Blaw 5392 Exam 1 (Part 1)
- 1.
8.001 Under the Sales Article of teh UCC, which of the following statements is correct regarding a seller's obligation under a FOB destination contract?
- A.
The seller is required to arrange for the buyer to pick up the conforming goods at a specified destination.
- B.
The seller is required to tender delivery of conforming goods at a specified destination.
- C.
The seller is required to tender delivery of conforming goods at the buyer's place of business.
- D.
The seller is required to tender delivery of conforming goods to a carrier who delivers to a destination specified by the buyer.
Correct Answer
B. The seller is required to tender delivery of conforming goods at a specified destination.Explanation
In a FOB (Free on Board) destination contract, the seller is obligated to deliver the goods to a specified destination. This means that the seller is responsible for arranging and covering the costs of transportation to the agreed-upon location. The buyer does not need to pick up the goods; instead, the seller must ensure that the goods are delivered to the specified destination. This ensures that the seller bears the risk of loss or damage to the goods until they are delivered to the buyer's chosen location.Rate this question:
-
- 2.
8.002 Under the Sales Article of the UCC, and unless otherwise agreed to, the seller's obligation to the buyer is to...
- A.
Deliver the goods to the buyer's place of business.
- B.
Hold conforming goods and give the buyer whatever notification is reasonably necessary to enable the buyer to take delivery.
- C.
Deliver all goods called for in the contract to a common carrier.
- D.
Set aside conforming goods for inspection by the buyer before delivery.
Correct Answer
B. Hold conforming goods and give the buyer whatever notification is reasonably necessary to enable the buyer to take delivery.Explanation
The correct answer is "Hold conforming goods and give the buyer whatever notification is reasonably necessary to enable the buyer to take delivery." This answer is correct because under the Sales Article of the UCC (Uniform Commercial Code), unless otherwise agreed to, the seller's obligation is to hold the goods that conform to the contract and provide the buyer with any necessary notification to facilitate the delivery of the goods. This means that the seller must keep the goods in their possession until the buyer is ready to take delivery and inform the buyer of any relevant information regarding the delivery process.Rate this question:
-
- 3.
8.003 Smith contracted in writing to sell Peters a used personal computer for $600.00. The contract did not specifically address the time for payment, place of delivery, or Peters' right to inspect the computer. Which of the following statements is correct?
- A.
Smith is obligated to deliver the computer to Peters' home.
- B.
Peters is entitled to inspect the computer before paying for it.
- C.
Peters may NOT pay for the computer using a personal check unless Smith agrees.
- D.
Smith is NOT entitled to payment until 30 days after Peters receives the computer.
Correct Answer
B. Peters is entitled to inspect the computer before paying for it.Explanation
The contract did not specify the time for payment, place of delivery, or Peters' right to inspect the computer. Therefore, Peters has the right to inspect the computer before making the payment.Rate this question:
-
- 4.
8.004 If a contract for the sale of goods includes a C. & F. shipping term and the seller has fulfilled all of its obligations, the
- A.
Title to the goods will pass to the buyer when the goods are received by the buyer at the place of destination.
- B.
Risk of loss will pass to the buyer upon delivery of the goods to the carrier.
- C.
Buyer retains the right to inspect the goods prior to making payment.
- D.
Seller must obtain an insurance policy at its own expense for the buyer's benefit.
Correct Answer
B. Risk of loss will pass to the buyer upon delivery of the goods to the carrier.Explanation
In a contract with a C. & F. shipping term, the seller is responsible for delivering the goods to the carrier. Once the goods are delivered to the carrier, the risk of loss is transferred to the buyer. This means that if the goods are damaged or lost during transit, it is the buyer's responsibility. The buyer should have insurance to cover any potential losses. The passing of title to the goods, on the other hand, occurs when the goods are received by the buyer at the place of destination. The buyer also has the right to inspect the goods before making payment.Rate this question:
-
- 5.
8.005 Wilson Corporation entered into a contract to sell goods to Marvin who has a place of business in the same town as Wilson. The contract was clear with respect to price and quantity, but failed to designate the place of delivery. Which of the following statements is correct?
- A.
The contract is unenforceable because of indefiniteness.
- B.
The place for delivery must be designated by the parties within five days or the contract is voidable.
- C.
The seller's place of business is the proper place for delivery.
- D.
The buyer's place of business is the proper place for delivery.
Correct Answer
C. The seller's place of business is the proper place for delivery.Explanation
The correct answer is that the seller's place of business is the proper place for delivery. In contracts, unless otherwise specified, the default rule is that the seller's place of business is considered the proper place for delivery. Since the contract failed to designate the place of delivery, the default rule applies in this case.Rate this question:
-
- 6.
8.006 In connection with risk and expense associated with the delivery of goods to a carrier for shipment under a sales contract, the term FOB the place of shipment means that...
- A.
The seller bears the risk but NOT the expense.
- B.
The buyer bears the risk but NOT the expense.
- C.
The seller bears the risk and expense.
- D.
The buyer bears the risk and the expense.
Correct Answer
C. The seller bears the risk and expense.Explanation
The term FOB (Free On Board) the place of shipment in a sales contract means that the seller is responsible for both the risk and expense associated with delivering the goods to the carrier for shipment. This means that the seller is responsible for any damage or loss that may occur during transit, as well as the costs involved in preparing and transporting the goods to the carrier. The buyer is not responsible for either the risk or the expense in this scenario.Rate this question:
-
- 7.
8.007 In connection with risk and expense associated with the delivery of goods to a destination under a sales contract, the term FOB the place of destination means that...
- A.
The seller bears the risk but NOT the expense.
- B.
The buyer bears the risk but NOT the expense.
- C.
The seller bears the risk and expense.
- D.
The buyer bears the risk and the expense.
