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Exam 18: Title and Risk of Loss

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Question 1

True/False

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In most situations involving sales or leases, rights and liabilities are generally not determined by who has title to the goods.

A) True
B) False

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Question 2

True/False

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An owner in common of fungible goods can pass title and risk of loss to the buyer only by actually separating the goods.

A) True
B) False

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False

Question 3

Multiple Choice

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

United Wear Inc. and Winter Gear stores enter into a contract for a sale of coats. Their contract can indicate that the price includes transportation costs to a specific destination by including the term

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

Title can pass to the buyer from the seller before the goods are identified to the contract.

Eve buys from Fiesta Autos a used pick-up truck. The truck was manufactured by Gem Vehicles, Inc., and previously owned by Hal. Regarding title to the truck, Eve acquires

Equipment Rental Corporation (ERC) agrees to lease two backhoes to Dig & Fill Construction, Inc. Before any interest in the backhoes can pass from ERC to Dig & Fill, they must be

When no documents of title are required, title does not pass.

Brad leaves a laptop at Computer Sales & Repair (CSR) to have the battery replaced. CSR sells the laptop to Doris, who does not know that it belongs to Brad. Brad can recover

Buyers and lessees have an insurable interest in identified goods even if the risk of loss has not yet passed .

Generally, all contracts are assumed to be destination contracts if nothing to the contrary is stated in the contract.

Quality Computer Company agrees to sell one hundred servers to Social Media Networks, Inc.  The servers, which Social Media Networks expressly requires to have certain amounts of memory, are to be shipped "F.O.B. Social Media Networks distribution center in Memphis, TN."  When the servers arrive, Social Media Networks rejects them and informs Quality Computer, claiming that the servers do not conform to Social Media Networks' memory requirement.  A few hours later, the servers are destroyed in a fire at Social Media Networks' distribution center.  Will Quality Computer succeed in a suit against Social Media Networks for the cost of the goods?

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

A buyer cannot acquire any more right to goods than the seller has to the goods sold.

In a sale or return, a buyer has an option to return the goods and undo the sale.

Great Bikes, Inc., allows Herb to take an Itasca-brand motorcycle for a "test run." Herb tries the bike for a few hours, returns, and buys it. This is

A trucking company that normally issues documents of title for goods it receives is called a bailee.

In a shipment contract, risk of loss passes to the buyer or lessee when the goods are delivered to the carrier.

Candy Corporation orders Double Chocolate Bars from Edibles Distribution Company. Edibles identifies the goods. Before they are shipped to Candy, an insurable interest in the goods exists in