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Name:
Class:
Date:
Ch 20 Ownership, Risk, and Warranties
1. Only one party can have an interest in particular goods at a particular time.
a.
True
b.
False
2. Roger purchased a tennis racquet from Rafael. Roger can prove he is a BFP by showing only that he gave value and
acted in good faith.
a.
True
b.
False
3. The UCC looks solely upon "title" to determine ownership in goods.
a.
True
b.
False
4. Crops are considered identified when they are planted.
a.
True
b.
False
5. A purchaser may acquire better title than the seller had.
a.
True
b.
False
6. Both the buyer and seller may have an insurable interest in the same goods at the same time.
a.
True
b.
False
7. Under the UCC, the party who has title to the goods always has the risk of loss.
a.
True
b.
False
8. Angela uses fraudulent means to induce Walter to enter a sales contract. Angela obtains a voidable title to the goods.
a.
True
b.
False
9. Murphy stops at a garage sale and purchases an oak rocking chair. Murphy and the seller agree that Murphy will pick
up the rocking chair the next day when Murphy will return with a truck. That night, there is an earthquake and the rocking
chair is swallowed up by earth and totally destroyed. In this case, the seller had the risk of loss and must refund the
purchase price to Murphy.
Name:
Class:
Date:
Ch 20 Ownership, Risk, and Warranties
a.
True
b.
False
10. Regardless of the language of the contract, title to goods passes to the buyer at the time and place at which the seller
physically delivers the goods.
a.
True
b.
False
11. If Terrill steals a digital camera and sells it to Samuel, Samuel will get a valid title as long as he can prove he gave
value for the camera and acted in good faith.
a.
True
b.
False
12. Arco sells to Melvin 1,000 computers that are stored in Arco's warehouse. Arco gives Melvin the ownership
documents and Melvin will pick up the computers at the warehouse. Title has passed to Melvin.
a.
True
b.
False
13. A buyer has an insurable interest in goods when they are identified.
a.
True
b.
False
14. You leave your watch with Bryte Jewelers for repair. Bryte could not transfer ownership interests in the watch to a
customer of the jewelry shop without your permission.
a.
True
b.
False
15. In a shipment contract, title and risk of loss pass to the buyer when the goods are properly tendered at the destination
point.
a.
True
b.
False
16. Buyer is located in Des Moines, Iowa and seller is located in Sacramento, California. The contract specifies F.O.B.
Des Moines. This contract is a:
a.
destination contract.
b.
sale or return.
c.
shipment contract.
d.
sale on approval.
Name:
Class:
Date:
Ch 20 Ownership, Risk, and Warranties
17. Ruppart Manufacturing has a contract for the sale of 100 cases of teaching supplies to Teachers Co-op, Inc. Payment
of the order is to be made in installments over the next year. Ruppart Manufacturing keeps a security interest in the cases
sold to assure payment by Teachers Co-op, Inc. When the order is completed, Ruppart ships the order. Legally:
a.
both Ruppart and Teachers have an insurable interest in the supplies.
b.
only Ruppart has an insurable interest in the supplies.
c.
only Teachers has an insurable interest in the supplies.
d.
neither Ruppart nor Teachers has an insurable interest in the supplies.
18. George's Greenery orders two dozen live dogwood trees from Nancy’s Nursery. George's is to keep the dogwoods
healthy by keeping them in a greenhouse following certain instructions to keep the air at the right temperature, etc. The
sale is made on a trial basis and George's may return all unsold dogwood trees at the end of 30 days. This contract is a:
a.
contract to sell future goods.
b.
conditional sale.
c.
sale or return.
d.
sale on approval.
19. In the case of Lindholm v. Brant, the court ruled:
a.
Brant was a BIOC, entitled to keep the painting in question.
b.
Brant could not be a BIOC since the seller had a reputation for dishonesty.
c.
Brant could not be a BIOC because he did not act in good faith.
d.
no entrustment was involved because Malmberg was not a “merchant who deals in goods of that kind.”
20. In January, Eddie contracts to sell 100 bushels of soybeans that fall. This contract:
a.
is void. He cannot contract to sell a crop before it is even planted; the goods must be in existence.
b.
is void. The soybeans must be identified to the contract at the time he contracts to sell them.
c.
can be valid; but title to the soybeans cannot pass until the soybeans exist.
d.
can be valid, and title to the soybeans passes when the contract is signed.
