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STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ14—1ȱQUIZȱ
LegalȱConceptsȱ
Directions:ȱFillȱinȱtheȱblank(s)ȱwithȱtheȱmostȱappropriateȱtermȱorȱphraseȱtoȱcompleteȱ
theȱsentence.ȱ
ȱȱ Answersȱ
ȱȱ1.ȱȱ Aȱpersonȱwhoȱbuysȱstolenȱgoodsȱfromȱaȱthiefȱ
receivesȱpossessionȱbutȱnotȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱȱtoȱtheȱ
goods.ȱ
1.ȱ______________________ȱ
ȱȱ2.ȱA(n)ȱȱpartyȱwhoȱbuysȱwithoutȱnoticeȱthatȱ
wouldȱputȱanȱordinaryȱpurchaserȱonȱguardȱasȱ
toȱtheȱlegitimacyȱofȱvariousȱaspectsȱofȱtheȱsaleȱ
isȱcalledȱa(n)ȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱ.ȱ
ȱ2.ȱ______________________ȱ
ȱȱ3.ȱȱ Onlyȱtheȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱȱownerȱofȱgoodsȱmayȱleȬ
gallyȱtransferȱownershipȱofȱthoseȱgoods.ȱ
3._______________________ȱ
ȱȱ4.ȱPhysicallyȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱȱareȱownedȱbyȱtheȱseller.ȱ4._______________________ȱ
ȱȱ5.ȱIfȱanȱownerȱofȱgoodsȱisȱinducedȱbyȱfraudȱtoȱsellȱ
goods,ȱtheȱbuyerȱobtainsȱa(n)ȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱȱtitle.ȱ
5._______________________ȱ
ȱȱ6.ȱ ȱ ȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱȱgoodsȱhaveȱbeenȱspecificallyȱdesigȬ
natedȱasȱtheȱsubjectȱmatterȱofȱaȱparticularȱsalesȱ
contract.ȱ
6._______________________ȱ
ȱȱ7.ȱAnyȱunitȱofȱaȱȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱȱgoodȱis,ȱbyȱnatureȱorȱ
tradeȱusage,ȱtheȱequivalentȱofȱanyȱotherȱlikeȱ
unit.ȱ
7._______________________ȱ
ȱȱ8.ȱ ȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱȱmeansȱthatȱtheȱsellerȱplacesȱtheȱ
properȱgoodsȱatȱtheȱbuyer’sȱdisposalȱandȱnotiȬ
fiesȱtheȱbuyerȱsoȱthatȱdeliveryȱcanȱbeȱreceived.ȱ
8._______________________ȱ
ȱȱ9.ȱA(n)ȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱȱisȱaȱpersonȱwhoȱisȱdeemedȱtoȱ
haveȱtitleȱtoȱtheȱgoods.ȱ
9._______________________ȱ
10.ȱ ȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱȱgoodsȱareȱneitherȱexistingȱnorȱidenȬ
tified.ȱ
