Contracts - UCC Art 2 - Title & Risk of Loss

Question 1

At what point does title/risk of loss pass when the terms are Free on Board the seller’s place (city, business, warehouse, or ship point)?

Answer 1

Delivery of conforming goods to carrier.

Question 2

Define “fungible goods.”

Answer 2

Fungible goods are those that cannot be distinguished either because of homogenous qualities or because they are so mixed together; identified when shipped, marked, or otherwise designated.

Question 3

Describe determination of “place of delivery.”

Answer 3

Unless the contract provides for shipment, delivery is the seller’s place of business or residence. There are no delivery terms under Uniform Commercial Cod Article 2 unless provided for in the contract.

Question 4

How is the title/risk of loss affected by the passage of goods in a sale or return?

Answer 4

Passes upon possession of Buyer - returns to Seller if Buyer returns properly the goods.

Question 5

When does the risk of loss pass in a warehouse (third party) delivery?

Answer 5

Risk of loss and title pass to buyer when the buyer has all necessary documents and the goods are available for pick-up.

Question 6

When does the title/risk of loss pass for sales on approval?

Answer 6

Title and risk of loss remain with seller until buyer accepts.

Question 7

Define “voidable title.”

Answer 7

Title to goods that has come through a voidable contract, as when a minor purchases a car and then sells it to a third party.

Question 8

What does the acronym CIF mean?

Answer 8

A shipping term - Cost, insurance and freight.

Question 9

What effect does a breach of a contract have on the passage of risk of loss?

Answer 9

Risk of loss does not pass until goods are conforming; if they never conform, risk of loss does not pass and return is at seller’s risk.

Question 10

At what point does title/risk of loss pass when the terms are Free on Board the buyer’s place (city, warehouse, or residence)?

Answer 10

Upon the seller’s tender of conforming goods at place of contract destination.

Question 11

When does title/risk of loss pass when delivery is required by a seller with no physical movement and the goods are represented by a negotiable document of title?

Answer 11

Title and risk of loss pass upon buyer’s receipt of document.

Question 12

List the ways in which a buyer can accept title of goods?

Answer 12

1. Due notification of acceptance;
2. Failure to reject within trial period;
3. Does any act inconsistent with seller’s ownership.

Question 13

Describe the general rule regarding passage of title and risk of loss.

Answer 13

In absence of agreement, the time title and risk of loss to identified goods passes from the seller to the buyer is dependent upon the contract’s delivery terms.

Question 14

When does the risk of loss pass in a non-delivery contract?

Answer 14

If seller is a merchant, risk of loss passes when buyer has actual receipt.
If seller is a non-merchant, risk of loss passes when goods are tendered to buyer.

Question 15

What does the acronym FAS mean?

Answer 15

A shipping term - Free alongside vessel (ship).

Question 16

When does title/risk of loss occur for a sale or return?

Answer 16

Title and risk of loss pass as with an ordinary complete sale of goods.

Question 17

Define “future goods.”

Answer 17

For contracts under which goods are to be manufactured, identification occurs when the goods are in existence and either shipped, marked, or otherwise designated for buyer.

Question 18

When does title/risk of loss pass when delivery is required by the seller without physical movement and the goods are represented by a nonnegotiable document of title?

Answer 18

1. Title passes to buyer upon receipt of document;
2. Risk of loss passes after buyer receives document and has a reasonable time to present document to receive the goods.

Question 19

Define “tender.”

Answer 19

The seller’s holding out to the buyer the goods in a reasonable manner, for a reasonable time, to allow the buyer to take possession of the goods.

Question 20

When does title/risk of loss pass when delivery is required by a seller with no physical movement and the goods are not represented by a document title?

Answer 20

1. Title passes when the contract is made;
2. If seller is a merchant, risk of loss does not pass until buyer gets possession;
3. If seller is a nonmerchant, risk of loss passes upon seller’s tender of goods to the buyer.

Question 21

Describe the free-on-board place of shipment term.

Answer 21

Risk of loss and title pass from seller to buyer when the goods are delivered to the carrier.

Question 22

Describe the differences between the timing of risk of loss and the title in shipment contracts and non-shipment contracts.

Answer 22

In shipment contracts, risk of loss and title pass at the same time. In non-shipment contracts, risk of loss and title do not pass at the same time and depends on whether there is a document of title and whether there is a merchant or non-merchant seller for risk of loss.

Question 23

When does the passage of title occur in a non-delivery contract?

Answer 23

If there is a document of title, title passes when buyer has the document.
If there are other documents, title passes when buyer has those documents.
If there are no documents, title passes at the time of contracting.

Question 24

When does title/risk of loss pass when the shipping terms of cost, insurance, and freight are used?

Answer 24

When the seller:

1. delivers identified conforming goods to the carrier;
2. obtains a negotiable bill(s) of lading covering transportation to named destination;
3. procures an insurance policy; and
4. forwards to buyer all documents.

Question 25

Define “void title.”

Answer 25

A thief in the chain of title.

Question 26

When does title/risk of loss pass for a sale on approval?

Answer 26

Neither title nor risk of loss pass until acceptance by the buyer.

Question 27

When does title/risk of loss pass in free alongside shipping terms?

Answer 27

Title and risk of loss pass upon seller’s delivery of conforming goods alongside the vessel in the manner usual in that port or on a dock designated and provided by the buyer.

Question 28

What does the acronym C&F mean?

Answer 28

A shipping term - Cost and freight.

Question 29

What does the acronym BFP stand for?

Answer 29

Bona fide purchaser or good-faith purchaser (pure heart and an empty head because they do not know of any problems with the title).

Question 30

Describe the free-on-board place of destination term.

Answer 30

Risk of loss and title pass from seller to buyer when goods have been tendered to the buyer at the destination.

Question 31

Define “identification.”

Answer 31

Occurs when goods are shipped, marked, or otherwise designated for the buyer; identification must occur before title and risk of loss pass.

Question 32

What does the acronym FOB mean?

Answer 32

A shipping term - Free on board.