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Law
Q:
A buyer has an insurable interest in identified goods.
Q:
In general, a buyer's breach of a contract causes the risk of loss to shift to the buyer.
Q:
A contract in which a buyer is allowed to take goods on a trial basis is a sale or return.
Q:
Under the UCC, a consignment is a sale on approval.
Q:
A contract in which a buyer takes goods primarily for resale, with a right to return any goods that fail to sell, is a sale on approval.
Q:
When a buyer agrees to buy goods held by a bailee, unless otherwise explicitly agreed, the risk of loss passes to the buyer when the price is paid.
Q:
If a seller is not a merchant, the risk of loss to goods held by the seller passes to a buyer only when the buyer takes physical possession of the goods.
Q:
If a seller is a merchant, the risk of loss to goods held by the seller passes to a buyer when the buyer takes physical possession of the goods.
Q:
C.I.F. stands for cost, insurance, freight.
Q:
Under a shipment contract, the risk of loss passes to the buyer only when the seller tenders conforming goods to the buyer at the specified destination.
Q:
When the risk of loss for goods passes from a seller to a buyer is generally determined by the contract between the parties.
Q:
Entrusting goods to a merchant who deals in goods of that kind gives the merchant the power to transfer all rights to a buyer in the ordinary course of business.
Q:
An innocent buyer from a thief acquires title to the goods as a good faith purchaser.
Q:
Unless a contract provides otherwise, it is assumed to be a destination contract.
Q:
A bill of lading is a receipt for goods that is signed by a carrier and serves as a contract for the transportation of goods.
Q:
In all circumstances, title passes to the buyer at the time and place at which the seller physically delivers the goods.
Q:
Fungible goods are goods that are alike by physical nature, agreement, or trade usage.
Q:
If a contract calls for the lease of specific and ascertained goods that are already in existence, identification takes place at the time payment is made.
Q:
Before any interest in specific goods can pass from the seller to the buyer, the goods must exist and be identified to the contract.
Q:
Quality Computer Company agrees to sell one hundred hard drives to Retail Electronics, Inc. The hard drives, which Retail Electronics expressly requires to have certain amounts of memory, are to be shipped "F.O.B. Retail Electronics distribution center in Memphis, TN." When the drives arrive, Retail Electronics rejects them and informs Quality Computer, claiming that the drives do not conform to Retail Electronics' memory requirement. A few hours later, the drives are destroyed in a fire at Retail Electronics' distribution center. Will Quality Computer succeed in a suit against Retail Electronics for the cost of the goods?
Q:
American Fabrics, Inc., in New York City sells certain material to Ben's Craft Stores in Omaha, Nebraska. American packs the fabric and ships it by rail to Ben's. In transit across Iowa, a tornado derails the train and scatters and shreds the fabric across miles of cornfields. What are the consequences if Ben's bore the risk? What if American bore the risk?
Q:
Peak Sales Corporation orders goods from Quick Stock Company. Peak plans to market the goods to consumers generally. Quick identifies the goods. Before they are shipped to Peak, an insurable interest in the goods exists in
a. Peak and Quick, but not consumers generally.
b. Peak, Quick, and consumers generally.
c. Peak only.
d. Quick only.
Q:
Good Food Corporation buys from Home Farms, Inc., a rice crop that Home Farms plans to plant and harvest during the next growing season. Good Food plans to sell the rice to Interstate Grocery Stores. After the rice is planted, but before it is harvested, an insurable interest in the rice exists in
a. Good Food and Home Farms, but not Interstate Grocery.
b. Good Food, Home Farms, and Interstate Grocery.
c. Good Food only.
d. Home Farms only.
Q:
Current Stores accepts a shipment of DVD players from Eastside Video, Inc. Current later discovers a defect in the players, revokes acceptance, and returns the players via Fastback, Inc. During the return, the players are lost. The loss is suffered by
a. Current only.
b. Current and Eastside, but not Fastback.
c. Current, Eastside, and Fastback.
d. Eastside only.
Q:
Town Style Stores orders leather jackets from Universal Clothing Company. Universal mistakenly ships denim jackets, which Town rejects and returns via Value Transport, Inc. During the return, the jackets are lost. The loss is suffered by
a. Town only.
b. Town and Universal, but not Value.
c. Town, Universal, and Value.
d. Universal only.
Q:
Regal Recreation Sales, Inc., allows Sandy to take a Regal boat for a "test run." Sandy tries the boat for a few hours, returns, and buys it. This is
a. a bailment.
b. a consignment.
c. a sale on approval.
d. a sale or return.