10.______________________ȱ
LegalȱApplicationȱ
11.ȱTheȱShiversȱboughtȱ35ȱbundlesȱofȱShastaȱwhiteȱshinglesȱfromȱFourȱStarȱLumberȱ
Companyȱonȱcredit.ȱFourȱStarȱwasȱtoȱretainȱpossessionȱofȱtheȱshinglesȱuntilȱtheȱ
pectedȱtoȱarriveȱtheȱnextȱday.ȱIfȱtheȱShiversȱpayȱforȱtheȱshinglesȱbeforeȱtheȱnewȱ
shipmentȱarrives,ȱwhatȱlegalȱactionȱcouldȱtheyȱtakeȱagainstȱFourȱStar?ȱExplainȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
12.ȱPerezȱmadeȱdollsȱinȱhisȱhomeȱfromȱAprilȱuntilȱAugust,ȱandȱthenȱsoldȱthemȱinȱhisȱ
friend’sȱshopȱfromȱSeptemberȱuntilȱChristmas.ȱInȱMarch,ȱAdelphiaȱcontactedȱ
theȱstoreȱwasȱfloodedȱbyȱunexpectedȱheavyȱrainfall.ȱWhatȱlegalȱactionȱcanȱAdelȬ
phiaȱtakeȱagainstȱPerez,ȱifȱany?ȱExplainȱyourȱanswer.ȱ
3-18 Chapter 14 Ownership and Risk of Loss in Sales
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ14—1ȱPRACTICEȱACTIVITYȱ
Readȱtheȱfollowingȱcasesȱandȱanswerȱtheȱquestionsȱaboutȱthem.ȱAttachȱaȱpageȱifȱadditionalȱ
spaceȱisȱneededȱforȱanswers.ȱ
ȱ
1.ȱTheȱRussellsȱdoȱbusinessȱasȱaȱfullȬserviceȱboatȱdealership.ȱUnderȱtheȱtermsȱofȱ
theirȱinsurance,ȱtheȱRussellsȱwereȱnotȱcoveredȱforȱdamagesȱresultingȱfromȱwaȬ
boatȱafterȱreplacingȱtheȱmotor,ȱitȱhitȱaȱseawallȱandȱwasȱcompletelyȱdestroyed.ȱ
TheȱRussellsȱfiledȱforȱdamagesȱunderȱtheirȱpolicy.ȱTheȱinsuranceȱcompanyȱreȬ
fusedȱtoȱpayȱonȱtheȱgroundsȱthatȱtheȱRussellsȱstillȱownedȱtheȱboat.ȱDoȱthey?ȱExȬ
ȱ
ȱ
ȱ
ȱ
ȱ
2.ȱMedicoȱLeasingȱCompanyȱgaveȱpossessionȱofȱanȱautomobile,ȱbutȱnotȱtheȱtitle,ȱtoȱ
Smith,ȱaȱusedȬcarȱdealer,ȱforȱhimȱtoȱshowȱtoȱprospectiveȱbuyers.ȱSmith,ȱrepreȬ
sentingȱhimselfȱasȱtheȱownerȱofȱtheȱcar,ȱsoldȱtheȱcarȱtoȱWesselȱBuickȱCompany,ȱ
carȱandȱheȱdidȱnotȱhaveȱtheȱtitle.ȱMedicoȱclaimsȱthatȱWesselȱwasȱnotȱaȱgoodȱfaithȱ
buyerȱbecauseȱtheyȱpurchasedȱtheȱcarȱwithoutȱtheȱtitleȱunderȱcircumstancesȱthatȱ
wouldȱhaveȱputȱaȱprudentȱpersonȱonȱnotice.ȱDoesȱMedicoȱgetȱtheȱcar?ȱExplain.ȱ
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ14—1ȱRETEACHȱ
Directions:ȱWriteȱtheȱnumbersȱ1–20ȱonȱindexȱcardsȱinȱlargeȱprint.ȱOnȱtheȱotherȱsideȱ
