Question 1

Which of the following is true regarding transportation costs when the shipping term "FOB" is used in a contract for the sale of goods requiring delivery?

Accepted Answer

The "FOB" shipping term means that the selling price includes transportation costs,and the seller carries the risk of loss to either the place of shipment ("FOB shipment")or the place of destination ("FOB destination").

Question 2

In a destination contract,who bears the risk of loss while the goods are in transit?

Accepted Answer

Destination contracts require the seller to deliver the goods to the destination stipulated in the sales contract.This destination may be the buyer's place of business or some other location.The seller bears the risk of loss until that time.

Question 3

Which of the following require that the seller make proper shipping arrangements and deliver goods to the buyer via a common carrier,but does not require a guarantee of the safety of goods to their destination?

Accepted Answer

With an origin (also known as a shipment)contract,the seller is required to make proper shipping arrangements and deliver the goods into the common carrier's hands,and the buyer bears the risk of loss while the goods are in transit.

Question 4

What does the shipping term "FOB" indicate?

Accepted Answer

The shipping term "FOB" means "free on board."

Question 5

In an origin contract,when does title pass to the buyer?

Accepted Answer

With an origin contract,title passes to the buyer at the time and place of shipment.

Question 6

Which of the following is true when the shipping term "FAS" is used?

Accepted Answer

The shipping term "FAS" means that the seller,at seller's expense,delivers the goods alongside the ship before the risk passes to the buyer.

Question 7

With a simple delivery contract in which the seller is a merchant,which party sustains the loss if,through no fault of either party,the goods are destroyed through fire prior to delivery to the buyer?

Accepted Answer

According to the Uniform Commercial Code,with a simple delivery contract involving a merchant seller,the risk of loss remains with the seller until the goods are actually delivered to the buyer.

Question 8

In a common-carrier delivery contract,the common carrier is:

Accepted Answer

In a common-carrier delivery contract,the common carrier is an independent contractor and not an agent (or employee)of the seller.What makes the common carrier an independent contractor,rather than an agent,is that the carrier controls the primary aspects of performance,such as how the goods are actually delivered.

Question 9

A goods-in-________ contract involves goods that are in some kind of storage,so the seller cannot transfer physical possession of them.

Accepted Answer

A goods-in-bailment contract involves goods that are in some kind of storage (for example,in a warehouse or on board a ship),so the seller cannot transfer physical possession of them.

Question 10

When does title transfer to the buyer in a simple delivery contract?

Accepted Answer

According to the Uniform Commercial Code,with a simple delivery contract,title transfers to the buyer when the goods are identified to the contract.Goods are identified to a contract when the contract is executed.

Question 11

What type of agreement do contracting parties have when the goods are delivered to a buyer via a common carrier,such as a trucking line?

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 12

With a simple delivery contract involving goods sold by a merchant that are to be delivered to the buyer,when does risk of loss transfer to the buyer?

Accepted Answer

According to the Uniform Commercial Code,with a simple delivery contract involving goods sold by a merchant that are to be delivered to the buyer,the risk of loss remains with the seller until the goods are actually delivered to the buyer.

Question 13

When is an insurable interest in the buyer created in a simple delivery contract?

Accepted Answer

According to the Uniform Commercial Code,with a simple delivery contract,an insurable interest is created in the buyer when the goods are identified to the contract (in other words,at the same time that title passes).

Question 14

What type of interest occurs when there is a right to insure goods against any risk exposure such as damage or destruction?

Accepted Answer

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

Question 15

With a simple delivery contract in which the seller is not a merchant,which party sustains the loss if,through no fault of either party,the goods are destroyed through fire prior to delivery to the buyer?

Accepted Answer

According to the Uniform Commercial Code,with a simple delivery contract involving a non-merchant seller,the buyer assumes the risk of loss after tender of delivery.Tender of delivery is the moment the goods were available for the buyer to take.

Question 16

What does the shipping term "FAS" indicate?

Accepted Answer

The shipping term "FAS" means "free alongside."

Question 17

With a ________ contract,the buyer and seller typically execute an agreement,and the buyer leaves with the goods.

Accepted Answer

With a simple delivery contract,the buyer and seller typically execute an agreement,and the buyer leaves with the goods.

Question 18

Which of the following are types of common-carrier delivery contracts?

Accepted Answer

The Uniform Commercial Code names two kinds of common-carrier delivery contracts: a)origin,or shipment contracts and b)destination contracts.

Question 19

In an origin contract,who bears the risk of loss while the goods are in transit?

Accepted Answer

In an origin (also known as shipment)contract,title passes to the buyer at the time and place of shipment.Thus,the buyer bears the risk of loss while the goods are in transit.

Question 20

What type of agreement do contracting parties have when the sale itself is contingent on approval?

Accepted Answer

A sale-on-approval contract is a type of conditional sales contract.A sale-on-approval contract allows the buyer to take possession of the goods before deciding whether to complete the contract by making the purchase.Title and risk of loss remain with the seller until the buyer notifies the seller about the approval of the contract.

Quiz 15: Formation and Performance of Sales and Lease Contracts