Q:
Eagle Company sells new and used motorcycles. Some of the motorcycles are held on consignment, including six consigned by Fine Cycles, Inc. While the Fine cycles are in Eagle's possession, title to them is held by
a. Eagle and Fine jointly.
b. Eagle only.
c. Eagle's creditors only.
d. Fine only.
Q:
Quality Watches, Inc., ships an assortment of timepieces to Retail Jewelers, Inc., which agrees to pay for items that are not returned within six months. This is
a. a bailment.
b. a consignment.
c. a sale on approval.
d. a sale or return.
Q:
Alan buys a bicycle from Best Bike Store, which agrees to keep the bike for Alan until he picks it up. Before Alan gets the bike, a fire destroys the store and the bike. The loss is suffered by
a. Alan and Best.
b. Alan only.
c. Best only.
d. neither Alan nor Best
Q:
Delta Products Corporation contracts with Excel Trucking Company to take goods to Flight Airlines, Inc., with Flight to transport the goods to a Geo Storage Company warehouse. Excel, Flight, and Geo each acknowledge possession of the goods by a document of title. Excel, Flight, and Geo are
a. bailees.
b. consignees.
c. lessees.
d. sellers.
Q:
In Case 21.2, Windows, Inc. v. Jordan Panel System Corp., a company in New York City contracted to purchase windows from a company in South Dakota. Although the windows were damaged while being transported by a freight carrier to New York, the New York company could not recover damages from the South Dakota company because the
a. seller can never be held liable for damage to goods that occurs after the goods have been transferred to a carrier for shipment.
b. court improperly applied UCC 2-509(1)(a) to the facts of the case.
c. delivery destination language in the contract was ambiguous, so the risk of loss passed from the seller to the buyer when the goods were transferred to the freight carrier for shipment.
d. buyer always bears the risk of loss once the seller delivers the goods to a freight carrier for shipment.
Q:
A-1 Furnishings, Inc., agrees to lease a desk to Business Resources, Inc. (BRI), which requests that the desk be left outside City Warehouse for BRI to pick up. Before BRI retrieves the desk, it is stolen. The loss is suffered by
a. A-1 Furnishings and BRI, but not City Warehouse.
b. A-1 Furnishings, BRI, and City Warehouse.
c. A-1 Furnishings only.
d. BRI only.
Q:
Fine Material Corporation in New Jersey sells fifty tons of fabric to Great Clothing, Inc., in Ohio, F.O.B. New Jersey. The cost of transporting the fabric to Ohio will be paid by
a. Fine Material.
b. Great Clothing.
c. New Jersey.
d. Ohio.
Q:
Martin buys 1,000 bales of hay from Nuevo Farms. The parties agree that the hay will be transported F.A.S. via Overland Transport Company. Nuevo Farms' truck carrying the hay explodes before reaching Overland Transport. The loss is suffered by
a. Martin and Nuevo Farms, but not Overland Transport.
b. Martin, Nuevo Farms, and Overland Transport.
c. Martin only.
d. Nuevo Farms only.
Q:
Home Products Store buys furniture from Imperial Furniture, Inc. The parties agree that the furniture will be shipped "F.O.B. Imperial's warehouse" to Home Products via Jiffy Shipping Corporation. The furniture is lost in transit. The loss is suffered by
a. Home Products and Imperial Furniture, but not Jiffy Shipping.
b. Home Products, Imperial Furniture, and Jiffy Shipping.
c. Home Products only.
d. Imperial Furniture only.
Q:
Beth leaves a pair of new shoes at Carl's Shoe Store to be dyed. Carl's sells the shoes to Dian, who does not know that the shoes belong to Beth. Beth can recover from
a. Carl's Shoe Store only.
b. Carl's Shoe Store or Dian.
c. Dian only.
d. neither Dian nor Carl's Shoe Store.
Q:
Southern Distribution, Inc., signs a receipt for goods that will also serve as a contract for the goods' transport. This is
a. a bill of lading.
b. a destination contract.
c. a shipment contract.
d. a warehouse receipt.
Q:
A contract between Fresh Fruit Corporation and Green Grocer, Inc., requires Fresh Fruit to deliver goods to Green Grocer's place of business. This is
a. a bill of lading.
b. a destination contract.
c. a shipment contract.
d. a warehouse receipt.
Q:
Quality Farm Supply, Inc., sells farm machinery to Rob and other grain farmers. Of these products, fungible goods include
a. grain only.
b. grain and machinery.
c. machinery only.
d. neither grain nor machinery.