ofȱtheȱcard,ȱwriteȱtheȱdefinitionȱorȱtermȱthatȱisȱshownȱbyȱeachȱnumberȱbelow.ȱTapeȱ
theȱcardsȱtoȱaȱchalkboardȱinȱtheȱpatternȱbelowȱwithȱtheȱnumbersȱfacingȱtheȱstudents.ȱ
Divideȱtheȱstudentsȱintoȱfourȱorȱfiveȱteams.ȱEachȱteamȱshouldȱchooseȱaȱcaptainȱtoȱ
answerȱforȱthem.ȱTheȱteamȱcaptainȱwillȱchooseȱanyȱtwoȱnumbers.ȱReadȱtheȱcontentsȱ
onȱtheȱbackȱofȱtheȱcardsȱoutȱloud.ȱIfȱtheȱtwoȱchosenȱcardsȱformȱaȱcorrectȱmatchȱofȱaȱ
termȱandȱitsȱdefinition,ȱtheyȱareȱremovedȱfromȱtheȱchalkboardȱandȱthatȱteamȱscoresȱ
aȱpoint.ȱIfȱtheȱcardsȱdoȱnotȱmakeȱaȱcorrectȱmatch,ȱtheȱnextȱteamȱmayȱtakeȱaȱturn.ȱ
Note:ȱDoȱnotȱallowȱstudentsȱanythingȱtoȱwriteȱwithȱduringȱtheȱgame.ȱ
Cardȱ1ȱ
Anyȱunitȱisȱtheȱ
equivalentȱofȱanyȱ
otherȱlikeȱunitȱ
Cardȱ2ȱ
Aȱpersonȱwhoȱ
buysȱstolenȱgoodsȱ
cannotȱreceiveȱthisȱ
Cardȱ3ȱ
Goodsȱthatȱhaveȱ
beenȱspecificallyȱ
designatedȱinȱaȱ
salesȱcontractȱ
ȱ
Cardȱ4ȱ
holderȱ
Cardȱ5ȱ
Aȱkindȱofȱtitleȱ
receivedȱbyȱaȱ
buyerȱwhenȱtheȱ
sellerȱwasȱ
defraudedȱ
Cardȱ6ȱ
Anȱinnocentȱthirdȱȱ
partyȱwhoȱboughtȱ
goodsȱthatȱwereȱ
originallyȱsoldȱ
throughȱfraudȱ
ȱ
Cardȱ7ȱ
Goodsȱthatȱexistȱ
butȱareȱnotȱ
assembledȱorȱ
readyȱtoȱbeȱ
deliveredȱ
Cardȱ8ȱ
voidableȱ
aȱtitleȱtoȱgoodsȱ
Chapter 14 Ownership and Risk of Loss in Sales 3-19
3-20 Chapter 14 Ownership and Risk of Loss in Sales
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ14—1ȱENRICHMENTȱ
Inȱthisȱlesson,ȱyouȱlearnedȱthatȱitȱisȱimportantȱtoȱunderstandȱwhenȱownershipȱtransȬ
fersȱfromȱsellerȱtoȱbuyer.ȱDisputesȱmayȱariseȱoverȱwhoȱhasȱtitleȱtoȱgoodsȱatȱparticuȬ
larȱtimesȱbecauseȱcreditorsȱmayȱwantȱtoȱcollectȱmoneyȱdue.ȱOtherȱdisputesȱariseȱ
whenȱgoodsȱareȱdamaged,ȱstolen,ȱorȱdestroyedȱbeforeȱtheȱtransactionȱisȱcompleted.ȱ
Whoȱmustȱbearȱtheȱloss?ȱOrȱwhoȱshouldȱplanȱaheadȱbyȱpurchasingȱtheȱprotectionȱofȱ
casualtyȱinsurance?ȱTheȱtextȱlistedȱfourȱcommonȱsituationsȱinvolvingȱtransferȱofȱtiȬ
tle.ȱInterviewȱoneȱorȱmoreȱindividualsȱwhoȱcommonlyȱdealȱinȱtheȱtransferȱofȱgoods,ȱ
