Question 1

Motor Vehicles Service Company orders NoBounce-brand shock absorbers from Parts & Tools,Inc.,to be delivered by the seller.Before Parts & Tools' truck arrives with the goods,Motor Vehicles tells Parts & Tools it will not pay.The shock absorbers are destroyed in transit.The loss is suffered by

Accepted Answer

Motor Vehicles is liable for the loss because it repudiated the contract before the goods arrived.

Question 2

Roadtrip County Fairs Corporation orders from Stuffed Animal Sales,Inc.,goods that are stored in a Toy Box Maxi-Storage warehouse.Roadtrip pays for the goods,delivery is via the transfer of a negotiable warehouse receipt,and Roadtrip moves the goods out of the warehouse.The risk of loss passes to the buyer when it

Accepted Answer

The risk of loss passes to the buyer when they receive the negotiable warehouse receipt, as it signifies the transfer of ownership and control over the goods.

Question 3

QuickFreeze Storage,a bailee,holds goods for Restaurant Purveyor,Inc.,which has contracted to sell the goods to Seafood Dining Company.The goods are to be delivered without being moved.The risk of loss will pass to Seafood Dining when it receives

Accepted Answer

The goods are being held by QuickFreeze Storage as a bailee, which means they don't have ownership of the goods but are holding them for someone else. In this case, the goods are being held for Restaurant Purveyor, Inc. who has contracted to sell them to Seafood Dining Company. When the goods are delivered without being moved, this means they are being delivered with a negotiable document of title, which is a document that shows ownership of the goods. Once Seafood Dining Company receives this document, the risk of loss passes to them.

Question 4

Drill Makers,Inc.,and Edge Mine & Mill Supply Stores enter into a contract for a sale of mining drill bits.The contract indicates that the price includes transportation costs to a specific destination by including the term

Accepted Answer

F.O.B. (Free on Board) indicates that the seller delivers the goods to a specified location for transportation by the buyer. This would include transportation costs to a specific destination, as indicated in the scenario.

Question 5

Quest Outdoor Store orders RiverRun-brand kayaks from Sports Merchandise,Inc.Sports Merchandise mistakenly ships kayaks of the wrong size,which Quest rejects and returns via Trans-State Shipping Company.During the return,the kayaks are lost.The loss is suffered by

Accepted Answer

The answer of Quest Outdoor Store orders RiverRun-brand kayaks from...

Question 6

Effortless Workouts,Inc.,offers to sell a treadmill to Farouk and sends it to him on a trial basis.This is

Accepted Answer

The fact that Effortless Workouts, Inc., is sending the treadmill to Farouk on a trial basis indicates that this is a sale on approval. In a sale on approval, the buyer has the option to return the goods within a specified period of time if they don't meet their expectations or if there are any defects. Therefore, this is the best choice for this situation.

Question 7

Megan,an agent for a department store,orders one hundred dresses from Sal's Clothing Shop for the Spring Blossom Sale.There is no specific agreement in the sale contract indicating when title will pass to the department store.The title will pass to the department store when

Accepted Answer

Under the common law, title will pass to the buyer (department store) upon physical delivery of the goods by the seller (Sal's Clothing Shop) unless otherwise indicated in the sale contract. Therefore, when Sal's Clothing Shop physically delivers the dresses to the department store, title will pass to the department store.

Question 8

With a bill of lading,Interstate Transport Company acknowledges possession of certain goods and contracts to deliver them.Interstate Transport is

Accepted Answer

Interstate Transport Company is acknowledging the possession of goods and undertaking a contract to deliver them. This makes them a bailee, as they have temporary possession of the goods but do not have ownership.

Question 9

Quaff n' Quench Café buys twenty-five crates of oranges from Reynaldo Produce,Inc.The parties agree to ship the oranges "F.O.B.Quaff n' Quench " via Swiftline Trucking Company.The oranges rot in transit.The loss is suffered by

Accepted Answer

The answer of Quaff n' Quench Café buys twenty-five crates...

Question 10

Outdoor Outfitters Store contracts to buy fifty tents from Pitched Camp,Inc.Unless the contract states otherwise,it is assumed to be

Accepted Answer

A shipment contract is the default assumption when a contract does not specify otherwise. This means that once the goods are delivered to the carrier, the buyer assumes responsibility and any risk associated with the shipment.