Correct Answer
A. The seller bears the risk but NOT the expense.Explanation
FOB stands for "Free On Board" and is a term used in international trade to determine when the responsibility and liability for goods transfer from the seller to the buyer. In this case, FOB the place of destination means that the seller is responsible for the risk of loss or damage to the goods until they are delivered to the destination. However, the expense of transporting the goods to the destination is borne by the buyer.Rate this question:
-
- 8.
8.008 In connect with a contract for the sale of goods, the term CIF means that the price includes...
- A.
The cost of the goods exclusive of insurance and freight.
- B.
The cost of the goods plus freight but exclusive of insurance.
- C.
The cost of the goods plus insurance but exclusive of freight.
- D.
The cost of the goods, freight, and insurance.
Correct Answer
D. The cost of the goods, freight, and insurance.Explanation
CIF stands for Cost, Insurance, and Freight. In a contract for the sale of goods, if the term CIF is used, it means that the price includes the cost of the goods, the cost of freight, and the cost of insurance. This means that the seller is responsible for arranging and paying for the transportation and insurance of the goods to the agreed-upon destination. The buyer is only responsible for the payment of the goods themselves, as the price already includes the freight and insurance costs.Rate this question:
-
- 9.
8.009 Suggs Company agreed to sell certain goods to Barr Corporation pursuant to a written contract. NO shipment or delivery date was specified in the contract. Based on these facts...
- A.
The time for shipment is within a reasonable time.
- B.
The time for shipment must be agreed upon.
- C.
The time for shipment is within 3 months.
- D.
The contract fails for indefiniteness.
Correct Answer
A. The time for shipment is within a reasonable time.Explanation
The answer "The time for shipment is within a reasonable time" is correct because when a contract does not specify a shipment or delivery date, the Uniform Commercial Code (UCC) provides that the goods must be shipped within a reasonable time. What constitutes a "reasonable time" may vary depending on the circumstances of the contract, such as the nature of the goods, industry practices, and any prior agreements or course of dealing between the parties. Therefore, without a specific timeframe mentioned in the contract, the default rule is that the goods should be shipped within a reasonable time.Rate this question:
-
- 10.
8.010 Martin, a wholesale distributer, made a contract for the purchase of 10,000 gallons of gasoline from the Wilberforce Oil Company. The price was to be determined in accordance with the refinery price as of the close of business on the delivery date. Credit terms were net/30 after delivery. Under these circumstances which of the following statements is true?
- A.
If Martin pays upon delivery, he is entitled to a 2% discount.
- B.
The contract being silent on the place of delivery, Martin has the right to expect delivery at his place of business.
- C.
Although the price has some degree of uncertainty, the contract is enforceable.
- D.
Because the goods involved are tangible, specific performance is a remedy available to Martin.
Correct Answer
C. Although the price has some degree of uncertainty, the contract is enforceable.Explanation
The contract between Martin and Wilberforce Oil Company is enforceable despite the uncertainty in the price. The contract states that the price will be determined based on the refinery price on the delivery date. While this introduces some degree of uncertainty, it does not render the contract unenforceable. The parties have agreed on the method of determining the price, and as long as it is determined in accordance with this agreed-upon method, the contract remains valid.Rate this question:
-
- 11.
8.011 A sheep rancher agreed, in writing, to sell all the wool shorn during the shearing season to a weaver. The contract failed to establish the price and a minimum quantity of wool. After the shearing season, the rancher refused to deliver the wool. The weaver sued the rancher for breach of contract. Under the Sales Article of the UCC, will the weaver win?
- A.
Yes, because this was an output contract.
- B.
Yes, because both price and quantity terms were omitted.
- C.
No, because quantity cannot be omitted for a contract to be enforceable.
- D.
No, because the omission of price and quantity terms prevents the formation of a contract.
Correct Answer
A. Yes, because this was an output contract.Explanation
The weaver will win because this was an output contract. In an output contract, the seller agrees to sell all of their output to a particular buyer. The UCC recognizes output contracts as valid and enforceable, even if the price and quantity terms are omitted. Therefore, the rancher's refusal to deliver the wool constitutes a breach of contract, and the weaver is entitled to sue for damages.Rate this question:
-
- 12.
8.012 Mayker, Inc. and Oylco contracted to have Oylco be the exclusive provider of Mayker's fuel oil for three months. The stated price was subject to increases of up to a total of 10% if the market price increased. The market price rose 25% and Mayker tripled its normal order. Oylco seeks to avoid performance. Oylco's best argument in support of its position is that...
- A.
There was NO meeting of the minds.
- B.
The contract was unconscionable.
- C.
The quantity was NOT definite and certain enough.
- D.
Mayker ordered amounts of oil unreasonably greater than its normal requirements.
Correct Answer
D. Mayker ordered amounts of oil unreasonably greater than its normal requirements. -
- 13.
8.013 Bass Electric Co. has entered an agreement to buy its actual requirements of copper wiriting for six months from the Seymour Metal Wire Company and Seymour Metal has agreed to sell all the copper wiring Bass will require for six months. The agreement between the two companies is...
- A.
Unenforceable because it is too indefinite.
- B.
Unenforceable because it lacks mutuality of obligation.
- C.
Unenforceable because of lack of consideration.
- D.
Valid and enforceable.
Correct Answer
D. Valid and enforceable.Explanation
The agreement between Bass Electric Co. and Seymour Metal Wire Company is valid and enforceable because it states that Bass will buy its actual requirements of copper wiring for six months from Seymour Metal, and Seymour Metal has agreed to sell all the copper wiring Bass will require. This agreement shows a clear intention from both parties to enter into a contract and fulfill their obligations. Additionally, the agreement does not lack mutuality of obligation or consideration, as both parties have agreed to specific terms and conditions. Therefore, the agreement is valid and enforceable.Rate this question:
-
- 14.