21. 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?
a.
Marco may sue Kurtz for the contract price, as risk of loss transferred to Kurtz at the F.O.B. point.
b.
Kurtz will not be liable for the purchase price. The risk of loss had not yet transferred since the goods were
nonconforming.
c.
The loss will be split between the parties upon a 50/50 basis.
d.
The loss will be assigned to the party who could best bear the loss.
22. Rayco Ski Shop purchased 500 pairs of skis from Skitron. Rayco is located in Colorado. Skitron's business is in
Tennessee. The purchase order included the following term: "F.O.B. Colorado." The contract makes no mention of risk of
loss or title. The contract can be described as a:
a.
shipment contract.
b.
destination contract.
c.
bulk transfer.
d.
sale on approval.
23. In a consignment contract, the consignee:
a.
holds title.
b.
takes the goods intending to resell them, and the goods are subject to the claims of the creditors of the
consignee.
c.
is the party who leaves goods with the consignor to be resold.
d.
cannot transfer title since the consignor retains the title.
24. Mike sold his car to Beth, who was to pick the car up at Mike's house by 12:00 noon on September 1. Mike was at his
house waiting for Beth but she was late. In fact, when Beth arrived she discovered Mike's home and the car destroyed by a
fire that started at 1:00 p.m. The risk of loss falls on:
a.
Mike because Beth had not taken possession of the car.
b.
Beth because Mike was ready, willing, and able to tender the car at 12:00 noon.
c.
Beth because under the UCC, the buyer bears the risk of loss.
d.
Mike, as he had possession of the car.
25. The term F.O.B.:
a.
can indicate a destination or shipment contract.
b.
stands for "freight on board."
c.
requires the seller to insure the goods for the buyer's benefit.
d.
shifts the risk of loss to the buyer when the goods are identified.
26. Marco sells goods to Byron for his personal use on the basis that the goods may be returned if Byron is not satisfied
with them. The sale is:
a.
a "sale or return."
b.
a "sale on approval."
c.
a consignment.
d.
outside the UCC.
27. 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:
a.
recover the trailer because Max did not have any ownership interest to pass.
Name:
Class:
Date:
Ch 20 Ownership, Risk, and Warranties
b.
recover, but only if Max bought insurance to cover the trailer while it was on his property.
c.
not recover because you “entrusted” the trailer to Max, who then had a right to sell it.
d.
not recover because Max had only a voidable title to transfer.
28. Imogene takes her diamond solitaire ring to Sparkle Jewelry Shop to have the prongs holding the diamond retipped
and have the ring cleaned. The clerk at Sparkle says she will have to leave the ring and that it should be ready in about a
week. When Imogene returns in a week to get her ring, she finds out that the ring has been sold. Which of the following is
true?
a.
Sparkle Jewelry Shop had the power to transfer all of Imogene's rights in the ring to a good faith buyer in the
ordinary course of business.
b.
This situation was a theft of the ring by Sparkle, and Sparkle must retrieve the ring and return it to Imogene.
c.
The buyer of the ring must return it to Imogene since the buyer did not fully investigate whether Sparkle had
good title to the ring.
d.
Imogene has lost title to her ring and has no recourse since she is responsible for investigating the merchant's
integrity before leaving her property.
29. Graham, an adult, purchases a car from a minor, and subsequently sells it to Harlow, another adult. Harlow paid full
value for the car and had no reason to know that Graham had purchased the car from a minor. Which of the following best
describes this situation?
a.
Graham had good title and Harlow gets good title.
b.
Graham had good title and Harlow gets a voidable title.
c.
Graham had voidable title and Harlow gets good title.
d.
Graham had void title and Harlow gets void title.
30. Hill Computers is a retailer, which buys its inventory from Acme Co. on credit, giving Acme a security interest in the
inventory. Hubert buys a computer from Hill in the normal course of business. Hubert's title in the computer is:
a.
a good title.
b.
a voidable title.
c.
Hubert has no title in the computer. Title does not pass to Hill and therefore to Hubert until Hill pays its debt
in full to Acme.
d.
Hubert has good title that is subject to Acme's security interest.
31. Sanco contracted to sell 1,000 cases of oil to AMF. The oil is located in a public warehouse, which has issued a
warehouse receipt for it. Which of the following is correct?
a.