Q:
Blend Juice Company contracts to buy a fruit crop from Citrus Farms. Before an interest in the fruit can pass from Citrus to Blend, Citrus must
a. arrange for shipment of the fruit and receive payment for it.
b. arrange for shipment of the fruit only.
c. receive payment for the fruit only.
d. none of the above.
Q:
Office Equipment Leasing, Inc. (OEL), agrees to lease five computer workstations to Product Promotion Corporation (PPC). Before any interest in the workstations can pass from OEL to PPC, they must be
a. in existence only.
b. identified as the specific goods designated in the contract only.
c. in existence and identified as the goods in the contract.
d. none of the above.
Q:
A buyer and a seller cannot normally have an insurable interest in identical goods at the same time.
Q:
When a buyer breaches a contract, the risk of loss immediately shifts to the seller.
Q:
In a sale on approval, title and risk of loss pass only when the buyer accepts the goods.
Q:
When goods are in a consignee's possession, the consignee's creditors will prevail over the consignor in an action to repossess the goods.
Q:
In a sale or return, the seller delivers the goods to the buyer with the understanding that the buyer can set aside the deal by returning the goods.
Q:
If a seller is not a merchant, and the goods are not to be moved, the risk of loss passes to a buyer on tender of delivery.
Q:
If a seller is not a merchant, the seller holds the goods, and the buyer is to pick them up, the risk of loss passes to the buyer on tender of delivery.
Q:
If a seller is a merchant, and the goods are not to be moved, the risk of loss passes to a buyer when the buyer takes physical possession of the goods.
Q:
If a seller is a merchant, and the goods are not to be moved, the risk of loss passes to a buyer on tender of delivery.
Q:
A warehousing company that normally issues documents of title for goods it receives is a bailee.
Q:
Under a destination contract, the risk of loss passes to the buyer when the goods are duly delivered to the carrier.
Q:
Under a shipment contract, the risk of loss passes to the buyer when the seller places conforming goods in the possession of the carrier.
Q:
When a lessee sells leased equipment to a third party, the lessor cannot, under any circumstances, recover the equipment from the buyer.
Q:
A lessor with voidable title has the power to transfer a valid leasehold interest to a good faith lessee for value.
Q:
When no document of title is required and delivery is made without moving the goods, title to identified goods passes when a contract for their sale is made.
Q:
When a document of title is required, title passes to a buyer when and where the document is delivered.
Q:
When an owner holds fungible goods as a tenant in common, the owner can pass title to the goods to a buyer only by physically separating the goods.
Q:
In contracts involving a sale of unborn animals to be born within twelve months, identification takes place when the animals are conceived.
Q:
If a sale involves crops that are to be harvested within twelve months, identification takes place when the crops are planted or begin to grow.
Q:
Under the UCC, title determines all of the rights and remedies of the parties to a sales contract.
Q:
Hatter owns 360 acres of land in Bear County. Hatter makes three separate contracts, in writing, with Bean concerning the land. First, Hatter contracts to sell Bean 500 tons of gravel from a quarry located on the land for a stated price. The contract calls for Bean to remove the gravel. The second contract sells to Bean all the wheat currently growing on a 40-acre tract. Hatter is obligated under the contract to harvest the wheat and deliver it to Bean. The third contract is for the sale of the northeast 90 acres with all corn standing. Which of these contracts, if any, falls under the Uniform Commercial Code and why?
Q:
Donna orally agrees to sell a tool shed to Erv for $450. Donna removes the shed from her property and takes it to Erv's place. When Erv does not pay, Donna sues. Erv claims that the sale of the shed was an oral contract that is not enforceable under the Statute of Frauds. What is the court likely to conclude?
Q:
In Case 3, Jones v. Star Credit Corp., which of the following factors was not considered by the court when it declared a contract for the purchase of a freezer unconscionable:
a. The price the plaintiffs were charged was more than four times the freezer's retail value.
b. The credit charges alone exceeded the freezer's retail value.
c. The seller knew of the buyers' limited resources.
d. The freezer was not merchantable.
Q:
Timber Products, Inc., and Walt, a consumer, enter into a contract for a sale of plywood. If the contract includes a clause that is perceived as grossly unfair to Walt, its enforcement may be challenged under the doctrine of
a. good faith.
b. square dealing.
c. the mere image rule.
d. unconscionability.
Q:
Recreational Supplies, Inc. (RSI), and Sam, the owner of a Tourist Time shop, orally agree to a sale of beach balls and seashells for $1,000. Sam gives RSI a check for $400 as a partial payment. This contract is
a. enforceable to the extent of $400.
b. fully enforceable because it is for specially made goods.
c. fully enforceable because it is oral.
d. not enforceable.