8.014 Mara Oil, Inc. had a contract with Gotham Apartments to supply it with its fuel oil needs for the year, approximately 10,000 gallons. The price was fixed at ten cents above the price per gallon that Mara paid for its oil. Due to an exceptionally cold winter, Mara found that its capacity to fulfill this contract was doubtful. Therefore, it contracted Sands Oil Company and offered to assign the contract to it for $100.00. Sands agreed. Which of the following is correct as a result of the above assignment?
- A.
The contract with Gotham was neither assignable nor delegable.
- B.
Mara is now released from any further obligation to perform the Gotham contract.
- C.
Mara has effectively assigned to Sands its rights and delegated its duties under the terms of the contract with Gotham.
- D.
In the event Sands breached the contract with Gotham, Mara has NO liability.
Correct Answer
C. Mara has effectively assigned to Sands its rights and delegated its duties under the terms of the contract with Gotham.Explanation
The passage states that Mara offered to assign the contract to Sands Oil Company, and Sands agreed. This means that Mara has effectively transferred its rights and delegated its duties under the contract to Sands. Therefore, the correct answer is that Mara has effectively assigned to Sands its rights and delegated its duties under the terms of the contract with Gotham.Rate this question:
-
- 15.
8.015 Major Steel Manufacturing, Inc. signed a contract on October 2, 1978, with the Hard Coal & Coke Company for its annual supply of coal for three years commencing on June 1, 1979, at a price to be determined by taking the average monthly retail price per ton, less a ten cent per ton quantity discount. On March 15, 1979, Major discovered that it could readily fulfill is requirements elsewhere at a much greater discount. Major is seeking to avoid its obligation. Which of the following is correct?
- A.
The pricing term is too indefinite and uncertain hence there is NO contract.
- B.
Since the amount of coal required is unknown at the time of the making of the contract, the contract is too indefinite and uncertain to be valid.
- C.
Major is obligated to take its normal annual coal requirements from Hard or respond in damages.
- D.
There is NO contract since Major could conceivably require NO coal during the years in question.
Correct Answer
C. Major is obligated to take its normal annual coal requirements from Hard or respond in damages.Explanation
The correct answer is that Major is obligated to take its normal annual coal requirements from Hard or respond in damages. This is because the contract was signed for a three-year supply of coal, starting on June 1, 1979. Major's discovery of a greater discount elsewhere does not release them from their obligation to fulfill their annual requirements with Hard. If Major fails to do so, they may be held liable for damages.Rate this question:
-
- 16.
8.016 Under the Sales Article of the UCC, in an auction announced in explicit terms to be without reserve, when may an auctioneer withdraw the goods put up for sale? I. At any time until the auctioneer announces completion of the sale. II. If NO bid is made within a reasonable time.
- A.
I only.
- B.
II only.
- C.
Either I and II.
- D.
Neither I nor II.
Correct Answer
B. II only.Explanation
Under the Sales Article of the UCC, an auctioneer may withdraw the goods put up for sale if no bid is made within a reasonable time. This means that if there are no bids made within a reasonable timeframe, the auctioneer has the right to withdraw the goods from the sale. However, once the auctioneer announces completion of the sale, they are not allowed to withdraw the goods. Therefore, the correct answer is II only.Rate this question:
-
- 17.
8.017 Which of the following statements is correct with regard to an auction of goods?
- A.
The auctioneer may withdraw the goods at any time prior to completion of the sale unless the goods are put up without reserve.
- B.
A bidder may retract his bid before the completion of the sale only if the auction is without reserve.
- C.
A bidder's retraction of his bid will revive the prior bid if the sale is with reserve.
- D.
In a sale with reserve, a bid made while the hammer is falling automatically reopens the bidding.
Correct Answer
A. The auctioneer may withdraw the goods at any time prior to completion of the sale unless the goods are put up without reserve.Explanation
The correct answer is that the auctioneer may withdraw the goods at any time prior to completion of the sale unless the goods are put up without reserve. This means that the auctioneer has the right to remove the goods from the auction before the sale is finalized, unless the goods are being sold without a minimum price. This gives the auctioneer flexibility in managing the auction and ensures that they can control the availability of the goods being sold.Rate this question:
-
- 18.
8.018 Grill deals in the repair and sale of new and used clocks. West brought a clock to Grill to be repaired. One of Grill's clerks mistakenly sold West's clock to Hone, another customer. Under the Sales Article of teh UCC, will West win a suit against Hone for the return of the clock?
- A.
No, because the clerk was NOT aware that the clock belonged to West.
- B.
No, because Grill is a merchant to whom goods had been entrusted.
- C.
Yes, because Grill could NOT convey good title to the clock.
- D.
Yes, because the clerk was negligent in selling the clock.
Correct Answer
B. No, because Grill is a merchant to whom goods had been entrusted. -
- 19.
8.019 Baker fraudulently induced Able to sell Baker a painting for $200.00. Subsequently, Baker sold the painting for $10,000.00 to Gold, a good faith purchaser. Able is entitled to...
- A.
Rescind the contract with Baker.
- B.
Recover the painting from Gold.
- C.
Recover damages from Baker.
- D.
Rescind Baker's contract with Gold.
Correct Answer
C. Recover damages from Baker.Explanation
Able is entitled to recover damages from Baker because Baker fraudulently induced Able to sell the painting at a significantly lower price than its actual value. This fraudulent act caused Able to suffer a financial loss. Although Gold is a good faith purchaser, Able cannot recover the painting from Gold because Gold purchased it without knowledge of the fraud. Therefore, the most appropriate course of action for Able is to seek compensation for the damages suffered from Baker.Rate this question:
-
- 20.
8.020 A claim has been made by Donnegal to certain goods in your client's possession. Donnegal will be entitled to the goods if it can be shown that Variance, the party from whom your client purchased the goods, obtained them by...
- A.
Deceiving Donnegal as to his identity at the time of the purchase.
- B.