The risk of loss passes to the buyer when the contract is made.
b.
The risk of loss passes to the buyer when the goods are tendered to him.
c.
The risk of loss passes to the buyer when the warehouse receipt is delivered to the buyer.
d.
The risk of loss passes to the buyer when the buyer gets the oil to its final destination.
32. The identification of goods permits the buyer to:
Name:
Class:
Date:
Ch 20 Ownership, Risk, and Warranties
a.
obtain insurance on the goods.
b.
take title to the goods in any manner that the parties agree upon.
c.
enter into a contract with the seller.
d.
Both a and b.
33. Dick steals Jane's camcorder and sells it to Sid. Jane can recover the camcorder from Sid:
a.
under any circumstances.
b.
only if Sid knew that the camcorder was stolen from Jane.
c.
only if Sid did not know that the camcorder was stolen from Jane.
d.
only if Sid paid less than the fair market value for the camcorder.
34. Circuit City Stores, Inc. v. Commissioner of Revenue...
a.
the issue was where were the goods identified.
b.
the Court determined that the goods were not subject to Massachusetts sales tax because title did not pass until
they were picked up in new Hampshire.
c.
The case involved insurable interest in good sold in one state but picked up in another.
d.
the court determined that until a specific serial number was recorded and the goods were identified title could
not pass.
35. In which case does the buyer receive no title to the goods he purchases?
a.
Owner has good title. Max steals the goods and sells them to buyer.
b.
Owner has good title. Max purchases the goods using deception. He then sells them to buyer who gives value
and acts in good faith.
c.
Owner has good title. Max purchases the goods using fraud. He then sells them to buyer who is not a BFP.
d.
All of the above.
e.
Both a and c.
36. A gun manufacturer in Helena, Montana agrees to sell guns and ammunition to the ATF in Washington, D.C. The
terms of the contract specify that the goods are to be shipped "FOB, Chicago." When does the buyer acquire title and risk
of loss?
a.
When the goods reach Chicago.
b.
When the goods are delivered to the carrier in Montana.
c.
When the goods are tendered in Washington D.C. by the carrier.
d.
When the goods reach Washington D.C.
37. Tuan, Inc. contracted to buy 200 monogrammed blankets from Titex, Inc. Tuan paid for the blankets in advance.
Before segregating and monogramming the blankets, Tuan filed for bankruptcy. Tuan will not be able to recover the
blankets because:
a.
Tuan is a merchant.
b.
the blankets were not identified to the contract.
Name:
Class:
Date:
Ch 20 Ownership, Risk, and Warranties
c.
Tuan became bankrupt after the contract was formed.
d.
the goods were specially manufactured.
38. Assume that Bubba orders 15 cases of BBQ chips from Mays Potato Chips for his restaurant, Bubba's BBQ. Mays
ships 15 cases of regular chips by mistake. If Bubba decides to keep the regular chips, in spite of the nonconformity with
the contract, then the destruction of the chips when a water pipe breaks in the food storage room will result in:
a.
Mays’ having to bear the loss, because it shipped nonconforming goods to Bubba.
b.
Mays’ having to bear the loss, because it failed to insure the chips.
c.
Bubba’s having to bear the loss, because he accepted delivery of the nonconforming chips.
d.
Bubba’s having to bear the loss, because it was a sale on approval contract.
39. Mayco has received goods from Wallace pursuant to a sale or return agreement. If Mayco subsequently declares
bankruptcy, the goods will be:
a.
returned to Wallace because title did not pass to Mayco under this type of sale.
b.
belong to Mayco and will not be a part of the bankruptcy.
c.
subject to the claims of Mayco's creditors under Section 2-326 of the Uniform Commercial Code.
d.
will be kept by the bankruptcy judge and clerk.
40. A contract that requires a seller to deliver goods to the carrier is:
a.
a destination contract.
b.
a shipment contract.
c.
a C.I.F. contract.
d.
a C.O.D. contract.
41. Garden World orders 120 hand cultivators from Green Thumb, Inc. When the cultivators arrive, they seem fine, so
Garden World accepts them. As the stock person is putting the cultivators on display, she notices that the tines are loose
on all the cultivators. Garden World returns the cultivators to Green Thumb, but they are lost when the delivery truck slips
on an oily spot in the road and drives into a nearby lake. Discuss who bears the risk of loss for the shipment.
