Definitions, Forms, Negotiations and rights Flashcards
Question #1 (AICPA.910547REG-BL)
Which of the following statements is correct concerning a common carrier that issues a bill of lading stating that the goods are to be delivered “to the order of Ajax”?
A. The carrier’s lien on the goods covered by the bill of lading for storage or transportation expenses is ineffective against the bill of lading’s purchaser.
B. The carrier may not, as a matter of public policy, limit its liability for the goods by the terms of the bill.
C. The carrier must deliver the goods only to Ajax or to a person who presents the bill of lading properly endorsed by Ajax.
D. The carrier would have liability only to Ajax because the bill of lading is nonnegotiable..
C. The carrier must deliver the goods only to Ajax or to a person who presents the bill of lading properly endorsed by Ajax.
This bill of lading is a negotiable order instrument, because it is made out to a particular person or that person’s order. When a document is of this type, only the person to whose order the instrument is made may use it, unless the original holder has properly endorsed it to someone else. If the bill of lading had been made payable to “bearer” or to no one in particular, then anyone could use it to take delivery of the goods.
Wrong Answer
D. The carrier would have liability only to Ajax because the bill of lading is nonnegotiable.
The carrier is generally strictly liable for loss to any proper holder of the bill of lading. This bill is negotiable, even though it is made out to a particular person, so long as the original holder has properly endorsed it to someone else. Thus, the carrier is liable to Ajax or any duly negotiated holder.
Question #2 (AICPA.960515REG-BL)
Under the Documents of Title Article of the UCC, which of the following statements is(are) correct regarding a common carrier’s duty to deliver goods subject to a negotiable, bearer bill of lading?
I. The carrier may deliver the goods to any party designated by the holder of the bill of lading.
II. A carrier who, without court order, delivers goods to a party claiming the goods under a missing negotiable bill of lading is liable to any person injured by the misdelivery.
A. I only.
B. II only.
C. Both I and II.
D. Neither I nor II.
C. Both I and II.
Because, if the bill of lading is a bearer document, the carrier can deliver the goods to any holder of the document or to any person whom the holder designates to receive the goods. The holder, however, must surrender the document to the carrier. If the bill of lading is negotiable and the document is not surrendered, in this case it is missing, the carrier is liable for any misdelivery (to someone other than the legal holder of the document) to any person injured thereby.
Wrong Answer
B. II only.
Because, when dealing with a negotiable bearer document of title (bill of lading), the carrier can release the goods to any holder of the document upon receipt of the bearer instrument or upon receipt of any party the holder designates. If the carrier delivers goods without a receipt of a bearer document of title, the carrier is liable, if not delivered to the legal holder of the document, for loss due to misdelivery.
Question #5 (AICPA.970505REG-BL)
Under the Documents of Title Article of the UCC, which of the following terms must be contained in a warehouse receipt?
I. A statement indicating whether the goods received will be delivered to the bearer, to a specified person, or to a specified person or his/her order.
II. The location of the warehouse where the goods are stored.
A. I only.
B. II only.
C. Both I and II.
D. Neither I nor II.
C. Both I and II.
is the correct answer because a warehouse receipt to be effective as a title to goods held by a warehouse company, the warehouse receipt must contain the location of the warehouse where the goods are stored, and an indication to the warehouse company whether the goods are to be delivered to any holder (a bearer document), a specified person (consignee) or his/her order (an order document), or a specified person (a nonnegotiable document). Generally also required are date and issue number, signature of the warehouse manager and if owner, rates, and description of the goods.
Wrong Answer
B. II only.
(A, B, and D) are incorrect because both terms must be contained in the warehouse receipt, and A and B require only one, and D states neither is required.
Question #7 (AICPA.921143REG-BL)
Under a nonnegotiable bill of lading, a carrier who accepts goods for shipment must deliver the goods to
A. Any holder of the bill of lading.
B. Any party subsequently named by the seller.
C. The seller who was issued the bill of lading.
D. The consignee of the bill of lading.
D. The consignee of the bill of lading.
When a seller places goods with a common carrier for delivery, a bill of lading is issued which represents title to the goods and the right of the holder to take possession of the goods. The seller who is issued a bill of lading is the consignor and does not get the right to receive the shipment. That right goes to the consignee, the party to whom the carrier has promised to deliver the goods in the bill of lading.
Wrong Answer
A. Any holder of the bill of lading.
When an instrument is negotiable, it may be transferred freely from one person to another. If, on the other hand, the instrument is nonnegotiable, it may be transferred only by assignment. Thus, it gives rights only to the original holder or the holder’s assignee of those rights. Just any holder will not have rights in a nonnegotiable bill of lading.