Giving Donnegal his check which was later dishonored.
- C.
Obtaining the goods from Donnegal by fraud, punishable as larceny under criminal law.
- D.
Purchasing goods which had been previously stolen from Donnegal.
Correct Answer
D. Purchasing goods which had been previously stolen from Donnegal.Explanation
The correct answer is "Purchasing goods which had been previously stolen from Donnegal." This means that if Variance purchased goods that were stolen from Donnegal, then Donnegal would be entitled to the goods. This suggests that the claim made by Donnegal is based on the fact that the goods were stolen from them and subsequently purchased by Variance.Rate this question:
-
- 21.
8.021 Under the Sales Article of the UCC, unless a contract provides otherwise, before title to goods can pass from a seller to a buyer, the goods must be...
- A.
Tendered to the buyer.
- B.
Identified to the contract.
- C.
Accepted by the buyer.
- D.
Paid for.
Correct Answer
B. Identified to the contract.Explanation
Under the Sales Article of the UCC, before title to goods can pass from a seller to a buyer, the goods must be identified to the contract. This means that the specific goods that are being sold must be designated or specified in the contract. This is important because it ensures that both parties are clear on which goods are being transferred and avoids any confusion or disputes. It also allows for the buyer to inspect the goods and make sure they conform to the contract before accepting them.Rate this question:
-
- 22.
8.022 Pulse Corp. maintained a warehouse where it stored its manufactured goods. Pulse received an order from Star. Shortly after Pulse identified the goods to be shipped to Star, but before moving them to the loading dock, a fire destroyed the warehouse and its contents. With respect to the goods, which of the following statements is correct?
- A.
Pulse has title but NO insurable interest.
- B.
Star has title and an insurable interest.
- C.
Pulse has title and an insurable interest.
- D.
Star has title but NO insurable interest.
Correct Answer
C. Pulse has title and an insurable interest.Explanation
Pulse has title and an insurable interest because they owned the goods and had the right to transfer ownership to Star. Even though the goods were destroyed in the fire, Pulse still had the right to be compensated for their loss through insurance because they had an insurable interest in the goods. Star also had title to the goods, but they did not have an insurable interest since they did not own the goods at the time of the fire.Rate this question:
-
- 23.
8.023 Mammoth Furniture, Inc. is in the retail furniture business and has stores located in principal cities in the United States. Its designers created a unique coffee table. After obtaining prices and schedules, Mammoth ordered 2,000 tables to be made to its design and specification for sale as a part of its annual spring sales promotion campaign. Which of the following represents the earliest time Mammoth will have an insurable interest in the tables.
- A.
Upon shipment of conforming goods by the seller.
- B.
When the goods are marked or otherwise designated by the seller as the goods to which the contract refers.
- C.
At the time the contract is made.
- D.
At the time the goods are in Mammoth's position.
Correct Answer
B. When the goods are marked or otherwise designated by the seller as the goods to which the contract refers.Explanation
The earliest time Mammoth will have an insurable interest in the tables is when the goods are marked or otherwise designated by the seller as the goods to which the contract refers. This means that once the seller has identified the specific goods that are being sold under the contract, Mammoth will have an insurable interest in those goods. This is important because it signifies that Mammoth has a legal stake in the goods and can protect its interest through insurance coverage.Rate this question:
-
- 24.
8.024 Under the Sales Article of the UCC, which of the following statements is correct regarding risk of loss and title to the goods under a sale or return contract?
- A.
Title and risk of loss are shared equally between the buyer and the seller.
- B.
Title remains with the seller until the buyer approves or accepts the goods, but risk of loss passes to the buyer immediately following delivery fo the goods to the buyer.
- C.
Title and risk of loss remain with the seller until the buyer pays for the goods.
- D.
Title and risk of loss rest with the buyer until the goods are returned to the seller.
Correct Answer
D. Title and risk of loss rest with the buyer until the goods are returned to the seller.Explanation
In a sale or return contract under the Sales Article of the UCC, the correct statement regarding risk of loss and title to the goods is that title and risk of loss rest with the buyer until the goods are returned to the seller. This means that the buyer is responsible for any damage or loss that occurs to the goods during the period they have possession of them. The seller retains ownership of the goods until they are returned, at which point the title and risk of loss transfer back to the seller.Rate this question:
-
- 25.
8.025 Under the Sales Article of the UCC, when a contract for the sale of goods stipulates that the seller ship the goods by common carrier "FOB purchaser's loading dock," which of the parties bears the risk of loss during shipment.
- A.
The purchaser, because risk of loss passes when the goods are delivered to the carrier.
- B.
The purchaser, because title to the goods passes at the time of shipment.
- C.
The seller, because risk of loss passes only when the goods reach the purchaser's loading dock.
- D.
The seller, because risk of loss remains with the seller until the goods are accepted by the purchaser.
Correct Answer
C. The seller, because risk of loss passes only when the goods reach the purchaser's loading dock.Explanation
The correct answer is that the seller bears the risk of loss until the goods reach the purchaser's loading dock. This is because when the contract stipulates "FOB purchaser's loading dock," it means that the seller is responsible for delivering the goods to the specified location. The risk of loss passes to the purchaser only after the goods have been delivered to their loading dock.Rate this question:
-
- 26.
8.026 Under the Sales Article of the UCC and the United Nations Convention for the International Sale of Goods (CISG), absent specific terms in an international sales shipment contract, when will risk of loss pass to the buyer?
- A.
When the goods are delivered to the first carrier for transmission to the buyer.
- B.
When the goods are tendered to the buyer.
- C.
At the conclusion of the execution of the contract.
- D.
At the time the goods are identified to the contract.