42. Rayco entered into a contract to buy Chia Pets from We Grow ‘Em. The contract specified that the shipment would be
"F.O.B. destination; title to pass on the date of shipment." The goods were destroyed in transit to Rayco. Rayco argues
that the loss is We Grow ‘Em's. Analyze the situation and determine who is liable for the loss.
Name:
Class:
Date:
Ch 20 Ownership, Risk, and Warranties
43. Discuss the concept of insurable interests.
44. Baker Furniture sold 50 living room sets to King's Department Store. The parties did not agree on passage of title, but
the delivery term was F.O.B. place of shipment. Discuss title and risk of loss regarding the furniture.
45. Oceanside entered into a contract with the seller Old Tennessee, for the purchase of $6,431 worth of plants. The terms
were sale and delivery C.O.D. with the express provision of "No Risk to Supplier," and a large logo at the top of papers
stating:
"NOTICE: ALL SHIPMENTS TRAVEL AT RISK AND COST OF PURCHASER."
The plants were shipped by an experienced truck common carrier. Upon arrival in New York, it appeared as though some
plants were in a poor state because of excessive heat. Although the carrier on its own marked the bill of lading to indicate
that the temperature in the truck should be 50 degrees, this was not done for at least a portion of the journey. Oceanside
rejected the shipment by writing "rejected" on the back of the trucker's bill of lading. However, the plants were retained
"on consignment" at Oceanside's premises. There were no other formal written rejections or official notices of breach or
defects given by the buyer to seller at any point prior to trial. Discuss who has the risk of loss.
46. Explain the concept and significance of identification of goods. Discuss how identification takes place.
47. Myrtle walks into Hank's Hardware Store and says, "I need metal storage shelves that can hold 500 pounds." Hank
directs her to a metal storage shelving system, which Myrtle buys. When Myrtle puts 475 pounds of weight on the
shelves, they collapse. Hank's Hardware breached the warranty of merchantability.
a.
True
b.
False
Name:
Class:
Date:
Ch 20 Ownership, Risk, and Warranties
48. A product liability case may be brought in warranty, negligence, or strict liability, but it must have the element that a
person or business has been hurt by goods.
a.
True
b.
False
49. Under the UCC, no warranty of title arises unless the contract is in writing.
a.
True
b.
False
50. Express warranties must be in writing so they can be proven in court.
a.
True
b.
False
51. Even though a car has an obvious dent in the rear quarter panel, the salesperson tells a potential customer, “This car
has never been in an accident.” The salesperson’s statement creates a valid express warranty.
a.
True
b.
False
52. The UCC requires sellers to give written warranties.
a.
True
b.
False
53. To prove an express warranty, some courts require evidence that the buyer relied on the seller’s statement.
a.
True
b.
False
54. Generally, a contract may include language that limits or alters the damages recoverable for a breach of warranty, as
long as the restrictions are not unconscionable.
a.
True
b.
False
55. Many states prohibit a seller from disclaiming implied warranties in the sale of consumer goods.
a.
True
b.
False
56. Mark, a power tool salesman, promises Jill, a customer, that the Turbo Power Hedge Trimmer 1000 will easily cut
through bamboo up to 3 inches thick. Mark's statement constitutes an express warranty if Jill purchases the hedge
trimmer.
a.
True
b.
False
57. Strict liability is based on contract law.
a.
True
b.
False
58. A tag attached to a tree in a nursery identifying the tree as a Southern Magnolia creates an express warranty.
a.
True
b.
False
59. In a tort case, the statute of limitations runs from the time the defect was discovered.
a.
True
b.
False
60. A statute of repose places an absolute limit on when a lawsuit may be filed regardless of when the defect is
discovered.
a.
True
b.
False
61. The economic loss doctrine states that, when the injured party is a corporation and the harm is purely economic, the
only remedies available are those under the common law.
a.
True
b.
False
62. The statute of limitations for breach of warranty under the UCC is?
a.
one year.
b.
two years.
c.
three years.
d.
four years.
63. Which of the following warranties provides that the goods will be useable for the ordinary purposes for which they are
used?
a.
Infringement.
b.
Fitness for a particular purpose.
Name:
Class:
Date:
Ch 20 Ownership, Risk, and Warranties
c.
Merchantability.
d.
Title.
