kim received A) no title. B) a valid title. C) a voidable title. D) formal title.

Martin leaves a suit purchased through a catalog at a tailor shop for alterations. The tailor shop also sold men's suits. While the suit was hanging on a rack waiting to be repaired, the tailor accidentally sold Martin's suit to McCabe, who had no knowledge that the suit belonged to someone else. Martin can recover from A) Mc Cabe for the return of the suit but cannot recover from the tailor shop because the tailor made an honest mistake. B) the tailor shop for the purchase price of the suit but cannot recover from McCabe since McCabe had no knowledge that the shoes were owned by Martin. C) both the tailor shop and McCabe. D) none of these.

If a person who holds goods under a voidable title because he or she purchased them through fraud transfers the goods for value and in good faith to a third party, the type of title transferred is A) nonexistent. B) defective. C) valid. D) voidable.

Mendon took her diamond ring to a jeweler to have it resized and arranged to pick it up in three days. When she returned, she discovered that a salesperson had sold her ring to a customer who was looking for a used diamond. To legally reclaim the ring from the customer, Mendon would need to prove that the A) customer was not satisfied with the ring. B) salesperson was dishonest. C) customer did not purchase the ring in good faith. D) customer failed to inform the salesperson that the ring was not for resale.

If the seller and buyer do not specify when title and risk of loss pass, the rules of the ____________________ apply.

A contract to sell involves ____________________.

A(n) ____________________ sale occurs when a merchant sells all or a major part of the business assets.

In a sale of goods, if the seller breaches the contract by delivering nonconforming goods, risk of loss remains with the seller until the seller ____________________ the defect.

Under Article 2 of the UCC, a purchaser obtains only such ____________________ to goods as the seller had.

The ____________________ must pay any expenses connected with the return of goods to the seller in a sale or return.

When one party breaches a sales contract, the UCC places the risk of loss on the party ____________________ for the breach.

A majority of states have repealed Article 6 of the UU dealing with ____________________ sales.

A buyer can require a seller to provide a ____________________ to ensure that the seller possesses the title to the goods.

A merchant who has temporary possession of a customer's goods can pass on a(n) ____________________ title to a buyer of goods who purchases them without knowing that the goods do not belong to the merchant.

Under what circumstances can a person in possession of personal property transfer a better title than he/she has?

Distinguish between a "sale on approval" and a" sale or return."

Jackson bought a typewriter from Kline for $100. Larson proved that the typewriter was stolen from him and demanded its return. Must Jackson do so?

Rogers was induced by fraud to sell a car to Sutter. Sutter resold the car to Andrews, who did not know of the fraud. Was Rogers entitled to void the sale and recover the car from Andrews?