Question 11

Foster contracts with Golf Carts Unlimited,Inc.to buy five golf carts.The contract lists the five carts as GC001,GC002,GC003,GC004,GC005.Identification

Accepted Answer

The identification of the five golf carts has already taken place by listing their identification numbers in the contract.

Question 12

Johan steals Krispin's car and sells it to Lemar.Krispin can recover the car from Lemar

Accepted Answer

Krispin can recover the car from Lemar under any circumstances because a thief cannot pass good title to stolen property, regardless of Lemar's knowledge or payment.

Question 13

Household Appliance Corporation sells Ideal-brand vacuum cleaners to Jolly Discount Stores and other retailers.Household Appliance will have an insurable interest in the players as long as

Accepted Answer

An insurable interest arises when the insured stands to benefit from the preservation of the property or would be harmed by its loss. In this case, Household Appliance Corporation has an insurable interest in the Ideal-brand vacuum cleaners as long as they retain title to the goods. This means that if the goods are damaged or lost, the corporation would suffer a financial loss and therefore have a legitimate reason to insure them.

Question 14

Pipes & Culverts Company orders six irrigation pumps from Quality Plumbing,Inc.The pumps are stored in Restorers Warehouse.Under the terms of the order,Quality must give Pipes & Culverts a warehouse receipt for the goods,which the buyer will then pick up.Title to the goods passes to Pipes & Culverts when

Accepted Answer

According to the terms of the order, title to the goods (irrigation pumps) passes to Pipes & Culverts when Quality gives them a warehouse receipt for the pumps. Therefore, the correct answer is D, when Quality gives Pipes & Culverts a warehouse receipt for the drives.

Question 15

Big Beef,Inc.raises calves to sell.Big Beef breeds its cows in April,and the cows calve in February of the following year.In January,Andrea contracts with Big Beef to buy fifty calves.Identification takes place in

Accepted Answer

The answer of Big Beef,Inc.raises calves to sell.Big Beef breeds...

Question 16

Gas & Wood Stove Shop receives Hearthwarm-brand stoves from Independent Dealer,Inc.,under a sale or return agreement.While the stoves are in Gas & Wood's possession,title is held by

Accepted Answer

The answer of Gas & Wood Stove Shop receives Hearthwarm-brand...

Question 17

Organicos Café orders five gallons of PureMaid-brand transfat-free olive oil from Quico Cooking Supplies,Inc.Quico mistakenly ships soy oil,which Organicos keeps,despite the nonconformity.The oil is destroyed in a fire.The loss is suffered by

Accepted Answer

Organicos Café bears the loss as they accepted and kept the nonconforming soy oil despite the mistake by Quico Cooking Supplies. Additionally, the loss due to the fire is an unforeseeable event and falls under the risk of loss for Organicos Café.

Question 18

Business Banners,Inc.,and Cam's Auto & Truck Sales Dealership enter into a contract for a sale of thirty advertising banners emblazoned with Cam's logo.The terms do not explicitly or clearly indicate whether it is a destination or shipment contract.A court would normally presume that it is

Accepted Answer

Since the contract does not explicitly state whether it is a destination or shipment contract, the court would normally presume that it is a shipment contract. In a shipment contract, the seller is responsible for delivering the goods to a carrier for transportation to the buyer, while in a destination contract, the seller is responsible for delivering the goods to a specific destination agreed upon with the buyer. A delivery ex-ship contract would mean that the seller is responsible for delivering the goods to the buyer at the port of destination. However, this option is not applicable in this case as the contract does not mention anything about delivery at a particular port.

Question 19

Moving & Storage Company holds goods for National Distribution Corporation,which contracts to sell them to Omni Stores,Inc.The goods are to be delivered without being moved and are represented by a negotiable bill of lading.The risk of loss passes to Omni Stores

Accepted Answer

The risk of loss passes to Omni Stores when they receive the bill of lading, as this is the point at which ownership and responsibility for the goods transfers to them.

Question 20

Stubbs buys a Tred-brand bicycle from his brother,Uriah.Uriah agrees to keep the bike at his house until Stubbs picks it up.During a storm,a tree falls from Victor's yard onto Uriah's garage and destroys the bike.The loss of the bike is suffered by

Accepted Answer

Since Stubbs purchased the bike from Uriah, the ownership had already transferred to him. Therefore, as the owner, he bears the risk of loss and is responsible for any damage suffered by the bike, including the damage caused by the fallen tree.

Quiz 21: Title,risk,and Insurable Interest