64. An express warranty can be created by which of the following?
a.
An affirmation of fact or promise.
b.
A description.
c.
A model.
d.
All of the above.
65. Which of the following statements could create an express warranty?
a.
"This is the best car available in town."
b.
"This motorcycle will double in value in the next ten years."
c.
"These tires have 10,000 miles on them."
d.
"This antique is quite a bargain."
66. Under which of the following warranties must the seller be a merchant?
a.
Express warranties.
b.
Implied warranty of merchantability.
c.
Implied warranty of fitness for a particular purpose.
d.
Both b and c.
67. Bugs R Us, an organic gardening merchant, sells and delivers 100 units of live lady bugs to eat the bad bugs on the
buyer's award-winning vegetables. The buyer ordered the lady bugs without consultation with Bugs R Us for suggestions.
Although the buyer correctly knew that lady bugs were the appropriate bugs for eating bad bugs on vegetables, when the
lady bugs were delivered, they refused to eat the bad bugs. The merchant has breached which warranty?
a.
Implied breach of fitness for a particular purpose.
b.
Implied breach of merchantability.
c.
No warranty, as you can’t control the behavior of insects.
d.
Implied warranty against infringement.
68. A sales representative at Oxtren, Inc. orally told the purchasing agent at Wety, Inc. that its industrial saw will cut
through metal up to 5 inches thick. Wety purchased the saw. Which statement is correct concerning the claim that the saw
can cut through metal up to five inches thick?
a.
The claim is an express warranty.
b.
The claim is an implied warranty of merchantability.
c.
The claim is not a warranty because it is not in writing.
d.
The claim is not a warranty because it is sales puffery.
Name:
Class:
Date:
Ch 20 Ownership, Risk, and Warranties
69. A sales representative at Oxtren, Inc orally told the purchasing agent at Wety, Inc. that its industrial saw is
exceptional. Which statement is correct concerning the claim that the saw is exceptional?
a.
The claim is an express warranty.
b.
The claim is an implied warranty of merchantability.
c.
The claim is not a warranty because it is not in writing.
d.
The claim is not a warranty because it is sales puffery.
70. Crytrin Manufacturing, Inc. contracted with Molfrey, Inc. to manufacture three large pieces of equipment. The
contract contained a clause stating that Crytrin agreed to repair or replace any defective equipment, but that was the only
remedy Molfry would have. This clause:
a.
is an effective disclaimer.
b.
will not keep Molfry from obtaining consequential damages since, under the UCC, consequential damages
cannot be excluded.
c.
is a limitation of remedy clause, which limits or excludes normal remedies permitted under the Code.
d.
limits any express warranties made by Crytrin.
71. Tu-thumbs buys a used paint sprayer from the local paint store. The sprayer had a large sign on it which said "AS IS."
The dealer made no promises or statements concerning the performance of the paint sprayer. When Tu-thumbs attempts to
spray paint his house, the trigger on the sprayer sticks in the "on" position and before Tu-thumbs can pull the electrical
cord to cut the power, paint is sprayed all over his prize Borzoi dog that is scheduled to be shown in a dog show the next
day. Tu-thumbs sues the dealership. Who wins?
a.
Dealer wins; there were no express warranties and all implied warranties have been successfully disclaimed.
b.
Tu-thumbs wins; he can recover on the basis of express warranties.
c.
Tu-thumbs wins; he can recover on the basis of the implied warranty of merchantability because the word
"merchantability" was not used in the disclaimer.
d.
Dealer wins; even though there were implied warranties, the damage to the dog could not have been foreseen.
72. Bill is injured while standing on the corner of Hollyhock and Vine when Mia's new Hog speeds out of control because
of a defective part. In most jurisdictions, Bill:
a.
can sue the motorcycle manufacturer even though he does not have privity.
b.
cannot sue the motorcycle manufacturer because his injuries are personal injuries as opposed to economic loss.
c.
cannot sue the motorcycle manufacturer because the lemon laws require arbitration.
d.
cannot sue the motorcycle manufacturer because there is no privity of contract.
73. Lemon laws, which assist consumers who have purchased automobiles that turn out to be "lemons,":
a.
are enacted by state legislatures.
b.
are enacted by Congress.
c.
are included in the warranty provisions of the UCC.
d.
come from common law equitable remedies.
