The term F.O.B.: Answer a. shifts the risk of loss to the buyer when the goods are identified. b. can indicate a destination or shipment contract. c. stands for "freight on board." d. requires the seller to insure the goods for the buyer's benefit. Question 2 On impulse, you purchase a travel trailer and ask your acquaintance, Max, if you can leave the trailer at the edge of his restaurant’s parking lot until you can have a concrete pad built to store the trailer on your property. Max agrees. When you return for the trailer the next week, it is gone and you find out that Max sold it. You can: Answer a. recover, but only if Max bought insurance to cover the trailer while it was on his property. b. not recover because you “entrusted” the trailer to Max, who then had a right to sell it. c. not recover because Max had only a voidable title to transfer. d. recover the trailer because Max did not have any ownership interest to pass. Question 3 Bernie’s stereo has been damaged when his niece spilled some juice on it. He takes it to High Fidelity Co. to be fixed. Five days later, when he returns to the store to pick it up, he finds out that a clerk had sold it to a customer, thinking it was part of their used items inventory. Which of the following is true? Answer a. Bernie may recover his stereo provided he was given a receipt by High Fidelity. b. High Fidelity did not have the power to transfer Bernie’s rights in the stereo. Bernie may recover his stereo from the third party. c. If the third party buyer was a good faith purchaser, Bernie will not be able to get his stereo back as he entrusted his stereo to High Fidelity. d. Bernie may recover his stereo if he can prove that the clerk at High Fidelity was not a good faith seller. Question 4 Which of the following statements about identification is correct? Answer a. It permits the buyer to obtain insurance on the goods. b. For unborn animals, it takes place when they are conceived. c. It must occur before title can pass. d. All of the above. Question 5 Assume that Dick steals Jane's camcorder and sells it to Sid. Jane can recover the camcorder from Sid: Answer a. only if Sid did not know that the camcorder was stolen from Jane. b. only if Sid paid less than the fair market value for the camcorder. c. under any circumstances. d. only if Sid knew that the camcorder was stolen from Jane. Question 6 A contract that requires a seller to deliver goods to the carrier is: Answer a. a shipment contract. b. a destination contract. c. a C.I.F. contract. d. a C.O.D. contract. Question 7 George's Grocery orders two dozen live lobsters from Sea Food Flyers. George's is to keep the lobsters happy by keeping them in a tank following certain instructions to keep the water at the right temperature, etc. The sale is made on a trial basis and George's may return all unsold lobsters at the end of 10 days. This contract is a: Answer a. contract to sell future goods. b. sale on approval. c. conditional sale. d. sale or return. Question 8 Marco Manufacturing contracted to sell Kurtz Industries 3,000 iron clasps. The contract specified: F.O.B. Kurtz Industries. Upon arrival and inspection, the goods were rejected by Kurtz Industries because they did not conform to the contract specifications. In transit back to Marco Manufacturing, the common carrier's truck overturned and completely destroyed the clasps. Which statement is correct? Answer a. The loss will be assigned to the party who could best bear the loss. b. The loss will be split between the parties upon a 50/50 basis. c. Marco may sue Kurtz for the contract price, as risk of loss transferred to Kurtz at the F.O.B. point. d. Kurtz will not be liable for the purchase price. The risk of loss had not yet transferred since the goods were nonconforming. Question 9 The Grand Hotel of Jonesville, Kentucky, purchased 200 chairs from Holton Furniture, whose business is in Minnesota. The purchase order included the following term: "F.O.B. Minneapolis, MN." The contract makes no mention of risk of loss or title. The contract can be described as a: Answer a. sale on approval. b. destination contract. c. sale or return.. d. shipment contract.