Mann_BLRB 9_TB_Ch21

Business Law and the Regulation of Business

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Chapter 21—Transfer of Title and Risk of Loss TRUE/FALSE 1. Title to existing, identified goods can pass whenever the parties agree it will pass. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 2. Under a shipment contract, the seller passes title to the buyer when the goods arrive at the buyer’s city. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 3. In a lease, the lessee obtains the right to possess and use the goods for a period of time in return for consideration, but title does not pass. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 4. The distinction between a void and voidable title is not important in determining the rights of good faith purchasers of goods. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 5. The buyer and seller of goods may not simultaneously hold insurable interests in the goods. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 6. A "buyer in the ordinary course of business" is necessarily a "good faith purchaser for value." ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 7. The UCC "risk of loss" rules assign the loss according to who has ownership of the goods. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 8. Jerry bought a stereo from SX Company "on approval." The risk of loss passed to Jerry when he took possession of the stereo. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 9. If goods are sold and delivered to buyer with an option to return them, the risk is on the buyer until they are returned. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 10. The risk of loss for "sale or return" is the same as for a sale "on approval." ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 11. If the owner of goods entrusts them to a merchant, the merchant can transfer good title to the goods to a buyer in the ordinary course of business even if the original owner does not want to sell the goods. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic
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12. Morris ordered 1,000 sq. ft. of green carpet from RS Company. In error, RS Company shipped 1,000 sq. ft. of gold carpet. In this case, the risk of loss remains with the seller until the seller remedies the defect. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 13. The bulk sales portion (Article 6) of the Code applies only to transfers in the ordinary course of busi- ness. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 14. Fungible goods are goods for which one unit is the equivalent of any other unit. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 15. The UCC and the common law are essentially the same in regard to their treatment of risk of loss or damage to identified goods. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 16. When goods are to be physically moved by a third-party carrier and delivery is made by physically moving the goods, title passes at the time and place at which the seller completes performance. ANS: T
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Mann_BLRB 9_TB_Ch21 - Chapter 21-Transfer of Title and Risk...

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