suchȱasȱaȱpurchasingȱagent.ȱFindȱanȱexampleȱofȱeachȱofȱtheȱsituationsȱandȱprovideȱ
detailsȱofȱtheȱownershipȱtransferȱinȱtheȱspacesȱgivenȱbelow.ȱ
ȱ
1.ȱSellerȱdeliversȱgoodsȱtoȱtheirȱdestination.ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
3.ȱSellerȱdeliversȱdocumentȱofȱtitle.ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ14—2ȱQUIZȱ
LegalȱConceptsȱ
Directions:ȱInȱtheȱAnswersȱcolumn,ȱwriteȱtheȱletterȱfromȱColumnȱ1ȱthatȱrepresentsȱ
theȱwordȱorȱphraseȱthatȱmatchesȱtheȱstatementȱinȱColumnȱ2.ȱ
Columnȱ1ȱȱColumnȱ2ȱ ȱȱȱȱȱȱȱȱȱAnswersȱ
ȱȱ ȱȱ
1.ȱȱȱ Aȱshipmentȱtermȱthatȱmeansȱtheȱsellerȱagreesȱtoȱȱ
deliverȱtheȱgoodsȱnoȱfartherȱthanȱtheȱspecifiedȱ
locationȱ
2.ȱȱȱAȱpersonȱwhoȱhasȱtemporaryȱpossessionȱofȱ
ȱȱ anotherȱperson’sȱgoodsȱ
3.ȱAȱpriceȱthatȱincludesȱtheȱcostȱofȱtheȱgoods,ȱȱ
plusȱtheȱcostsȱofȱadequateȱinsuranceȱandȱȱ
shipmentȱofȱtheȱgoodsȱ
4.ȱAȱsaleȱwhereȱbothȱpartiesȱagreeȱthatȱtheȱȱȱ
goodsȱwillȱbeȱpaidȱforȱatȱaȱlaterȱdateȱ
5.ȱAȱshippingȱtermȱthatȱmeansȱtheȱcarrierȱwillȱȱ
collectȱtheȱpriceȱandȱshippingȱchargesȱuponȱȱ
deliveryȱ
6.ȱAȱcompletedȱsaleȱinȱwhichȱtheȱbuyerȱhasȱanȱ
optionȱofȱreturningȱtheȱgoodsȱ
7.ȱAȱsaleȱwhereȱtheȱbuyerȱdoesȱnotȱassumeȱownerȬ
shipȱorȱriskȱofȱlossȱuntilȱtheyȱhaveȱȱ
approvedȱtheȱgoodsȱ
8.ȱAȱsaleȱwhereȱaȱfractionalȱinterestȱinȱaȱsingleȱȱ
goodȱorȱinȱaȱnumberȱofȱgoodsȱthatȱareȱtoȱȱ
remainȱtogetherȱisȱsoldȱȱ
9.ȱAȱsaleȱofȱallȱorȱaȱmajorȱpartȱofȱtheȱgoodsȱofȱ
aȱbusinessȱatȱoneȱtimeȱ
10.ȱAȱpublicȱsaleȱwhereȱgoodsȱareȱsoldȱtoȱtheȱȱ
highestȱbidderȱ
ȱȱ1.ȱ_____ȱ
ȱȱȱ
ȱ
ȱȱ2.ȱ_____ȱ
ȱȱȱ
ȱȱ3.ȱ_____ȱ
ȱȱȱ
ȱ
ȱȱ4.ȱ_____ȱ
ȱȱȱ
ȱȱ5.ȱ_____ȱ
ȱȱȱ
ȱ
ȱȱ6.ȱ_____ȱ
ȱȱ
ȱȱȱ7.ȱ_____ȱ
ȱȱȱ
ȱ
ȱȱ8.ȱ_____ȱ
ȱȱȱ
ȱ
ȱȱ9.ȱ_____ȱ
ȱ
10.ȱ_____ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
A.ȱcreditȱsaleȱ
B.ȱsaleȱofȱanȱ
ȱundividedȱ
ȱinterestȱ
C.ȱFOBȱ
D.ȱauctionȱ
E.ȱbulkȱtransferȱ
F.ȱsaleȱorȱreturnȱ
G.ȱCIFȱ
H.ȱCODȱ
I.ȱsaleȱonȱȱ
ȱapprovalȱ
J.ȱbaileeȱ
ȱ
LegalȱApplicationȱ
11.ȱAnȱautomobileȱmanufacturerȱinȱDetroitȱsoldȱaȱtruckloadȱofȱsportȱutilityȱvehiclesȱ