Q:
Kelly offers to buy cooking oil from Jim. Jim believes Kelly asks for 10,000 gallons and orally agrees to the sale. When the parties later dispute the deal in court, Jim's claim of 10,000 gallons and Kelly's testimony that she ordered only 1,000 gallons
a. prevents the enforcement of any contract between these parties.
b. supports an enforceable contract for 10,000 gallons.
c. supports an enforceable contract for 5,500 gallons.
d. supports an enforceable contract for 1,000 gallons.
Q:
Fresh Produce, Inc., and Great Grocery Stores dispute the interpretation of an ambiguous phrase in their contract. In a suit between the parties to construe the contract, a court may accept evidence of
a. consistent additional terms only.
b. consistent additional terms and contradictory terms only.
c. contradictory terms only.
d. anything extrinsic to the contract.
Q:
AAA Rental Corporation and Bright Lights, Inc., are parties to an oral agreement for a lease of goods with payments in excess of $10,000. They may satisfy the Statute of Frauds by
a. mutually agreeing not to commit fraud.
b. restating the terms in a phone call.
c. setting out the terms in an e-mail.
d. shaking hands on the deal.
Q:
Packaging Products, Inc., sends its standard purchase-order form to Quality Box Company to evidence a sale of packaging material. Quality responds with its own standard order form. Additional terms in Quality's form automatically become part of the contract unless
a. Packaging objects to the new terms within a reasonable time.
b. Packaging's form expressly required acceptance of its terms.
c. the additional terms materially alter the original contract.
d. any of the above.
Q:
Best Sales, Inc., is the offeror and City Goods Corporation is the offeree under a unilateral sales contract in which Delta Products Company is also interested. Best is not notified of City's performance within a reasonable time. Best
a. may treat the offer as having lapsed.
b. must assume that City has started to perform.
c. must contact City.
d. must contract with Delta.
Q:
Community Construction Corporation offers to buy from Dandy Cement Company a certain quantity of cement for a certain price. Dandy can accept the offer by
a. doing nothing.
b. promising to ship or promptly shipping the cement.
c. promising to ship the cement only.
d. promptly shipping the cement only.
Q:
NuTech Company agrees to sell computer equipment to Office Stores, Inc. (OSI) for OSI to market to its customers. Their contract will not be enforceable unless it includes
a. the duration of the deal.
b. the price of the goods.
c. the quantity of the goods.
d. the requirements of OSI's customers.
Q:
Doctors Clinic orders 1,000 bandages from Emergency Supplies Company but fails to specify the sizes. The bandages are delivered in an assortment of sizes. Doctors Clinic may
a. accept the bandages "as is" only.
b. accept the bandages "as is" or reject the entire shipment only.
c. accept only the bandages that it wants and reject the rest.
d. reject the entire shipment only.
Q:
Variety Goods, Inc., and World Sales Corporation enter into a contract that does not specify the payment terms. Payment may be made in
a. any commercially acceptable means except cash.
b. cash only.
c. cash or any commercially acceptable substitute.
d. cash or check only.
Q:
Cathy and Dave sign a contract for a sale of goods. Cathy is to set the price for the goods at the time of delivery, but on delivery, refuses to do so. Dave may only
a. fix a reasonable price.
b. fix a reasonable price or treat the contract as canceled.
c. treat the contract as canceled.
d. wait for Cathy to set the price.
Q:
American Products Company and Best Manufacturing, Inc. (BMI), enter into a contract for the sale of a certain quantity of machine parts, with BMI to determine the price. The price must be fixed according to the concept of
a. good faith.
b. square dealing.
c. the mere image rule.
d. unconscionability.
Q:
Allen and Becky enter into a sales contract. With respect to the specific contractual provisions set out in the UCC, Allen and Becky may
a. agree to different terms only to a reasonable extent.
b. agree to different terms unless they "get caught."
c. agree to whatever terms they wish.
d. not agree to different terms.
Q:
Excel Autos & Trucks, Inc., contracts to sell five trucks to First Leasing Corporation, which contracts to lease the trucks to General Delivery Company. Article 2A of the UCC applies to
a. neither the lease nor the sale.
b. the lease and the sale.
c. the lease only.
d. the sale only.
Q:
Fred, the owner of Fred's Bicycle Store, sells a preowned motorcycle to Gail. Fred is a merchant for purposes of the UCC if he
a. enjoys riding motorcycles on weekends.
b. has sold bicycles for at least one year.
c. holds himself out by occupation as having knowledge and skill unique to motorcycles.
d. subscribes to Motorcycle Monthly magazine.