Correct Answer
A. When the goods are delivered to the first carrier for transmission to the buyer.Explanation
According to the Sales Article of the UCC and the United Nations Convention for the International Sale of Goods (CISG), the risk of loss passes to the buyer when the goods are delivered to the first carrier for transmission to the buyer. This means that once the goods are in the possession of the carrier and are being transported to the buyer, the buyer assumes the risk of any loss or damage that may occur during transit. This is the default rule in the absence of any specific terms in the sales shipment contract.Rate this question:
-
- 27.
8.027 Under the Sales Article of the UCC, which of the following factors is most important in determining who bears the risk of loss in a sale of goods contract?
- A.
The method of shipping the goods.
- B.
The contract's shipping terms.
- C.
Title to the goods.
- D.
How the goods were lost.
Correct Answer
B. The contract's shipping terms.Explanation
The contract's shipping terms are the most important factor in determining who bears the risk of loss in a sale of goods contract. The shipping terms typically outline the responsibilities and obligations of both the buyer and the seller regarding the transportation of the goods. These terms determine at what point the risk of loss transfers from the seller to the buyer. Therefore, understanding and agreeing upon the shipping terms in the contract is crucial in determining who ultimately bears the risk of loss.Rate this question:
-
- 28.
8.028 Under the Sales Article of the UCC, in an FOB place of shipment contract, the risk of loss passes to the buyer when the goods...
- A.
Are identified to the contract.
- B.
Are placed on the seller's loading dock.
- C.
Are delivered to the carrier.
- D.
Reach the buyer's loading dock.
Correct Answer
C. Are delivered to the carrier.Explanation
In an FOB place of shipment contract, the risk of loss passes to the buyer when the goods are delivered to the carrier. This means that once the seller hands over the goods to the carrier, the buyer becomes responsible for any loss or damage that may occur during transit. The seller's responsibility ends once the goods are in the possession of the carrier, and from that point onwards, it is the buyer's responsibility to ensure the safe delivery of the goods to their destination.Rate this question:
-
- 29.
8.029 Under the Sales Article of the UCC, which of the following events will result in the risk of loss passing from a merchant seller to a buyer? I. Tender of the goods at the seller's place of business. II. Use of the seller's truck to deliver the goods.
- A.
Both I and II.
- B.
Only I.
- C.
Only II.
- D.
Neither I nor II.
Correct Answer
D. Neither I nor II.Explanation
Under the Sales Article of the UCC, the risk of loss generally passes from the seller to the buyer when the goods are delivered. In this case, neither I nor II will result in the risk of loss passing from the merchant seller to the buyer. Tender of the goods at the seller's place of business does not automatically transfer the risk of loss, and the use of the seller's truck to deliver the goods does not affect the transfer of risk either. Therefore, neither I nor II will result in the risk of loss passing from the merchant seller to the buyer.Rate this question:
-
- 30.
8.030 Quick Corp. agreed to purchase 200 typewriters from Union Suppliers, Inc. Union is a wholesaler of appliances and Quick is an appliance retailer. The contract required Union to ship the typewriters to Quick by common carrier, "FOB Union Suppliers, Inc. Loading Dock." Which of the parties bears the risk of loss during shipment?
- A.
Union, because the risk of loss passes only when Quick receives the typewriters.
- B.
Union, because both parties are merchants.
- C.
Quick, because title to the typewriters passed to Quick at the time of shipment.
- D.
Quick, because the risk of loss passes when the typewriters are delivered to the carrier.
Correct Answer
D. Quick, because the risk of loss passes when the typewriters are delivered to the carrier.Explanation
Quick bears the risk of loss during shipment because the contract states that the typewriters are to be shipped "FOB Union Suppliers, Inc. Loading Dock." FOB stands for "Free on Board," which means that the seller (Union) is responsible for the goods until they are delivered to the carrier (the common carrier in this case). Once the goods are delivered to the carrier, the risk of loss transfers to the buyer (Quick). Therefore, Quick is responsible for any loss or damage that may occur during shipment.Rate this question:
-
- 31.
8.031 Which of the following statements applies to a sale on approval under the UCC Sales Article?
- A.
Both the buyer and seller must be merchants.
- B.
The buyer must be purchasing the goods for resale.
- C.
Risk of loss for the goods passes to the buyer when the goods are accepted after the trial period.
- D.
Title to the goods passes to the buyer on delivery of the goods to the buyer.
Correct Answer
C. Risk of loss for the goods passes to the buyer when the goods are accepted after the trial period.Explanation
In a sale on approval under the UCC Sales Article, the buyer has the option to return the goods after a trial period. During this trial period, the risk of loss for the goods remains with the seller. It is only after the buyer accepts the goods, indicating their intention to keep them, that the risk of loss transfers to the buyer. This means that if the goods are damaged or lost during the trial period, the seller is responsible for any losses.Rate this question:
-
- 32.
8.032 Bond purchased a painting from Wool, who is not in the busines of selling art. Wool tendered delivery of the painting after receiving payment in frull from Bond. bond informed Wool that Bond would be unable to take possession of the painting until later in the day. Thieves stold the painting before Bond returned. The risk of loss...
- A.
Passed to Bond at Wool's tender of delivery.
- B.
Passed to Bond at hte time the contract was formed and payment was made.
- C.
Remained with Wool, because the parties agreed on a later time of delivery.
- D.
Remained with Wool, because Bond had not yet received the painting.
Correct Answer
A. Passed to Bond at Wool's tender of delivery.Explanation
The risk of loss passed to Bond at Wool's tender of delivery. This means that once Wool delivered the painting to Bond, the risk of any damage or loss to the painting became Bond's responsibility. Even though Bond was unable to take possession of the painting immediately, the risk still transferred to him at the time of delivery.Rate this question:
-
- 33.
8.033 On May 2, Lace Corp., an appliance wholesaler, offered to sell appliances worth $3,000.00 to Parco, Inc., a hosehold appliances retailer. The offer was signed by Lace's president, and provided that it would not be withdrawn before June 1. It also included the shipping terms: "FOB--Parco's warehouse." on May 29, Parco mailed an acceptance of Lace's offer. Lace received the acceptance on June 2. Which of the following statements is correct if Lace sent Parco a telegram revoking its offer, and Parco received the telegram on may 25?
