Ch.21: Transfer of Title and Risk of Loss

Question 1

Identification

Answer 1

Designation of specific goods as goods to which the contract of sale refers.

Question 2

Fungible

Answer 2

The equivalent of any other unit.

Question 3

Security interest

Answer 3

Interest in personal property or fixtures that insurance payment or performance of an obligation.

Question 4

Insurable interest

Answer 4

Interest in property that may be insured against loss

Question 5

Lien

Answer 5

A non-consensual claim against property

Question 6

Passage of title

Answer 6

Title passes when the parties intended to pass; when the parties do not specifically agree, the Code provides rules to determine when title passes.

Question 7

Physical movement of the goods

Answer 7

When delivery is to be made by moving the goods, title passes at the time and place that the seller completes his performance with reference to delivery.

Question 8

Shipment contract

Answer 8

Seller is required to deliver the goods to a carrier for delivery to buyer.

Question 9

Destination contract

Answer 9

Seller is required to tender delivery of the goods at a particular destination.

Question 10

Tender

Answer 10

Seller offers conforming goods to buyer and gives buyer noticed that the kids are available.

Question 11

Power to transfer title

Answer 11

The purchaser of goods obtains such title as his transferor either has or had the power to transfer; however, to encourage and make secure a good faith acquisitions of goods, it is necessary to protect certain third parties under certain circumstances.

Question 12

Good faith purchaser

Answer 12

Buyer who acts honestly, gives value, and takes the goods without notice or knowledge of any defect in the title of his transferor.

Question 13

Void title

Answer 13

No title can be transferred

Question 14

Voidable title

Answer 14

The good faith purchaser acquires good title

Question 15

Good faith

Answer 15

Honesty in fact and observance of reasonable commercial standards of fair dealing.

Question 16

Entrustment of goods to a merchant

Answer 16

Buyers in the ordinary course of business acquire a good title when buying from Merchant.

Question 17

Buyer in ordinary course of business

Answer 17

Person who buys an ordinary course of business, in good faith, and without knowledge that the sale to him is in violation of anyone’s ownership rights.

Question 18

Entrusting

Answer 18

Transfer of possession of goods.

Question 19

Risk of loss

Answer 19

Allocation of loss between seller and buyer when the goods have been damaged, destroyed, or lost.

Question 20

Breach by the seller

Answer 20

If the seller ships to the buyer goods that do not conform to the contract, the risk of loss remains on the seller until the buyer has excepted the goods or until the seller has remedied the defect.

Question 21

Breach by the buyer

Answer 21

The seller may treat the risk of loss is resting on the buyer for a commercially reasonable time to the extent of any deficiency in the seller’s effective insurance coverage.

Question 22

Agreement by the parties

Answer 22

The parties may by agreement allocate the risk of loss

Question 23

Sale on approval

Answer 23

Transfer of possession without title to buyer for trial period.

Question 24

Sale or return

Answer 24

Sale for which buyer has option to return goods to seller.

Question 25

Consignment

Answer 25

Delivery of possession of personal property to an agent for sale.

Question 26

Contract involving carriers

Answer 26

In shipment contracts, the seller bears the risk of loss and expense until the goods are delivered to the carrier for shipment; and destination contracts, the seller bears the risk of loss and expense until tender of the goods at a particular destination.

Question 27

All other sales

Answer 27

For Merchant seller, risk of loss passes to buyer on the buyer’s receipt of the goods; for non-merchant seller, risk of loss passes to buyer upon tender of goods.

Question 28

Bulk sale

Answer 28

Transfer of a major part of a merchant’s inventory made not in the ordinary course of the seller’s business.