When, at the time of contracting, the goods are in the hands of a third-party bailee and are covered by a document of title, the risk passes to the buyer when he or she:
A) takes possession of the goods.
B) receives the document of title.
C) acknowledges the third-party bailee's right to possession.
D) indulges in a breach of contract.

Question

Quizplus · Accepted Answer

When, at the time of contracting, the goods are in the hands of a third-party bailee and are covered by a document of title (negotiable or nonnegotiable), the risk passes when the buyer receives the document of title. When no document of title is involved, the risk passes when the bailee acknowledges the buyer's right to possession.

When, at the Time of Contracting, the Goods Are in the Hands