Name:
Class:
Date:
Ch 20 Ownership, Risk, and Warranties
74. Mason bought a rotisserie in preparation for a party he was planning. When he put a chicken on the rotisserie, it would
not rotate, but stayed in one position where it burned the chicken on one side and left it raw on the other. When he
returned the rotisserie to the store, the salesperson disclaimed any responsibility because he had never told Mason the
rotisserie would rotate the food as it cooked. Does Mason have any recourse?
a.
No, the salesperson did not make any express warranties.
b.
Yes, the salesperson made an express warranty just by selling the goods.
c.
Yes, although the salesperson did not make any express warranties, the UCC imposes an express warranty on
the sale.
d.
Yes, although the salesperson did not make any express warranties, the UCC imposes an implied warranty of
merchantability under which the rotisserie is guaranteed to be fit for the ordinary purposes for which it is used.
75. When Angelena was shopping for a new lawn mower, the salesman, Mark, told her the model she was interested in
cuts an 18” swath and the only maintenance it needs is an oil change and a new sparkplug at the beginning of each
mowing season. He hands her a warranty booklet which describes that model as a mulching mower and says it has a five-
year full warranty. The booklet also disclaims “any warranties or statements made by any agent or salesperson or that
appear elsewhere in this booklet.” The effect of the written disclaimer is:
a.
that it is valid to disclaim only the written warranties within the booklet.
b.
that it is valid to disclaim both oral and written warranties.
c.
it does not disclaim either the oral or written warranties.
d.
that it disclaims the oral warranties, but not the written warranties.
76. Daddy buys an electric car for his 10-year-old son. Daddy follows the directions for assembly carefully, but the son
gets an injuring shock when he sits in the car. If Daddy and son sue the manufacturer for negligence, they will:
a.
be successful only if they can prove that the car manufacturer knew of the defect and failed to correct it.
b.
be successful only if they can prove that the car manufacturer failed to use reasonable care in designing,
manufacturing, or warning the purchasers about intended uses and foreseeable misuses.
c.
lose, because the son has no privity of contract and therefore no standing to sue.
d.
not be successful if the car was sold "AS IS."
77. Van is using his wrench as a hammer when the wrench breaks and a piece flies off, injuring his neighbor who is
helping Van change a tire on Van's car. If Van sues the tool manufacturer, its best defense will be:
a.
consent.
b.
warranties have been disclaimed.
c.
product misuse.
d.
that the claim is an economic loss only.
78. Ned sold his refrigerator to his next door neighbor, Ian. Ned fails to tell Ian he has not finished paying for the
refrigerator and Neighborhood Bank has a lien on it.
a.
Ned has breached the warranty against infringement.
b.
Ned has breached the warranty of title.
c.
Ned has breached the warranty of merchantability.
Name:
Class:
Date:
Ch 20 Ownership, Risk, and Warranties
d.
Ned has not breached any warranties because he did not guarantee that the refrigerator was free and clear of
security liens.
79. Which of the following is not guaranteed under an implied warranty?
a.
The goods are free of hidden security interests or liens.
b.
The goods are not subject to a rightful claim by a third party.
c.
The goods are merchantable.
d.
The goods may be returned for a refund or replaced in the event of any defect.
80. In a breach of warranty case, the buyer must:
a.
notify the seller of defects within a reasonable time.
b.
bring any lawsuit no later than three years after the defect was discovered.
c.
extend the statute of limitations in writing rather than orally if they choose to allow a longer time for bringing
suit.
d.
notify the seller of defects within six months of their discovery or they cannot bring a lawsuit.
81. In order to disclaim a warranty of fitness for a particular purpose, a merchant:
a.
need do nothing; such a warranty will not exist unless the merchant intends to create the warranty.
b.
must make the disclaimer orally and directly to the buyer.
c.
may disclaim the warranty with any language that is clear and conspicuous.
d.
None of the above. Implied warranties cannot be disclaimed.
82. Alice's Aspirin Inc., produces and packages aspirin for sale to retail stores. Bob buys a bottle of Alice's aspirin at
Dahl's Food Stores. Two days later Bob's friend, Hank, takes two aspirin while at Bob's house. Within minutes, Hank is
very ill and is rushed to the hospital, where it is found that a defect in the aspirin caused the reaction. Which of the
following is correct?
a.
Hank can sue both Alice's Aspirin Inc. and Dahl's under tort theories because he is an injured party due to the
defective product.
b.