toȱaȱdealershipȱinȱPhiladelphia.ȱTheȱvehiclesȱwereȱshippedȱ“FOBȱPhiladelphia.”ȱ
WhenȱdidȱtheȱriskȱofȱlossȱtransferȱtoȱtheȱdealerȱinȱPhiladelphia?ȱExplainȱyourȱanȬ
swer.ȱ
Chapter 14 Ownership and Risk of Loss in Sales 3-21
3-22 Chapter 14 Ownership and Risk of Loss in Sales
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ14—2ȱPRACTICEȱACTIVITYȱ
Readȱtheȱfollowingȱcaseȱandȱanswerȱtheȱquestionȱaboutȱit.ȱAttachȱaȱpageȱifȱadditionalȱspaceȱisȱ
neededȱforȱanswer.ȱ
ȱ
1.ȱJason’sȱFoodsȱcontractedȱtoȱsellȱ38,000ȱpoundsȱofȱribsȱtoȱEckrichȱ&ȱSons.ȱTheȱribsȱ
wereȱhousedȱinȱaȱstorageȱwarehouse,ȱandȱtheȱsaleȱwasȱtoȱbeȱconsummatedȱbyȱaȱ
transferȱofȱtheȱribsȱfromȱJason’sȱFoodsȱaccountȱtoȱEckrich’sȱaccountȱbetweenȱ
receivedȱtheȱnoticeȱinȱtheȱmail.ȱInȱtheȱmeantime,ȱonȱJanuaryȱ18,ȱtheȱwarehouseȱ
caughtȱfireȱandȱtheȱribsȱwereȱdestroyed.ȱJason’sȱFoodsȱsuedȱEckrichȱforȱtheȱcostȱ
ofȱtheȱribs.ȱWillȱJasonȱwin?ȱExplain.ȱ[Jason’sȱFoods,ȱInc.ȱv.ȱPeterȱEckrichȱ&ȱSons,ȱ
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ14—2ȱRETEACHȱ
Directions:ȱWriteȱtheȱcategoryȱnamesȱandȱtheȱavailableȱpointsȱinȱcolumnsȱonȱtheȱ
chalkboard.ȱReadȱtheȱclueȱasȱitsȱrespectiveȱcategoryȱandȱpointȱvalueȱisȱchosen.ȱEraseȱ
eachȱpointȱvalueȱasȱitȱisȱansweredȱcorrectly.ȱStudentsȱshouldȱanswerȱinȱtheȱformȱofȱaȱ
question.ȱForȱexample,ȱtheȱcorrectȱresponseȱtoȱtheȱfirstȱcategoryȱatȱ300ȱwouldȱbeȱ
“Whatȱisȱaȱbailee?”ȱWhenȱaȱstudentȱanswersȱcorrectly,ȱgiveȱthemȱcreditȱforȱtheȱ
pointsȱandȱletȱthemȱchooseȱtheȱnextȱclue.ȱIfȱaȱstudentȱanswersȱincorrectly,ȱsubtractȱ
theȱpointsȱfromȱtheirȱscoreȱandȱletȱanotherȱstudentȱchooseȱtheȱnextȱclue.ȱ
ShippingȱTermsȱTypesȱofȱSalesȱMiscellaneousȱ
100ȱ100ȱ100ȱ
600ȱ600ȱ600ȱ
Cluesȱtoȱbeȱreadȱtoȱstudents:ȱ
ShippingȱTermsȱ
100—FOBȱisȱanȱabbreviationȱforȱtheseȱwordsȱ(freeȱonȱboard)ȱ
600—Aȱpublicȱwarehouseȱisȱanȱexampleȱofȱthisȱ(bailee)ȱ
TypesȱofȱSalesȱ
100—Aȱtypeȱofȱsaleȱwhereȱtheȱbuyerȱpaysȱcashȱandȱtakesȱimmediateȱdeliveryȱ(cashȱandȱcarȬ
ry)ȱ
Miscellaneousȱ
100—CODȱisȱanȱabbreviationȱforȱtheseȱwordsȱ(collectȱonȱdelivery)ȱ
