42. Although he knows the ring is really valuable, Alex tells Mona her ring contains artificial gems, but he would be
willing to buy it for $50. Mona agrees. Alex quickly takes the ring to Hanna’s Antique Jewelry Shop and sells it for
$1,000. A month later, Mona sees her ring on sale for $2,000 at the shop. Is Mona entitled to get the ring back?
a. Yes, she is the true owner of the ring since she was defrauded.
b. Yes, since Alex had void title to the ring.
c. No, since Alex had voidable title to the ring and Hanna was a good faith purchaser.
d. No, since Mona was an entruster.
43. Alex tells Mona that he thinks her ring is very valuable and that he would like to take it to be appraised. She gives
him the ring, and he quickly sells it to unsuspecting Hanna’s Antique Jewelry Shop for $2,000. A week later, Mona
discovers her ring on sale at Hanna’s and uncovers the story. Can Mona get the ring back?
a. Yes, a true owner can always recover his or her own property
b. Yes, since Alex had no title to the ring
c. No, since Alex had voidable title to the ring and Hanna was a good faith purchaser
d. No, since Hanna has paid for the ring
44. Jack is a guest in Harry‘s home. While there, he goes into the library and picks up a music box that is part of Harry’s
collection. Jack overwinds the stem and it breaks. Hoping Harry won’t notice, Jack takes the music box for repair to
a jeweler who sells similar ones. The jeweler fixes it, but forgets to tag it and an unsuspecting clerk sells it to Robert.
Jack is frantic. Can Harry get the music box from Robert?
a. No, the jeweler gives good title to a bona fide purchaser for value
b. No, the jeweler was not a merchant with regard to the music box
c. Yes, Robert was not a buyer in the ordinary course of business
d. Yes, Robert has assumed only Jack’s title, which is no title at all
45. Growingreen, a gourmet fresh food store, orders 100 lbs. of peaches from Western Fruits “on approval.”
Growingreen has never dealt with Western before this transaction. Since it only sells the highest quality fruits,
Growingreen asked for and received these special terms. The peaches arrived on Saturday, but the owners of
Growingreen were too busy to open the crates. Sunday they are closed. Monday at 4 p.m., they opened the boxes
and inspected the peaches. They did not meet the high standards of Growingreen, so they nailed the crates shut and
ordered a truck to return them the next day. They arrived at Western on Thursday, totally spoiled, a week after they
were sent. This is the first time Western knew they were not being accepted. Who is responsible for the damages to
the peaches?
a. Growingreen, since it did not, within a reasonable time, notify Western of its election to return the peaches
b. Growingreen; the risk of loss was on them when the peaches arrived
c. Western, since they retained the risk of loss until approval
d. Western, because they agreed to take the goods back
46. Inga runs a Swedish health spa in Connecticut. She orders 100 loofah sponges from a company in California. They
are sent “F.O.B. Hartford, Connecticut,” but they never arrive at Inga’s. What consequence?
a. Inga has to pay anyway since it was a destination contract.
b. The California company is required to bear the loss since the sponges had not yet reached the F.O.B. point.
c. The California company and Inga will have to split the loss since they did not specify in their contract when
the risk of loss would pass to Inga.
d. It cannot be determined from the information given who has the risk of loss.
47. Tom makes pottery in his spare time. Jackie asks if he’d sell her a particular covered bowl. Later that day, he
telephones her and says she can have it for $50. She agrees, so he tells her he’ll wrap it up for her and it will be
ready in half an hour. Six days later, Jackie had not yet come for the bowl when a dog knocks the box off the shelf
and breaks the bowl. Who is liable?
a. Tom, because he is a merchant regarding the pottery and Jackie had not yet received the bowl
b. Tom, because the bowl was in his possession when the dog broke it
c. Jackie, because she had identified the bowl
d. Jackie, because Tom had it ready for her to pick up for nearly a week
48. A(n) is a delivery of possession of personal property to an agent for sale by the agent.
a. sale on approval
b. consignment
c. sale or return
d. None of these.
49. The seller and buyer of goods agree that identification will be made by the seller when it manufactures and separates
those particular goods out for the buyer. Identification will actually occur:
a. at the time and in the manner agreed upon by the parties.
b. according to Code Section 2-501, upon the making of the contract of sale.
c. when the buyer points out the particular goods it wants; the seller cannot identify goods.
d. when the goods are tendered to the carrier for shipment to the buyer.
50. Property law protects existing ownership of goods. A principal belief underlying this policy is:
a. a person should not be required to retain constant possession of all the goods he owns, yet at the same time,
ownership should be indicated by who is in possession of the goods.
b. while a person should not be required to retain constant possession of all the goods he owns, there must be a
method for good faith purchasers for value to be protected so they may make safe acquisitions of goods.
c. even good faith purchasers should be held responsible for making sure the item they are buying wasn’t stolen
from the rightful owner.
d. there must not be conflicts among underlying beliefs.
51. Brett contracts to purchase a particular automobile from Johnson’s car lot. At what point does Brett obtain a special
property interest that enables him to insure the car?
a. When the car is tendered to Brett
b. When the contract is made
c. When Brett pays for the car
d. When Brett accepts the car
52. Mary orders a dress for $1,000. Mary doesn’t inspect the dress on arrival and therefore doesn’t discover a flaw in
the fabric until the day before she is to wear it to her first board meeting as president of Tri-State Engineering. This
is a month after the dress arrived. She calls the designer and sends the dress back, but it is lost in the mail. Mary’s
insurance would cover $400 of the loss. The designer’s insurance would cover $900. Who is liable?
a. Mary will bear the whole loss because she accepted the goods.
b. The designer will bear the whole loss because Mary returned the nonconforming goods.
c. Mary will owe $100; the designer, $900.
d. The risk is Mary‘s to the extent of $400.