- A.
A contract was formed on May 2.
- B.
Lace's revocation effectively terminated its offer on May 25.
- C.
Lace's revocation was ineffective because the offer could NOT be revoked before June 1.
- D.
No contract was formed because lace received Parco's acceptance after June 1.
Correct Answer
C. Lace's revocation was ineffective because the offer could NOT be revoked before June 1.Explanation
The correct answer is Lace's revocation was ineffective because the offer could NOT be revoked before June 1. This is because the offer clearly stated that it would not be withdrawn before June 1. Therefore, Lace's attempt to revoke the offer on May 25 was not valid and the offer remained open.Rate this question:
-
- 34.
8.034 On May 2, Lace Corp., an appliance wholesaler, offered to sell appliances worth $3,000.00 to Parco, Inc., a hosehold appliances retailer. The offer was signed by Lace's president, and provided that it would not be withdrawn before June 1. It also included the shipping terms: "FOB--Parco's warehouse." on May 29, Parco mailed an acceptance of Lace's offer. Lace received the acceptance on June 2. Risk of loss for the appliances will pass to Parco when they are...
- A.
Identified to the contract.
- B.
Shipped by Lace.
- C.
Tendered at Parco's warehouse.
- D.
Accepted by Parco.
Correct Answer
C. Tendered at Parco's warehouse.Explanation
The risk of loss for the appliances will pass to Parco when they are tendered at Parco's warehouse. This means that once Lace delivers the appliances to Parco's warehouse and makes them available for Parco to take possession, the risk of any damage or loss to the appliances will be transferred from Lace to Parco. The fact that Parco mailed their acceptance of Lace's offer on May 29 and Lace received it on June 2 is not relevant to determining when the risk of loss passes.Rate this question:
-
- 35.
8.035 On May 2, Lace Corp., an appliance wholesaler, offered to sell appliances worth $3,000.00 to Parco, Inc., a hosehold appliances retailer. The offer was signed by Lace's president, and provided that it would not be withdrawn before June 1. It also included the shipping terms: "FOB--Parco's warehouse." on May 29, Parco mailed an acceptance of Lace's offer. Lace received the acceptance on June 2. If Lace inadvertently ships the wrong appliances to Parco and Parco rejects them two days after receipt, title to the goods will...
- A.
Pass to Parco when they are identified in the contract.
- B.
Pass to Parco when they are shipped.
- C.
Remain with Parco until the goods are returned to Lace.
- D.
Revert to Lace when they are rejected by Parco.
Correct Answer
D. Revert to Lace when they are rejected by Parco.Explanation
If Lace inadvertently ships the wrong appliances to Parco and Parco rejects them two days after receipt, title to the goods will revert to Lace when they are rejected by Parco. This is because under the Uniform Commercial Code (UCC), when goods are rejected by the buyer, the title to the goods goes back to the seller. In this case, Parco's rejection of the wrong appliances would trigger the reversion of title to Lace.Rate this question:
-
- 36.
8.036 Cey Corp. entered into a contract to sell parts to Deck, Ltd. The contract provided that the goods would be shipped "FOB Cey's warehouse." Cey shipped parts different from those specified in the contract. Deck rejected the parts. A few hours after Deck informed Cey that the parts were rejected, they were destroyed by a fire in Deck's warehouse. Cey believed that the parts were conforming to the contract. Which of the following statements is correct?
- A.
Regardless of whether the parts were conforming, Deck will bear the loss because the contract was a shipment contract.
- B.
If the parts were nonconforming, Deck had the right to reject them, but the risk of loss remains with Deck until Cey takes possession of the parts.
- C.
If the parts were conforming, risk of loss does NOT pass to Deck until a reasonable period of time after they are delivered to Deck.
- D.
If the parts were nonconforming, Cey will bear the risk of loss, even though the contract was a shipment contract.
Correct Answer
D. If the parts were nonconforming, Cey will bear the risk of loss, even though the contract was a shipment contract.Explanation
If the parts were nonconforming, Cey will bear the risk of loss, even though the contract was a shipment contract. This means that even though Deck had the right to reject the nonconforming parts, the risk of loss still remains with Cey until they take possession of the parts. Therefore, in this situation, Cey would be responsible for the loss caused by the fire in Deck's warehouse.Rate this question:
-
- 37.
8.037 Which of the following factors is most important in deciding who bears the risk of loss between merchants when goods are destroyed during shipment?
- A.
The agreement of the parties.
- B.
Whether the goods are perishable.
- C.
Who has title at the time of the loss.
- D.
The terms of applicable insurance policies.
Correct Answer
A. The agreement of the parties.Explanation
The most important factor in deciding who bears the risk of loss between merchants when goods are destroyed during shipment is the agreement of the parties. This means that the merchants can come to a mutual understanding and determine who will be responsible for the loss. This agreement can be based on various factors such as the nature of the goods, the value of the goods, and the terms of their contract. The agreement of the parties allows for flexibility and customization in determining the allocation of risk in case of loss during shipment.Rate this question:
-
- 38.
8.038 On Monday, Wolfe paid Aston Co., a furniture retailer, $500.00 for a table. On Thursday, Aston notified Wolfe that the table was ready to be picked up. on Saturday, while Aston was still in possession of the table, it was destroyed in a fire. Who bears the risk of loss of the table?
- A.
Wolfe, because Wolfe had title to the table at the time of the loss.
- B.
Aston, unless Wolfe is a merchant.
- C.
Wolfe, unless Aston breached the contract.
- D.
Aston, because Wolfe had NOT yet taken possession of the table.