200—Aȱpublicȱsaleȱtoȱtheȱhighestȱbidderȱ(auction)ȱ
Chapter 14 Ownership and Risk of Loss in Sales 3-23
3-24 Chapter 14 Ownership and Risk of Loss in Sales
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ14—2ȱENRICHMENTȱ
Thisȱlessonȱwentȱintoȱgreatȱdetailȱconcerningȱtransferȱofȱownershipȱandȱriskȱofȱlossȱ
inȱspecificȱtransactions.ȱTheȱtextȱlistedȱeightȱtransactionsȱthatȱmeritȱspecialȱattentionȱ
becauseȱofȱtheȱfrequencyȱwithȱwhichȱtheyȱoccurȱorȱbecauseȱofȱtheȱuniquenessȱofȱtheȱ
rulesȱthatȱapplyȱtoȱthem.ȱYouȱorȱyourȱfamilyȱmembersȱhaveȱlikelyȱexperiencedȱ
manyȱofȱtheseȱtransactions—buyingȱgroceriesȱwithȱcash,ȱpurchasingȱonȱcreditȱatȱaȱ
retailȱstore,ȱorȱorderingȱitemsȱonȱapprovalȱfromȱaȱmailȬorderȱbookȱorȱmusicȱclub.ȱByȱ
consideringȱyourȱownȱtransactionsȱandȱbyȱinterviewingȱfamilyȱandȱfriendsȱforȱexȬ
amplesȱofȱothers,ȱoutlineȱaȱspecificȱexampleȱofȱeachȱofȱtheȱtransactionsȱmentionedȱ
below.ȱ
ȱ
ȱ
ȱ
2.ȱSalesȱonȱcreditȱ
ȱ
ȱ
3.ȱCODȱsalesȱ
ȱ
ȱ
4.ȱSaleȱorȱreturnȱ
ȱ
ȱ
5.ȱSaleȱonȱapprovalȱ
ȱ
ȱ
6.ȱSaleȱofȱanȱundividedȱinterestȱ
ȱ
ȱ
ȱ
ȱ
8.ȱBulkȱtransferȱ
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱ
TESTȱ
CHAPTERȱ14
SECTION I—IDENTIFY LEGAL TERMS
Directions:ȱPlaceȱaȱTȱforȱTrueȱorȱanȱFȱforȱFalseȱinȱtheȱAnswersȱcolumnȱtoȱshowȱ
whetherȱeachȱofȱtheȱfollowingȱstatementsȱisȱtrueȱorȱfalse.ȱȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱAnswersȱ
ȱȱ1.ȱAnyȱperson,ȱinnocentȱorȱknowingly,ȱwhoȱbuysȱstolenȱgoodsȱfromȱaȱ
thief,ȱreceivesȱtitleȱasȱwellȱasȱpossession.ȱ
ȱȱ1.ȱ_____ȱ
ȱȱ2.ȱForȱownershipȱofȱgoodsȱtoȱbeȱtransferredȱinȱaȱsale,ȱtheȱgoodsȱmustȱ
beȱeitherȱexistingȱorȱidentified.ȱ
ȱȱ2.ȱ_____ȱ
ȱȱ3.ȱIdentifiedȱgoodsȱareȱallȱgoodsȱpertainingȱtoȱaȱtrademark.ȱȱȱ3.ȱ_____ȱ
ȱȱ4.ȱOwnershipȱofȱgoodsȱbringsȱwithȱitȱaȱbundleȱofȱrightsȱandȱbenefitsȱ
asȱwellȱasȱrelatedȱdutiesȱandȱburdens.ȱ
ȱȱ4.ȱ_____ȱ
ȱȱ5.ȱNeitherȱownershipȱnorȱriskȱofȱlossȱpassesȱatȱtheȱtimeȱofȱtheȱcontractȱ
forȱtheȱsaleȱofȱfutureȱgoods.ȱ
ȱȱ5.ȱ_____ȱ