53. Amanda ordered fifty personalized sweatshirts from King Manufacturing Company. After the shirts were specially
imprinted, but before they were mailed, Amanda called King Manufacturing to disavow the contract. The next day
the sweatshirts were stolen. Who must bear the loss?
a. Amanda must pay the entire purchase price, because she breached the contract.
b. King will have to bear the entire loss, because it had not yet mailed the shirts.
c. Amanda must bear the entire loss, because the shirts were identified to the contract.
d. King must first seek payment from its insurance carrier, and then collect from Amanda for any amount not
covered by insurance.
54. In the goods are sold and delivered to the buyer with an option to return them to the seller.
a. a bailment
b. a sale on approval
c. a sale or return
d. entrusting to a merchant
55. If the goods that are the subject of a sale are in the possession of a bailee and are to be delivered without being
moved, when does the risk of loss pass to the buyer?
a. When the seller tenders a negotiable document of title
b. When the buyer receives a negotiable document of title or a nonnegotiable document of title is tendered to the
buyer
c. When a negotiable or nonnegotiable document of title is tendered to the buyer
d. When the seller tenders a negotiable or nonnegotiable document of title
56. Under the CISG:
a. loss of or damage to the goods after the risk of loss has passed to the buyer does not discharge the buyer
from the obligation to pay the purchase price.
b. loss of or damage to the goods after the risk of loss has passed to the buyer discharges the buyer from the
obligation to pay the purchase price.
c. if the buyer is bound to take over the goods at a place other than the seller’s place of business, the risk of loss
passes when the goods arrive at that location.
d. if the sales contract does not involve the carriage of the goods, the risk of loss passes to the buyer as soon as
the goods are placed at his disposal, regardless of the amount of time it takes him to take possession.
57. In a sale on approval:
a. possession but not title is transferred to the buyer for a stated period of time.
b. possession and title are transferred to the buyer for a stated period of time.
c. title but not possession is transferred to the buyer for a stated period of time.
d. title but not risk of loss remains with the seller until the buyer accepts the goods.
58. At common law, the risk of loss or damage to goods identified under a contract of sale falls upon:
a. the buyer.
b. the seller.
c. the party who had title or ownership of the goods at the time of the loss or damage.
d. the designated party as determined by the court.
59. New Horizons delivers 20 dozen blankets to its agent, Marketall, for sale by Marketall. Marketall maintains a place
of business where it sells bedding under its own name. A creditor of Marketall may obtain possession of New
Horizons’ blankets:
a. under the Code, since a consignment is regarded as a sale or return.
b. but cannot prevail against New Horizons because New Horizons keeps title in a consignment until the goods
are sold to a third party.
c. and will prevail against New Horizons even if Marketall had a sign, in compliance with state law, evidencing
New Horizons’ ownership interest in the blankets.
d. and will prevail against New Horizons even if Marketall can establish that it is generally known by its creditors
to be substantially engaged in selling the goods of others.
60. According to the Code, identification takes place:
a. upon the making of a contract if it is for future goods.
b. when the seller ships, marks, or otherwise designates the goods as those to which the contract refers if the
contract is for goods that are already existing and identified.
c. when the crops are planted or start growing if the contract is for crops to be grown within twelve months.
d. when the young animals are born if the contract is for offspring of animals to be born within twelve months.
61. Under the UCC, identifying goods to which a contract refers gives the buyer a special property interest which
permits the holder to:
a. insure the goods.
b. immediately transfer title to the goods.
c. take immediate possession of the goods from the seller.
d. sue the seller for improper treatment of the goods.
62. With regard to UCC Article 6, which of the following is true?
a. The 1988 joint recommendation of the National Conference of Commissioners on Uniform State Laws and
the American Law Institute was for states to adopt the revised version of Article 6, which the majority of
states have done.
b. At least 45 states have repealed Article 6.
c. Article 60 is a revision of Article 6.
d. All of these.
63. Answer the following:
a. What is an insurable interest? At what point in a sales transaction does the buyer get an
insurable interest?
b. Is the buyer the only one who has an insurable interest in the goods? Is it possible for both the
buyer and the seller to simultaneously hold an insurable interest? Explain.
64. Answer the following:
Arthur brings his new computer to the Quick Fix Repair Shop to be fixed. Two days later, a
a. buyer comes into the shop, and Quick Fix inadvertently sells Arthur’s computer. Arthur now
wants his computer back. What Code provision applies in this situation? Can Arthur get his
computer back? Explain.
b. Why do you think the Code follows this rule in situations such as the one above? Explain.
65. Discuss who has the risk of loss in the absence of a breach in a destination contract for the sale of goods. Also
discuss the effect of an agreement of the parties.
66. Answer the following:
a. What is the special property interest created by the Code?
b. When does this interest arise in each of the following situations?
(1) Where the goods are crops to be planted this spring
(2) Where the goods are fungible
67. Answer the following:
a. What is a bulk transfer, and under what part of the Code is it governed?
b. Identify the central purpose of bulk sales law.