Correct Answer
D. Aston, because Wolfe had NOT yet taken possession of the table.Explanation
The correct answer is Aston, because Wolfe had NOT yet taken possession of the table. Since the table was still in Aston's possession at the time of the fire, Aston bears the risk of loss. According to the principle of risk of loss, the party who has possession of the goods at the time of the loss is responsible for any damage or destruction. Since Wolfe had not yet taken possession of the table, he is not liable for the loss.Rate this question:
-
- 39.
8.039 If goods have been delivered to a buyer pursuant to a sale or return contract, the...
- A.
Buyer may use the goods but NOT sell them.
- B.
Seller is liable for the expenses incurred by the buyer in returning the goods to the seller.
- C.
Title to the goods remains with the seller.
- D.
Risk of loss for the goods passed to the buyer.
Correct Answer
D. Risk of loss for the goods passed to the buyer.Explanation
In a sale or return contract, the buyer has the right to return the goods if they are unsatisfied. However, until the goods are returned, the buyer assumes the risk of any loss or damage that may occur to the goods. This means that if the goods are lost or damaged while in the possession of the buyer, they are responsible for the loss. Therefore, the correct answer is that the risk of loss for the goods passed to the buyer.Rate this question:
-
- 40.
8.040 Sand Corp. sold and delivered a photocopier to Barr for use in Barr's business. According to their agreement, Barr may return the copier within 30 days. During the 30-day period, if Barr has NOT returned the copier or indicated acceptance of it, which of the following statements is correct with respect to the risk of loss and title?
- A.
Risk of loss and title passed to Barr.
- B.
Risk of loss and title remain with Sand.
- C.
Risk of loss passed to Barr but title remains with Sand.
- D.
Risk of loss remains with Sand but title passed to Barr.
Correct Answer
B. Risk of loss and title remain with Sand.Explanation
If Barr has not returned the copier or indicated acceptance of it within the 30-day period, the risk of loss and title remain with Sand Corp. This means that Sand Corp. is still responsible for any damage or loss that may occur to the copier during this time, and they still retain ownership of the copier. Barr does not assume any responsibility or ownership until they either return the copier or indicate acceptance of it.Rate this question:
-
- 41.
8.041 Which of the following is most important in determining who bears the risk of loss in a sale of goods contract?
- A.
The shipping terms.
- B.
The agreement of the parties.
- C.
Who has title to the goods.
- D.
Who has possession of the goods.
Correct Answer
B. The agreement of the parties.Explanation
The agreement of the parties is the most important factor in determining who bears the risk of loss in a sale of goods contract. This is because the parties involved can negotiate and specify the terms and conditions regarding the transfer of risk in the contract. The shipping terms, who has title to the goods, and who has possession of the goods are all relevant factors, but they are secondary to the agreement of the parties.Rate this question:
-
- 42.
8.042 Bell Co. owned 20 engines which it deposited in a public warehouse on May 5, receiving a negotiable warehouse receipt in its name. Bell sold the engines to Spark Corp. On which of the following dates did the risk of loss transfer from Bell to Spark?
- A.
June 11--Spark signed a contract to buy the engines from Bell for $19,000.00. Delivery was to be at the warehouse.
- B.
June 12--Spark paid for the engines.
- C.
June 13--Bell negotiated the warehouse receipt to Spark
- D.
June 14--Spark received delivery of the engines at the warehouse.
Correct Answer
C. June 13--Bell negotiated the warehouse receipt to SparkExplanation
The risk of loss transferred from Bell to Spark on June 13 when Bell negotiated the warehouse receipt to Spark. This means that Bell transferred the ownership and responsibility of the engines to Spark by transferring the negotiable warehouse receipt. This indicates that Spark now has control over the engines and any potential loss or damage would be their responsibility.Rate this question:
-
- 43.
8.043 Bell by telegram to Major Corp. ordered 10,000 yards of fabric, first quality, 50% wool and 50% cotton. THe shipping terms were FOB Bell's factory in Akron, Ohio. Major accepted the order and packed the fabric for shipment. In the process it discovered that one-half of the fabric packed had been commingled with fabric which was 30% wool and 70% cotton. Since Major did not have any additional 50% wool fabric, it decided to send the shipment to Bell as an accomodation. The goods were shipped and later the same day Major wired Bell its apology informing Bell of the facts and indicating that the 5,000 yards of 30% wool would be priced at $2.00 per yard less. The carrier delivering the goods was destroyed on the way to Akron. Under the circumstances, who bears the risk of loss?
- A.
Bell, since Bell has title to the goods.
- B.
Major, because the order was NOT a signed writing.
- C.
Bell, since the shipping terms were FOB Bell's place of business.
- D.
Major, since they shipped goods which failed to conform to the contract.
Correct Answer
D. Major, since they shipped goods which failed to conform to the contract.Explanation
Under the given circumstances, Major bears the risk of loss because they shipped goods that did not meet the specifications of the contract. Although Major informed Bell about the mix-up and offered a discounted price for the fabric, the fact remains that they sent a shipment that did not conform to the agreed-upon terms. Therefore, Major is responsible for any loss or damage that may occur during transportation.Rate this question:
-
- 44.
8.044 A dispute has arisen between two merchants over the question of who has the risk of loss in a given sales transaction. The contract does not specifically cover the point. The goods were shipped to the buyer who rightfully rejected them. Which of the following factors will be the most important factor in resolving their dispute?
- A.
Who has title to the goods.
- B.
The shipping terms.
- C.
The credit terms.
- D.
The fact that a breach has occurred.
Correct Answer
D. The fact that a breach has occurred.Explanation
The most important factor in resolving the dispute between the two merchants is the fact that a breach has occurred. This means that one of the parties involved has failed to fulfill their obligations under the contract, which can have implications for determining who bears the risk of loss. The breach may affect the legal rights and responsibilities of the parties involved, and can impact the resolution of the dispute. The other factors mentioned, such as who has title to the goods, the shipping terms, and the credit terms, may also be relevant in determining the outcome, but the fact of a breach is likely to be the most significant factor.Rate this question:
-
- 45.