ȱȱ6.ȱWhenȱaȱbulkȱtransferȱisȱmade,ȱtheȱUCCȱrequiresȱnoticeȱtoȱtheȱbuyȬ
er’sȱcreditors.ȱ
ȱȱ6.ȱ_____ȱ
ȱȱ7.ȱAnȱinnocentȱthirdȱpartyȱwhoȱinȱgoodȱfaithȱbuysȱsomeȱorȱallȱofȱtheȱ
goodsȱfromȱaȱbulkȱtransfereeȱcannotȱgetȱaȱgoodȱtitle.ȱ
ȱȱ7.ȱ_____ȱ
ȱȱ8.ȱAuctionȱsalesȱareȱ“withȱreserve”ȱunlessȱspecificallyȱannouncedȱinȱ
advanceȱtoȱbeȱ“withoutȱreserve.”ȱ
ȱȱ8.ȱ_____ȱ
ȱȱ9.ȱȱ Byȱnatureȱorȱtradeȱusage,ȱeachȱfungibleȱgoodsȱunitȱisȱregardedȱasȱ
equalȱtoȱeveryȱotherȱunit.ȱ
ȱȱ9.ȱȱ_____ȱ
10.ȱAȱfractionalȱinterestȱinȱaȱsingleȱgoodȱthatȱisȱtoȱremainȱtogetherȱisȱȱ
notȱaȱvalidȱsaleȱunderȱtheȱUCC.ȱ
10.ȱ_____ȱ
SECTION II—THINK CRITICALLY ABOUT LEGAL CONCEPTS
Directions:ȱInȱtheȱAnswersȱcolumnȱatȱtheȱrightȱofȱeachȱstatement,ȱwriteȱtheȱletterȱthatȱ
representsȱtheȱword,ȱorȱgroupȱofȱwords,ȱthatȱcorrectlyȱcompletesȱtheȱstatement.ȱ
ȱȱ Answersȱ
11.ȱGoodsȱspecificallyȱdesignatedȱasȱtheȱsubjectȱmatterȱofȱaȱparticuȬ
larȱsalesȱcontractȱcanȱbeȱidentifiedȱbyȱ(a)ȱtheȱbuyer,ȱ(b)ȱtheȱseller,ȱ
(c)ȱaȱmutuallyȱagreedȬuponȱthirdȱparty,ȱ(d)ȱanyȱofȱtheseȱ
11.______ȱ
Chapter 14 Ownership and Risk of Loss in Sales 3-25
12.ȱTransferȱofȱownershipȱofȱgoodsȱmayȱbeȱdoneȱbyȱtheȱownersȱandȱ
authorizedȱpersons,ȱorȱ(a)ȱbyȱmerchantsȱwithȱpossessionȱofȱsoldȱ
goods,ȱ(b)ȱbyȱholdersȱofȱnegotiableȱdocumentsȱofȱtitle,ȱ(c)ȱbyȱ
buyersȱinȱaȱsaleȱinducedȱbyȱfraud,ȱ(d)ȱallȱofȱtheseȱ
12.______ȱ
13.ȱAȱgoodȱfaithȱpurchaserȱisȱoneȱwhoȱ(a)ȱpurchasesȱmaterialsȱforȱ
religiousȱorganizations,ȱ(b)ȱchargesȱgoodsȱonȱtheȱfaithȱthatȱtheȱ
moneyȱwillȱbeȱprovided,ȱ(c)ȱhasȱinnocentlyȱgivenȱvalueȱandȱacȬ
quiredȱrightsȱtoȱgoodsȱwithȱaȱvoidableȱtitle,ȱ(d)ȱnoneȱofȱtheseȱ
13.______ȱ
14.ȱIfȱtheȱpartiesȱdoȱnotȱspecifyȱwhenȱtheȱtitleȱisȱtoȱpass,ȱtheȱcourtsȱ
willȱ(a)ȱdetermineȱifȱthereȱisȱanyȱapplicableȱcustomȱorȱusageȱinȱ
theȱparticularȱtradeȱthatȱcanȱsettleȱtheȱquestion,ȱ(b)ȱlookȱtoȱtheȱ
UCCȱforȱaȱsolution,ȱ(c)ȱbothȱaȱandȱb,ȱ(d)ȱnoneȱofȱtheseȱ
14.______ȱ
15.ȱȱ Futureȱgoodsȱareȱ(a)ȱnotȱbothȱexistingȱandȱidentified,ȱ(b)ȱwinȬ