Hank cannot sue anyone because he assumed the risk of taking the aspirin.
c.
Hank cannot sue anyone because he is not in privity with Dahl's or Alice's.
d.
Hank can sue but will not be able to recover consequential damages for his medical expenses.
83. M & E sold a lathe "AS IS" to Brenna. M & E has disclaimed:
a.
strict liability.
b.
liability for negligence.
c.
all implied warranties.
d.
all of the above.
Name:
Class:
Date:
Ch 20 Ownership, Risk, and Warranties
84. A merchant seller who would like to exclude the warranty of merchantability can do so by doing which of the
following?
a.
The merchant can sell the goods "As Is."
b.
The merchant can sell the goods "With All Faults."
c.
The merchant can write conspicuously that the warranty of MERCHANTABILITY is excluded.
d.
All of the above.
85. Which one of the following warranties arises in a sale of goods?
a.
Implied warranty of title.
b.
Warranty against adverse possession.
c.
Implied warranty of quiet enjoyment.
d.
All of the above arise in a sale of goods.
86. Which of the following would be a breach of the implied warranty of merchantability?
a.
A knife that cuts its user when slicing a bagel.
b.
A radio that does not pick up FM signals.
c.
A match that burns a spot in the carpet when accidentally dropped.
d.
A watch that does not keep accurate time after getting wet.
87. Inez contracted with Filippo Furnaces Co. for the installation of a new furnace. Inez selected the furnace she wanted,
accepting no suggestions from Filippo Furnaces' heating engineer. The furnace operated fine, but it did not heat the entire
house. The size of the blower on the furnace was too small to accommodate the third floor of the house. Inez sued Filippo
Furnaces Co. for the breach of the implied warranties of merchantability and fitness. What result?
88. Sonny had a contract to paint the rides at an amusement park and needed a paint that would protect against extensive
wear, potentially harsh weather, and rust. Sonny asked for paint samples from several companies, and selected one
supplier based on the quality of the sample. When he received his order, he found that the quality did not match that of the
sample. What recourse does Sonny have?
89. The plaintiff, Donald Laird has a bachelor of science degree in animal science, had previously been employed at the
university's swine research center, had managed a feed mill, had been employed as a herdsman for Hog Breeders,
Incorporated, had worked for five years for Armour & Company at its feeder pig operations, and was a branch manager of
the Scribner Co-op, Inc. for 14 years. Laird's assistant manager while at the Co-op was Gary Ruwe. When Laird quit the
Co-op, Ruwe became the manager. Later, Laird went to Co-op to purchase some feed ingredients for his hogs. In speaking
Name:
Class:
Date:
Ch 20 Ownership, Risk, and Warranties
with Ruwe, Laird learned that the Co-op grain bin was not operating properly and therefore the corn was not drying
properly. If the corn does not dry properly, it can collect mold and insects. Laird said he would take 1300 bushels of corn
if Ruwe could pull the corn out of the middle of the grain bin. The corn was delivered to Laird where he noticed some
damaged corn and an odor that indicated that the corn may have mold. Laird did not reject the shipment, however. Laird
then began to feed the corn to his hogs. The boars began to develop pneumonia, began vomiting, and would not eat
regularly. When it was time for the sows to farrow, the sows had an abnormally high number of miscarriages and
stillborns. The ultimate conclusion was that the corn delivered was tainted with vomitoxins, a toxic substance that made
the corn unmarketable as feed. Laird sued the Co-op for breach of the implied warranties of fitness for a particular
purpose and merchantability. In order to recover under the warranty of fitness for a particular purpose what does Laird
have to prove? What is the implied warranty of merchantability? Does Laird have a successful claim with this warranty?
90. How do the tort theories of negligent product liability and strict product liability differ from each other? List and
describe the elements an injured party must establish for recovery under each cause of action.
91. Peter purchased a new car from Monster Motors. As he drove away from the dealership in the new car, the steering
mechanism failed. Peter lost control of the car and plunged down an embankment. Peter was seriously injured. If Peter
sues the car manufacturer under strict liability, what does he have to prove? Will Peter be successful?
92. A common problem in cases of express warranty is being able to separate statements that create express warranties
from statements that do not. Discuss what type of statements create an express warranty and four indications that a
statement is likely to create an express warranty.