8.045 Buyer ordered goods from Seller. The contract required Seller to deliver them FOB Buyer's place of business. Buyer inspected the goods, discovered they failed to conform to the contract, and rightfully rejected them. In the event of loss of the oods, which of the following is a correct statement?
- A.
Seller initially had the risk of loss and it remains with him after delivery.
- B.
Risk of loss passes to Buyer upon tender of the goods FOB Buyer's place of business.
- C.
Buyer initially had the risk of loss, but it is shifted to SEller upon rightful rejection.
- D.
If Seller used a public carrier to transport the goods to Buyer, risk of loss is on Buyer during transit.
Correct Answer
A. Seller initially had the risk of loss and it remains with him after delivery.Explanation
The correct answer is that the seller initially had the risk of loss and it remains with him after delivery. This is because the contract required the seller to deliver the goods FOB (Free on Board) the buyer's place of business. Under FOB terms, the seller is responsible for the goods until they are delivered to the buyer's specified location. Therefore, if there is any loss or damage to the goods during transit, it is the seller's responsibility.Rate this question:
-
- 46.
8.046 Duval Liquor Wholesalers, Inc. stored its inventory of goods in the Reliable Warehouse Company. Duval's shipments would arrive by truck and be deposited with Reliable who would in turn issue negotiable warehouse receipts to Duval. Duval would resell the liquor by transferring the negotiable warehouse receipts to the buyer who was responsible for transporting it to his place of business. In one of the sales of liquor to a retailer, the liquor was badly damaged and a question has arisen as to who has the risk of loss, Duval or the retailer. If the contract is silent on this point, when did the risk of loss pass to the retailer?
- A.
When the goods have been placed on the warehouseman's delivery dock awaiting pick up by the retailer.
- B.
When the goods have been identified to the contract.
- C.
On his receipt of the negotiable warehouse receipts covering the goods.
- D.
When the goods have been properly loaded upon the retailer's carrier.
Correct Answer
C. On his receipt of the negotiable warehouse receipts covering the goods.Explanation
The correct answer is "On his receipt of the negotiable warehouse receipts covering the goods." This means that the risk of loss passes to the retailer when they receive the negotiable warehouse receipts. These receipts serve as proof of ownership and transfer the responsibility of the goods to the retailer. The contract being silent on this point means that the default rule applies, which is that the risk of loss transfers when the negotiable warehouse receipts are received.Rate this question:
-
- 47.
8.047 Under the Sales Article of the UCC, most goods sold by merchants are covered by certain warranties. An example of an express warranty would be a warranty of...
- A.
Usage of trade.
- B.
Fitness for a particular purpose.
- C.
Merchantability.
- D.
Conformity of goods to sample.
Correct Answer
D. Conformity of goods to sample.Explanation
An express warranty is a guarantee or promise made by the seller regarding the quality, condition, or performance of the goods being sold. It can be created through statements, advertisements, or descriptions of the goods. In this case, a warranty of conformity of goods to sample means that the goods being sold will match the sample shown or provided to the buyer. This means that the buyer can expect the goods to be identical or similar to the sample in terms of quality, appearance, and specifications.Rate this question:
-
- 48.
8.048 Which of the following factors result(s) in an express warranty with respect to a sale of goods? I. The seller's description of the goods is part of the basis of the bargain. II. The seller selects goods knowing the buyer's intended use.
- A.
I only.
- B.
II only.
- C.
Both I and II.
- D.
Neither I nor II.
Correct Answer
A. I only.Explanation
An express warranty is created when the seller's description of the goods becomes part of the basis of the bargain. This means that the buyer relies on the seller's description when deciding to purchase the goods. In this case, factor I satisfies this requirement as the seller's description is considered in the sale. Factor II, on the other hand, does not result in an express warranty as it does not involve the seller's description of the goods. Therefore, the correct answer is I only.Rate this question:
-
- 49.
8.049 An important fator in determining if an express warranty has been created is whether the...
- A.
Statements made by the seller became part of the basis of the bargain.
- B.
Sale was made by a merchant in the regular course of business.
- C.
Statements made by the seller were in writing.
- D.
Seller intended to create a warranty.
Correct Answer
A. Statements made by the seller became part of the basis of the bargain.Explanation
The correct answer is "Statements made by the seller became part of the basis of the bargain." This means that for an express warranty to be created, the statements made by the seller must have influenced the buyer's decision to enter into the contract. In other words, the buyer relied on the seller's statements when making the purchase. This is an important factor because it shows that the seller made specific promises or guarantees about the product, which can be legally enforceable.Rate this question:
-
- 50.
8.050 Which of the following factors will be most important in determining whether an express warranty has been created concerning goods sold?
- A.
The seller gave a description of the goods that is part of the basis of the bargain.
- B.
The buyer or seller is a merchant with respect to the goods being sold.
- C.
Whether the seller intended to create the express warranty.
- D.
Whether the buyer relied on the seller's statements.
Correct Answer
A. The seller gave a description of the goods that is part of the basis of the bargain.Explanation
The most important factor in determining whether an express warranty has been created concerning goods sold is whether the seller gave a description of the goods that is part of the basis of the bargain. This means that if the seller provided a description of the goods that influenced the buyer's decision to purchase them, it can be considered an express warranty. The other factors mentioned, such as the buyer or seller being a merchant, the seller's intent to create a warranty, and the buyer's reliance on the seller's statements, are also relevant but not as crucial as the description of the goods.Rate this question:
-
Quiz Review Timeline +
Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.
-
Current Version
-
Mar 21, 2023Quiz Edited by
ProProfs Editorial Team -
Feb 19, 2012Quiz Created by
Inigoimago
Back to top