dowȱdisplayȱitemsȱindicatingȱwhatȱisȱtoȱcome,ȱ(c)ȱjustȱideasȱthatȱ
haven’tȱbeenȱformulatedȱyet,ȱ(d)ȱnoneȱofȱtheseȱ
15.______ȱ
16.ȱIfȱtheȱsellerȱshipsȱgoodsȱbyȱcarrier,ȱtheȱtransferȱofȱtheȱriskȱofȱlossȱ
fromȱsellerȱtoȱbuyerȱoccursȱ(a)ȱimmediatelyȱwhenȱtheȱtitleȱtransȬ
fers,ȱ(b)ȱatȱtheȱdestinationȱuponȱtenderȱofȱdeliveryȱbyȱcarrier,ȱȱȱ
(c)ȱuponȱpayment,ȱ(d)ȱnoneȱofȱtheseȱ
16.______ȱ
17.ȱȱ WhichȱofȱtheȱfollowingȱtransactionsȱmeritȱspecialȱattentionȱbeȬ
causeȱofȱtheirȱfrequencyȱandȱuniqueȱrules?ȱ(a)ȱsalesȱonȱcreditȱ
andȱsalesȱonȱapproval,ȱ(b)ȱsalesȱofȱundividedȱinterest,ȱ(c)ȱcashȱ
andȱcarryȱsales,ȱ(d)ȱallȱofȱtheseȱ
17.______ȱ
18.ȱOnȱCODȱsales,ȱ(a)ȱtheȱbuyerȱhasȱcontrolȱofȱtheȱgoodsȱuponȱ
placementȱofȱtheȱorder,ȱ(b)ȱtheȱsellerȱretainsȱcontrolȱoverȱtheȱ
goodsȱuntilȱtheȱpriceȱisȱpaid,ȱ(c)ȱtheȱcarrierȱhasȱcontrolȱoverȱtheȱ
goodsȱuntilȱdelivery,ȱ(d)ȱnoneȱofȱtheseȱ
18.______ȱ
19.ȱIfȱaȱbuyerȱofȱaȱbulkȱtransferȱfailsȱtoȱnotifyȱtheȱseller’sȱcreditorsȱofȱ
theȱforthcomingȱtransfer,ȱtheȱcreditorsȱmayȱ(a)ȱmakeȱclaimsȱ
againstȱtheȱinventoryȱandȱequipmentȱafterȱtheȱbuyerȱtakesȱposȬ
session,ȱ(b)ȱmakeȱtheȱsaleȱnullȱandȱvoid,ȱ(c)ȱeitherȱaȱorȱb,ȱȱȱȱȱȱȱȱȱ(d)ȱ
noneȱofȱtheseȱ
19.______ȱ
ȱ
SECTION III—APPLY LEGAL PRACTICES
20.ȱFranȱhadȱtheȱmotorȱinȱherȱcarȱreplacedȱatȱFred’sȱFixȬItȱAutoȱShop.ȱTwoȱweeksȱ
laterȱtheȱpoliceȱconfiscatedȱherȱcar,ȱasȱitȱcontainedȱaȱstolenȱmotor.ȱFranȱwasȱnotȱ
awareȱofȱtheȱcrime.ȱDoesȱsheȱhaveȱownership?ȱExplainȱyourȱanswer.ȱ
3-28 Chapter 14 Ownership and Risk of Loss in Sales
ANSWERS
Lessonȱ14—1ȱ
Quiz
ȱ
12. AdelphiaȱwouldȱnotȱhaveȱaȱcauseȱofȱactionȱagainstȱPerezȱbecauseȱatȱtheȱtimeȱsheȱ
Practice Activity
1.ȱNo,ȱtheȱRussellsȱnoȱlongerȱownȱtheȱboat.ȱȱBecauseȱthereȱwasȱnoȱrequirementȱforȱ
documentsȱofȱtitleȱtoȱbeȱdeliveredȱunderȱtheȱcontract,ȱandȱdeliveryȱofȱtheȱboatȱ
2.ȱNo,ȱMedicoȱdoesn’tȱgetȱtheȱcar.ȱTheȱcourtȱruledȱthatȱunderȱtheȱUCC,ȱSmithȱwasȱ
aȱmerchantȱofȱusedȱcarsȱand,ȱasȱsuch,ȱhadȱapparentȱauthorityȱtoȱsellȱtheȱcar.ȱUnȬ
Reteach
Theȱcorrectȱwordȱmatchesȱareȱasȱfollows:ȱ
