Under UCC Article 2, which statement is most correct regarding an insurable interest in contracted goods?

	a.	Both the buyer and the seller can hold at the same time an insurable interest in goods contracted for sale.
	b.	A contract for the sale of goods must state when and how an insurable interest in the goods transfers. Otherwise, it does not transfer to buyer.
	c.	In a sale of goods, only the buyer or the seller can hold the insurable interest in goods.
	d.	Insurable interest runs with title. That is, whichever party has good title to the goods is the party with the insurable interest in the goods.

Bee left her wedding ring with Houston Jewelers, Inc. for cleaning and repair. Jewelers sold the ring to a young man for his upcoming wedding. The ring had no markings or inscriptions. Young man paid market price and is a buyer in the ordinary course of business (BIOC). When Bee sees her ring on a girl at church, can she get it back?

	a.	No. This is an entrustment situation and young man is a BIOC. Therefore, he gets good title because Article 2 protects buyers. Bee must sue Jewelers for her loss.
	b.	Yes. This is an entrustment situation and the young man is a BIOC. Under Article 2, merchant Jewelers had the right of possession, but not good title, and no right to sell the ring. Therefore, no title passed to the young man. Bee can get her ring back.
	c.	Yes. She has pictures of herself with the ring on, and the police agree that the ring is the same on that belongs to Bee, and that Bee entrusted to Jewelers for cleaning.
	d.	No. This is a special bailment called an entrustment. Jewelers has voidable title to goods entrusted to it for repairs, and also the power and right to sell to a BIOC if the buyer is acting in good faith. Bee cannot get her ring back.

Question 8

Buyer purchases several computers and printers at Costco, paying cash. Costco removes the equipment to a cart, shrink wraps all the equipment, and attaches labels with buyers name on them. The cart is parked near the service desk for pick-up by buyer later that day. Which statement or statements below is/are correct for this scenario?

	a.	Seller has identified the goods to the sales contract.
	b.	All the answer choices are correct.
	c.	Title has passed from seller to buyer.
	d.	Buyer does not have to have physical possession of the goods to have an insurable interest in the goods.

Question 7

Seller in Houston entered a goods sales contract with buyer in Dallas. The contract states F.O.B. Houston. What does this term mean?

	a.	It means free of both, meaning that neither seller nor buyer bears any risk, only the carrier bears this risk.
	b.	It means that buyer has the risk of loss or damage to the goods while they are in transit from Houston to Dallas.
	c.	It means seller bears the risk of loss or damage to the goods while they are in transit to Dallas.
	d.	It means the goods are packaged in bottles, so the carrier must be careful. F.O.B. means full of bottles.

Question 6

Seller of latte machines entered into a sale-on-approval contract with coffee bar. Coffee bar used 2 machines for 4 months. The coffee bar burned down. Who bears the risk of loss for the latte machines, seller or coffer bar owner/buyer?

	a.	Buyer bears this loss because the machine was destroyed on Buyers business premises.
	b.	Seller bears this loss. Title remained with Seller until coffee bar signed a written agreement for the purchase of the machines, and paid in full.
	c.	Coffee bar owner. Using the machines for 4 months is consistent with acceptance. Bar owner must pay seller for the machines.
	d.	It depends on the length of time a latte machine is ordinarily tried out before being purchased.

Houston buyer purchased a prize race horse stabled on a farm in Waco. Seller lives in Dallas. Buyer wired cash to seller, and seller faxed the Certificate of Ownership to buyer. The horse remained in Waco for pickup the following day. Overnight, the horse died of a heart attack. Who bears this loss?

	a.	Seller because he retains control of the horse until the Waco farm is notified of the sale. Seller sent no such notice.
	b.	Both buyer and seller will split the loss.
	c.	Seller because he cannot now ensure delivery of a live racehorse.
	d.	Buyer because he has the documents of title proving ownership.Title has passed from seller to buyer.

Question 4

Seller in Austin entered into a contract with Buyer in Waco.The contract was silent on who bears the risk of loss or damage to the goods while in transit. Is this a shipment contract, a destination contract, or neither shipment nor destination contract?

	a.	This is a shipment contract. It is the default position when goods are shipped and the contract is silent as to risk allocation.
	b.	In this contract, only the carrier bears the risk of loss because the contract is silent on whether seller or buyer bears it.
	c.	This is neither a shipment nor destination contract because the contract is silent on who bears the risk of loss while goods are in transit.
	d.	This is a destination contract. No reasonable buyer would take on shipping risk. Therefore, the seller bears the risk of loss here.

Question 3

Under Article 2 contract for the sale of goods, why is it important when title passes from seller to buyer?

	a.	Without a shift in title, a sale under Article 2 has not occurred.
	b.	All the answer choices are reasons it is important.
	c.	Title is required in order for a creditor to take goods owed by a debtor. That right can originate from a default judgment against the debtor, or from a security agreement giving the right of repossession.
	d.	The person with title also has an insurable interest in the goods.

UCC Article 2 defines a/an _______ as transfer of title from seller to buyer for a price.

	a.	bailment
	b.	sale
	c.	lease
	d.	entrustment

Thief stole a watch from a mall. He sold it for market price to a co-worker. What kind of title does the co-worker get in the watch (and he paid market value for it so is acting in good faith)?

	a.	voidable title
	b.	valid title (he is a BIOC)
	c.	semi-valid title because seller is not a merchant, and because he paid market price so acted in good faith.
	d.	void title