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Title Risk and Insurable Interest

Page history last edited by abogado 9 years, 5 months ago



Chapter 20 – Title & Risk

1. 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 


a. January, when the contract is signed.

b. April, when the calves are conceived.

c. February, when the calves are born.

d. a reasonable period of time.




 2. 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 


a. Megan signs the contract.

b. Megan and the Sal’s Clothing Shop agent sign the contract.

c. Sal’s Clothing Shop physically delivers the dresses to the department store.

d. Megan pays Sal’s Clothing Shop for the dresses.




 3. 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


a. requires that Foster verify his identity to take possession of the carts.

b. has taken place.

c. cannot take place until the contract is reviewed by a court.

d. will take place only when Foster pays for the golf carts.




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


a. none of the choices.

b. a destination contract.

c. a shipment contract.

d. a delivery ex-ship.




 5. 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


a. Quality stores the drives.

b. Pipes & Culverts orders the drives.

c. Pipes & Culverts picks up the drives.

d. Quality gives Pipes & Culverts a warehouse receipt for the drives.




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


a. only if Lemar did not know that the car was stolen.

b. only if Krispin pays to Lemar the amount that Lemar paid to Johan for the car.

c. only if Lemar knew that the car was stolen.

d. under any circumstances.




 7. 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


a. a delivery ex-ship.

b. a destination contract.

c. a shipment contract.

d. none of the choices.




 8. 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


a. Quaff n’ Quench.

b. Swiftline.

c. Columbia.

d. Reynaldo Produce.




 9. 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


a. C.I.F.

b. delivery ex-ship.

c. F.A.S.

d. F.O.B.




 10. 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


a. Stubbs.

b. Uriah.

c. Tred.

d. Victor.




 11. 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


a. a copy of Restaurant Purveyor’s contract with QuickFreeze Storage.

b. a copy of Restaurant Purveyor’s contract with Seafood Dining.

c. a negotiable document of title.

d. a notice that Seafood Dining’s payment for the goods has cleared.




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


a. a bailee.

b. a buyer in the ordinary course of business.

c. a good faith purchaser for value.

d. an F.O.B.




 13. 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


a. if Moving & Storage refuses to honor the bill of lading.

b. if National Distribution gives the bill of lading to Moving & Storage.

c. if the goods are lost due to an “act of God.”

d. when Omni Stores receives the bill of lading.




 14. 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


a. orders the goods.

b. pays for the goods.

c. receives the negotiable warehouse receipt.

d. moves the goods out of the warehouse.




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


a. a bailment.

b. a delivery ex-ship.

c. a sale on approval.

d. a sale or return.




 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


a. Independent Dealer.

b. Gas & Wood.

c. Gas & Wood’s creditors.

d. Hearthwarm.




 17. 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


a. Quest .

b. Trans-State.

c. RiverRun.

d. Sports Merchandise.




 18. 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


a. all of the parties as tenants in common in equal measure.

b. PureMaid.

c. Organicos Café.

d. Quico Cooking Supplies.




 19. 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


a. all of the parties’ insurance companies pro rata.

b. NoBounce’s insurance company.

c. Motor Vehicles to the extent of a deficiency in Parts & Tools’ insurance coverage.

d. Parts & Tools to the extent of a deficiency in Motor Vehicles’ insurance coverage.




 20. 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


a. Household Appliance remains in business.

b. Household Appliance retains title to the goods.

c. the goods are in existence.

d. there is no risk of loss.




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